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These risks are discussed more fully below and include:
−Removed: • 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.
• The success of our business depends on retention of existing customers and their purchase of additional services, and attracting new customers.
+Added: • Supporting our customer base requires intensive personnel, infrastructure and resource commitment, and if we are unable to scale our operations and increase productivity, we may not be able to successfully implement our business plan.
• Our business depends significantly on our ability to retain our key personnel, attract new personnel, and manage attrition.
−Removed: • Our Gainshare program offers contingent pricing and if we are unsuccessful at achieving customer objectives, the program could result in operating losses.
+Added: • Our contingent pricing arrangement 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.
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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.
+Added: • There are inherent limitations on the effectiveness of our controls.
+Added: • As a “smaller reporting company,” we may comply with certain reduced reporting and disclosure requirements which could make our common stock less attractive to investors.
• 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: • If our goodwill or long-lived assets become impaired, we may be required to record a significant charge to earnings.
• 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.
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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 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.
−Removed: • The conditional conversion feature of our outstanding convertible debt securities, 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 our outstanding convertible debt securities, could have a material effect on our reported financial results.
−Removed: • The capped call transactions may affect the value of our outstanding convertible debt securities and our common stock.
+Added: • The terms of our First Lien Convertible Senior Notes due 2029 require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility.
+Added: If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.
+Added: • We may not have the ability to raise the funds necessary to settle conversions of our outstanding convertible debt securities and cash-settled warrants in cash or to repurchase our outstanding convertible debt securities 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 and cash-settled warrants.
+Added: • Provisions in the indentures for our outstanding convertible debt securities may deter or prevent a business combination that may be favorable to security holders.
• 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.
+Added: • If our common stock continues to trade below $1.00, we may fail to meet the continued listing requirements of The Nasdaq Stock Market LLC, which could result in a delisting of our common stock.
• Our common stock is traded on more than one market and this may result in price variations.
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Risks Related to Operating our Business
−Removed: 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.
−Removed: 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.
−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 can be no assurance 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 depends 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 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.
−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.
The success of our business depends on retention of existing customers and their purchase of additional services, and attracting new customers.
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In some cases, our agreements are terminable or may terminate upon 30 to 90 days’ notice without penalty.
+Added: Factors including 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 lead customers to terminate our service.
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.
We depend on monthly fees and interaction-based fees from our services for substantially all of our revenue.
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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: Our revenue could decline unless we are able to obtain additional customers or alternate revenue sources.
+Added: Because of the small amount of services historically sold in initial orders, we depend significantly on the growth of our customer base, sales to new customers and sales of additional services to our existing customers.
+Added: If we are able to obtain additional customers or if existing customers decline to purchase additional services, our revenues will be adversely affected.
+Added: Supporting our customer base requires intensive personnel, infrastructure and resource commitment, 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 infrastructure, research;
+Added: and development 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;
+Added: and to expand our business into new geographic areas.
+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, 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 business effectively.
+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.
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.
−Removed: 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
−Removed: 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 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.
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Thus, any significant amount of staff attrition could cause our business and financial results to suffer.
−Removed: 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 labor, automation, and end-to-end program management.
−Removed: 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 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.
+Added: Our contingent pricing arrangement program offers contingent pricing and if we are unsuccessful at achieving customer objectives, the program could result in operating losses.
+Added: The Company has developed a fully managed solution where LivePerson provides messaging and AI automation technology as well as labor, automation, and end-to-end program management.
+Added: This program pricing is contingent on the degree to which a customer achieves its financial objectives, such as increased revenue or reduced operating costs.
+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 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.
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If we do not effectively implement our plans to migrate our technology infrastructure to the public cloud, our operations could be significantly disrupted.
−Removed: We have announced plans to migrate our technology infrastructure to the public cloud.
+Added: We have begun the process of migrating our technology infrastructure to the public cloud.
This initiative is a major undertaking as we migrate and reconfigure our current system processes, transactions, data and controls to a new cloud-based platform.
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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.
−Removed: 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.
−Removed: Additionally, we may experience issues with customer migration, as many of our customers may not migrate to cloud-based technologies on a timely basis or at all or may choose not to utilize our products and services during and after our transition to cloud-based technologies, which could negatively impact our revenue.
+Added: While we are implementing 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.
+Added: Additionally, we have experienced and may continue to experience issues with customer migration, as many of our customers may not migrate to cloud-based technologies on a timely basis or at all or may choose not to utilize our products and services during and after our transition to cloud-based technologies, which could negatively impact our revenue.
Additionally, we may experience difficulties as we manage these changes and transition our technology infrastructure to the public cloud, including loss or corruption of data, interruptions in service and downtime, increased cyber threats and activity, delayed financial reporting, unanticipated expenses including increased costs of implementation and of conducting business, and lost revenue.
−Removed: Although we plan to conduct design validations and user testing, these may cause delays in transacting our business due to system challenges, limitations in functionality, inadequate management or process deficiencies in the development and use of our systems.
+Added: Although we are conducting design validations and user testing, these may cause delays in transacting our business due to system challenges, limitations in functionality, inadequate management or process deficiencies in the development and use of our systems.
Difficulties in implementing or an inability to effectively implement our migration plans could disrupt our operations and harm our business.
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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.
−Removed: 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.
+Added: Our public cloud providers are also vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, war, public health crises, 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
−Removed: 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 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.
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Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient to refinance our outstanding indebtedness.
−Removed: In particular, we have $517.5 million in aggregate principal amount of 0% Convertible Notes due in December 2026.
