−Removed: The following are certain of the important risk factors that could cause, or contribute to causing, our actual operating results to differ materially from those indicated, expected, or suggested by forward-looking statements made in this Annual Report on Form 10-K or presented elsewhere by management from time to time.
+Added: The following are certain of the important risk factors that make an investment in our securities speculative or risky.
The risks described below are not the only ones we face.
−Removed: Additional risks not presently known to us, or that we currently deem to be immaterial, could also materially and adversely affect our business, results of operations, financial condition, cash flows, prospects, and/or the price of our outstanding securities.
+Added: Additional risks not presently known to us, or that we currently deem to be immaterial, could also materially and adversely affect our business, results of operations, financial condition, cash flows or prospects, or the price of our outstanding securities.
Summary of Risk Factors
−Removed: The following is a summary of the principal risks and uncertainties that could materially adversely affect our business, results of operations, financial condition, cash flows, prospects, and/or the price of our outstanding securities, and make an investment in our securities speculative or risky.
−Removed: You should read this summary together with the more detailed description of each risk factor contained below.
+Added: Our business is subject to risks and uncertainties that make an investment in our securities speculative or risky and could materially adversely affect our business, results of operations, financial condition, cash flows or prospects, or the price of our outstanding securities.
+Added: These risks are discussed more fully below and include:
+Added: • Supporting our customer base strains our personnel resources and infrastructure, and if we are unable to scale our operations and increase productivity, we may not be able to successfully implement our business plan.
+Added: • The success of our business depends on retention of existing customers and their purchase of additional services, and attracting new customers.
• Our business depends significantly on our ability to retain our key personnel, attract new personnel, and manage attrition.
−Removed: • Supporting our existing and growing customer base could strain our personnel resources and infrastructure, and if we are unable to scale our operations and increase productivity, we may not be able to successfully implement our business plan.
−Removed: • The success of our business depends on retention of existing customers and their purchase of additional services, and attracting new customers and new consumer users of our consumer services.
+Added: • Our Gainshare program offers contingent pricing and if we are unsuccessful at achieving customer objectives, the program could result in operating losses.
• Our expansion into new products, services, and technologies could subject us to additional risks.
−Removed: • Major public health issues, and specifically the pandemic caused by the spread of COVID-19, could have a material adverse impact on our business, results of operations, financial condition, cash flows, prospects, and/or the price of our outstanding securities.
• If we do not successfully integrate past or potential future acquisitions, we may not realize the expected business or financial benefits and our business could be adversely impacted.
−Removed: • Capital needs necessary to execute our business strategy could increase substantially and we may not be able to secure additional financing to execute this strategy.
−Removed: • Our sales cycles can be lengthy, and the timing of sales can be difficult to predict, which may cause our operating results to vary significantly.
+Added: • We may not be able to refinance our substantial indebtedness before it becomes due.
+Added: In addition, capital needs necessary to execute our business strategy could increase substantially.
+Added: There is a significant risk that we may not be able to secure necessary financing on commercially reasonable terms, or at all.
+Added: • Our sales cycles can be lengthy, and the timing of sales can cause our operating results to vary significantly.
• Delays in our implementation cycles could have an adverse effect on our results of operations.
−Removed: • If the sale of Kasamba is completed, we will no longer be engaged in the consumer segment of our business and our future results of operations will be dependent solely on our business segment.
−Removed: • We have identified a material weakness in our internal control over financial reporting that, if not properly remediated, could adversely affect our business and results of operations.
• Our quarterly revenue and operating results may fluctuate significantly, which may cause a substantial decline in the trading price of our securities.
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• Our business is subject to a variety of U.S.
−Removed: and international laws and regulations regarding privacy and data protection, and increased public scrutiny of privacy and security issues could result in increased government regulation, industry standards, and other legal obligations that could adversely affect our business.
+Added: and international laws and regulations regarding privacy, data protection, and AI, and increased public scrutiny of privacy, security, and AI issues could result in increased government regulation, industry standards, and other legal obligations that could adversely affect our business.
+Added: • We are the subject of a number of ongoing actions that have resulted in significant expense, and adverse developments in our ongoing actions and/or future actions could have a material adverse effect on our business results of operations and financial condition.
• We may be subject to governmental export controls and economic sanctions regulations that could impair our ability to compete in international markets due to licensing requirements and could subject us to liability if we are not in compliance with applicable laws.
• Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations, or interpretive positions could harm our business.
−Removed: • Future regulation of the internet or mobile devices may slow our growth, resulting in decreased demand for our services and increased costs of doing business.
+Added: • Future regulation of the internet or mobile devices may result in decreased demand for our services and increased costs of doing business.
• Our products and services may infringe upon intellectual property rights of third parties and any infringement could require us to incur substantial costs and may distract our management.
• Our business and prospects would suffer if we are unable to protect and enforce our intellectual property rights.
−Removed: • Issues in the use of AI in our product offerings may result in reputational harm or liability.
+Added: • Issues in the use of AI in our product offerings or by our vendors may result in reputational harm or liability.
• Our results of operations may be adversely impacted due to our exposure to foreign currency exchange rate fluctuations.
−Removed: • We may be unsuccessful in expanding our operations internationally and/or into direct-to-consumer services due to additional regulatory requirements, tax liabilities, currency exchange rate fluctuations, and other risks, which could adversely affect our results of operations.
+Added: • We may be unsuccessful in expanding our operations internationally due to additional regulatory requirements, tax liabilities, currency exchange rate fluctuations, and other risks, which could adversely affect our results of operations.
• Our operations may expose us to greater than anticipated income, non-income, and transactional tax liabilities, which could harm our financial condition and results of operations.
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• Servicing our debt may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our indebtedness.
−Removed: • We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.
−Removed: • Provisions in the indentures for the Notes may deter or prevent a business combination that may be favorable to you.
−Removed: • The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.
−Removed: • The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results.
−Removed: • The capped call transactions may affect the value of the Notes and our common stock.
+Added: • We may not have the ability to raise the funds necessary to settle conversions of our outstanding convertible debt securities in cash or to repurchase them upon a fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase of our outstanding convertible debt securities.
+Added: • The conditional conversion feature of our outstanding convertible debt securities, if triggered, may adversely affect our financial condition and operating results.
+Added: • The accounting method for convertible debt securities that may be settled in cash, such as our outstanding convertible debt securities, could have a material effect on our reported financial results.
+Added: • The capped call transactions may affect the value of our outstanding convertible debt securities and our common stock.
• Our stock price has been, and may continue to be, highly volatile, which could reduce the value of your investment and subject us to litigation.
• Our common stock is traded on more than one market and this may result in price variations.
−Removed: • If our officers, directors and largest stockholders choose to act together, they may be able to significantly influence our management and operations, acting in their own best interest and not necessarily those of our other stockholders.
−Removed: • Future sales of substantial amounts of our common stock may negatively affect our stock price.
−Removed: • Provisions in our charter documents and Delaware law could discourage, delay or prevent a takeover that stockholders may consider favorable.
+Added: • Provisions in our charter documents, Delaware law and the indentures for our outstanding convertible debt securities could discourage, delay or prevent a takeover that stockholders may consider favorable.
Risks Related to Operating our Business
+Added: Supporting our customer base strains our personnel resources and infrastructure, and if we are unable to scale our operations and increase productivity, we may not be able to successfully implement our business plan.
+Added: We anticipate that additional investments in our internal infrastructure, research, and customer support and development will be required to scale our operations and increase productivity, to address the needs of our customers, to further develop and enhance our services, to expand into new geographic areas, and to scale with our overall growth.
+Added: The additional investments we are making will increase our cost base, which will make it more difficult for us to offset any future revenue shortfalls by reducing expenses in the short term, and there can be no assurance that they will be successful or meet our customers’ needs.
+Added: We regularly upgrade or replace our various software systems.
+Added: If the implementations of these new applications are delayed, or if we encounter unforeseen problems with our new systems or in migrating away from our existing applications and systems, our operations and our ability to manage our business could be negatively impacted.
+Added: Our success depends in part upon the ability of our senior management to manage our projected growth effectively.
+Added: To do so, we must continue to increase the productivity of our existing employees and to hire, train and manage new employees as needed.
+Added: To optimize the performance of our business, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures.
+Added: If we fail to successfully scale our operations and increase productivity, we may be unable to execute our business plan and the market price of our securities could decline.
+Added: The success of our business depends on retention of existing customers and their purchase of additional services, and attracting new customers.
+Added: Our customers typically subscribe for our services for a twelve-month term and have no obligation to renew their subscription after expiration of the twelve-month term.
+Added: In some cases, our agreements are terminable or may terminate upon 30 to 90 days’ notice without penalty.
+Added: If a significant number of our customers, or any one customer to whom we provide a significant amount of services, were to terminate services, reduce the amount of services purchased, or fail to purchase additional services, our results of operations may be negatively and materially affected.
+Added: Dissatisfaction with the nature or quality of our services as well as reductions in our customers’ spending levels, or declines in customer activity as a result of general economic conditions or uncertainty in financial markets, could also lead customers to terminate our service.
+Added: We depend on monthly fees and interaction-based fees from our services for substantially all of our revenue.
+Added: As part of our strategy, we frequently offer customers subscriptions with interaction-based fees.
+Added: While this interaction-based fee model has demonstrated success in our business to date, it could potentially produce greater variability in our revenue as revenue in this model is impacted by the number of interactions that our customers generate through use of our products.
+Added: Because of the historically small amount of services sold in initial orders, we depend significantly on the growth of our customer base and sales to new customers and sales of additional services to our existing customers.
+Added: Our revenue could decline unless we are able to obtain additional customers or alternate revenue sources.
Our business depends significantly on our ability to retain our key personnel, attract new personnel, and manage attrition.
Our success depends largely on the continued services of our senior management team.
+Added: We have had recent changes in our senior management team, including the appointment of a new Chief Executive Officer at the end of 2023.
The loss of one or more members of senior management could have a material adverse effect on our business, results of operations, and financial condition.
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Changes to senior management and key employees could also lead to additional unplanned losses of key employees.
−Removed: The loss of key employees could seriously harm our ability to release new products and services and upgrade existing products and services on a timely basis, and put us at a competitive disadvantage.
+Added: The loss of key employees could seriously
+Added: harm our ability to release new products and services and upgrade existing products and services on a timely basis, and put us at a competitive disadvantage.
In the technology industry, there is substantial competition for key personnel, including skilled engineers, sales executives and operations personnel.
We may not be able to successfully recruit, integrate and retain qualified personnel in the future, which could impact our ability to innovate and deliver new or updated products to our customers, which could harm our business.
−Removed: Among other things, our decision to shift to a remote working environment following the onset of the COVID-19 pandemic may make it harder for us to recruit and retain our personnel.
If our retention and recruitment efforts are ineffective, employee turnover could increase and our ability to provide services to our customers would be materially and adversely affected.
−Removed: Furthermore, the requirement to expense stock options may discourage us from granting the size or type of stock option awards that job candidates may require in order to join our company.
+Added: Following the onset of the global novel coronavirus disease (“COVID-19”) pandemic, we vacated most of our physical offices around the world, and transitioned to a work-from-anywhere model.
+Added: While we have been able to operate effectively from remote locations, the long-term impact of such work arrangements remains unknown.
+Added: For example, such remote work arrangements may present workplace culture challenges.
We expect to evaluate our needs and the performance of our staff on a periodic basis and may choose to make adjustments in the future.
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Thus, any significant amount of staff attrition could cause our business and financial results to suffer.
−Removed: Supporting our existing and growing customer base could strain our personnel resources and infrastructure, and if we are unable to scale our operations and increase productivity, we may not be able to successfully implement our business plan.
−Removed: We continue to experience significant growth in our customer base and personnel, which has placed a strain on our management, administrative, operational and financial infrastructure.
−Removed: We anticipate that additional investments in our internal infrastructure, data center capacity, research, customer support and development, and real estate spending will be required to scale our operations and increase productivity, to address the needs of our customers, to further develop and enhance our services, to expand into new geographic areas, and to scale with our overall growth.
−Removed: We may also need to make additional investments with third party outsourcing providers, such as our announced plans to work with a digital services and consulting company to move our technology infrastructure to the public cloud.
−Removed: The additional investments we are making will increase our cost base, which will make it more difficult for us to offset any future revenue shortfalls by reducing expenses in the short term, and there is no guarantee that they will be successful or meet our customers’ needs.
−Removed: We regularly upgrade or replace our various software systems.
−Removed: If the implementations of these new applications are delayed, or if we encounter unforeseen problems with our new systems or in migrating away from our existing applications and systems, our operations and our ability to manage our business could be negatively impacted.
−Removed: Our success will depend in part upon the ability of our senior management to manage our projected growth effectively.
−Removed: To do so, we must continue to increase the productivity of our existing employees and to hire, train and manage new employees as needed.
−Removed: To manage the expected domestic and international growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls, our reporting systems and procedures, and our utilization of real estate.
−Removed: If we fail to successfully scale our operations and increase productivity, we may be unable to execute our business plan and the market price of our securities could decline.
−Removed: The success of our business depends on retention of existing customers and their purchase of additional services, and attracting new customers and new consumer users of our consumer services.
−Removed: Our customers typically subscribe for our services for a twelve-month term and may have no obligation to renew their subscription after expiration of the twelve-month term.
−Removed: In some cases, our agreements are terminable or may terminate upon 30 to 90 days’ notice without penalty.
−Removed: If a significant number of our customers, or any one customer to whom we provide a significant amount of services, were to terminate services, reduce the amount of services purchased, or fail to purchase additional services, our results of operations may be negatively and materially affected.
−Removed: Dissatisfaction with the nature or quality of our services as well as reductions in our customers’ spending levels or declines in customer activity as a result of general economic conditions or uncertainty in financial markets, could also lead customers to terminate our service.
−Removed: We depend on monthly fees and interaction-based fees from our services for substantially all of our revenue.
−Removed: As part of our strategy, we are increasingly offering customers subscriptions with interaction-based fees.
−Removed: While this interaction-based fee model has demonstrated success in our business to date, it could potentially produce greater variability in our revenue as revenue in this model is impacted by the number of interactions that our customers generate through use of our products.
−Removed: Because of the historically small amount of services sold in initial orders, we depend significantly on the growth of our customer base and sales to new customers and sales of additional services to our existing customers.
−Removed: The success of our consumer offerings similarly depends on our ability to attract and retain new customers.
−Removed: Our revenue could decline unless we are able to obtain additional customers or alternate revenue sources.
Our Gainshare program offers contingent pricing and if we are unsuccessful at achieving customer objectives, the program could result in operating losses.
−Removed: The Company has developed Gainshare, a fully managed solution where LivePerson provides messaging and AI automation technology as well as the labor, automation, and end-to-end program management.
+Added: The Company has developed Gainshare, a fully managed solution where LivePerson provides messaging and AI automation technology as well as labor, automation, and end-to-end program management.
Gainshare pricing is contingent on the degree to which a customer achieves its financial objectives, such as increased revenue or reduced operating costs.
−Removed: If we are unsuccessful in achieving these objectives for our customers (including as a result of broader market events, such as inflation and recessionary pressures, decreased consumer confidence, normalization of pandemic-specific shopping trends and returns to physical, in-store shopping experiences), it will reduce the revenue that we recognize from Gainshare and could result in our operating the program at a financial loss, which could have a materially adverse impact on our financial results.
+Added: If we are unsuccessful in achieving these objectives for our customers (including as a result of broader market events, such as inflation and recessionary pressures or decreased consumer confidence), it will reduce the revenue that we recognize from Gainshare and could result in our operating the program at a financial loss, which could have a materially adverse impact on our financial results.
Our expansion into new products, services, and technologies could subject us to additional risks.
−Removed: We have invested and expect to continue to expand in new products, services, and technologies.
+Added: We have invested in new products, services, and technologies.
We may have limited or no experience in new market segments that we enter or new services that we decide to offer, and customers may not choose to buy or use our service offerings.
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In addition, new and evolving products, services, and technologies, including those that use AI, machine learning, and blockchain, can raise ethical, technological, legal, regulatory, and other challenges, which may negatively affect our business and demand for our products and services.
−Removed: In addition, profitability, if any, in our newer activities may not meet our expectations, and we may not be successful enough in these newer activities to recoup our investments in them.
+Added: Profitability, if any, in our newer activities may not meet our expectations, and we may not be successful enough in these newer activities to recoup our investments in them.
Failure to realize the benefits of amounts we invest in new technologies, products, or services could result in the value of those investments being written down or written off.
−Removed: Major public health issues, and specifically the pandemic caused by the spread of COVID-19, could have a material adverse impact on our business, results of operations, financial condition, cash flows, prospects, and/or the price of our outstanding securities.
−Removed: Our results of operations could in the future be materially adversely impacted by the COVID-19 pandemic.
−Removed: We closely monitor developments related to the COVID-19 pandemic to assess its impact on our business.
−Removed: While still evolving, the COVID-19 pandemic (including the emergence and spread of more transmissible variants) has created significant economic disruption, and financial volatility and uncertainty both in the U.S.
−Removed: and around the world.
−Removed: Although vaccines believed to be highly effective at preventing hospitalization from COVID-19 continue to be produced and distributed, it is not possible to predict the longer term-effects that the COVID-19 pandemic could have on our business, including after the COVID-19 pandemic has subsided.
−Removed: The extent to which the COVID-19 pandemic impacts our business, results of operations, financial condition, cash flows or prospects will depend on future developments, which are highly uncertain and that we may not be able to accurately predict, including the duration and severity of the pandemic;
−Removed: governmental, business and individual actions that
−Removed: have been and continue to be taken in response to the pandemic;
−Removed: the rate of vaccine adoption, the effectiveness of global vaccine distribution efforts and vaccine efficacy;
−Removed: the impact of the pandemic on economic activity and actions taken in response;
−Removed: the effect on our clients and client demand for our services and solutions, including the potential lengthening of the sales cycle;
−Removed: our ability to sell and provide our services and solutions, including through global customer summits (which were held virtually in 2020 and 2021);
−Removed: the ability of our clients to pay for our services and solutions;
−Removed: travel restrictions and working from home;
−Removed: and any closures of our and our clients’ offices and facilities.
−Removed: Clients may also slow down decision making, delay planned work, seek to terminate existing agreements and/or delay payment terms.
−Removed: While we have implemented risk management and contingency plans and taken preventive measures and other precautions, the ultimate impact of the COVID-19 pandemic on our business is uncertain.