+Added: In particular, we have $361.2 million in aggregate principal amount of 0% Convertible Notes due in December 2026 (“2026 Notes”) and $207.1 million in aggregate principal amount of First Lien Convertible Senior Notes due 2029 (“2029 Notes”).
+Added: Further, our 2029 Notes will come due 91 days before the maturity of the 2026 Notes, if greater than $60.0 million principal amount of our 2026 Notes remains outstanding on such date.
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.
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.
−Removed: In the recent past, we have obtained financing principally through the sale of convertible notes which required minimal interest payments.
−Removed: 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.
+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, additional preferences, and privileges senior to holders of common stock, and could have terms that impose further restrictions on our operations.
If additional funds are raised through the issuance of additional equity or convertible securities, our stockholders could suffer dilution.
We cannot assure you that additional funding, if required, will be available to us in amounts or on terms acceptable to us.
−Removed: If sufficient funds are not available or are not available on acceptable terms, our ability to fund any potential expansion, take advantage of acquisition opportunities, develop or enhance our services or products, or otherwise respond to competitive pressures would be significantly limited.
+Added: If sufficient funds are not available or are not available on acceptable terms, our ability to refinance our existing indebtedness, fund any potential expansion, take advantage of acquisition opportunities, develop or enhance our services or products, or otherwise respond to competitive pressures would be significantly limited.
Those limitations would materially and adversely affect our business, results of operations, cash flows, and financial condition.
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Certain of our products require some implementation services, including but not limited to training our customers.
−Removed: As an open platform, we also work with other third parties on implementing a variety of integrations into our platform.
+Added: As an open platform, we also work with third parties on implementing a variety of integrations into our platform.
We have historically experienced a lag between signing a customer contract and recognizing revenue from that customer.
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We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted in such a way as to make compliance infeasible.
−Removed: 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.
+Added: If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction
+Added: 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.
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.
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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.
−Removed: 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: As a result, we are not able to control the actions of these operators and the impression that any such operator leaves the user with whom they interact.
A user may not know that the operator is not a LivePerson employee.
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Additionally, we have no control over the content of our customers’ websites on which our website chat icon appears.
−Removed: Environmental, social and governance (“ESG”) matters may increase our costs, harm our reputation, or otherwise adversely impact our business.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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: Increased regulatory uncertainty and conflicting stakeholder views regarding 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 remain focused on ESG concerns, such as diversity and inclusion, climate change, sustainability, social responsibility, and corporate governance and transparency.
+Added: However, stakeholder expectations on ESG matters continue to evolve and are not uniform.
+Added: This focus on ESG concerns and efforts to comply with shifting and sometimes conflicting expectations could result in increased compliance costs and other complexities, including with respect to collecting, measuring, and reporting ESG-related information in connection with expanding mandatory and voluntary reporting, diligence and disclosure requirements.
+Added: Responding to ESG considerations and implementation of our ESG goals and initiatives involves risks and uncertainties, requires investments, may subject us to governmental and political scrutiny, and depends in part on third-party performance or data that is outside of our control.
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.
−Removed: 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.
+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, or if we become subject to regulatory scrutiny 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
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• our ability to maintain and add integrations with third-party consumer messaging platforms and endpoints;
−Removed: • continued adoption by companies of mobile and cloud-based messaging solutions;
+Added: • levels of adoption by companies of mobile and cloud-based messaging solutions;
• investments in growing our sales and marketing programs;
−Removed: • continued adoption by users of conversational AI and web and mobile-based conversation technology;
+Added: • levels of adoption by users of conversational AI and web and mobile-based conversation technology;
• exposure to foreign currency exchange rate fluctuations;
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• economic conditions specific to the web, mobile technology, electronic commerce, and cloud computing;
−Removed: consequences of unexpected geopolitical events, natural disasters, acts of war or terrorism, outbreaks of contagious disease (e.g., COVID-19), or climate change;
+Added: consequences of unexpected geopolitical events, natural disasters, acts of war or terrorism, outbreaks of contagious disease, or climate change;
• general, regional, and/or global economic and political conditions.
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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.
−Removed: 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.
+Added: We recorded a net loss of $134.3 million for the year ended December 31, 2024, and as of December 31, 2024, our accumulated deficit was $991.3 million.
We cannot assure you that we can sustain or increase profitability on a quarterly or annual basis in the future.
−Removed: Failure to maintain profitability may materially and adversely affect the market price of our securities.
+Added: Failure to achieve or maintain profitability may materially and adversely affect the market price of our securities.
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 2023, we increased our allowance for credit losses from $9.2 million to approximately $9.3 million .
−Removed: During 2022, we increased our allowance for credit losses from $6.3 million to approximately $9.2 million .
+Added: For the years ended December 31, 2024, 2023 and 2022, our allowance for credit losses was $8.6 million, $9.3 million and $9.2 million, respectively .
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.
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There are inherent limitations on the effectiveness of our controls.
−Removed: In fiscal 2022, we identified a material weakness in our internal controls.
−Removed: Although this material weakness has been remediated, there can be no assurance that similar control issues will not be identified in the future.
−Removed: 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
−Removed: 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.
+Added: As a non-accelerated filer, we are no longer required to include, and have not included in this Annual Report, an attestation report from our independent registered public accounting firm as to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.
+Added: If and when we again become subject to the auditor attestation requirements under Section 404(b) of the Sarbanes Oxley Act, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.
+Added: Including such an attestation report would also cause us to incur additional expenses, which may be significant.
+Added: There can be no assurance that 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 report financial information and our ability to prepare financial statements within required time periods, could be adversely affected.
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: As a “smaller reporting company,” we may comply with certain reduced reporting and disclosure requirements which could make our common stock less attractive to investors.
+Added: As a smaller reporting company, we are permitted to comply with scaled-back disclosure obligations in our SEC filings compared to other issuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
+Added: In addition, we are only required to provide two years of audited financial statements in our SEC reports.
+Added: If we rely on these exemptions, less information will be available in our SEC reports than SEC reports filed by other public companies.
+Added: We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
+Added: If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile
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.
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Our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, because revenue from new customers and additional revenue from existing customers is generally recognized over the applicable subscription term, rather than immediately.
−Removed: If our goodwill or amortizable intangible assets become impaired, we may be required to record a significant charge to earnings.
+Added: If our goodwill or long-lived assets become impaired, we may be required to record a significant charge to earnings.
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.
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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.
−Removed: 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.
−Removed: 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 channels and messaging endpoints, such as SMS, Facebook Messenger, WhatsApp, Apple Business Chat, Google Rich Business Messenger, Line, Kakao Talk, Instagram, and WeChat.
−Removed: In order to grow our business, we have identified and developed, and maintain, strategic relationships with many key technology partners.
+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,
+Added: WhatsApp, Apple Business Chat, Google Rich Business Messenger, Line, Kakao Talk, Instagram, and WeChat.
+Added: Accordingly, we have identified and developed, and maintain, strategic relationships with many key technology partners.
As part of our growth strategy, we plan to further develop partnerships and specific solution areas with additional technology partners.
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
−Removed: 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: 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.
Replacing a strategic relationship could also take a long 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 our ability to grow our business may be adversely affected.
−Removed: 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.
+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 prospects may be adversely affected.
+Added: We have begun the process of migrating 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.
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: We have extended our products and services to support messaging on mobile phone and tablet applications belonging to our company and our customers.
+Added: We have extended our products and services to support messaging on mobile phone and tablet applications (together, “mobile solutions”) belonging to our company and our customers.
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.
Such solutions also present risks related to privacy and security, which could subject us to investigations, litigation, or reputational harm.
−Removed: 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.
+Added: If we are unable to rapidly innovate and grow mobile revenue, or if we incur excessive expenses in this effort, our financial performance and prospects may be negatively affected.
Additionally, our mobile phone and tablet applications and those of our customers depend on their interoperability with popular mobile operating systems, networks, and standards that we and they do not control, such as Android and iOS operating systems, and any changes in such systems and terms of service that degrade the functionality of our solutions or give preferential treatment to competitive products could adversely affect our revenue.
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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.
−Removed: If we are unable to accurately anticipate technology developments and continue to innovate in the markets in which we compete and develop successful integrations with third-party consumer messaging platforms, AI providers, and endpoints, or our competitors are more successful than us at developing compelling new products, services, and integrations, or at attracting and retaining customers, we may lose revenue and market share and our operating results could be adversely affected.
+Added: If we are unable to accurately anticipate technology developments and to innovate in the markets in which we compete and develop successful integrations with third-party consumer messaging platforms, AI providers, and endpoints, or our competitors are more successful than us at developing compelling new products, services, and integrations, or at attracting and retaining customers, we may lose revenue and market share and our operating results could be adversely affected.
We have current and potential competition from providers of messaging and digital engagement solutions that enable companies to engage and connect with their consumer customers, as well as technology providers that offer customer relationship management and contact center solutions.
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Updating our technology may require significant additional capital expenditures.
−Removed: 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.
+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 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.
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.
−Removed: 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.
+Added: Further, there is increased uncertainty regarding social, political, immigration and trade policies in the U.S.
+Added: (including implementation of tariffs on U.S.
+Added: imports and retaliatory tariffs), which could impact our global operations and our business.
Global credit and financial markets have in the past experienced extreme disruptions, including diminished liquidity and credit availability and rapid fluctuations in market valuations.
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Weak economic conditions may 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 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
−Removed: marketing technology, including services such as ours.
+Added: Our customers
+Added: 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 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.
−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.
+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 any particular industry 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.
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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.
−Removed: 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: A 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.
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.
−Removed: 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: 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
+Added: 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 identified and/or addressed.
The goal of the information security program is to manage risks in a prioritized fashion;
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And while technological advancements enable more data and processes, such as mobile computing and mobile payments, they also increase the risk that cyber-attacks and other security incidents will occur.
−Removed: Additionally, the global threat of cyber-attacks has increased in response to the Russia-Ukraine War.
+Added: Additionally, the global threat of cyber-attacks has increased in response to the Russia-Ukraine war and the Israel-Hamas war.
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.
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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.
−Removed: Any security breach could result in disclosure of our trade secrets or disclosure of confidential customer, supplier or employee data.
+Added: A security breach could result in disclosure of our trade secrets or disclosure of confidential customer, supplier or employee data.
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.
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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.
−Removed: While we currently maintain insurance coverage that may cover certain cyber security risks, such insurance coverage is subject to certain exclusions and exceptions and may be insufficient to cover all losses.
+Added: While we currently maintain insurance coverage that may cover certain cybersecurity risks, such insurance coverage is subject to certain exclusions and exceptions and may be insufficient to cover all losses.
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: 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 have conducted initial due diligence on these cloud providers with respect to their security and business controls, we may not have the visibility to
−Removed: effectively monitor the implementation, configuration, and efficacy of these controls.