−Removed: In 2020, due to health concerns related to the COVID-19 pandemic, we vacated our physical offices around the world, and transitioned to a work-from-anywhere model.
−Removed: While we have been able to operate effectively from remote locations, the long-term impact of such work arrangements remains unknown.
−Removed: For example, such remote work arrangements may increase the risk of cyber incidents or data breaches and may present workplace culture challenges.
−Removed: Furthermore, we have incurred expenses associated with the early termination of various leases at our office locations around the world.
−Removed: We also outsource certain critical business activities to third parties and plan to continue to increasingly do so.
−Removed: As a result, we rely upon the successful implementation and execution of the business continuity and repopulation planning of such entities in the current environment.
−Removed: While we closely monitor the business continuity activities of these third parties, successful implementation and execution of their business continuity and repopulation strategies are largely outside our control.
−Removed: If one or more of the third parties to whom we outsource certain critical business activities experience operational failures as a result of the impacts from the spread of COVID-19, or claim that they cannot perform due to a force majeure, it may have a material adverse effect on our business, financial condition, results of operations, liquidity and cash flows.
−Removed: While governmental and non-governmental organizations are engaging in efforts to combat the spread and severity of the COVID-19 pandemic and related public health issues, these measures may not be effective.
−Removed: We also cannot predict how legal and regulatory responses to concerns about the COVID-19 pandemic and related public health issues will impact our business.
−Removed: Such events or conditions could result in additional regulation or restrictions affecting the conduct of our business in the future.
−Removed: Any of these events or other currently unforeseen consequences of the coronavirus pandemic, or of other pandemics, epidemics or similar widespread public health concerns, could cause or contribute to the risks and uncertainties enumerated in this Annual Report on Form 10-K, and could materially adversely affect our business, results of operations, financial condition, cash flows, prospects and/or the price of our outstanding securities.
If we do not successfully integrate past or potential future acquisitions, we may not realize the expected business or financial benefits and our business could be adversely impacted.
As part of our business strategy, we have made and may continue to make acquisitions to add complementary businesses, products, technologies, revenue and intellectual property rights.
−Removed: In October 2018, we acquired AdvantageTec, Inc., a leading provider of texting solutions for service departments of automotive dealerships that helps enable the conversational experience across the entire dealership, including variable and fixed operations.
−Removed: In September 2018, we acquired the employees and technology assets of Conversable, Inc.
−Removed: a SaaS based AI powered conversational platform.
−Removed: In January 2018, we acquired the employees and technology assets of BotCentral, Inc., a Silicon Valley based startup which has created a number of bot solutions for major brands in banking, insurance, and travel, running on LivePerson’s conversational platform.
−Removed: In July 2021, we acquired German conversational AI company e-bot7.
−Removed: In October 2021, we acquired VoiceBase, a leader in real-time speech recognition and conversational analytics;
−Removed: and Tenfold, an advanced customer engagement platform for integrating communication systems with leading CRM and support services.
−Removed: In February 2022, we acquired WildHealth, which leverages advanced machine learning to combine DNA analysis, biometrics, microbiome testing and phenotypic data in an effort to provide people with a blueprint for optimized health.
−Removed: Acquisitions and investments involve numerous risks to us, including:
+Added: Acquiring and integrating technology companies presents unique risks including difficulties in adapting and developing new software technologies and systems protocols, increased software integration expenses, and incompatibility of acquired technologies.
+Added: Acquisitions and investments also involve numerous other risks to us, including:
• potential failure to achieve the expected benefits of the combination or acquisition;
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• the tax effects of any such acquisitions.
−Removed: These difficulties could disrupt our ongoing business, expose us to unexpected costs, distract our management and employees, increase our expenses, and adversely affect our results of operations.
+Added: These d if ficulties could disrupt our ongoing business, expose us to unexpected costs, distract our management and employees, increase our expenses, and adversely affect our results of operations.
Furthermore, we may incur debt or issue equity securities to pay for any future acquisitions.
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It could have a significant impact on our business processes, financial reporting, information systems and internal controls.
−Removed: As we implement the transition of our technology infrastructure to the public cloud, we may need to divert resources away from other important business operations, including management attention.
+Added: As we implement the transition of our technology infrastructure to the public cloud, we may need to divert resources and management attention away from other important business operations.
While we plan to implement business contingency and other plans to facilitate continuous internet access, sustained or concurrent service denials or similar failures could limit our ability to provide our customers access to cloud-based services or otherwise operate our business.
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As we increase our reliance on public cloud infrastructure, our products and services will become increasingly reliant on continued access to, and the continued stability, reliability, and flexibility of third-party public cloud services.
+Added: Additionally, we may in the future be unable to secure additional cloud hosting capacity on commercially reasonable terms or at all.
+Added: If any of our public cloud providers increases pricing terms, terminates or seeks to terminate our contractual relationship, establishes more favorable relationships with our competitors, or changes or interprets their terms of service or policies in a manner that is unfavorable to us, we may be required to transfer to another provider and may incur significant costs and experience service interruptions.
We have limited control over the public cloud operations and facilities on which we plan to host our technology infrastructure.
−Removed: Any changes in third-party service levels or any disruptions or delays from errors, defects, hacking incidents, security breaches, computer viruses, DDoS attacks, bad acts or performance problems could harm our reputation, damage our customers’ businesses, and harm our business.
+Added: Any changes in third-party service levels or any disruptions or delays from errors, defects, hacking incidents, security breaches, computer viruses, misconfigurations, distributed denial of service attacks, bad acts or performance problems could harm our reputation, damage our customers’ businesses, and harm our business.
Our public cloud providers are also vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, war, public health crises, such as COVID-19, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar events.
Although our transition and migration to the public cloud may increase our risk of liability and cause us to incur significant technical, legal or other costs, we may have limited remedies against third-party providers in connection with such liabilities.
−Removed: Additionally, our public cloud providers may not be able to effectively manage existing traffic levels or increased demand in capacity requirements, especially to cover peak levels or spikes in traffic, and as a result, our customers may experience delays in accessing our solutions or encounter slower performance in our solutions, which could significantly harm the operations of our customers.
+Added: Additionally, our public cloud providers may not be able to effectively manage existing traffic levels or increased demand in capacity requirements, especially to cover peak levels or spikes in traffic, and as a result, our customers may experience delays in accessing our solutions or encounter slower performance in our solutions, which could significantly harm the
+Added: operations of our customers.
Interruptions in our services might reduce our revenue, cause us to issue credits to customers, subject us to potential liability, and cause customers to terminate their subscriptions or harm our renewal rates.
−Removed: Finally, we may in the future be unable to secure additional cloud hosting capacity on commercially reasonable terms or at all.
−Removed: If any of our public cloud providers increases pricing terms, terminates or seeks to terminate our contractual relationship or changes or interprets their terms of service or policies in a manner that is unfavorable, we may be required to transfer to another provider and may incur significant costs and experience service interruptions.
−Removed: Capital needs necessary to execute our business strategy could increase substantially and we may not be able to secure additional financing to execute this strategy.
−Removed: To the extent that we require additional funds to support our operations or the expansion of our business, or to pay for acquisitions, we may need to sell additional equity, issue debt or convertible securities, or obtain credit facilities through financial institutions.
−Removed: In the past, we have obtained financing principally through the sale of preferred stock, common stock, warrants, and convertible notes.
−Removed: If additional funds are raised through the issuance of debt or preferred equity securities, these securities could have rights, preferences, and privileges senior to holders of common stock, and could have terms that impose restrictions on our operations.
+Added: We may not be able to refinance our substantial indebtedness before it becomes due.
+Added: In addition, capital needs necessary to execute our business strategy could increase substantially.
+Added: There is a significant risk that we may not be able to secure necessary financing on commercially reasonable terms, or at all.
+Added: Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient to refinance our outstanding indebtedness.
+Added: In particular, we have $517.5 million in aggregate principal amount of 0% Convertible Notes due in December 2026.
+Added: From time to time, we have explored, and expect to continue to explore, a variety of transactions to improve our liquidity and/or to refinance our indebtedness, including issuing new debt or equity and repurchasing outstanding notes in the open market with available liquidity.
+Added: We cannot assure you that we will enter into or consummate successfully any liquidity-generating or debt refinancing transactions, and we cannot currently predict the impact that any such transactions, if consummated, would have on us.
+Added: In the recent past, we have obtained financing principally through the sale of convertible notes which required minimal interest payments.
+Added: If additional funds are raised through the issuance of debt or preferred equity securities, or borrowing from financial institutions under credit facilities, these instruments could require materially higher interest payments than we have historically paid, have rights, preferences, and privileges senior to holders of common stock, and could have terms that impose restrictions on our operations.
If additional funds are raised through the issuance of additional equity or convertible securities, our stockholders could suffer dilution.
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Those limitations would materially and adversely affect our business, results of operations, cash flows, and financial condition.
−Removed: Our sales cycles can be lengthy, and the timing of sales can be difficult to predict, which may cause our operating results to vary significantly.
+Added: If we cannot make scheduled payments on our indebtedness, we will be in default under one or more of the agreements governing our indebtedness, and as a result, we could be forced into bankruptcy or liquidation.
+Added: Our sales cycles can be lengthy, and the timing of sales can cause our operating results to vary significantly.
The sales cycle for our products can be several months or more and varies substantially from customer to customer, particularly for sales to enterprise customers.
Because we sell complex, integrated solutions, it can take many months to close sales as customers evaluate our product offering against available alternatives and define their requirements.
−Removed: We are often required to expend substantial time, effort, and money educating potential customers about the value of our offerings.
−Removed: The increasingly complex needs of our customers can contribute to a longer sales cycle.
+Added: We are often required to spend substantial time, effort, and money educating potential customers about the value of our offerings.
+Added: The increasingly complex needs of our customers can further contribute to a longer sales cycle.
Additionally, our quarterly sales have historically reflected an uneven pattern in which a disproportionate percentage of a quarter’s total sales occur in the last month, weeks and days of each quarter.
−Removed: These patterns make prediction of revenue especially difficult and uncertain and increase the risk of unanticipated variations in our results of operations.
−Removed: As a result, we are not always able to precisely predict the quarter in which expected sales will occur.
+Added: This makes prediction of revenue especially difficult and uncertain and increases the risk of unanticipated variations in our results of operations.
In addition, historically a large portion of our revenue has derived from large orders from large clients.
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If new or existing customers cancel or have difficulty deploying our products or require significant amounts of our professional services, support, or customized features, revenue recognition could be canceled or delayed and our costs could increase, which could negatively impact our operating results.
−Removed: If the sale of Kasamba is completed, we will no longer be engaged in the consumer segment of our business and our future results of operations will be dependent solely on our business segment.
−Removed: The business of Kasamba, Inc.
−Removed: (“Kasamba”) and its associated assets and liabilities represent the entire consumer segment of our business, which generated approximately 7% of our total revenue for the year ended December 31, 2022, and approximately 8% of our total revenue for the years ended December 31, 2021 and 2020.
−Removed: Accordingly, if the sale of Kasamba is completed, our future financial results will be dependent solely on our business segment.
−Removed: We may also reduce our opportunities with respect to certain markets, consumer products or revenue streams, as well as our ability to compete in such markets and product categories.
−Removed: We have identified a material weakness in our internal control over financial reporting that, if not properly remediated, could adversely affect our business and results of operations.
−Removed: As described in Item 9A, Controls and Procedures, we have identified certain control deficiencies that in the aggregate constitute a material weakness in our internal control over financial reporting as of December 31, 2022.
−Removed: Such control deficiencies were identified in connection with the Company’s previously disclosed review of certain transactions related to its subsidiary WildHealth, which was acquired in February 2022, and primarily include a combination of ineffective operation of controls and inadequate controls related to:
−Removed: formal review, approval, and evaluation of non-core, complex transactions as well as engagement with government agencies;
−Removed: segregation of duties between accounting and contracting approval functions for non-core, complex transactions;
−Removed: and formal review, approval and evaluation of manual journal entries.
−Removed: As further described in Item 9A, Controls and Procedures, the identified control deficiencies are already in the process of being remediated, primarily through the development and implementation of new controls and enhanced procedures for formal review, approval, and evaluation of non-core, complex transactions as well as engagement with government agencies, enhanced accounting staff, enhanced procedures for segregation of duties between accounting and contracting approval functions for non-core, complex transactions, and additional procedures and information technology systems for formal review, approval and evaluation of manual journal entries.
−Removed: However, we cannot guarantee that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to the material weakness or that they will prevent or avoid potential future material weaknesses.
−Removed: Implementing any further changes to our internal controls may distract our officers and employees and entail material costs to implement new processes and/or modify our existing processes.
−Removed: Moreover, these changes do not guarantee that we will be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could harm our business.
−Removed: In addition, investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm the price of our common stock.
Our services are subject to payment-related risks.
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If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our customers or facilitate other types of online payments, and our business and operating results could be adversely affected.
−Removed: Through our consumer-facing platform, we facilitate online transactions between individual service providers who provide online advice and information to consumers.
−Removed: In connection with these services, we accept payments using a variety of methods, such as credit card, debit card and PayPal.
−Removed: These payments are subject to “chargebacks” when consumers dispute payments they have made to us.
−Removed: Chargebacks can occur whether or not services were properly provided.
−Removed: Susceptibility to chargebacks puts a portion of our revenue at risk.
−Removed: We take measures to manage our risk relative to chargebacks and to recoup properly charged fees, however, if we are unable to successfully manage this risk our business and operating results could be adversely affected.
−Removed: As we offer new payment options to our users, we may be subject to additional regulations, compliance requirements, and fraud.
We are also subject to a number of other laws and regulations relating to money laundering, international money transfers, privacy and information security, and electronic fund transfers.
If we were found to be in violation of applicable laws or regulations, we could be subject to civil and criminal penalties or forced to cease our payments services business.
−Removed: We may experience difficulties integrating e-bot7, VoiceBase, Tenfold and WildHealth, and may not realize expected business or financial benefits and our business could be adversely impacted.
−Removed: In the third quarter of 2021, we acquired e-bot7, a Conversational AI company.
−Removed: In the fourth quarter of 2021, we acquired VoiceBase, a leader in real time speech recognition and conversational analytics and Tenfold, an advanced customer engagement platform for integrating communication systems with leading CRM and support systems.
−Removed: In the first quarter of 2022, we acquired WildHealth, which leverages advanced machine learning to combine DNA analysis, biometrics, microbiome testing and phenotypic data to provide people with a blueprint for truly optimized health and a maximized health span.
−Removed: We intend to maintain the business operations of each of these companies while integrating and leveraging e-bot7’s self-service capabilities, Tenfold’s technology platform, VoiceBase’s technology and WildHealth’s data platform with our proprietary messaging and Conversational AI offerings.
−Removed: However, acquiring and integrating a technology company presents unique risks
−Removed: including difficulties in adapting and developing new software technologies and systems protocols, increased software integration expenses, and incompatibility of acquired technologies in addition to the risks discussed under “ If we do not successfully integrate past or potential future acquisitions, we may not realize the expected business or financial benefits and our business could be adversely impacted.
−Removed: Our business of facilitating at-home rapid-testing solutions poses substantial risks.
−Removed: In the recent past, our subsidiaries Bella Health and WildHealth have offered COVID-19 testing solutions.
−Removed: This business poses certain risks, including our lack of experience operating in the healthcare industry and elevated risks related to compliance with federal, state, and local laws, rules and regulations pertaining to the healthcare and diagnostic testing industry.
−Removed: In addition, due to reduced demand for COVID-19 testing, the revenue generated from this service has decreased and is expected to cease entirely.
−Removed: Our expansion into digital healthcare poses substantial new risks to which we have not previously been exposed.
−Removed: The digital healthcare market is new and unproven, and it may not sustain high levels of demand, consumer acceptance and market adoption.
−Removed: Our success in digital healthcare will depend on the willingness of consumers to use our solutions.
−Removed: Negative publicity about our solutions, or digital healthcare generally could limit market acceptance of our solutions.
−Removed: Similarly, concerns or negative publicity regarding patient confidentiality and privacy in the context of digital healthcare could limit market acceptance of our healthcare offerings.
−Removed: If any of these events occur, it could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: Our success is dependent upon our continued ability to maintain a network of qualified digital healthcare providers that leverage our technology offerings.
−Removed: The failure to maintain or to secure new providers may result in a loss of or inability to grow our revenue base and higher costs.
−Removed: Other risks include our lack of experience operating in the healthcare industry and elevated risks relating to compliance with certain U.S.
−Removed: federal, state, and local healthcare laws, regulations, and rules in the heavily-regulated healthcare industry, including:
−Removed: state laws relating to the licensure of medical professionals;
−Removed: state laws regulating telehealth and online healthcare services;
−Removed: state laws that prohibit general business corporations from practicing medicine, controlling physicians’ medical decisions, or engaging in certain practices, such as splitting fees with physicians;
−Removed: federal and state law provisions relating to anti-kickback, self-referral, fraud and false claims;
−Removed: provisions of, and regulations relating to the Health Insurance Portability and Accountability Act of 1996, as amended, and its accompanying regulations (“HIPAA”), including provisions relating to criminal healthcare fraud and the confidentiality and security of individually identifiable health information;
−Removed: and federal and state laws relating to the provision of services by non-physician clinical providers (such as physician assistants or nurses);
−Removed: and exposure to liability, which may include liabilities for failure to comply with healthcare laws, regulations, and rules for which we may not have sufficient insurance or indemnification rights.
−Removed: In addition, we have in some instances begun to accept payments from third party payors, including, among others, private insurance companies and government payors (such as Medicaid or Medicaid), which has created additional compliance obligations, including:
−Removed: federal laws that prohibit entities from submitting fraudulent or false claims to Medicare, Medicaid, or other government programs;
−Removed: federal laws that prohibit the receipt of any form of remuneration in return for the referral of patients for items and services covered, in whole or in part, by federal healthcare programs;
−Removed: federal laws prohibiting physicians from referring Medicare or Medicaid patients to an entity for the provision of certain “designated health services” if the physician (or a member of the physician’s immediate family) has a direct or indirect financial relationship with the entity;
−Removed: federal laws relating to failure to disclose or refund overpayments by a government payor;
−Removed: federal and state laws that prohibit healthcare providers from billing and receiving payment from Medicare or Medicaid for services, unless the services are medically necessary;
−Removed: and federal laws that impose civil administrative sanctions for, among other violations, inappropriate billing of services to federally funded healthcare programs, or employing individuals who are excluded from participation in federally funded healthcare programs.