+Added: As we expand our use of cloud-based services, we will increasingly rely on third-party cloud
+Added: 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 effectively monitor the implementation, configuration, and efficacy of these controls.
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.
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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.
−Removed: 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.
+Added: We offer service-level commitments in certain of our customer contracts, primarily related to uptime of our service.
If we are unable to meet the stated service-level commitments or suffer periods of downtime that exceed the periods allowed under our customer contracts, whether due to downtime caused by us or our third-party service providers, which has occurred on several occasions in the past and could occur in the future (including in connection with the migration of our technology infrastructure to the public cloud), we may be contractually obligated to provide these customers with service credits and/or pay financial penalties, which could significantly impact our revenue.
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Therefore, even when connectivity problems are not caused by our services, our customers or their consumers may attribute the problem to us.
−Removed: 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.
+Added: This could diminish our brand and harm our business, divert the attention of our technical personnel or cause significant customer relations problems.
In addition, we outsource certain critical business activities to third parties and plan to continue to do so.
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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.
−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
−Removed: other unauthorized attempts by third parties to access, obtain, modify or delete our or our customers’ data.
+Added: Additionally, despite our security procedures or those of our third-party
+Added: 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.
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.
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Our products are complex, and errors, failures, or “bugs” may be difficult to correct.
−Removed: Our products are complex, integrating hardware, software and elements of a customers’ existing infrastructure.
+Added: Our products are complex, integrating hardware, software and elements of a customer’s existing infrastructure.
Despite quality assurance testing conducted prior to the release of our products, our software may contain “bugs” that are difficult to detect and fix.
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Our inability to cure an application or product defect, should one occur, could result in the failure of an application or product line, damage to our reputation, litigation, and/or product reengineering expenses.
−Removed: Our insurance may not cover or may be insufficient to cover expenses associated with such events.
+Added: Our insurance may not cover, or may be insufficient to cover fully, expenses associated with such events.
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.
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The loss of, or inability to obtain, these licenses could result in delays or reductions of our products and services until we identify, license and integrate or develop equivalent software, and new licenses could require us to pay higher royalties.
−Removed: If we are unable to successfully license and integrate third-party technology, we could experience a reduction in functionality and/or errors or failures of our products, which may reduce demand for our products and services.
+Added: If we are unable to
+Added: successfully license and integrate third-party technology, we could experience a reduction in functionality and/or errors or failures of our products, which may reduce demand for our products and services.
Third-party licenses may expose us to increased risks, including risks associated with the integration of new technology, the impact of new technology integration on our existing technology, open-source software disclosure requirements, the diversion of resources from the development of our own proprietary technology, and our inability to generate revenue from new technology sufficient to offset associated acquisition and maintenance costs.
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In addition, acts of terrorism could cause disruptions in our business or the economy as a whole.
−Removed: Our headquarters are located in New York City and we have a significant employee presence located in Israel, each of which regions has experienced acts of terrorism in the past.
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.
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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 other countries, our liability exposure and the complexity and cost of compliance with data and privacy requirements will likely increase.
+Added: To the extent 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.
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.
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.
−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
−Removed: many instances, enacted increased regulation and changes in industry practices.
+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 many instances, enacted increased regulation and changes in industry practices.
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.
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GDPR remain substantially similar for the time being, the U.K.
−Removed: 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: 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 in some respects.
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.
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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.
−Removed: For example, on July 16, 2020, the Court of Justice of the European Union (“CJEU”) invalidated the E.U.-U.S.
−Removed: Privacy Shield Framework (the “E.U.-U.S.
−Removed: Privacy Shield”) under which personal information could be transferred from the EEA to U.S.
−Removed: entities who had self-certified under the Privacy Shield program.
−Removed: 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.
−Removed: data transfers.
−Removed: 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: For example, 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 concerns raised in 2020 by the Court of Justice of the European Union 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.
The European Commission adopted its Adequacy Decision in relation to the DPF on July 10, 2023, rendering the DPF effective as an E.U.
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to the United States.
+Added: In recent years, the UK government has introduced proposed legislation intended to create a more business-friendly regime in the UK through changes to the existing data protection legislation.
+Added: At this stage it is unclear whether and when changes to the legislation will be adopted and whether such legislative reforms could potentially lead the European Commission not to extend or to revoke the UK adequacy decision.
We also currently rely on the E.U.
−Removed: SCCs and the U.K.
+Added: standard contractual clauses and the U.K.
Addendum to the E.U.
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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.
−Removed: 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.
+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 standard contractual clauses and other mechanisms are settled, we will continue to face uncertainty as to whether our efforts to comply
+Added: with our obligations under the GDPR and U.K.
GDPR will be sufficient.
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and the U.K., we are subject to U.S.
−Removed: 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: laws and regulations, including 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”).
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;
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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.
−Removed: 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: For example, comprehensive privacy laws in multiple U.S.
+Added: states have gone, or will go, into effect between 2024 and 2026, and a number of other states are considering similar laws related to the protection of consumer personal information.
Moreover, laws in all 50 U.S.
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However, federal, state and foreign laws and regulations, many of which can be enforced by government entities or private parties, are constantly evolving and can be subject to significant changes in application and interpretation.
−Removed: If, for example, the scope of the previously mentioned “spyware” legislation were changed to include web analytics, such legislation could apply to the technology we use and potentially restrict our ability to conduct our business.
+Added: If, for example, the scope of the
+Added: previously mentioned “spyware” legislation were changed to include web analytics, such legislation could apply to the technology we use and potentially restrict our ability to conduct our business.
Similarly, some U.S.
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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 in 2023 on laws and regulations related to AI, including the current U.S.
−Removed: presidential administration, the U.S.
−Removed: Congress, and U.S.
−Removed: regulators, which cover, among other things, algorithm accountability, privacy, and transparency.
−Removed: 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.
−Removed: The European Commission has also released a revised draft of the EU AI Act.
−Removed: 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.
−Removed: The EU AI Act is expected to be adopted by Parliament in 2024, taking effect in 2025 or 2026.
−Removed: Additionally, other countries have proposed legal frameworks on AI, which is a trend that is expected to increase.
+Added: There has been an increased focus in 2024 on laws and regulations related to AI.
+Added: For example, states, regions and supranational bodies, including the European Union and the United States, have passed or proposed new rules and regulations related to the development and use of AI technology, which cover, among other things, consumer protection, algorithmic accountability, privacy and transparency.
+Added: In the United States, there is uncertainty at the federal level regarding applicable regulations that will apply to the development and use of AI.
+Added: In January 2025, the Trump administration rescinded an Executive Order implemented by the Biden administration in 2023 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 Trump administration then issued a new Executive Order that, among other things, directed the heads of various federal governmental bodies to review actions taken under the Biden Executive Order and develop a new action plan with respect to AI-related matters.
+Added: In Europe, the EU AI Act, enacted on August 1, 2024, began to apply in February 2025, with the remaining requirements to become effective on a staggered basis through August 2027.
+Added: The EU AI Act establishes, among other things, a risk-based governance framework for regulating AI systems operating in the EU.
+Added: This framework categorizes AI systems, based on the risks associated with such AI systems’ intended purposes, as creating unacceptable or high risks, with all other AI systems being considered low risk.
+Added: The EU AI Act prohibits certain uses of AI systems and places numerous obligations on providers and deployers of permitted AI systems, with heightened requirements based on AI systems that are considered high risk.
+Added: The EU AI Act establishes 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: We may not be able to anticipate how to respond to these rapidly evolving frameworks, which could impact our ability to develop and deploy AI-powered features in a timely manner.
+Added: Compliance with evolving regulatory requirements may increase our operational costs, and we may need to expend additional resources to adjust our operations or offerings in certain jurisdictions if the legal frameworks are inconsistent across jurisdictions.
+Added: This could include requirements to retrain our algorithms, disclose or provide greater transparency regarding the nature of our AI systems and the data we have employed to train them, or prevent or limit our use of AI.
+Added: Any failure to comply with these regulations or delays in adapting to new requirements could result in penalties, loss of market access, competitive disadvantages, or reputational harm.
+Added: Furthermore, because AI technology itself is highly complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that may arise relating to the use of AI.
+Added: Additionally, other countries have proposed legal frameworks on AI, which is a trend that is expected to increase, and existing laws and regulations may be interpreted in ways that may affect our use of AI.
Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business.
−Removed: Further, various federal, state and foreign government bodies and agencies are highly focused on consumer protection initiatives, particularly in light of the increase in new technologies and services that incorporate or use bots, artificial intelligence and/or machine learning.
+Added: Our competitors may be developing their own AI products and technologies, which may be superior in features, functionality, compliance readiness, or cost efficiency compared to our offerings, potentially impacting our competitive position.
+Added: Any of these factors could adversely affect our business, reputation, or operating results.
+Added: Further, various federal, state and foreign government bodies and agencies are highly focused on consumer protection initiatives, particularly in light of the increase in new technologies and services that incorporate or use bots, AI and/or machine learning.
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 ten million unique monthly visitors from the U.S.
+Added: Act 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.
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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’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: The European Commission’s EU AI Act imposes 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.
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.
−Removed: 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.
+Added: Regulation in this area could impact how businesses use our products and services to interact with consumers and how we provide our
+Added: services to our customers.
+Added: As regulatory scrutiny of AI continues to grow, we may need to modify or restrict certain AI-driven functionalities in our products or services, which could impact their adoption or effectiveness.
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.
+Added: AI algorithms or automated processing of data may be flawed, and datasets may be insufficient or contain inaccurate, incomplete, poor-quality or biased information, which can create discriminatory outcomes or reduce the effectiveness of AI-driven insights.
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.
+Added: Additionally, AI-generated content and AI-assisted decision-making may raise unresolved intellectual property concerns, including uncertainty regarding ownership, licensing rights, and third-party claims over training data.
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.
+Added: Evolving regulations, legal uncertainties, and enforcement actions could increase our compliance burden, limit our ability to deploy AI-driven solutions, and create additional operational challenges.
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.
+Added: If we fail to stay ahead of these developments, we may face additional costs, disruptions in our product development roadmap, and potential competitive disadvantages.
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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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.
−Removed: 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
−Removed: comply with any such legal requirements.
+Added: It is also likely that, as our business 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.
+Added: We may need to expend considerable effort and resources to develop new product features and/or procedures to 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.
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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.
−Removed: Existing and proposed laws and regulations regarding cybersecurity and monitoring of online behavioral data, such as proposed “Do Not Track” regulations, regulations aimed at restricting certain targeted advertising practices and collection and use of data from mobile devices, new and existing tools that allow consumers to block online advertising and other content, and other proposed online privacy legislation could potentially apply to some of our current or planned products and services.