−Removed: Accordingly, to the extent they are applicable as and if we continue to grow in the digital healthcare space, we must monitor our compliance with applicable healthcare laws, regulations, and rules in every jurisdiction in which we operate, on an ongoing basis, and we cannot provide assurance that our activities and arrangements, if challenged, will be found to be in compliance.
−Removed: Even if our activities and arrangements are found to be in compliance, investigations can be time- and resource-consuming and can divert management’s attention from the business.
−Removed: Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
−Removed: Achieving and sustaining compliance with these laws may prove
−Removed: Compliance may require obtaining appropriate licenses or certificates, increasing our security measures and expending additional resources to monitor developments in applicable rules and ensure compliance.
−Removed: We also may become subject to medical liability claims, which could cause us to incur significant expenses and may require us to pay significant damages if not covered by insurance.
−Removed: Additionally, it is possible that the laws, regulations and rules governing the provision of healthcare services may change significantly in the future.
−Removed: Any new or changed healthcare laws, regulations or rules or any review of our business by judicial, law enforcement, regulatory or accreditation authorities or any successful medical liability claim could adversely affect our business, financial condition and results of operations.
Our reputation depends, in part, on factors which are partially or entirely outside of our control .
Our services typically appear under the LivePerson brand or as a LivePerson-branded icon on our customers’ websites.
−Removed: The customer service operators and Experts who respond to the inquiries of our customers’ users are employees or agents of our customers or independent consultants rather than employees of LivePerson.
−Removed: As a result, we are not able to control the actions of these operators or Experts and the impression that such operator or Expert leaves the user with whom they interact.
−Removed: A user may not know that the operator or Expert is not a LivePerson employee.
+Added: The customer service operators who respond to the inquiries of our customers’ users are employees or agents of our customers or independent consultants rather than employees of LivePerson.
+Added: As a result, we are not able to control the actions of these operators and the impression that such operator leaves the user with whom they interact.
+Added: A user may not know that the operator is not a LivePerson employee.
If a user were to have a negative experience in a LivePerson-powered real-time dialogue, it is possible that this experience could be attributed to us, which could diminish our brand and harm our business.
−Removed: Additionally, we believe the success of our business services is aided by the prominent placement of the chat icon on a customer’s website, over which we also have no control.
−Removed: We are subject to risks related to corporate and social responsibility and reputation.
−Removed: Many factors influence our reputation including the perception held by our customers, business partners and other key stakeholders.
−Removed: Businesses face increasing scrutiny related to environmental, social and governance activities.
−Removed: We risk damage to our reputation if we fail to act responsibly in a number of areas, such as diversity and inclusion, sustainability and social responsibility.
−Removed: Any harm to our reputation could impact employee engagement and retention, our corporate culture and the willingness of customers and our partners to do business with us, which could have a material adverse effect on our business, results of operations and cash flows.
+Added: Additionally, we have no control over the content of our customers’ websites on which our website chat icon appears.
+Added: Environmental, social and governance (“ESG”) matters may increase our costs, harm our reputation, or otherwise adversely impact our business.
+Added: Governmental authorities, non-governmental organizations, rating agencies, customers, investors, employees, and other stakeholders are increasingly focused on ESG concerns, such as diversity and inclusion, climate change, sustainability, social responsibility, and corporate governance and transparency.
+Added: This focus on ESG concerns could result in increased costs and complexities of compliance, including with respect to collecting, measuring, and reporting ESG-related information in connection with expanding mandatory and voluntary reporting, diligence and disclosure requirements.
+Added: Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions.
+Added: Unfavorable ESG ratings could lead to increased negative investor sentiment, which could negatively impact our share price as well as our access to and cost of capital.
+Added: Responding to ESG considerations and implementation of our ESG goals and initiatives involves risks and uncertainties, requires investments, and depends in part on third-party performance or data that is outside of our control.
+Added: In addition, some stakeholders may disagree with our ESG goals and initiatives, and we could be criticized for the timing, scope or nature of our ESG goals or initiatives.
+Added: If we fail to meet our goals and initiatives or otherwise do not act responsibly, or if we are perceived to not be acting responsibly, in key ESG areas, we risk negative stockholder reaction, including from proxy advisory services, as well as damage to our reputation, loss of customers or business partners, inability to attract and retain employee talent, and other material adverse effects on our business, results of operations and cash flows.
Risks Related to our Financial Condition and Operating Results
Our quarterly revenue and operating results may fluctuate significantly, which may cause a substantial decline in the trading price of our securities.
−Removed: We have in the past incurred, and may in the future incur, losses and experience negative cash flows, either or both of which may be significant and may cause our quarterly revenue and operating results to fluctuate significantly.
−Removed: These fluctuations may result from a variety of factors, many of which are outside of our control.
+Added: Our quarterly revenue and operating results may fluctuate significantly as a result of a variety of factors, many of which are outside of our control.
Some of the important factors that may cause our revenue and operating results to fluctuate include:
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• our ability to retain and increase sales to existing customers;
−Removed: • demand from customers and consumers for our services;
+Added: • demand from customers for our services;
• our ability to innovate and provide new services to current and future customers;
−Removed: • our ability to continue to add artificial intelligence, machine learning, and automation into our services;
+Added: • our ability to add AI, machine learning, and automation into our services;
• the introduction of new services by us or our competitors;
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• investments in growing our sales and marketing programs;
−Removed: • continued adoption by Experts and Users of web-based advice services;
+Added: • continued adoption by users of conversational AI and web and mobile-based conversation technology;
• exposure to foreign currency exchange rate fluctuations;
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In the past we have experienced losses, we had an accumulated deficit of $857.0 million as of December 31, 2023 and we may incur losses in the future.
−Removed: We have in the past incurred, and we may in the future incur, losses and experience negative cash flow, either or both of which may be significant.
+Added: We have in the past experienced, and we may in the future experience, losses and negative cash flow, either or both of which may be significant.
We recorded a net loss of $100.4 million for the year ended December 31, 2023, and as of December 31, 2023, our accumulated deficit was approximately $857.0 million.
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The non-payment or late payment of amounts due to us from a significant number of customers may negatively impact our financial condition or make it difficult to forecast our revenues accurately.
−Removed: During 2022, we increased our allowance for doubtful accounts from $6.3 million to approximately $9.2 million .
−Removed: During 2021, we increased our allowance for doubtful accounts from $5.3 million to approximately $6.3 million.
−Removed: We base our allowance for doubtful accounts on specifically identified credit risks of customers, historical trends, and other information that we believe to be reasonable.
−Removed: A large p roportion of receivables are due from larger corporate customers that typically have longer payment cycles.
−Removed: We adjust our allowance for doubtful accounts when accounts previously reserved have been collected.
−Removed: As a result of increasingly long payment cycles, we have faced increased difficulty in predicting our operating results for any given period, and have experienced significant unanticipated fluctuations in our revenues from period to period.
+Added: During 2023, we increased our allowance for credit losses from $9.2 million to approximately $9.3 million .
+Added: During 2022, we increased our allowance for credit losses from $6.3 million to approximately $9.2 million .
+Added: We base our allowance for credit losses on specifically identified credit risks of customers, historical trends, and other information that we believe to be reasonable.
+Added: A large p roportion of receivables is due from larger corporate customers that typically have longer payment cycles.
+Added: We adjust our allowance for credit losses when accounts previously reserved have been collected.
+Added: As a result of increasingly long payment cycles, we have experienced unanticipated fluctuations in our revenues from period to period.
Any failure to achieve anticipated revenues in a period could cause the market price of our securities to decline.
There are inherent limitations on the effectiveness of our controls.
+Added: In fiscal 2022, we identified a material weakness in our internal controls.
+Added: Although this material weakness has been remediated, there can be no assurance that similar control issues will not be identified in the future.
+Added: If we cannot remediate future material weaknesses or significant deficiencies in a timely manner, or if we identify additional control deficiencies that individually or together constitute significant deficiencies or material weaknesses, our ability to accurately record, process, and
+Added: report financial information and our ability to prepare financial statements within required time periods, could be adversely affected.
We do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud.
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Over time, controls may become inadequate due to changes in conditions or deterioration in the degree of compliance with policies or procedures.
−Removed: If our controls become inadequate, we could fail to meet our financial reporting obligations, our reputation may be adversely affected, our business and operating results could be harmed, and the market price of our securities could decline.
−Removed: With the recent volatility in the capital markets, there is a risk that we could suffer a loss of principal in our cash and cash equivalents and short-term investments and suffer a reduction in our interest income or in our return on investments.
−Removed: As of December 31, 2022, we had $391.8 million in cash and cash equivalents.
−Removed: We regularly invest excess funds from our cash and cash equivalents in short-term money ma rket funds.
−Removed: We currently hold no mortgaged-backed or auction rate securities.
−Removed: However, some of our investments are subject to general credit, liquidity, market, and interest rate risks, which may be exacerbated by any ongoing uncertainty in the United States and global credit markets.
−Removed: In the future, these market risks associated with our investment portfolio may harm the results of our operations, liquidity and financial condition.
−Removed: Although we believe we have chosen a portfolio reasonably designed to preserve our existing cash position, it may not adequately protect the value of our investments.
−Removed: Furthermore, this more cautious portfolio is unlikely to provide us with any significant interest income in the near term.
−Removed: Because we recognize revenue from subscriptions for our service over the term of the subscription, declines in business may not be immediately reflected in our operating results.
+Added: Failure to maintain effective internal controls could result in violations of applicable securities laws, stock exchange listing requirements, subject us to litigation and investigations, negatively affect investor confidence in our financial statements, and adversely impact our stock price and our ability to access capital markets.
+Added: Because we recognize revenue from subscriptions for our service over the term of the subscription, declines in our business may not be immediately reflected in our operating results.
We generally recognize revenue from customers ratably over the terms of their subscription agreements, which are typically 12 or more months.
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If our goodwill or amortizable intangible assets become impaired, we may be required to record a significant charge to earnings.
−Removed: Under GAAP, we review our amortizable intangible assets for impairment when events or changes in circumstances indicated that the carrying value may not be recoverable.
We review our goodwill for impairment at least annually and when events or changes in circumstances indicate that the carrying value may not be recoverable.
Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable include a decline in stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in our industry.
−Removed: Based on our annual review for 2022, we determined that it is not more likely than not that the fair value of the reporting units is less than their carrying amount.
−Removed: However, future assessments may yield a different result, and from time to time, we may be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, resulting in a negative impact on our results of operations.
+Added: As discussed in Note 5 – Goodwill and Intangible Assets, Net in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K, we have experienced impairments in the past, and from time to time, we may be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, resulting in a negative impact on our results of operations.
+Added: As a result of the Company’s annual goodwill impairment test in the third quarter of 2023, the Company recorded a no n-cash impairment charge of $11.9 million in th e consolidated statements of operations during the year ended December 31, 2023 , to recognize the im pairment of goodwill in the WildHealth reporting unit.
+Added: As a result of our impairment test in the third quarter of 2023 , the Company recognized an immaterial non-cash impairment charge of $3.0 million included in the cost of revenue in the consolidated statements of operations, related to our intangible assets – developed technology associated with WildHealth.
Risks Related to Industry Dynamics and Competition
If we are unable to develop and maintain successful relationships with partners, service partners, social media, and other third-party consumer messaging platforms and endpoints, our business, results of operations, and financial condition could be adversely affected.
−Removed: We believe that continued growth for companies in our industry depends, in part, on enabling brands to connect with consumers across consumers’ preferred conversational interfaces and messaging endpoints, such as SMS, Facebook Messenger, WhatsApp, Apple Business Chat, Google Rich Business Messenger, Line and Alexa.
+Added: We believe that continued growth for companies in our industry depends, in part, on enabling brands to connect with consumers across consumers’ preferred conversational channels and messaging endpoints, such as SMS, Facebook Messenger, WhatsApp, Apple Business Chat, Google Rich Business Messenger, Line, Kakao Talk, Instagram, and WeChat.
In order to grow our business, we have identified and developed, and maintain, strategic relationships with many key technology partners.
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We typically rely on our strategic partners and third-party service providers to supplement our own subject matter expertise and to leverage industry best practice, provide enhanced products and services, and reduce costs.
−Removed: If we fail to establish these relationships in a timely and cost-effective manner or at all, if these strategic partners or third-party service providers fail to provide the services expected, or if we lose any or all of our current relationships, then our business, results of operations, and financial condition could be adversely affected.
−Removed: Replacing a strategic relationship could also take a long period of time and result in increased expenses.
−Removed: Additionally, even if we are successful at developing these relationships, but there are problems or issues with the integrations, or our ability to scale and onboard our customers onto new endpoints, our reputation, and ability to grow our business may be adversely affected.
+Added: If we fail to establish these
+Added: relationships in a timely and cost-effective manner or at all, if these strategic partners or third-party service providers fail to provide the services expected, or if we lose any or all of our current relationships, then our business, results of operations, and financial condition could be adversely affected.
+Added: Replacing a strategic relationship could also take a long time and result in increased expenses.
+Added: Additionally, even if we are successful at developing these relationships, but there are problems or issues with the integrations, or our ability to scale and onboard our customers onto new endpoints, our reputation and our ability to grow our business may be adversely affected.
We have announced plans to migrate our technology infrastructure to the public cloud and may in the future be unable to secure additional cloud hosting capacity on commercially reasonable terms or at all.
−Removed: If any of our public cloud providers increases pricing terms, terminates or seeks to terminate our contractual relationship, establishes more favorable relationships
−Removed: with our competitors, or changes or interprets their terms of service or policies in a manner that is unfavorable with respect to us, we may be required to transfer to another provider and may incur significant costs and experience service interruptions.
+Added: If any of our public cloud providers increases pricing terms, terminates or seeks to terminate our contractual relationship, establishes more favorable relationships with our competitors, or changes or interprets their terms of service or policies in a manner that is unfavorable to us, we may be required to transfer to another provider and may incur significant costs and experience service interruptions.
If we are unable to effectively operate on mobile devices, our business could be adversely affected.
−Removed: The number of people who access the internet and complete transactions over the internet through devices other than desktop computers, including smartphones, handheld tablets, and mobile phones, has increased dramatically in the past few years and is projected to continue to increase.
−Removed: To address these developments, we continue to extend our products and services to support messaging on mobile phone and tablet applications belonging to our company and our customers.
−Removed: If the mobile solutions we have developed do not meet our customers’ needs or the needs of their website visitors, or are not widely adopted by our customers and consumers, we may fail to retain existing customers and we may have difficulty attracting new customers.
−Removed: Such solutions may also create new risks related to privacy and security, which could subject us to investigations, litigation, or reputational harm.
+Added: We have extended our products and services to support messaging on mobile phone and tablet applications belonging to our company and our customers.
+Added: If the mobile solutions we have developed do not meet our customers’ needs or the needs of their website visitors, we may fail to retain existing customers and we may have difficulty attracting new customers.
+Added: Such solutions also present risks related to privacy and security, which could subject us to investigations, litigation, or reputational harm.
If we are unable to rapidly innovate and grow mobile revenue, or if we incur excessive expenses in this effort, our financial performance and ability to continue to grow overall revenue may be negatively affected.
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We may not be successful in developing products that operate effectively with these technologies, systems, networks, or standards.
−Removed: As new devices and platforms are continually being released, it is difficult to predict the challenges we may encounter in developing versions of our solutions for use on these alternative devices.
+Added: As new devices and platforms are released, it is difficult to predict the challenges we may encounter in developing versions of our solutions for use on these alternative devices.
The markets in which we participate are highly competitive, and we may lose customers and revenue if we are not able to innovate or effectively compete.
−Removed: The markets for mobile and online business messaging and digital engagement and AI technology are intensely competitive, rapidly changing, and characterized by aggressive marketing, pricing pressure, evolving industry standards, rapid technology developments, and frequent new product introductions.
+Added: The markets for mobile and online business messaging, digital engagement and AI technology are intensely competitive, rapidly changing, and characterized by aggressive marketing, pricing pressure, evolving industry standards, rapid technology developments, and frequent new product introductions.
We believe that competition will continue to increase as our current competitors increase the sophistication of their offerings and as new participants enter the market, which may cause additional pressure.
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• service providers that offer basic messaging products or services with limited functionality free of charge or at significantly reduced entry level prices;
−Removed: • social media, social listening, messaging, artificial intelligence, bots, e-commerce, and/or data and data analytics companies, such as Facebook, Google and WeChat, which may leverage their existing or future capabilities and consumer relationships to offer competing B2B solutions;
+Added: • social media, social listening, messaging, AI, bots, e-commerce, and/or data and data analytics companies, such as Meta Platforms, Google and WeChat, which may leverage their existing or future capabilities and consumer relationships to offer competing B2B solutions;
• customers that develop and manage their messaging solutions in-house.
−Removed: In addition, many of our current and potential competitors have substantial competitive advantages, such as greater brand recognition, significantly larger financial, marketing, and resource and development budgets, access to larger customer and/or consumer bases, larger and more established marketing and distribution relationships, and/or more diverse product and service offerings.
−Removed: As a result, these competitors may be able to respond more quickly and effectively than we can to any change in the general market acceptance of messaging services or any new or changing opportunities, technologies, standards, pricing
−Removed: strategies, or customer requirements.
+Added: In addition, many of our current and potential competitors have substantial competitive advantages, such as greater brand recognition, significantly larger financial, marketing, and resource and development budgets, access to larger customer bases, larger and more established marketing and distribution relationships, and/or more diverse product and service offerings.
+Added: As a result, these competitors may be able to respond more quickly and effectively than we can to any change in the general market acceptance of messaging services or any new or changing opportunities, technologies, standards, pricing strategies, or customer requirements.
Also, because of these advantages, potential customers may select a competitor’s products and services, even if our services are more effective.
For all of these reasons, we may not be able to compete successfully against our current and future competitors.
−Removed: We may be unable to respond to the rapid technological change and changing customer preferences in the online sales, marketing, customer service, and/or online consumer services industries and this may harm our business.
−Removed: If we are unable, for technological, legal, financial, or other reasons, to adapt in a timely manner to changing market conditions in the online sales, marketing, customer service, and/or e-commerce industry or our customers’ or consumers’ requirements or preferences, our business, results of operations, and financial condition would be materially and adversely affected.
+Added: We may be unable to respond to rapid technological change and changing customer preferences in the online sales, marketing, customer service, and/or online e-commerce industries and this may harm our business.