+Added: Existing and proposed laws and regulations regarding cybersecurity and monitoring of online behavioral data, such as proposed “Do Not Track” regulations, regulations aimed at restricting certain targeted advertising
+Added: practices and collection and use of data from mobile devices, new and existing tools that allow consumers to block online advertising and other content, and other proposed online privacy legislation could potentially apply to some of our current or planned products and services.
Existing and proposed laws and regulations related to email and other categories of electronic spam could impact the delivery of commercial email and other electronic communications by us or on behalf of customers using our services.
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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.
−Removed: Refer to Note 15 Legal Matters in the Notes to the
−Removed: Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding material ongoing Actions.
+Added: Refer to Note 14 - Legal Matters in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding material ongoing Actions.
Legal proceedings in general, and securities and class action litigation and regulatory investigations in particular, can be expensive and disruptive.
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Certain of our products and services may be subject to export control and economic sanctions regulations, including the U.S.
−Removed: Export Administration Regulations, U.S.
−Removed: Customs regulations and various economic and trade sanctions regulations administered by the U.S.
+Added: Export Administration Regulations and various economic and trade sanctions regulations administered by the U.S.
Treasury Department’s Office of Foreign Assets Control.
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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, or for certain end uses.
+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
+Added: 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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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.
−Removed: 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: Although we believe that we are in compliance with all applicable export control and sanctions 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.
Any such violation could result in fines or other penalties and could severely impact our ability to access U.S.
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.
+Added: Changes to trade policy, including tariff and customs regulations, or failure to comply with such regulations, may have an adverse effect on our business, financial condition and results of operations.
+Added: Changes or proposed changes in U.S.
+Added: or other countries’ trade policies may result in restrictions and economic disincentives on international trade.
+Added: Tariffs, economic sanctions and other changes in U.S.
+Added: trade policy have in the past and could in the future trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing retaliatory measures on certain U.S.
+Added: Further, any emerging protectionist or nationalist trends (whether regulatory- or consumer-driven) either in the U.S.
+Added: or in other countries could affect the trade environment.
+Added: We conduct a significant amount of business that could be impacted by changes to the trade policies of the U.S.
+Added: and other countries (including governmental action related to tariffs, international trade agreements, or economic sanctions).
+Added: Such changes have the potential to adversely impact the U.S.
+Added: economy or certain sectors thereof or the economy of other countries in which we operate, our industry, the industries of our customers and the global demand for our services.
+Added: We cannot predict how these developments will impact us, and existing or future tariffs and trade restrictions could have a material adverse effect on our business, results of operations, and financial condition.
+Added: Additionally, tariffs and retaliatory trade measures could result in an increase in supply chain costs that we may not be able to offset in full or in part or that may otherwise adversely impact our financial results.
Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations, or interpretive positions could harm our business.
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The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit our customers’ use and adoption of our services and reduce overall demand.
−Removed: For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or that require financial services providers to obtain regulatory approval prior to outsourcing certain functions.
+Added: For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or that require financial services providers to obtain regulatory
+Added: approval prior to outsourcing certain functions.
If we are unable to comply with these guidelines or controls, or if our customers are unable to obtain regulatory approval to use our service where required, our business may be harmed and we may be unable to conduct business with customers in such industries.
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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 that subject us to additional regulations, laws and new risks.
+Added: In addition, we may become subject to additional regulatory and compliance burdens to the extent we expand our product offerings into new conversational businesses that subject us to additional regulations, laws and new risks.
Future regulation of the internet or mobile devices may result in decreased demand for our services and increased costs of doing business.
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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.
+Added: Additionally, several states are considering or have passed social media age design laws that require age verifications and implement additional protections for children.
+Added: Some of these laws have been halted by courts as violations of the First Amendment, both in regard to age verification and the requirement to disclose documents to the government creating overbroad speech restrictions.
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.
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In addition, our server infrastructure consumes significant energy resources, including those generated by the burning of fossil fuels.
−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, resulting in increased costs for the energy usage of our global data centers.
−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 and in sourcing services in our supply chain, including our global data center providers.
−Removed: The costs and any expenses we may incur to make our network more energy-efficient and comply with any
−Removed: new environmental and other sustainability regulations could negatively impact our operating results.
+Added: We also face climate change risks associated with the process of transitioning to a low-carbon economy.
+Added: For example, 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 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 to comply with any new environmental and other sustainability regulations could negatively impact our operating results.
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.
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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.
−Removed: 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: Additionally, over the last few years, 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, among others, concerning alleged copyright and other intellectual property violations with respect to the information used to train AI models.
The outcomes of these litigations may impair our ability to provide our AI technologies.
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Others may develop technologies that are similar or superior to our technology.
−Removed: We enter into confidentiality and other written agreements (including invention assignment agreements) with our employees, consultants, customers, potential customers, strategic partners, and other third parties, and through these and other written agreements, we attempt to control access to and distribution of our software, documentation and other proprietary information.
+Added: We enter into confidentiality and other written agreements (including invention assignment agreements) with our employees, consultants, customers, potential customers, strategic partners, and other third parties, and through these and other written agreements, we seek to control access to and distribution of our software, documentation and other proprietary information.
Despite our efforts to protect our proprietary rights, third parties may, in an unauthorized manner, attempt to use, copy or otherwise obtain and market or distribute our intellectual property rights or technology or otherwise develop a service with the same functionality as our services.
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The duration of the protection afforded to our intellectual property depends on the type of property in question, the laws and regulations of the relevant jurisdiction and the terms of its license agreements with others.
−Removed: With respect to our trademarks and trade names, trademark laws and rights are generally territorial in scope and limited to those countries where a mark has been registered or protected.