+Added: If we are unable, for technological, legal, financial, or other reasons, to adapt in a timely manner to changing market conditions in the online sales, marketing, customer service, and/or e-commerce industries or our customers’ requirements or preferences, our business, results of operations, and financial condition would be materially and adversely affected.
Online business is characterized by rapid technological change.
−Removed: In addition, the market for online sales, marketing, customer service, and expert advice solutions is relatively new.
−Removed: Sudden changes in customer and consumer requirements and preferences, frequent new product and service introductions embodying new technologies, and the emergence of new industry and regulatory standards and practices such as but not limited to data privacy and security standards, could render the LivePerson services and our proprietary technology and systems obsolete.
−Removed: The rapid evolution of these products and services will require that we continually improve the performance, features and reliability of our services.
−Removed: Our success will depend, in part, on our ability to:
+Added: Sudden changes in customer and consumer requirements and preferences, frequent new product and service introductions embodying new technologies, and the emergence of new industry and regulatory standards and practices including without limitation data privacy, security, and AI standards, could render the LivePerson services and our proprietary technology and systems obsolete.
+Added: The rapid evolution of these products and services requires that we continually improve the performance, features and reliability of our services.
+Added: Our success depends, in part, on our ability to:
• enhance the features and performance of our services;
−Removed: • develop and offer new services that are valuable to companies doing business online as well as consumers;
+Added: • develop and offer new services that are valuable to companies doing business online;
• respond to technological advances and emerging industry and regulatory standards and practices in a cost-effective and timely manner.
If any of our new services, including upgrades to our current services, do not meet our customers’ or consumers’ expectations, we could lose customers and our business may be harmed.
−Removed: Updating our technology may require significant additional capital expenditures and could materially and adversely affect our business, results of operations, and financial condition.
−Removed: If new services require us to grow rapidly, this could place a significant strain on our managerial, operational, technical and financial resources.
−Removed: In order to manage our growth, we could be required to implement new or upgraded operating and financial systems, procedures and controls.
−Removed: Our failure to expand our operations in an efficient manner could cause our expenses to grow, our revenue to decline or grow more slowly than expected and could otherwise have a material adverse effect on our business, results of operations, and financial condition.
+Added: Updating our technology may require significant additional capital expenditures.
+Added: Our failure to update our technology or expand our operations in an efficient manner could cause our expenses to grow, our revenue to decline or grow more slowly than expected and could otherwise have a material adverse effect on our business, results of operations, and financial condition.
Downturns in the global economic environment or in particular industries in which our sales are concentrated may adversely affect our business and results of operations.
−Removed: and other global economies have experienced in the past and could in the future experience economic downturn that affects all sectors of the economy, particularly in the financial services and retail industries, resulting in declines in economic growth and consumer confidence, increases in unemployment rates and uncertainty about economic stability.
+Added: and other global economies have experienced in the past and could in the future experience economic downturn that affects all sectors of the economy, resulting in declines in economic growth and consumer confidence, increases in unemployment rates and uncertainty about economic stability.
Further, there is increased uncertainty regarding social, political, immigration and trade policies in the U.S., which could impact our global operations and our business.
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Our business has been affected by these conditions in the past and could be similarly impacted in the future by any downturn in global economic conditions.
−Removed: Our business is, and will continue to be, dependent on sales to customers in the telecommunications, financial services, retail, automotive, real estate and technology industries.
+Added: Our business is, and will continue to be, dependent on sales to customers in the telecommunications, financial services, retail, travel, consumer/retail, automotive, and technology industries.
A downturn in one or more of these industries could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows.
In the event that industry conditions deteriorate in one or more of these industries, we could experience, among other things, cancellation or non-renewal of existing contracts, reduced demand for our products and reduced sales.
−Removed: It could be difficult to predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, either relating to the global economic environment or to the particular industries in which our sales are concentrated, which, in turn, could make it more challenging for us to forecast our operating results, make business decisions and identify risks that may adversely affect our business, sources and uses of cash, financial condition and results of operations.
−Removed: Weak economic conditions may also cause our customers to experience difficulty in supporting their current operations and implementing their business plans.
−Removed: Our customers may reduce their spending on our services, may not be able to
−Removed: discharge their payment and other obligations to us, may experience difficulty raising capital, or may elect to scale back the resources they devote to customer service and/or sales and marketing technology, including services such as ours.
+Added: Weak economic conditions may cause our customers to experience difficulty in supporting their current operations and implementing their business plans.
+Added: Our customers may reduce their spending on our services, may not be able to discharge their payment and other obligations to us, may experience difficulty raising capital, or may elect to scale back the resources they devote to customer service and/or sales and
+Added: marketing technology, including services such as ours.
Economic conditions may also lead consumers and businesses to postpone spending, which may cause our customers to decrease or delay their purchases of our products and services.
+Added: It could be difficult to predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, either relating to the global economic environment or to the particular industries in which our sales are concentrated, which, in turn, could make it more challenging for us to forecast our operating results, make business decisions and identify risks that may adversely affect our business, sources and uses of cash, financial condition and results of operations.
If economic conditions deteriorate for us or our customers, we could be required to record charges relating to restructuring costs or the impairment of assets, may not be able to collect receivables on a timely basis, and our business, financial condition, and results of operations could be materially adversely affected.
Risks Related to Security Vulnerabilities and Service Reliability
−Removed: Failures or security breaches in our services or systems, those of our third-party service providers, or in the websites of our customers, including those resulting from cyber-attacks, security vulnerabilities, defects, or errors, could harm our business.
−Removed: Our products and services involve the storage and transmission of proprietary information and personal data related to our customers and their users, as well as experts and consumers, and theft and security breaches expose us to a risk of loss of such information and data, improper use and disclosure thereof, litigation, regulatory investigation, and potential liability.
−Removed: We experience cyber-attacks of varying degrees on a regular basis.
−Removed: Our security measures may also be breached due to employee or other error, intentional malfeasance and other third-party acts, and system errors or vulnerabilities, including vulnerabilities of our third-party service providers, or customers, or otherwise.
+Added: Failures or security breaches in our services or systems, those of our third-party service providers, customers or partners, including those resulting from cyber-attacks, security vulnerabilities, defects, or errors, could harm our business.
+Added: Our products and services involve the storage and transmission of proprietary information and personal data related to our customers and their users, employees and consumers.
+Added: Theft and security breaches expose us to a risk of improper use, disclosure or loss of such information, which could result in litigation, regulatory investigation, and potential liability.
+Added: In the period prior to the completion of our public cloud migration, we are exposed to risks inherent in maintaining the stability and security of our legacy infrastructure due to prior customization, aging and obsolescence of related legacy systems and third-party technologies.
+Added: Because our customers are, and may continue to be, dependent upon these legacy systems, we also face an increased level of embedded risk in maintaining the legacy systems.
+Added: Moreover, our ability to timely mitigate, manage and patch vulnerabilities related to legacy systems and related legacy third-party technologies could impact our system security as well as our day-to-day operations, and the deployment of technology enhancements and innovation.
+Added: In addition, we face risks related to recently acquired businesses and in-process integration of related technologies and platforms.
+Added: If our operational systems, or those of external parties on which our business depends, are unable to meet our or our customers’ business and operations requirements, or if they fail, have other significant shortcomings or are impacted by cyber-attacks, we could be materially and adversely affected.
+Added: We experience cyber-attacks of varying degrees on a regular basis in the ordinary course of our business.
+Added: Our security measures may also be breached and such breach may be difficult to contain—due to employee or other error, lack of appropriately restricted technical and administrative or privileged access controls, intentional malfeasance and other third-party acts, and system errors or vulnerabilities, including vulnerabilities of our third-party service providers, our customers, partners, or otherwise.
We have announced plans to move our technology infrastructure to the public cloud, which will require us to rely on third-party cloud providers to maintain appropriate safeguards.
−Removed: Additionally, following the COVID-19 pandemic, we have elected to maintain a globally distributed, substantially remote workforce.
−Removed: Remote working arrangements may potentially further increase the risk of cyber incidents or data breaches.
−Removed: Any such breach or unauthorized access, or attempts by outside parties to fraudulently induce employees, users, vendors, or customers to disclose sensitive information in order to gain access to our data or data of our customers, users, experts, or consumers, including, but not limited to, individual personal information and financial credit or debit card data that is protected by law or contract, could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the security of our products and services that could potentially have an adverse effect on our business.
−Removed: While we continue to expand our focus on this issue and are taking measures to safeguard our products and services from cybersecurity threats and vulnerabilities in desktop computers, mobile phones, smartphones and handheld devices, cyber-attacks, and other security incidents continue to evolve in sophistication and frequency.
+Added: Additionally, following the COVID-19 pandemic, we elected to maintain a globally distributed, substantially remote workforce.
+Added: Remote working arrangements may increase the risk of cybersecurity incidents or data breaches.
+Added: Our use of employees and contractors from countries with higher rates of cybercrime and whose privacy laws reduce our ability to perform full background checks may increase risk of a cybersecurity incident or data breach, including insider risk.
+Added: Any breach or unauthorized access, or attempts by outside parties to fraudulently induce employees, users, vendors, or customers to disclose sensitive information in order to gain access to our data or data of our customers, users, experts, or consumers, including, but not limited to, individual personal information and financial credit or debit card data that is protected by law or contract, could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the security of our products and services that could potentially have an adverse effect on our business.
+Added: While we continue to take measures to enhance our information security program and safeguard our products and services, cybersecurity threats and vulnerabilities in desktop computers, mobile phones, smartphones and handheld devices, as well as cyber-attacks, cybersecurity threats, malicious actors and other security incidents continue to evolve in sophistication and frequency industry-wide and there can be no assurance that we can prevent all security risks.
+Added: Furthermore, while the Company has designed an information security program to protect our information systems from cybersecurity threats, and to ensure the confidentiality, integrity and availability of systems and information used, owned or managed by the Company related to our employees, our customers and their users, implementation of the supporting controls has coverage gaps and weaknesses and potential for human error that could provide threat actors a window of time to exploit such weaknesses before they are addressed.
+Added: The goal of the information security program is to manage risks in a prioritized fashion;
+Added: however, control gaps and/or effectiveness, resource constraints, and execution failure can pose cybersecurity risk to LivePerson.
+Added: In addition, although we work to continuously improve our internal controls and procedures on cybersecurity incident management, prevention, detection, mitigation, response, and recovery, we may be unsuccessful in detecting, reporting or responding to these events in a timely manner, accurately assessing the severity of an event, or sufficiently preventing, limiting, or containing harm arising out of an event.
Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems are constantly evolving in sophisticated ways to avoid detection and often are not recognized until launched against a target, it may be difficult or impossible for us to anticipate or identify these techniques or to implement adequate preventative measures.
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Additionally, the global threat of cyber-attacks has increased in response to the Russia-Ukraine War.
−Removed: A significant cyber-attack, or a security incident of any magnitude that is profiled in the media, involving our, our third-party service providers’ or our customers’ systems, could result in material harm to our brand and reputation, our ability to deliver our services or retain customers, and expose us to lawsuits, regulatory investigations, and significant damages, fines or penalties.
−Removed: In addition, our customers may authorize third-party access to their customer data located in our cloud environment.
+Added: An advanced threat actor of high sophistication, such as a nation state, with essentially unlimited resources, poses a significant risk to LivePerson and arguably all similarly situated firms with LivePerson’s size and resources.
+Added: A significant cyber-attack, or a security incident of any magnitude that is profiled in the media, involving our, our third-party service providers’ or our customers’ systems, could result in material harm to our brand and reputation, and our ability to deliver our services or retain customers, and expose us to lawsuits, regulatory investigations, and significant damages, fines or penalties.
+Added: Moreover, our customers may authorize third-party access to their customer data located in our cloud environment.
Because we do not control the transmissions to customer-authorized third parties, or the processing of such data by customer-authorized third parties, we cannot ensure the integrity or security of such transmissions or processing.
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We may be liable if third parties access or misappropriate confidential or personal data from our systems or services.
−Removed: The dialogue transcripts of the text-based chats, email interactions and other interactions between our customers and their users may include information, such as personal contact and demographic information.
+Added: The dialogue transcripts of the text-based chats, email interactions and other interactions between our customers and their users may include sensitive and/or personally identifiable information such as personal contact and demographic information, financial information, personal health matters, and account numbers.
Although we employ and continually test and update our security measures to protect this information from unauthorized access, it is still possible that our security measures could be breached and such a breach could result in unauthorized access to our customers’ data or our data, including our intellectual property and other confidential business information.
−Removed: Because the techniques employed by hackers to obtain unauthorized access or to sabotage systems change frequently and are becoming more sophisticated in circumventing security measures and avoiding detection, we may be unable to anticipate all techniques or to implement
−Removed: adequate preventative measures.
+Added: These risks could arise from acts of external parties or from acts or omissions of employees or third-party service provider personnel to whom we have granted access to our systems, including if the information systems used by such third parties are penetrated or compromised by an insider or by external third parties.
+Added: Because the techniques employed by hackers to obtain unauthorized access or to sabotage systems change frequently and are becoming more sophisticated in circumventing security measures and avoiding detection, we may be unable to anticipate all techniques or to implement adequate preventative measures.
Any security breach could result in disclosure of our trade secrets or disclosure of confidential customer, supplier or employee data.
−Removed: If third parties were able to penetrate our network security or otherwise misappropriate personal data relating to our customers’ users or the text of customer service inquiries, our competitive position may be harmed and we could be subject to liability.
+Added: If third parties were able to penetrate our network security or otherwise copy and/or misappropriate personal data relating to our customers’ users or the text of customer service inquiries, our competitive position may be harmed and we could be subject to liability.
In the event of a security incident, we could be required to comply with a myriad of breach notification laws at the state, federal and international level, which may cause business disruption and extensive notification costs, and could lead to penalties, government investigations and lawsuits for compliance failures.
We may as a result of a security incident be deemed out of compliance with U.S.
−Removed: federal and state laws, international laws, or contractual commitments, and we may be subject to government investigations, lawsuits, fines, criminal penalties, statutory damages, and other costs to respond to breach or security incidents, which could have a material adverse effect on our business, results of operations, and financial condition.
+Added: federal and state laws, international laws, securities laws or contractual commitments, and we may be subject to government investigations, lawsuits, fines, criminal penalties, statutory damages, and other costs to respond to breach or security incidents, which could have a material adverse effect on our business, results of operations, and financial condition.
We may incur significant costs to protect against the threat of security breaches or to mitigate the harm and alleviate problems caused by such breaches.
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Furthermore, certain software and services that we use to operate our business are hosted and/or operated by third parties or integrated with our systems.
−Removed: For example, as we expand our use of cloud-based services, we will increasingly rely on third-party cloud providers to maintain appropriate safeguards to protect confidential or personal data we receive.
−Removed: While we intend to conduct due diligence on these cloud providers with respect to their security and business controls, we may not have the visibility to effectively monitor the implementation and efficacy of these controls.
−Removed: If third-party services were to be interrupted or their security breached, our business operations could be similarly disrupted and we could be exposed to liability and costly investigations or litigation.
−Removed: The need to properly secure, and securely transmit and store, confidential information online has historically been a significant barrier to e-commerce and online communications, and will become increasingly highlighted as a consumer and regulatory focus and concern.
+Added: As we expand our use of cloud-based services, we will increasingly rely on third-party cloud providers to maintain appropriate safeguards to protect confidential or personal data we receive.
+Added: While we have conducted initial due diligence on these cloud providers with respect to their security and business controls, we may not have the visibility to
+Added: effectively monitor the implementation, configuration, and efficacy of these controls.
+Added: If third-party services do not have adequate security measures in place, experience service interruptions, or have their security breached, our business operations could be similarly disrupted and we could be exposed to liability and costly investigations or litigation.
+Added: The risk of circumvention of our security measures or those of third parties on which we rely has been heightened by advances in computer and software capabilities and the increasingly complex techniques employed by, bad actors.
+Added: In particular, supply-chain attacks have increased in frequency and severity, and there can be no assurance that third parties’ infrastructure in our supply chain or our third-party service providers’ supply chains have not been compromised.
+Added: The need to properly secure, and securely transmit and store, confidential information online requires caution and has shaped the e-commerce and online communications landscape, and increasingly has become an area of consumer and regulatory focus and concern.
Any publicized compromise of security could deter people from using online services such as the ones we offer or from using them to conduct transactions, which involve transmitting confidential information.
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We provide service-level commitments to certain customers.
−Removed: If we do not meet these contractual commitments, we could be obligated to provide credits or refunds or face contract terminations, which could adversely affect our revenue and harm our reputation.
+Added: If we do not meet these contractual commitments, or if we suffer significant outages, we could be obligated to provide credits or refunds or face contract terminations, which could adversely affect our revenue and harm our reputation.
As is common for many cloud service providers, we offer service-level commitments in certain of our customer contracts, primarily related to uptime of our service.
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In addition, even if our contracts provide otherwise, these customers may attempt to terminate or reduce their contracts, which has occurred from time to time, and/or pursue other legal remedies.
−Removed: Recurring or extended service outages could also cause damage to our reputation and result in substantial customer dissatisfaction or loss, which could adversely affect our current and future revenue and operating results.
+Added: Recurring or extended service outages and the inability to recover our services and systems in a timely fashion could also cause damage to our reputation and result in substantial customer dissatisfaction or loss, could cause significant interruptions to our business operations, and could cause us to incur significant costs or divert the attention of our technical or other personnel to recover, all of which could adversely affect our current and future revenue and operating results.
We are dependent on technology systems and third-party content that are beyond our control.
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This could diminish our brand and harm our business, divert the attention of our technical personnel from our product development efforts or cause significant customer relations problems.
−Removed: In addition, we rely in part on third-party service providers and other third parties for various services, including, but not limited to, internet connectivity, network infrastructure hosting, security and maintenance, and software and hardware from a variety of vendors.
−Removed: These providers may experience problems that result in slower than normal response times and/or interruptions in service.
−Removed: If we are unable to continue utilizing the third-party services that support our web hosting and
−Removed: infrastructure or if our services experience interruptions or delays due to existing third-party service providers or transition to new third-party service providers, our reputation and business could be harmed, and we may be exposed to legal and reputational risk, and significant remediation costs.
+Added: In addition, we outsource certain critical business activities to third parties and plan to continue to do so.