+Added: With respect to our trademarks and trade names, trademark laws and rights are generally territorial in scope and limited to those countries where a mark has been
+Added: registered or protected.
While trademark registrations may generally be maintained in effect for as long as the mark is in use in the respective jurisdictions, there may be occasions where a mark or title is not registrable or protectable or cannot be used in a particular country.
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Third parties may register marks that are confusingly similar to the trademarks or services marks that we have used in the U.S.
−Removed: and our failure to monitor foreign registrations or mark usage may impact out rights in certain trademarks or services marks.
+Added: and our failure to monitor foreign registrations or mark usage may impact our rights in certain trademarks or services marks.
Policing unauthorized use of our services and intellectual property rights is difficult, and we cannot be certain that the steps we have taken will prevent misappropriation of our technology or intellectual property rights, particularly in foreign countries where we do business, where our services are sold or used, where the laws may not protect proprietary rights as fully as do the laws of the U.S.
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These deficiencies could undermine the decisions, predictions, or analysis AI applications produce.
−Removed: 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: 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 current and 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.
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.
−Removed: If we enable or offer AI solutions that have unintended consequences,
−Removed: 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: If we enable or offer AI solutions that have unintended consequences, 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.
The regulatory landscape regarding AI is evolving globally.
−Removed: 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: 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
+Added: other liabilities.
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.
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Any costs incurred as a result of this potential liability could harm our business.
−Removed: In addition, negative publicity and user sentiment generated as a result of fraudulent or deceptive conduct by users of our technology platforms could damage our reputation, reduce our ability to attract new users or retain our current users, and diminish the value of our brand.
+Added: In addition, negative publicity and user sentiment generated as a result of fraudulent or deceptive conduct by customers of our technology platforms could damage our reputation, reduce our ability to attract new users or retain our current customers, and diminish the value of our brand.
In the future, we may be required to spend substantial resources to take additional protective measures or discontinue certain service offerings, either of which 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
−Removed: 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.
−Removed: 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.
+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 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: 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 cloud or SaaS industry could have a material adverse effect on our business, results of operations, and financial condition.
Risks Related to our International Operations and Tax Issues
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dollar in Europe, Australia, Japan and Israel.
−Removed: As we continue to expand our international operations we become more exposed to the effects of fluctuations in currency exchange rates.
−Removed: 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.
−Removed: As a result of the expanding size and scope of our international operations, our currency rate fluctuation risk associated with the exchange rate movement of the U.S.
−Removed: dollar has increased.
−Removed: Since we conduct business in currencies other than the U.S.
+Added: Because we conduct business in currencies other than the U.S.
dollar but report our financial results in U.S.
dollars, fluctuations in currency exchange rates could adversely affect our results of operations.
−Removed: For example, during the year ended December 31, 2023, we experienced a foreign currency exchange impact of approximately 1% percent, or approximately $0.3 million if held in constant currency, to our revenue.
Fluctuations in the value of the U.S.
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.
+Added: Expansion of our international operations increases our exposure to such fluctuations in currency exchange rates.
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.
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We cannot predict whether or not we will incur foreign exchange losses.
−Removed: To the extent the international component of our revenues grows, our results of operations will become more sensitive to foreign exchange rate fluctuations.
+Added: 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.
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.
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.
−Removed: We have also continued to invest in global messaging initiatives and in acquisitions.
−Removed: 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.
−Removed: Our international operations may also fail due to other risks inherent in foreign operations, including:
+Added: We have also invested in global messaging initiatives and in acquisitions.
+Added: Our ability to expand into international markets is subject to 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 subject us to other risks inherent in foreign operations, including:
• 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;
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• adverse tax consequences or additional tax liabilities;
−Removed: • difficulty in addressing country-specific business requirements and regulations, for instance, data privacy laws;
+Added: • difficulty in addressing country-specific business requirements and regulations including, for instance, data privacy laws;
• fluctuations in currency exchange rates;
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• different consumer preferences and requirements in specific international markets;
−Removed: • international legal, compliance, political, regulatory or systemic restrictions, or other international governmental scrutiny, applicable to United States companies with sales and operations in foreign countries, including, but not limited to, possible compliance issues involving the U.S.
+Added: • international legal, compliance, political, regulatory or systemic restrictions, or other international governmental scrutiny, applicable to U.S.
+Added: companies with sales and operations in foreign countries, including, but not limited to, possible compliance issues involving the U.S.
Foreign Corrupt Practices Act, the U.K.
Bribery Act, and similar laws in other jurisdictions;
+Added: • the imposition of tariffs, quotas, import duties or other market barriers (including the implementation of tariffs on U.S.
+Added: imports and potential retaliatory tariffs);
• local instability and shifting political, economic, and military conditions including armed conflict and terrorist activity.
In addition, we rely in part on third-party service providers with international operations.
−Removed: 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.
+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 Israel-Hamas war or the Russia-Ukraine war, then our ability to provide services to some of our 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 expanding 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 efforts 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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The Organization for Economic Co-operation and Development (“OECD”) has issued guidelines, referred to as the Base Erosion and Profit Shifting project, to its member-nations aimed at encouraging broad-based legislative initiatives intended to prevent perceived base erosion transactions and income shifting in a tax-advantaged manner.
−Removed: Further, for the past several years, the OECD has had a specific focus on the taxation implications of e-commerce business, generally referred by the OECD as the “digital economy.” In the fourth quarter of 2019, the OECD released details on its proposed approach which would, among other changes, create a new right to tax certain “digital economy” income not necessarily based on traditional nexus concepts nor on the “arm’s length principle.” At this point, there is a lack of consensus among the key members, particularly the United States, with the latest OECD proposal.