+Added: We rely in part on service providers and other third parties for various services, including, but not limited to, internet connectivity, network infrastructure hosting, security and maintenance, and utilize software and hardware from a variety of vendors.
+Added: As a result, we rely upon the successful implementation and execution of the business continuity and repopulation planning of these providers.
+Added: These providers may experience problems that result in slower than normal response times, interruptions in service or other operational failures.
+Added: If we are unable to continue utilizing the third-party services that support our web hosting and infrastructure or if our services experience interruptions or delays due to existing third-party service providers, new third-party service providers or a transition between third-party service providers, our reputation and business could be harmed, and we may be exposed to legal and reputational risk, and significant remediation costs.
We also rely on the security of our third-party service providers to protect our proprietary information and information of our customers and their end users.
−Removed: Information technology system failures, including a breach of our or our third-party service providers’ data security, could disrupt our ability to function in the normal course of business by potentially causing, among other things, an unintentional disclosure of customer information or loss of information.
−Removed: Additionally, despite our security procedures or those of our third-party service providers, information systems may be vulnerable to threats such as computer hacking, ransomware, cyber-terrorism or other unauthorized attempts by third parties to access, obtain, modify or delete our or our customers’ data.
+Added: IT system failures, including a breach of our or our third-party service providers’ data security, could disrupt our ability to function in the normal course of business by potentially causing, among other things, an unintentional disclosure of customer information or loss of information.
+Added: Additionally, despite our security procedures or those of our third-party service providers, information systems may be vulnerable to threats such as computer hacking, ransomware, cyber-terrorism or
+Added: other unauthorized attempts by third parties to access, obtain, modify or delete our or our customers’ data.
Any such breach could have a material adverse effect on our operating results and our reputation as a provider of business collaboration and communications solutions and could subject us to significant penalties and negative publicity, as well as government investigations and claims for damages or injunctive relief under state, federal and foreign laws or contractual agreements.
−Removed: We also depend on third parties for hardware and software, and our consumer services depend on third parties for content.
−Removed: Such products and content could contain defects or inaccurate information.
−Removed: Problems arising from our use of such hardware or software or third-party content could require us to incur significant costs or divert the attention of our technical or other personnel from our product development efforts or to manage issues related to content.
+Added: We also depend on third parties for hardware and software.
+Added: Such products could contain errors, defects, software bugs, material vulnerabilities, or inaccurate information that may be difficult to detect and correct, and could require us to incur significant costs or divert the attention of our technical or other personnel from our product development efforts.
To the extent any such problems require us to replace such hardware or software, we may not be able to do so on acceptable terms, if at all.
−Removed: We depend on the continued viability of the infrastructure of the internet.
−Removed: To the extent that the internet continues to experience growth in the number of users and frequency of use by consumers resulting in increased bandwidth demands, we cannot assure you that the infrastructure for the internet will be able to support the demands placed upon it.
−Removed: The internet has experienced outages and delays as a result of damage to portions of its infrastructure.
−Removed: Outages or delays could adversely affect online sites, email and the level of traffic on the internet.
−Removed: The internet is also subject to continued and ongoing cyber-attacks and related conduct, which affect all online businesses.
−Removed: We also depend on internet service providers that provide our customers and internet users with access to the LivePerson services.
−Removed: In the past, users have experienced difficulties due to system failures unrelated to our service.
−Removed: In addition, the internet could lose its viability due to delays in the adoption of new standards and protocols required to handle increased levels of internet activity.
−Removed: Insufficient availability of telecommunications services to support the internet also could result in slower response times and negatively impact use of the internet generally, and our customers’ sites (including their use of the Conversational Cloud) in particular.
−Removed: If the infrastructure of the internet does not effectively support the growth of the internet, we may not maintain profitability and our business, results of operations, and financial condition will suffer.
Technological or other defects could disrupt or negatively impact our services, which could harm our business and reputation.
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If future versions of our software contain undetected errors, our business could be harmed.
−Removed: If third-party content is flawed, our business could be harmed.
As a result of software upgrades at LivePerson, our customer sites have, from time to time, experienced slower than normal response times and interruptions in service.
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These problems, if not remedied, could harm our business.
−Removed: Our services also depend on complex software which may contain defects, particularly when we introduce new versions onto our servers.
+Added: Our services also depend on complex software which may contain defects, particularly when we introduce new versions.
We may not discover software defects that affect our new or current services or enhancements until after they are deployed.
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Failure to license necessary third-party software for use in our products and services, or failure to successfully integrate third-party software, could cause delays or reductions in our sales, or errors or failures of our service.
−Removed: We license third-party software that we plan to incorporate into our products and services.
+Added: We license third-party software that we incorporate into our products and services.
In the future, we might need to license other software to enhance our products and meet evolving customer requirements.
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Although we intend to migrate our technology infrastructure to the public cloud, a substantial majority of our computer and communications infrastructure is running in our private cloud on hardware that is located at a limited number of facilities in the United States, Europe, and Australia.
−Removed: Our systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, hurricanes, other acts of nature, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins, state-sponsored or other cyber-attacks or failures, pandemics or other public health crises, or similar events.
+Added: Our systems, operations, and data centers are vulnerable to damage or interruption from earthquakes, fires, floods, hurricanes, other acts of nature, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins, state-sponsored or other cyber-attacks or failures, pandemics or other public health crises, or similar events.
For example, a significant natural disaster, such as an earthquake, fire or flood, could have a material adverse impact on our business, operating results and financial condition, and our insurance coverage may be insufficient to compensate us for losses that may occur.
+Added: Our global data providers could be vulnerable to the physical effects of climate change, including increased frequency and duration of extreme weather events and natural disasters.
In addition, acts of terrorism could cause disruptions in our business or the economy as a whole.
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Our servers may also be vulnerable to computer viruses, break-ins, cyber-attacks, such as coordinated denial-of-service attacks or ransomware, or other failures, and similar disruptions from unauthorized tampering with our computer systems, which could lead to interruptions, delays, loss of critical data or the unauthorized disclosure of confidential customer data.
−Removed: Although we have implemented security measures and disaster recovery capabilities, there can be no assurance that we will not suffer from business interruption, or unavailability or loss of data, as a result of any such events.
+Added: Although we have implemented security measures and data recovery capabilities, there can be no assurance that we will not suffer from business interruption, or unavailability or loss of data, as a result of any such events, or that data recovery would be complete or on a timeline expected by our customers.
As we rely heavily on our servers, computer and communications systems and the internet to conduct our business and provide high quality service to our customers, such disruptions could negatively impact our ability to run our business, result in loss of existing or potential customers and increased expenses, and/or have an adverse effect on our reputation and the reputation of our products and services, any of which would adversely affect our operating results and financial condition.
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Our business is subject to a variety of U.S.
−Removed: and international laws and regulations regarding privacy and data protection, and increased public scrutiny of privacy and security issues could result in increased government regulation, industry standards, and other legal obligations that could adversely affect our business.
+Added: and international laws and regulations regarding privacy, data protection and AI, and increased public scrutiny of privacy, security and AI issues could result in increased government regulation, industry standards, and other legal obligations that could adversely affect our business.
We collect, process, store, and use personal data and other information generated during mobile and online messaging between brands and consumers and between experts and consumers.
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To the extent that additional legislation regarding user privacy is enacted, such as legislation governing the collection and use of information regarding internet or mobile users through the use of cookies or similar technologies, the effectiveness of our services could be impaired by restricting us from collecting or using information that may be valuable to our customers and/or exposing us to lawsuits or regulatory investigations.
−Removed: The foregoing could have a material adverse effect our business, results of operations, and financial condition.
+Added: The foregoing could have a material adverse effect on our business, results of operations, and financial condition.
and international privacy laws and regulations are evolving and changing, subject to differing interpretations, may be costly to comply with, and may be inconsistent among countries and jurisdictions or conflict with other rules.
−Removed: As we expand our operations in these countries, our liability exposure and the complexity and cost of compliance with data and privacy requirements will likely increase.
−Removed: Any failure by us to comply with our posted privacy policies, applicable federal, state or international laws and regulations relating to data privacy and data protection, or the privacy commitments contained in our contracts, could result in proceedings against us by governmental entities, customers, consumers, watchdog groups or others, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: In addition, the increased attention focused upon liability as a result of lawsuits and legislative proposals and enactments could harm our reputation or otherwise impact the growth of our business.
−Removed: Laws and practices regarding handling and use of personal and other information by companies have come under increased public scrutiny, and governmental entities, consumer agencies and consumer advocacy groups have called for, and in many instances, enacted increased regulation and changes in industry practices.
−Removed: For example, the E.U.
−Removed: General Data Protection Regulation (“GDPR”) imposes significantly greater compliance burdens on companies that control or process personal data of users primarily located in the E.U.
+Added: As we expand our operations in other countries, our liability exposure and the complexity and cost of compliance with data and privacy requirements will likely increase.
+Added: Any failure by us to comply with our posted privacy policies, applicable federal, state or international laws and regulations relating to data privacy, data protection and AI, or the privacy commitments contained in our contracts, could result in proceedings against us by governmental entities, customers, consumers, watchdog groups or others, which could have a material adverse effect on our business, financial condition and results of operations.
+Added: In addition, the increased attention focused upon liability as a result of lawsuits and legislative proposals and enactments could harm our reputation or otherwise impact our business, results of operations and financial condition.
+Added: Laws and practices regarding handling and use of personal and other information by companies have come under increased public scrutiny, and governmental entities, consumer agencies and consumer advocacy groups have called for, and in
+Added: many instances, enacted increased regulation and changes in industry practices.
+Added: For example, we are subject to the European Union (“E.U.”) General Data Protection Regulation (“GDPR”), which imposes significantly greater compliance burdens on companies that control or process personal data of users primarily located in the E.U.
and, for noncompliance, provides for considerable fines up to the higher of 20 million Euros or 4% of global annual revenue.
−Removed: European regulators have issued numerous fines pursuant to the GDPR.
−Removed: The GDPR also imposes certain technological requirements that may, from time to time, require us to make changes to our services to enable LivePerson and/or our customers to meet legal requirements and may impact how data protection is addressed in our customer and vendor agreements.
−Removed: Ensuring compliance with the GDPR is an ongoing commitment that involves substantial costs, and it is possible that despite our efforts, governmental authorities or third parties will assert that our services or business practices fail to comply.
+Added: Additionally, following the United Kingdom’s withdrawal from the E.U., we also are subject to the U.K.
+Added: General Data Protection Regulation (“U.K.
+Added: GDPR”), a version of the GDPR as implemented into the laws of the U.K.
+Added: While the GDPR and U.K.
+Added: GDPR remain substantially similar for the time being, the U.K.
+Added: government has announced that it would seek to chart its own path on data protection and reform its relevant laws, including in ways that may differ from the GDPR.
+Added: While these developments increase uncertainty with regard to data protection regulation in the U.K., even in their current, substantially similar form, the GDPR and U.K.
+Added: GDPR can expose businesses to divergent parallel regimes that may be subject to potentially different interpretations and enforcement actions for certain violations and related uncertainty.
+Added: The GDPR and U.K.
+Added: GDPR also impose certain technological requirements that may, from time to time, require us to make changes to our services to enable LivePerson and/or our customers to meet legal requirements and may impact how data protection is addressed in our customer and vendor agreements.
+Added: regulators have issued numerous fines pursuant to the GDPR and U.K.
+Added: GDPR, respectively.
+Added: Ensuring compliance with the GDPR and U.K.
+Added: GDPR is an ongoing commitment that involves substantial costs, and it is possible that despite our efforts, governmental authorities or third parties will assert that our services or business practices fail to comply.
We also must require vendors that process personal data to take on additional privacy and security obligations, and some may refuse, causing us to incur potential disruption and expense related to our business processes.
−Removed: If our policies and practices, or those of our vendors, are, or are perceived to be, insufficient, we could be subject to enforcement actions or investigations by Data Protection Authorities (including in the E.U.) or lawsuits by private parties, and our business could be negatively impacted.
+Added: If our policies and practices, or those of our vendors, are, or are perceived to be, insufficient, we could be subject to enforcement actions or investigations by Data Protection Authorities (including in the E.U.
+Added: and U.K.) or lawsuits by private parties, and our business could be negatively impacted.
has also released a proposed Regulation on Privacy and Electronic Communications (“e-Privacy Regulation”) to replace the E.U.’s Privacy and Electronic Communications Directive (“e-Privacy Directive”) to, among other things, better align with the GDPR, to amend the current e-Privacy Directive’s rules on the use of cookies and other tracking technologies, and to harmonize across current E.U.
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Noncompliance could result in material fines and penalties, litigation, regulatory investigation and/or governmental orders requiring us to change our data practices, which could damage our reputation and harm our business.
−Removed: Additionally, as web and mobile commerce continues to evolve, regulation by federal, state and foreign governments or agencies in the areas of data privacy and data security is likely to increase.
−Removed: For instance, recent legal developments in Europe have created complexity and regulatory compliance uncertainty regarding certain transfers of personal information from the European Economic Area (the “EEA”) to the United States and certain other third countries.
+Added: Additionally, complexity and regulatory compliance uncertainty under the GDPR regarding certain transfers of personal information from the European Economic Area (the “EEA”) to the United States and certain other third countries remains.
For example, on July 16, 2020, the Court of Justice of the European Union (“CJEU”) invalidated the E.U.-U.S.
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Privacy Shield”) under which personal information could be transferred from the EEA to U.S.
−Removed: entities who had self-certified under the
−Removed: Privacy Shield program.
−Removed: Similarly, on September 8, 2020, the Swiss Data Protection Authority announced in a position statement that it no longer considers the Swiss-U.S.
−Removed: Privacy Shield adequate for the purpose of transferring personal data from Switzerland to the United States.
−Removed: While the CJEU upheld the adequacy of E.U.-specified standard contractual clauses (“SCCs”) as an adequate personal information transfer mechanism, it made clear that reliance on them alone is not sufficient and that their use must be assessed on a case-by-case basis taking into account the surveillance laws in and the right of individuals afforded by, the destination country.
−Removed: The CJEU went on to state that, if the competent supervisory authority believes that the SCCs cannot be complied with in the destination country and the required level of protection cannot be secured by other means, such supervisory authority is under an obligation to suspend or prohibit that transfer unless the data exporter has already done so itself.
−Removed: Ongoing legal challenges in the E.U.
−Removed: to the mechanisms allowing companies to transfer personal data from the EEA to certain other jurisdictions, including the U.S., following the CJEU’s decision may result in further limitations on the ability to transfer data across borders, particularly if governments are unable or unwilling to reach new or maintain existing agreements that permit cross-border data transfers.
−Removed: On January 31, 2020, the U.K.
−Removed: withdrew its membership from the E.U., which is commonly referred to as “Brexit.” As a result, we became subject to the GDPR as incorporated into UK law through the Data Protection Act of 2018 (“U.K.
−Removed: The relationship between the U.K.
−Removed: in relation to certain aspects of data protection law remains unclear, however, and it is unclear how U.K.
−Removed: data protection laws and regulations will develop in the medium to longer term, including how data transfers to and from the U.K.
−Removed: will be regulated in the long term.
−Removed: Any changes to these laws may require us to modify our data processing practices and policies and to incur substantial costs and expenses to comply.
−Removed: Although the European Commission adopted an adequacy decision for the U.K.
−Removed: on June 28, 2021, allowing the continued flow of personal data from the EEA to the United Kingdom, this decision will automatically expire four years after its entry into force, will be regularly reviewed going forward and may be revoked if the U.K.
−Removed: diverges from its current adequate data protection laws following its exit from the E.U.
−Removed: We rely on a mixture of mechanisms to govern the transfer of personal data from our E.U.
−Removed: business to the U.S.
−Removed: and are continuing to evaluate what additional mechanisms may be required to establish adequate safeguards for the cross-border transfer of personal data.
−Removed: The European Commission updated the SCCs on June 4, 2021, and additional regulatory guidance has been released that seeks to impose additional obligations on companies choosing to rely on the SCCs.
−Removed: Parties transferring personal data from the EEA to third countries with “inadequate data protection” such as the U.S.
−Removed: had until December 27, 2022 to update any existing agreements.
−Removed: The new SCCs apply only to the transfer of data outside of the EEA and not the U.K., which issued its own form of agreement and an addendum to the E.U.
−Removed: SCCs (the “U.K.
−Removed: SCCs”), in March 2022 for transfers of data from the U.K.
−Removed: Compliance with the SCCs and the U.K.
−Removed: SCCs may require us to implement additional safeguards to further enhance the security of data transferred out of the EEA and the U.K., which could increase our compliance costs, expose us to further regulatory scrutiny and liability, and adversely affect our business.
−Removed: If we are unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services and could adversely affect our financial results, and, until the legal uncertainties regarding how to legally continue transfers pursuant to the SCCs and other mechanisms are settled, we will continue to face uncertainty as to whether our efforts to comply with our obligations under the GDPR and U.K.
+Added: entities who had self-certified under the Privacy Shield program.
+Added: Even though the CJEU decision upheld the standard contractual clauses (“SCCs”) as an adequate transfer mechanism, the decision created uncertainty around the validity of all E.U.-to-U.S.
+Added: data transfers.
+Added: On October 7, 2022, President Biden signed an Executive Order on “Enhancing Safeguards for United States Intelligence Activities,” which introduced new redress mechanisms and binding safeguards to address the concerns raised by the CJEU in relation to data transfers from the EEA to the United States and which formed the basis of the new E.U.-US Data Privacy Framework (“DPF”), as released on December 13, 2022.
+Added: The European Commission adopted its Adequacy Decision in relation to the DPF on July 10, 2023, rendering the DPF effective as an E.U.
+Added: GDPR transfer mechanism to U.S.
+Added: entities self-certified under the DPF.
+Added: On October 12, 2023, the U.K.
+Added: Extension to the DPF came into effect (as approved by the U.K.
+Added: Government), as a U.K.
+Added: GDPR data transfer mechanism to U.S.
+Added: entities self-certified under the U.K.
+Added: Extension to the DPF.
+Added: We currently rely on the DPF and on a similar Swiss-US Data Privacy Framework to transfer certain personal data from the EEA and Switzerland, respectively to the United States and on the U.K.
+Added: Extension to the DPF to transfer certain personal data from the U.K.
+Added: to the United States.
+Added: We also currently rely on the E.U.
+Added: SCCs and the U.K.
+Added: Addendum to the E.U.
+Added: standard contractual clauses and the U.K.
+Added: International Data Transfer Agreement as relevant to transfer personal data outside the EEA and the U.K.
+Added: with respect to both intragroup and third-party transfers.
+Added: We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue.
+Added: In particular, we expect the DPF Adequacy Decision to be challenged and international transfers to the United States and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulators.
+Added: If the transfer mechanisms we rely on are not sufficient and we are unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services and could adversely affect our financial results, and, until the legal uncertainties regarding how to legally continue transfers pursuant to the SCCs and other mechanisms are settled, we will continue to face uncertainty as to whether our efforts to comply with our obligations under the GDPR and U.K.
GDPR will be sufficient.
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In addition to the changing regulatory landscape in the E.U.
−Removed: and the U.K., in June 2018, the State of California legislature passed the California Consumer Privacy Act of 2018 (“CCPA”), which gave California residents new data privacy rights, allowed consumers to opt out of certain data sharing with third parties, and provided a new private cause of action for data breaches.
−Removed: The CCPA contained certain exemptions for personal information of employees and job applicants, and personal information collected in a “business-to-business” context, each of which expired as of January 1, 2023, expanding compliance obligations under the CCPA.
−Removed: Moreover, the California Privacy Rights Act (“CPRA”), which took effect on January 1, 2023 (with a lookback to January 1, 2022), significantly expanded the CCPA, to include, among other changes, additional obligations such as data minimization and storage limitations;
−Removed: formation of a dedicated privacy regulator in California, the California Privacy Protection Agency, to implement and enforce the law;
−Removed: additional rights for consumers, such as correction of personal information and additional opt-out rights with respect to a new category of “sensitive information.” The CCPA marked the beginning of a trend toward more stringent state data privacy legislation in the United States, which may result in significant costs to our business, damage our reputation, require us to amend our business practices, and could adversely affect our business, especially to the extent the specific requirements vary from those and other existing laws.
−Removed: For example, Virginia’s Consumer Data Protection Act took effect on January 1, 2023, and Colorado, Utah, and Connecticut have adopted new state data protection laws, which are set to take effect later in 2023.
+Added: and the U.K., we are subject to U.S.
+Added: laws and regulations at the state level, such as the California Consumer Privacy Act of 2018 as amended by the California Privacy Rights Act (“CPRA”), which took effect on January 1, 2023 (the “CCPA”).
+Added: Among other things, the CCPA gives California residents expanded data privacy rights, allowing consumers to opt out of certain data sharing with third parties, provides a private cause of action for data breaches, imposes additional obligations such as data minimization and storage limitations;
+Added: on covered businesses;
+Added: and forms a dedicated privacy regulator in California, the California Privacy Protection Agency, to implement and enforce the law.
+Added: The CCPA marked the beginning of a trend toward more stringent state data privacy legislation in the United States, which may result in significant costs to our business, damage our reputation, and require us to amend our business practices, and could adversely affect our business, especially to the extent the specific requirements vary from those and other existing laws.
+Added: Four such laws, in Virginia, Colorado, Connecticut, and Utah, have taken effect in 2023, and at least three more laws in Montana, Texas and Oregon are scheduled to take effect in 2024.
+Added: Moreover, laws in all 50 U.S.
+Added: states require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a data breach.
Many similar laws have been proposed at the federal and state level;
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and foreign laws, and existing, new and developing regulatory or other legal requirements could subject us to claims or materially impact our business.
−Removed: We and our customers are subject to a number of laws and regulations in the United States and abroad, including laws related to conducting business on the internet or mobile devices, such as laws regarding data privacy, data protection, information security, cybersecurity, restrictions or technological requirements regarding the collection, use, storage, protection, transfer or other processing of consumer data, content, consumer protection, internet (or net) neutrality, advertising, electronic contracts, taxation, provision of online payment services (including credit card processing), and intellectual property rights, which are continuously evolving and developing.
+Added: We and our customers are subject to a number of laws and regulations in the United States and abroad, including laws related to conducting business on the internet and on mobile devices, such as laws regarding data privacy, data protection, information security, cybersecurity, restrictions or technological requirements regarding the collection, use, storage, protection, disposal, transfer or other processing of consumer data, content, consumer protection, internet (or net) neutrality, advertising, electronic contracts, taxation, provision of online payment services (including credit card processing), and intellectual property rights, which are continuously evolving and developing.
Because our services are accessible worldwide, certain foreign jurisdictions may claim that we are required to comply with their laws, even if we do not have a local entity, employees or infrastructure.
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Requirements that a website must first obtain consent from its web visitors before using our technology could reduce the amount and value of the services we provide to customers, which might impede sales and/or cause some existing customers to discontinue using our services or could subject us to fines and/or proceedings by governmental agencies, regulatory bodies, and/or private litigation, which could materially and adversely affect our business, financial condition and results of operations.
−Removed: There has been an increased focus on laws and regulations related to artificial intelligence, including the current U.S.
+Added: There has been an increased focus in 2023 on laws and regulations related to AI, including the current U.S.
presidential administration, the U.S.
Congress, and U.S.
−Removed: regulators, which cover, among other things, algorithm accountability and transparency.
−Removed: The European Commission has also released its draft proposed regulations (i.e., the EU AI Act) that would establish requirements for the provision and use of products that leverage artificial intelligence, machine learning, and similar technologies, including chatbots.
−Removed: The EU Act is expected to be adopted by Parliament in 2023, taking effect in 2024 or 2025.
−Removed: Additionally, other countries are considering legal frameworks on artificial intelligence, which is a trend that may increase now that the European Commission has proposed the EU AI Act.
+Added: regulators, which cover, among other things, algorithm accountability, privacy, and transparency.
+Added: For example, the Biden Administration issued an Executive Order aimed at establishing new standards for AI safety and security, privacy, consumer and employee protection and innovation and competition associated with the use of AI.
+Added: The European Commission has also released a revised draft of the EU AI Act.
+Added: The EU AI Act would establish requirements for the provision and use of products that leverage AI, machine learning, and similar technologies, including chatbots, with potential fines reaching up to the greater of €35 million and 7% of global income.
+Added: The EU AI Act is expected to be adopted by Parliament in 2024, taking effect in 2025 or 2026.
+Added: Additionally, other countries have proposed legal frameworks on AI, which is a trend that is expected to increase.
Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business.
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For example, the California B.O.T.
−Removed: Act came into effect in July 2019 and requires that companies using bots on platforms with more than 10 million unique monthly visitors from the U.S.
+Added: Act came into effect in July 2019 and requires that companies using bots on platforms with more than ten million unique monthly visitors from the U.S.
use clear and conspicuous disclosure to inform consumers that they are not speaking to a human.
Similar bills have been introduced from time to time at the state and federal level in recent years.
−Removed: Further, use of artificial intelligence and machine learning may be subject to laws and evolving regulations regarding the use of artificial intelligence, controlling for, among other things, data bias, and antidiscrimination.
+Added: Further, the use of certain AI and machine learning may be subject to laws and evolving regulations, controlling for, among other things, data bias and antidiscrimination.
For example, the Federal Trade Commission (“FTC”) enforces consumer protection laws such as Section 5 of the FTC Act, which prohibits unfair and deceptive practices, including use of biased algorithms in AI.
−Removed: The European Commission also recently published its proposal for a regulation implementing harmonized rules on AI and amending certain union legislative acts.
−Removed: The proposed regulation would impose additional restrictions and obligations on providers of AI systems, including increasing transparency so consumers know they are interacting with an AI system, requiring human oversight in AI, and prohibiting certain practices of AI that could lead to physical or psychological harm.
−Removed: Given the increased focus by the FTC and other regulators on the use of AI, it is possible that additional laws, regulations, and standards related to AI may be introduced in the future.
+Added: The European Commission’s EU AI Act would impose additional restrictions and obligations on providers of AI systems, including increasing transparency so consumers know they are interacting with an AI system, requiring human oversight in AI, and prohibiting certain practices of AI that could lead to physical or psychological harm.
+Added: Given the increased focus by the FTC and other regulators on the use of AI, it is likely that additional laws, regulations, and standards related to AI may be introduced in the future.
Regulation in this area could impact how businesses use our products and services to interact with consumers and how we provide our services to our customers.
−Removed: AI tools can also present unique technological and legal challenges, such as the possibility of insufficient data sets, or (as stated above) data sets that contain biased information, which can negatively impact the decisions, predictions or analyses that AI applications produce.
+Added: AI tools can also present unique technological and legal challenges, such as the possibility of insufficient data sets, or data sets that contain biased or inaccurate information, which can negatively impact the decisions, predictions or analyses that AI applications produce.
Deficiencies such as these could cause us reputational harm and subject us to legal liability, including claims of product liability, breach of warranty, or negligence.
The scope of these laws and regulations is rapidly evolving, subject to differing interpretations, may be inconsistent among jurisdictions, or conflict with other rules and is likely to remain uncertain for the foreseeable future.
−Removed: We also expect that there will continue to be new laws, regulations, and industry standards concerning artificial intelligence and machine learning proposed and enacted in various jurisdictions.
+Added: We also expect that there will continue to be new laws, regulations, and industry standards concerning AI and machine learning proposed and enacted in various jurisdictions.
In addition, regulatory authorities and governments around the world are considering a number of legislative and regulatory proposals concerning privacy, collection and use of website visitor data, data storage, data protection, the “right to be forgotten,” content regulation, cybersecurity, government access to personal information, online advertising, email and other categories of electronic spam, and other matters that may be applicable to our business.
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It is also likely that, as our business grows and evolves, an increasing portion of our business shifts to mobile, and our solutions are offered and used in a greater number of countries, we will become subject to laws and regulations in additional jurisdictions.
−Removed: We may need to expend considerable effort and resources to develop new product features and/or procedures to comply with any such legal requirements.
+Added: We may need to expend considerable effort and resources to develop new product features and/or procedures to
+Added: comply with any such legal requirements.
It is difficult to predict how existing laws will apply to our business and what new laws and legal obligations we may become subject to.
If we are not able to comply with these laws or other legal obligations, or if we become liable under them, we may be forced to implement material changes to our business practices, delay release of new and enhanced services and expend substantial resources, which would negatively affect our business, financial condition and results of operations.
−Removed: In addition, any increased attention focused on liability issues, or as a result of regulatory fines or lawsuits, could harm our reputation or otherwise impact the growth of our business.
+Added: In addition, any increased attention focused on liability issues, or as a result of regulatory fines or lawsuits, could harm our reputation or otherwise impact our business, results of operations and financial condition.
Any costs incurred as a result of this potential liability could harm our business and operating results.
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This review may result in new laws or the promulgation of new regulations or guidelines that may apply to our products and services.
−Removed: For example, the State of California and other states have passed laws relating to disclosure of companies’ practices with regard to
−Removed: Do-Not-Track signals from internet browsers, the ability to delete information of minors, and new data breach notification requirements.
−Removed: Outside the E.U.
+Added: For example, the State of California and other states have passed laws relating to disclosure of companies’ practices with regard to global opt-out signals from internet browsers, the ability to delete information of minors, age appropriate design obligations for companies that offer online services, products or features “likely to be accessed” by children, and new data breach notification requirements.
+Added: Washington State recently enacted the “My Health, My Data Act,” which broadly protects the privacy of certain personal health information and generally requires consent for the collection, use, or sharing of any such information.
+Added: Similarly, outside the E.U.
and the U.S., a number of countries have adopted or are considering privacy laws and regulations that may result in significant greater compliance burdens.
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Any such developments could subject us to legal liability exposure, and harm our business, operating results and financial condition.
+Added: We are the subject of a number of ongoing Actions that have resulted in significant expense, and adverse developments in our ongoing Actions and/or future Actions could have a material adverse effect on our business, results of operations and financial condition.
+Added: We are actively involved in a variety of litigation and other legal matters and may be subject to additional legal, administrative, governmental and/or regulatory proceedings, inquiries and investigations as well as actual or threatened litigation, claims and/or demands, which we refer to collectively as Actions.
+Added: Refer to Note 15 Legal Matters in the Notes to the
+Added: Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding material ongoing Actions.
+Added: Legal proceedings in general, and securities and class action litigation and regulatory investigations in particular, can be expensive and disruptive.
+Added: We cannot predict the outcome of any particular Action, or whether ongoing Actions will be resolved favorably or ultimately result in charges or material damages, fines or other penalties.
+Added: Our insurance will not cover all claims that may be asserted against us, and we are unable to predict how long the Actions to which we are currently subject will continue.
+Added: An unfavorable outcome of any Action may have a material adverse impact on our business, results of operations and financial condition, and regardless of the outcome, Actions can have an adverse impact on the Company because of defense and/or settlement costs, diversion of management resources, reputational risks and other factors.
We may be subject to governmental export controls and economic sanctions regulations that could impair our ability to compete in international markets due to licensing requirements and could subject us to liability if we are not in compliance with applicable laws.
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Obtaining the necessary authorizations, including any required license, for a particular deployment may be time-consuming, is not guaranteed and may result in the delay or loss of sales opportunities.
−Removed: In addition, changes in our products or services, or changes in applicable export or economic sanctions regulations may create delays in the introduction and deployment of our products and services in international markets, or, in some cases, prevent the export of our products or provision of our services to certain countries or end users.
+Added: In addition, changes in our products or services, or changes in applicable export or economic sanctions regulations may create delays in the introduction and deployment of our products and services in international markets, or, in some cases, prevent the export of our products or provision of our services to certain countries or end users, or for certain end uses.
Any change in export or economic sanctions regulations, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could also result in decreased use of our products and services, or in our decreased ability to export our products or provide our services to existing or prospective customers with international operations.
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Governmental regulation of encryption technology and regulation of exports of encryption products, or our failure to obtain required approval for our products, when applicable, could harm our international sales and adversely affect our revenue.
−Removed: Compliance with applicable regulatory requirements regarding the export of our products and provision of our services, including with respect to new releases of our products and services, may create delays in the introduction of our products and services in international markets, prevent our customers with international operations from deploying our products and using our services throughout
−Removed: their globally-distributed systems or, in some cases, prevent the export of our products or provision of our services to some countries altogether.
+Added: Compliance with applicable regulatory requirements regarding the export of our products and provision of our services and the need to determine the appropriate export classifications of our products, including with respect to new releases of our products and services, may create delays in the introduction of our products and services in international markets, prevent our customers with international operations from deploying our products and using our services throughout their globally-distributed systems or, in some cases, prevent the export of our products or provision of our services to some countries altogether.
+Added: Beginning on February 24, 2022, the United States, U.K., and E.U.
+Added: have imposed sanctions on Russia in response to its invasion of Ukraine.
+Added: Many of these sanctions are targeted at Russian banks and Russian sovereign debt.
+Added: The range of sanctions includes prohibitions on dealings in the debt or equity of certain Russian companies, as well as blocking sanctions imposed on many Russian individuals and entities.
+Added: On April 6, 2022, the United States issued Executive Order 14071, prohibiting new investment in Russia by a U.S.
+Added: These measures and any future sanctions imposed by the United States or other countries may impact our ability to deal with certain persons or in certain jurisdictions.
+Added: Although we believe that we are in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations.
+Added: Any such violation could result in fines or other penalties and could severely impact our ability to access U.S.
+Added: capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us.
Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations, or interpretive positions could harm our business.
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Any failure or perceived failure by us to comply with such requirements could have a material adverse impact on our business and results of operations.
−Removed: In addition, we may become subject to additional regulatory and compliance burdens as we expand our product offerings into new conversational businesses.
−Removed: For example, we recently launched a new conversational banking initiative.
−Removed: While we are relying on the banking license of a third party and certain of their compliance programs for this initiative, if we or our partner fail to comply with applicable laws, rules and regulations, fail to successfully manage our regulatory or compliance obligations, or fail to obtain and maintain required licenses, we could be subject to fines and/or proceedings by governmental agencies, regulatory bodies, and/or private litigation, which could materially and adversely affect our business, financial condition and results of operations.
−Removed: Future regulation of the internet or mobile devices may slow our growth, resulting in decreased demand for our services and increased costs of doing business.
+Added: In addition, we may become subject to additional regulatory and compliance burdens as we expand our product offerings into new conversational businesses that subject us to additional regulations, laws and new risks.
+Added: Future regulation of the internet or mobile devices may result in decreased demand for our services and increased costs of doing business.
State, federal and foreign regulators could adopt laws and regulations that impose additional burdens on companies that conduct business online or that adversely affect the growth or use of the internet or mobile commerce.
−Removed: For example, these laws and regulations could discourage communication by e-mail or other web-based communications, particularly targeted e-mail of the type facilitated by our services, which could reduce demand for our services.
+Added: For example, these laws and regulations could discourage communication by e-mail or other web-based communications, which could reduce demand for our services.
Laws or regulations that affect the use of the internet or mobile devices, including but not limited to laws affecting net neutrality, could also decrease demand for our services and increase our costs.
−Removed: Some jurisdictions have adopted regulations prohibiting certain forms of discrimination by internet access providers;
−Removed: however, substantial uncertainty exists in the U.S.
−Removed: and elsewhere.
−Removed: For example, in the U.S., the Federal Communications Commission repealed net neutrality rules effective June 11, 2018, which could lead internet access providers to restrict, block, degrade or charge for access to our products and services, while California, among other states, have passed legislation that seeks to reestablish net neutrality.
−Removed: Further, regulatory focus on data privacy, data security and consumer protection continues to expand on a worldwide basis and is becoming more complex, which will increase the risks to our business on reputational, operational, and compliance bases.
The continued growth and development of the market for online services may prompt calls for more stringent consumer protection laws or laws that will inhibit the use of internet-based or mobile-based communications or the information contained in these communications or the ways in which information may be collected, stored, used and transferred in the course of providing services.
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and the Children’s Online Privacy Protection Act regulates the ability of certain online services to collect or use certain categories of information from children under age 13 absent parental consent.
−Removed: The adoption of any additional laws or regulations, or changes to existing laws or regulations, may decrease the expansion of the internet or smartphone usage.
−Removed: A decline in the growth of the internet or smartphone usage, particularly as it relates to online
−Removed: communication, could decrease demand for our services and increase our costs of doing business, or otherwise harm our business.
−Removed: Any new legislation or regulations, application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or application of existing laws and regulations to the internet, mobile and other online services could increase our costs and harm our growth.
−Removed: We anticipate potentially making investments in, and potentially holding, creating or managing blockchain-based assets, including cryptocurrency or other digital tokens and development of blockchain-based decentralized applications (“DApps”), which may subject us to exchange risk and additional tax and regulatory requirements.
−Removed: In the fourth quarter of 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.
−Removed: Under this policy, we may invest a portion of such cash in investment instruments related to cryptocurrencies and other blockchain-based assets through a subsidiary, which would contract with providers to invest in funds and/or directly hold blockchain-based, assets including cryptocurrencies such as USD Coin, in order to engage in investment strategies such as yield farming, which involves lending or staking cryptocurrencies to generate returns in the form of transaction fees or interest.
−Removed: The laws surrounding cryptocurrency and blockchain-based assets are uncertain and evolving.
−Removed: Cryptocurrencies are not considered legal tender or backed by any government, and any cryptocurrencies we may hold or related investments we may experience price volatility, technological glitches and various law enforcement and regulatory interventions.
−Removed: The use of cryptocurrency is currently limited both in the U.S.
−Removed: and around the world, and the widespread acceptance and adoption of cryptocurrencies as a store of value or means of payment for goods and services is uncertain.
−Removed: The application of securities laws and other regulations to cryptocurrency and blockchain-based assets is unclear, and it is possible that regulators in the U.S.
−Removed: or other jurisdictions may create new regulations or interpret laws in a manner that adversely affect the price of blockchain-based assets, restrict our future ability to invest in or hold blockchain-based assets and subject us to additional regulatory requirements, including laws governing payments, financial services, virtual currency, anti-money laundering, counter-terrorism financing, trade sanctions, privacy and data protection, tax, consumer protection, environmental protection and competition.
−Removed: Further, the use and development of cryptocurrency has been prohibited or effectively prohibited in some countries.
−Removed: If we fail to comply with regulations or prohibitions applicable to us, we could face regulatory or other enforcement actions and potential fines and other consequences.
−Removed: If any regulatory authority asserts that we require a license or other regulatory approval to conduct business involving cryptocurrencies or other blockchain-based assets, it could have a material adverse effect on our business, results of operations, cash flows and financial condition.
−Removed: If we accept and hold cryptocurrency in the future, we may have exchange rate risk on the cryptocurrencies we hold as well as the risks that regulatory or other developments may adversely affect their value.
−Removed: We may choose not to hedge, or may be unable to fully hedge, our exposure to cryptocurrencies and other blockchain-based assets and may at times be unable to convert them to U.S.
−Removed: If we hold cryptocurrency and its value decreases relative to our acquisition price, our financial condition may be harmed.
−Removed: Moreover, cryptocurrency and blockchain-based assets are currently considered indefinite-lived intangible assets under applicable accounting rules, meaning that any decrease in the asset’s fair value below our carrying value for such asset at any time subsequent to its acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale, which may adversely affect our operating results in any period in which such impairment occurs.
−Removed: Moreover, there is no guarantee that future changes in GAAP will not require us to change the way we account for cryptocurrency held by us.
−Removed: As intangible assets that may lack centralized issuers or governing bodies, cryptocurrencies’ and blockchain-based assets’ lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of security breaches, cyber-attacks or other malicious activities, as well as human errors or computer malfunctions that may result in the loss or destruction of private keys needed to access such assets.
−Removed: As cryptocurrencies and blockchain-based assets have no physical existence beyond the record of transactions on a blockchain, a variety of technical factors related to blockchain technologies could also impact the price of cryptocurrencies and the stability of our investments.
−Removed: For example, malicious attacks by cryptocurrency miners, inadequate mining fees to incentivize validation of transactions, hard “forks” of individual blockchains into multiple blockchains, and advances in digital computing, algebraic geometry, and quantum computing could undercut the integrity of blockchain technologies and negatively affect the price of cryptocurrencies and the stability of our investments.
−Removed: While we intend to take all reasonable measures to secure any digital assets, if such threats are realized or the measures or controls we or our counterparties create or implement to secure our digital
−Removed: assets fail, it could result in a partial or total misappropriation or loss of our digital assets, and our financial condition and operating results may be harmed.
−Removed: Finally, blockchain is an emerging technology that offers new capabilities which are not fully proven through sustained widespread use in the marketplace.
−Removed: Furthermore, the creation and use of blockchain technology and DApps in new industries will be subject to potential technical, legal and regulatory constraints.
−Removed: There is no warranty that blockchain-based assets and DApps will be uninterrupted or error-free and there is an inherent risk that the software, network, blockchain-based assets and related technologies and theories could contain undiscovered technical flaws or weaknesses, the cryptographic security measures that authenticate transactions and the distributed ledger could be compromised, and breakdowns could cause the partial or complete inability to use or loss of blockchain-based assets or DApps.
−Removed: Global or local climate change and natural resource conservation regulations or requirements could adversely impact our business.
−Removed: The long-term effects of climate change on the global economy and the cloud and SaaS industry remain unknown.
−Removed: Changes in weather where we operate may increase the costs of powering and cooling computer hardware we use to develop software and provide cloud-based services.
−Removed: In response to concerns about global climate change, governments may adopt new regulations affecting the use of fossil fuels or requiring the use of alternative fuel sources.
−Removed: Our server infrastructure consumes significant energy resources, including those generated by the burning of fossil fuels.
−Removed: Our customers, investors and other stakeholders may require us to take steps to demonstrate that we are taking ecologically responsible measures in operating our business.
−Removed: The costs and any expenses we may incur to make our network more energy-efficient and comply with any new regulations could negatively impact our operating results.
−Removed: Failure to comply with applicable laws and regulations or other requirements imposed on us could result in material fines and penalties, litigation, regulatory investigation and/or governmental orders requiring us to change our data practices, which could damage our reputation and harm our business.
+Added: The adoption of any additional laws or regulations, or changes to existing laws or regulations or their interpretation or application, may increase our costs of doing business, decrease the expansion of the internet or smartphone usage and, in turn, unfavorably affect demand for our services.
+Added: Climate change and environmental and other sustainability regulations or requirements could adversely impact our business.
+Added: Climate change has the potential to negatively affect our business and results of operations, cash flows and prospects.
+Added: The adverse physical impacts of climate change include increased frequency and severity of natural disasters and extreme weather events such as hurricanes, tornados, wildfires (exacerbated by drought), flooding, and extreme heat, which could pose physical risks to the facilities of our global data providers and other suppliers.
+Added: Such risks include losses incurred as a result of physical damage to facilities, and business interruption caused by such natural disasters and extreme weather events.
+Added: These risks could disrupt our operations and our supply chain, which may result in increased costs.
+Added: In addition, our server infrastructure consumes significant energy resources, including those generated by the burning of fossil fuels.
+Added: In response to concerns about global climate change, governments may adopt new regulations affecting the use of fossil fuels or requiring the use of alternative fuel sources, resulting in increased costs for the energy usage of our global data centers.
+Added: Our customers, investors and other stakeholders may require us to take steps to demonstrate that we are taking ecologically responsible measures in operating our business and in sourcing services in our supply chain, including our global data center providers.
+Added: The costs and any expenses we may incur to make our network more energy-efficient and comply with any
+Added: new environmental and other sustainability regulations could negatively impact our operating results.
+Added: Failure to comply with applicable environmental or other sustainability laws and regulations or other requirements imposed on us could result in material fines and penalties, litigation, regulatory investigation and/or governmental orders requiring us to change our data practices, which could damage our reputation and harm our business.
Risks Related to our Intellectual Property
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Therefore, any such claims could have a material adverse effect on our business, results of operations, cash flows and financial condition.
+Added: Additionally, over the last year, there have been multiple class action lawsuits filed against large language model developers in the Northern District of California, the Southern District of New York, and the Middle District of Tennessee concerning alleged copyright and other intellectual property violations with respect to the information used to train AI models.
+Added: The outcomes of these litigations may impair our ability to provide our AI technologies.
Our business and prospects would suffer if we are unable to protect and enforce our intellectual property rights.
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We rely on a combination of patent, copyright, trade secret, trademark and other common law protections in the United States and other jurisdictions, as well as confidentiality requirements and contractual provisions, to protect our proprietary technology, processes and other intellectual property.
−Removed: We own a portfolio of patents and
−Removed: patent applications in the U.S.
+Added: We own a portfolio of patents and patent applications in the U.S.
and internationally and regularly file patent applications to protect intellectual property that we believe is important to our business, including intellectual property related to digital engagement technology, and/or web and mobile based consumer-facing services.
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or where enforcement of laws protecting proprietary rights is not common or effective.
−Removed: The unauthorized reproduction or other misappropriation of our intellectual property rights could enable third parties to benefit from our
−Removed: technology without paying us for it.
+Added: The unauthorized reproduction or other misappropriation of our intellectual property rights could enable third parties to benefit from our technology without paying us for it.
If this occurs, our business, results of operations, and financial condition could be materially and adversely affected.
In addition, disputes concerning the ownership or rights to use intellectual property could be costly and time-consuming to litigate, may distract management from operating our business and may result in our loss of significant rights.
−Removed: Issues in the use of AI in o ur product offerings may result in reputational harm or liability.
+Added: Issues in the use of AI in our product offerings may result in reputational harm, regulatory compliance issues or liability.
We have built, and expect to continue to build, AI into many of our product offerings and we expect this element of our business to grow.
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Datasets may be insufficient or contain biased information.
+Added: Content generated by AI systems may be offensive, illegal, or harmful.
Inappropriate or controversial data practices by us or others could impair the acceptance of AI solutions.
−Removed: These deficiencies could undermine the decisions, predictions, or analysis AI applications produce, subjecting us to competitive harm, legal liability, and brand or reputational harm.
−Removed: Social and ethical issues relating to the use of new and evolving uses of AI that we may offer may result in reputational harm and liability and may cause us to incur additional research and development costs to resolve such issues.
−Removed: If we enable or offer AI solutions that are controversial because of their impact on human rights, privacy, employment, or other social issues, we may experience a material adverse effect on our business, results of operations and cash flows.
−Removed: Potential government regulation related to AI use and ethics may also increase the burden and cost of research and development in this area, and failure to properly remediate AI usage or ethics issues may cause public confidence in AI to be undermined, which could slow adoption of AI in our offerings.
+Added: These deficiencies could undermine the decisions, predictions, or analysis AI applications produce.
+Added: As a result of these and other challenges associated with innovative technologies, our use of AI systems could subject us to competitive harm, regulatory action, legal liability, including under proposed legislation regulating AI in jurisdictions such as the E.U., applications of existing data protection, privacy, intellectual property, and other laws, and brand or reputational harm.
+Added: Social and ethical issues relating to new and evolving uses of AI that we may offer may result in reputational harm and liability and may cause us to incur additional research and development (“R&D”) costs to resolve such issues.
+Added: If we enable or offer AI solutions that have unintended consequences,
+Added: unintended usage, or are controversial because of their impact on human rights, privacy, employment, intellectual property, or other social issues, we may experience a material adverse effect on our business, results of operations and cash flows.
+Added: The regulatory landscape regarding AI is evolving globally.
+Added: Potential government regulation related to AI use and ethics may also increase the burden and cost of operations and R&D efforts in this area, and the risk of regulatory compliance issues or other liabilities.
+Added: Failure to properly remediate AI usage, legal or ethics issues may cause public confidence in AI to be undermined, which could slow adoption of AI in our offerings.
The rapid evolution of AI will require the application of resources to develop, test and maintain our products and services to help ensure that AI is implemented ethically in order to minimize unintended, harmful impact.
+Added: If we enable or offer AI solutions that are controversial because of their impact on human rights, privacy, employment, intellectual property, or other social issues, we may experience a material adverse effect on our business, results of operations and cash flows.
We may be subject to legal liability and/or negative publicity for the services provided to consumers via our technology platforms.
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There are various Congressional efforts to restrict the scope of the protections from liability for service providers in certain circumstances.
−Removed: Important questions regarding the safe harbor under the DMCA and the CDA have yet to be litigated, and we cannot guarantee that we will meet the safe harbor requirements of the DMCA or of the CDA.
+Added: Important questions regarding the safe harbor under the DMCA and the CDA have yet to be litigated, and there can be no assurance that we will meet the safe harbor requirements of the DMCA or of the CDA.
If we are not covered by a safe harbor, for any reason, we could be exposed to claims, which could be costly and time-consuming to defend.
−Removed: Our consumer service allows consumers to provide feedback regarding service providers.
−Removed: Although all such feedback is generated by users and not by us, claims of defamation or other injury could be made against us for content posted on our websites.
−Removed: Our liability for such claims may be higher in jurisdictions outside the United States where laws governing internet or mobile transactions are unsettled.
If we become liable for information provided by our users and carried via our service in any jurisdiction in which we operate, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability.
−Removed: In addition, the increased attention focused upon liability issues as a result of these lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business.
+Added: In addition, the increased attention focused upon liability issues as a result of these lawsuits and legislative proposals could harm our reputation or otherwise impact our business, results of operations and financial condition.
Any costs incurred as a result of this potential liability could harm our business.
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In addition to legislation and regulations relating to privacy and data security and collection, we may be subject to consumer protection laws that are enforced by regulators such as the FTC and private parties and include statutes that regulate the collection and use of information for marketing purposes.
−Removed: Any new legislation or regulations regarding the internet, mobile devices, software sales or export and/or the cloud or SaaS industry, and/or the application of existing laws and regulations to the internet, mobile devices, software sales or export and/or the cloud or SaaS industry, could create new legal or regulatory burdens on our business that could have a material adverse effect on our business, results of operations, and financial condition.
+Added: Any new legislation or regulations regarding the internet, mobile devices, software sales or export and/or the cloud or SaaS industry, and/or the application of existing laws and regulations to the internet, mobile devices, software sales or export and/or the
+Added: cloud or SaaS industry, could create new legal or regulatory burdens on our business that could have a material adverse effect on our business, results of operations, and financial condition.
Additionally, as we operate outside the U.S., the international regulatory environment relating to the internet, mobile devices, software sales or export, and/or the SaaS industry could have a material adverse effect on our business, results of operations, and financial condition.
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As we continue to expand our international operations we become more exposed to the effects of fluctuations in currency exchange rates.
−Removed: For example, the New Israeli Shekel, British Pound, Euro, Australian Dollar, and Japanese Yen have all recently experienced declines in value in relation to the U.S.
Further, as geopolitical volatility around the world increases, there is increasing risk of the imposition of exchange or price controls, or other restrictions on the conversion of foreign currencies, which could have a material adverse effect on our business.
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dollar relative to other foreign currencies could materially affect our revenue, cost of revenue and operating expenses, and result in foreign currency transaction gains and losses.
−Removed: We may seek to enter into hedging transactions in the future or to use financial instruments, such as derivative financial instruments, to mitigate risk, but we may be unable to enter into them successfully, on acceptable terms or at all.
+Added: We may seek to enter into hedging transactions or to use financial instruments, such as derivative financial instruments, to mitigate risk, but we may be unable to enter into them successfully, on acceptable terms or at all.
Additionally, these programs rely on our ability to forecast accurately and could expose us to additional risks that could adversely affect our financial condition and results of operations.
−Removed: We cannot predict whether or not we will incur foreign exchange losses in the future.
+Added: We cannot predict whether or not we will incur foreign exchange losses.
To the extent the international component of our revenues grows, our results of operations will become more sensitive to foreign exchange rate fluctuations.
−Removed: Economic conditions and regulatory changes caused by the United Kingdom’s exit from the European Union could negatively impact our business.
−Removed: On January 31, 2020, the U.K.
−Removed: withdrew its membership from the E.U., which is commonly referred to as “Brexit.” Pursuant to the withdrawal arrangements entered into between the U.K.
−Removed: in connection with Brexit, the U.K.
−Removed: was no longer a part of the E.U.
−Removed: at the end of the transition period on December 31, 2020.
−Removed: While the U.K.
−Removed: has for the most part chosen to retain existing E.U.
−Removed: law and on December 24, 2020 the U.K.
−Removed: agreed to a trade and cooperation agreement which took provisional effect from January 1, 2020, the longer term economic, legal, political and social implications for the U.K.
−Removed: remain unclear and may lead to ongoing political, regulatory and economic uncertainty and periods of exacerbated
−Removed: volatility in both the U.K.
−Removed: and in wider European markets for some time.
−Removed: Such uncertainty may have a material adverse effect on our ability to operate in the U.K.
−Removed: Brexit has resulted in significant volatility in global stock market and currency exchange rate fluctuations that resulted in strengthening of the U.S.
−Removed: dollar relative to other foreign currencies in which we conduct business and global economic uncertainty.
−Removed: The continuing uncertainty may cause our customers to closely monitor their costs and reduce their spending budgets.
−Removed: This could negatively impact our business, including affecting our relationships with our existing and future customers, suppliers and employees.
−Removed: Further volatility in exchange rates resulting from Brexit is expected to continue in the short term as a result of Brexit.
−Removed: We translate sales and other results denominated in foreign currency into U.S.
−Removed: dollars for our financial statements.
−Removed: During periods of a strengthening dollar, our reported international sales and earnings could be reduced because foreign currencies may translate into fewer U.S.
−Removed: The longer term economic, legal, political and social implications of Brexit could potentially disrupt the markets we serve and the tax jurisdictions in which we operate and adversely change tax benefits or liabilities in these or other jurisdictions.
−Removed: They may also impact how we deliver our products and services to customers in the U.K.
−Removed: and in the E.U., which may cause us to lose customers, suppliers and/or employees and could result in increased operating expenses.
−Removed: In addition, Brexit could lead to further legal uncertainty and potentially divergent laws and regulations, as well as other adverse effects that we are unable to anticipate.
−Removed: Any of these effects of Brexit, among others, could negatively impact our business, results of operations, financial condition, cash flows and prospects.
−Removed: We may be unsuccessful in expanding our operations internationally and/or into direct-to-consumer services due to additional regulatory requirements, tax liabilities, currency exchange rate fluctuations, and other risks, which could adversely affect our results of operations.
−Removed: In addition to our operations in the U.S., we have operations in Australia, Bulgaria, Canada, France, Germany, Israel, Italy, Japan, Latin America, Netherlands, Singapore, Spain, and the U.K.
+Added: We may be unsuccessful in expanding our operations internationally due to additional regulatory requirements, tax liabilities, currency exchange rate fluctuations, and other risks, which could adversely affect our results of operations.
+Added: In addition to our operations in the U.S., we have operations in Australia, Brazil, Bulgaria, Canada, Costa Rica, France, Germany, Israel, India, Italy, Japan, Mexico, the Netherlands, Singapore, Spain, and the U.K.
We have also continued to invest in global messaging initiatives and in acquisitions.
−Removed: Our ability to continue to expand into international markets and in the online consumer market involves various risks, including the possibility that returns on such investments will not be achieved in the near future, or ever, and the difficulty of competing in markets with which we are unfamiliar.
−Removed: Our international operations and direct-to-consumer services may also fail due to other risks inherent in foreign and/or online consumer operations, including:
−Removed: • varied, unfamiliar, unclear and changing legal and regulatory restrictions, including different legal and regulatory standards applicable to internet or mobile services, communications, privacy, and data protection;
+Added: Our ability to continue to expand into international markets involves various risks, including the possibility that returns on such investments will not be achieved in the near future, or ever, and the difficulty of competing in markets with which we are unfamiliar.
+Added: Our international operations may also fail due to other risks inherent in foreign operations, including:
+Added: • varied, unfamiliar, unclear and changing legal and regulatory restrictions, including different legal and regulatory standards applicable to internet or mobile services, communications, privacy, data protection, and AI;
• difficulties in staffing and managing foreign operations;
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In addition, we rely in part on third-party service providers with international operations.
−Removed: For example, we rely on a third-party service provider that utilizes approximately 100 engineers based in Ukraine for a portion of our engineering and
−Removed: software development initiatives.
−Removed: If this third party’s operations were disrupted or discontinued due to local instability or political, economic or military conditions or cyber-attacks, then our ability to provide services to some of our current customers and the development of new products or enhancement of existing products could be delayed, and our results of operations could be adversely affected.
+Added: If the third party’s operations were disrupted or discontinued due to local instability or political, economic or military conditions or cyber-attacks, including in connection with the Russia-Ukraine war, then our ability to provide services to some of our current customers and the development of new products or enhancement of existing products could be delayed, and our results of operations could be adversely affected.
Our current and any future international expansion plans will require management attention and resources and may be unsuccessful.
−Removed: We may find it impossible or prohibitively expensive to continue expand internationally or we may be unsuccessful in our attempt to do so, and our results of operations could be adversely impacted.
+Added: We may find it impossible or prohibitively expensive to continue expanding internationally or we may be unsuccessful in our attempt to do so, and our results of operations could be adversely impacted.
In addition, violations of any foreign laws or regulations could result in fines, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business and damage to our reputation.
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Since the decision, a number of states have enacted sales tax enabling legislation which has had the effect of significantly expanding the liability of e-commerce companies to register, collect and remit state sales taxes from customers.
−Removed: A successful assertion by one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest.
+Added: A successful assertion by one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and
The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could have a material adverse effect on our business and results of operations.
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federal taxable income.
−Removed: As a result of a change in the treatment of research and development expenses during the period ending December 31, 2022, the Company is required to capitalize and amortize amounts previously deducted currently.
+Added: As a result of a change in the treatment of R&D expenses during the period ending December 31, 2022, the Company is required to capitalize and amortize amounts previously deducted currently.
This is resulting in U.S.
taxable income that is allowing the Company to utilize its pre-2018 NOLs.
−Removed: The capitalized research and development costs will give rise to future deductions that could result in new NOLs being generated, which NOLs would be eligible to be carried forward indefinitely but would only be able to offset up to 80% of federal taxable income earned in a taxable year.
+Added: The capitalized R&D costs will give rise to future deductions that could result in new NOLs being generated, which NOLs would be eligible to be carried forward indefinitely but would only be able to offset up to 80% of federal taxable income earned in a taxable year.
+Added: We have entered into a Tax Benefits Preservation Plan (the “Tax Benefits Preservation Plan”), which is designed to reduce the risk of substantial impairment to our NOLs that could result from an “ownership change” within the meaning of Section 382 of the Code.
+Added: See “Tax Benefits Preservation Plan” in Note 21 – Subsequent Events in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information .
+Added: Although the Tax Benefits Preservation Plan is intended to reduce the risk of an “ownership change” within the meaning of Section 382 of the Code, the Company cannot provide any assurance that the Company will not experience such an ownership change or that the Company will otherwise be able to utilize, in full or in part, the Company’s NOLs.
+Added: Additionally, the Tax Benefits Preservation Plan could deter or prevent a third party from acquiring us even when the acquisition may be favorable to you, make the Company’s common stock less attractive to large institutional holders or otherwise adversely affect the market price of our common stock.
Political, economic, and military conditions in Israel could negatively impact our Israeli operations.
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Although substantially all of our sales to date have been made to customers outside Israel, we are directly influenced by the political, economic and military conditions affecting Israel.
−Removed: Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries, Hamas (an Islamist militia and political group that controls the Gaza Strip), Hezbollah (an Islamist militia and political group based in Lebanon) and other armed groups.
+Added: Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries, Hamas, Hezbollah and other armed groups, including the ongoing Israel-Hamas war.
Furthermore, Iran has threatened to attack Israel and may be developing nuclear weapons.
In addition, the State of Israel and Israeli companies have been subject to economic boycotts.
−Removed: Several countries still restrict business with the State of Israel and with Israeli companies.
+Added: Several countries and international organizations still restrict business with the State of Israel and with Israeli companies or support and advocate for the implementation of such boycotts.
These restrictive laws and policies may have an adverse impact on our results of operations, financial condition or the expansion of our business.
A campaign of boycotts, divestment, and sanctions has been undertaken against Israel, which could also adversely affect our business.
+Added: We are in compliance with applicable anti-boycott rules and regulations administered by the U.S.
+Added: Departments of Commerce and the Treasury.
Actual or perceived political instability in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy and, in turn, our business, financial condition and results of operations.
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Armed conflicts or political instability in the region could negatively affect our business and could harm our results of operations.
−Removed: Continued hostilities between Israel and its neighbors and any future armed conflict, terrorist activity or political instability in the region could adversely affect our operations in Israel and adversely affect the market price of our securities.
−Removed: In addition, escalation of tensions or violence might require more widespread military reserve service by some of our Israeli employees and might result in a significant downturn in the economic or financial condition of Israel, either of which could have a material adverse effect on our operations in Israel and our business.
+Added: Continued hostilities and both current and any future armed conflict, terrorist activity or political instability in the region could adversely affect our operations in Israel and adversely affect the market price of our securities.
+Added: In addition, escalation of tensions or violence might require more widespread military reserve service by some of our Israeli employees and could result in a significant downturn in the economic or financial condition of Israel, either of which could have a material adverse effect on our operations in Israel and our business.
Risks Related to our Outstanding Convertible Notes
Servicing our debt may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our indebtedness.
−Removed: In March 2019, we issued $230.0 million in aggregate principal amount of 0.75% Convertible Senior Notes due 2024 in a private placement.
−Removed: The interest rate on the 2024 Notes is fixed at 0.75% per annum and is payable semi-annually in arrears on March 1 and September 1 of each year.
−Removed: In December 2020, we issued $517.5 million in aggregate principal amount of 0% Convertible Senior Notes due 2026 in a private placement.
+Added: In December 2020, we issued $517.5 million in aggregate principal amount of 0% Convertible Senior Notes due 2026 (the “2026 Notes”) in a private placement.
The 2026 Notes do not bear any regular interest payments.
−Removed: These obligations will need to be refinanced on or prior to their maturity.
+Added: The 2026 Notes will need to be refinanced on or prior to their December 2026 maturity.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our 2026 Notes or any additional future indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
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Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our debt.
−Removed: We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.
+Added: We may not have the ability to raise the funds necessary to settle conversions of our outstanding convertible debt securities in cash or to repurchase them upon a fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase of our outstanding convertible debt securities.
Holders of the 2026 Notes have the right to require us to repurchase all or a portion of their 2026 Notes upon the occurrence of a fundamental change before the maturity date at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid interest, if any.
In addition, upon conversion of the 2026 Notes, 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 are required to make cash payments in respect of the 2026 Notes being converted.
−Removed: However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or pay cash with respect to Notes being converted.
−Removed: In addition, our ability to repurchase Notes or to pay cash upon conversions of Notes may be limited by law, regulatory authority, or any agreements governing our future indebtedness.
−Removed: Our failure to repurchase Notes at a time when the repurchase is required by the indenture or to pay any cash upon conversions of Notes as required by the indenture would constitute a default under the indenture.
+Added: However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of the 2026 Notes surrendered therefor or pay cash with respect to the 2026 Notes being converted.
+Added: In addition, our ability to repurchase the 2026 Notes or to pay cash upon conversions of the 2026 Notes may be limited by law, regulatory authority, or any agreements governing our future indebtedness.
+Added: Our failure to repurchase the 2026 Notes at a time when the repurchase is required by the indenture or to pay any cash upon conversions of the 2026 Notes as required by the indenture would constitute a default under the indenture.
A default under the indenture or the fundamental change itself could also lead to a default under agreements governing any future indebtedness.
−Removed: If the payment 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 and repurchase the Notes or to pay cash upon conversions of Notes.
−Removed: Provisions in the indentures for the Notes may deter or prevent a business combination that may be favorable to you.
+Added: If the payment of the related indebtedness were to be accelerated after any applicable notice or
+Added: grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2026 Notes or to pay cash upon conversions of the 2026 Notes.
+Added: Provisions in the indentures for our outstanding convertible debt securities may deter or prevent a business combination that may be favorable to you.
If a fundamental change occurs prior to the maturity date of the 2026 Notes, the holders of the 2026 Notes will have the right, at their option, to require us to repurchase all or a portion of their 2026 Notes.
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These and other provisions in the indentures governing the 2026 Notes could deter or prevent a third party from acquiring us even when the acquisition may be favorable to you.
−Removed: The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.
+Added: The conditional conversion feature of our outstanding convertible debt securities, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional conversion feature of the 2026 Notes is triggered, holders of the 2026 Notes will be entitled to convert their 2026 Notes at any time during specified periods at their option.
If one or more holders elect to convert their 2026 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
−Removed: In addition, even if holders of Notes do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
−Removed: The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results.
−Removed: Under ASC 470-20, Debt with Conversion and Other Options , an entity must separately account for the liability and equity components of the convertible debt instruments (such as the Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost.
−Removed: The effect of ASC 470-20 on the accounting for the Notes is that the equity component, net of issuance costs, is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet at the issuance date and the value of the equity component is treated as original issue discount for purposes of accounting for the liability component of the Notes.
−Removed: As a result, we are required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the Notes to their face amount over the term of the Notes.
−Removed: We will report larger net losses (or lower net income) in our financial results because ASC 470-20 requires interest to include both the current period’s amortization of the debt discount and the instrument’s non-convertible coupon interest rate, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the Notes.
−Removed: In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt - Debt with Conversion and Other Options” and ASC Subtopic 815-40 “Hedging - Contracts in Entity’s Own Equity” that changes the accounting for the convertible debt instruments described above.
+Added: In addition, even if holders of the 2026 Notes do not elect to convert their 2026 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
+Added: The accounting method for convertible debt securities that may be settled in cash, such as our outstanding convertible debt securities, could have a material effect on our reported financial results.
+Added: Under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options , an entity was required to separately account for the liability and equity components of the convertible debt instruments (such as the 2026 Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost.
+Added: The effect of ASC 470-20 on the accounting for the 2026 Notes and the Company’s 0.75% Convertible Senior Notes due 2024 which were outstanding during the period presented (the “2024 Notes” and together with the 2026 Notes “the Notes”) was that the equity component, net of issuance costs, was required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheets at the issuance date and the value of the equity component was treated as original issue discount for purposes of accounting for the liability component of the Notes.
+Added: In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt - Debt with Conversion and Other Options” and ASC Subtopic 815-40 “Hedging - Contracts in Entity’s Own Equity” that changed the accounting for the convertible debt instruments described above.
Under the new standard, an entity may no longer separately account for the liability and equity components of convertible debt instruments.
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As a result, the 2024 Notes and 2026 Notes are accounted for as a single liability and we use the “if-converted” method of calculating diluted earnings per share.
−Removed: See Note 8 – Convertible Senior Notes, Net and Capped Call Transactions and Note 1 – Description of Business and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information.
+Added: See Note 8 – Convertible Senior Notes, Net of Current Portion and Capped Call Transactions and Note 1 – Description of Business and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information.
We cannot be sure whether other changes may be made to the accounting standards related to the 2024 Notes and 2026 Notes, or otherwise, that could have an adverse impact on our financial statements.
−Removed: The capped call transactions may affect the value of the Notes and our common stock.
+Added: The capped call transactions may affect the value of our outstanding convertible debt securities and our common stock.
In connection with the transaction in which we issued the 2026 Notes, we entered into capped call transactions with certain option counterparties.
−Removed: The capped call transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of Notes and/or offset any cash payments we are required to make in excess of the principal amount of the converted Notes, as the case may be, upon any conversion of Notes, with such reduction and/or offset subject to a cap.
−Removed: The option counterparties or their respective affiliates are expected to modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock, the Notes or other of our securities or instruments (if any), in secondary market transactions prior to the maturity of the Notes (and are likely to do so during any observation period related to a conversion of Notes or following any earlier conversion or any repurchase of Notes by us on any fundamental change repurchase date or otherwise).
−Removed: This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Notes, which could affect a holder’s ability to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of Notes, it could affect the amount and value of the consideration that a holder will receive upon conversion of such Notes.
+Added: The capped call transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of the 2026 Notes and/or offset any cash payments we are required to make in excess of the principal
+Added: amount of the converted 2026 Notes, as the case may be, upon any conversion of the 2026 Notes, with such reduction and/or offset subject to a cap.
+Added: The option counterparties or their respective affiliates are expected to modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock, the 2026 Notes or other of our securities or instruments (if any), in secondary market transactions prior to the maturity of the 2026 Notes (and are likely to do so during any observation period related to a conversion of the 2026 Notes or following any earlier conversion or any repurchase of the 2026 Notes by us on any fundamental change repurchase date or otherwise).
+Added: This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the 2026 Notes, which could affect a holder’s ability to convert the 2026 Notes and, to the extent the activity occurs during any observation period related to a conversion of the 2026 Notes, it could affect the amount and value of the consideration that a holder will receive upon conversion of such 2026 Notes.
The potential effect, if any, of these transactions and activities on the market price of our common stock or the 2026 Notes will depend in part on market conditions and cannot be ascertained at this time.
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In addition, we do not make any representation that the option counterparties or their respective affiliates will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
−Removed: We are subject to counterparty risk with respect to the capped call transactions.
−Removed: The option counterparties to the capped call transactions are financial institutions, and we are subject to the risk that any or all of them may default under the capped calls.
−Removed: Our exposure to the credit risk of the option counterparties is not secured by any collateral.
−Removed: Global economic conditions have in the recent past resulted in, and may again result in, the actual or perceived failure or financial difficulties of many financial institutions.
−Removed: If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings, with a claim equal to our exposure at that time under our transactions with that option counterparty.
−Removed: Our exposure depends on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price and in the volatility of our common stock.
−Removed: In addition, upon a default by an option counterparty, we may suffer more dilution than we currently anticipate with respect to our common stock.
−Removed: We can provide no assurances as to the financial stability or viability of the option counterparties.
Risks Related to our Common Stock
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• additions or departures of key personnel;
−Removed: • our exposure, or perceptions or misperceptions of our exposure to cryptocurrencies;
• consequences of unexpected geopolitical events, natural disasters, acts of war or climate change;
• pandemics, epidemics or similar widespread public health concerns;
−Removed: • general economic, political and market conditions, such as recessions, political unrest or terrorist attacks, or in the specific locations where we operate, such as the United States, Israel and the United Kingdom.
+Added: • general economic, political and market conditions, such as recessions, political unrest or terrorist attacks, or in the specific locations where we operate, such as the United States, Israel and the U.K.
In addition, extreme price and volume fluctuations in the stock markets generally, and in the markets for technology companies in particular, could cause the market price for our common stock to decline.
−Removed: In the past, companies that have experienced volatility in the market price of their stock have been the subject of securities class action litigation.
−Removed: We may in the future be the target of similar litigation, which could result in substantial costs and distract management’s attention and resources.
+Added: As a result of such volatility in the market price of our common stock, we have been the subject of securities class action litigation and may in the future be the target of similar litigation, which could result in substantial costs and distract management’s attention and resources.
Our common stock is traded on more than one market and this may result in price variations .
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Trading in our common stock on these markets takes place in different currencies (U.S.
−Removed: dollars on the Nasdaq and New Israeli Shekels on the TASE) and at different times (due to different time zones, trading days and public holidays in the United States and Israel).
+Added: dollars on the Nasdaq and New Israeli Shekels (“NIS”) on the TASE) and at different times (due to different time zones, trading days and public holidays in the United States and Israel).
The trading prices of our common stock on these two markets may differ due to these and other factors.
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Differences in trading prices on the two markets could negatively impact our trading price.
−Removed: If our officers, directors, and largest stockholders choose to act together, they may be able to significantly influence our management and operations, acting in their own best interest and not necessarily those of our other stockholders.
−Removed: As of February 20, 2023, our executive officers, directors and holders of 5% or more of our outstanding common stock and their affiliates in the aggregate beneficially owned approximately 46.4% of our outstanding common stock.
−Removed: As a result, these stockholders, acting together, have the ability to significantly influence all matters requiring approval by our stockholders, including the election of directors and approval of significant corporate transactions.
−Removed: Our executive officers, directors and principal stockholders could also delay or prevent a change in control.
−Removed: The interests of this group of stockholders may not always coincide with LivePerson’s interests or the interests of other stockholders, and they may act in a manner that advances their best interests and not necessarily those of our other stockholders.
Future sales of substantial amounts of our common stock may negatively affect our stock price.
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This anti-takeover provision defenses could discourage, delay or prevent a change in control of our company, whether or not it is desired by or beneficial to our stockholders, which in turn could have a material adverse effect on the market price of our common stock.
−Removed: We cannot assure our stockholders that any stock repurchase programs will be fully consummated or will enhance long-term stockholder value, and stock repurchases could increase the volatility of the price of our common stock and will diminish our cash reserves.
−Removed: Repurchases pursuant to any stock repurchase program that we may enter could affect our stock price and increase its volatility.
−Removed: The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.
−Removed: Additionally, repurchases under a stock repurchase program would diminish our cash reserves, which could impact our ability to pursue possible future strategic opportunities and acquisitions and could result in lower overall returns on our cash balances.
−Removed: There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of stock.
−Removed: Unresolved Staff Comments
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.