+Added: Further, for the past several years, the OECD has had a specific focus on the taxation implications of e-commerce business, generally referred to by the OECD as the “digital economy.” In the fourth quarter of 2019, the OECD released details on its proposed approach which would, among other changes, create a new right to tax certain “digital economy” income not necessarily based on traditional nexus concepts nor on the “arm’s length principle.” At this point, there is a lack of consensus among the key members, particularly the United States, with the latest OECD proposal.
The United States has expressed that it would generally support a solution along the lines proposed by the OECD only if the solution was in the form of a “safe-harbor” rather than a mandatory requirement.
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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
+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 interest.
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.
Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.
−Removed: As of December 31, 2023, we had federal net operating loss carryforwards (“NOLs”) of approximately $583.1 million which are available to offset future federal taxable income.
−Removed: In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” (generally defined as a greater than 50-percentage-point cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period) is subject to limitations on its ability to utilize its pre-change NOLs to offset post-change taxable income.
+Added: As of December 31, 2024, we had federal net operating loss carryforwards (“NOLs”) of $644.0 million which are available to offset future federal taxable income.
+Added: In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” (generally defined as a greater than 50-percentage-point
+Added: cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period) is subject to limitations on its ability to utilize its pre-change NOLs to offset post-change taxable income.
Under Section 382 of the Code, our existing NOLs may be subject to limitations arising from previous ownership changes, and if we undergo an ownership change in the future, our ability to utilize NOLs could be further limited by Section 382 of the Code, or as a result of a corresponding provision of state law.
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Federal NOLs generated in taxable years ending after December 31, 2017, are eligible to be carried forward indefinitely, but generally may only offset up to 80% of federal taxable income earned in a taxable year.
−Removed: As of December 31, 2023, approximately $70.2 million of our approximately $583.1 million of federal NOLs were generated in taxable years ending on or before December 31, 2017.
+Added: As of December 31, 2024, $70.3 million of our $644.0 million of federal NOLs were generated in taxable years ending on or before December 31, 2017.
If our ability to utilize federal NOLs were limited by Section 382 of the Code, it could result in NOLs generated on or before December 31, 2017, expiring unused.
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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.
−Removed: 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 .
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.
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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, Hezbollah and other armed groups, including the ongoing Israel-Hamas war.
+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 Israel-Hamas war.
Furthermore, Iran has threatened to attack Israel and may be developing nuclear weapons.
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A campaign of boycotts, divestment, and sanctions has been undertaken against Israel, which could also adversely affect our business.
−Removed: We are in compliance with applicable anti-boycott rules and regulations administered by the U.S.
−Removed: 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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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 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.
−Removed: The 2026 Notes do not bear any regular interest payments.
−Removed: The 2026 Notes will need to be refinanced on or prior to their December 2026 maturity.
−Removed: 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.
+Added: In December 2020, we issued $517.5 million in aggregate principal amount of 2026 Notes, which do not bear any regular interest, in a private placement.
+Added: In June 2024, we privately exchanged $100.0 million in principal amount of newly issued 2029 Notes, which, depending on time- and event-based conditions, bear cash interest at a rate ranging from 4.375% to 5% and paid-in-kind interest at a rate ranging from 7% to 8%, for $146.0 million aggregate principal amount of outstanding 2026 Notes, and issued $50.0 million in aggregate principal amount of 2029 Notes in a private placement.
+Added: In December 2024, we issued an additional $57.1 million in aggregate principal amount of 2029 Notes, including $7.1 million in aggregate principal amount of 2029 Notes issued as paid-in-kind interest.
+Added: The remaining 2026 Notes will need to be refinanced on or prior to their December 15, 2026 maturity.
+Added: Further, if greater than $60.0 million principal amount of 2026 Notes remains outstanding 91 days prior to such maturity date, then the 2029 Notes will immediately become due and payable.
+Added: Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our outstanding Notes or any additional future indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.
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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 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.
−Removed: 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.
−Removed: 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 the 2026 Notes surrendered therefor or pay cash with respect to the 2026 Notes being converted.
−Removed: 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.
−Removed: 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.
−Removed: 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
−Removed: 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.
−Removed: Provisions in the indentures for our outstanding convertible debt securities may deter or prevent a business combination that may be favorable to you.
−Removed: 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.
−Removed: In addition, if a make-whole fundamental change occurs prior the maturity date of the 2026 Notes, we will in some cases be required to increase the conversion rate for a holder that elects to convert its 2026 Notes in connection with such make-whole fundamental change.
−Removed: Furthermore, the indentures for the 2026 Notes prohibit us from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the 2026 Notes.
−Removed: 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.
+Added: The terms of our First Lien Convertible Senior Notes due 2029 require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility.
+Added: If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.
+Added: The 2029 Notes are guaranteed on a senior basis by certain of our direct and indirect domestic and foreign subsidiaries and secured by first priority security interests in substantially all of the assets of the Company and the subsidiary guarantors, subject to customary exceptions.
+Added: The indenture governing the 2029 Notes restricts our ability to, among other things, pursue certain dispositions, mergers or acquisitions, encumber our intellectual property, incur debt, preferred stock or liens, pay dividends or make other payments in respect of our capital stock, or make investments and engage in certain business transactions.
+Added: The indenture governing the 2029 Notes also includes a financial covenant that requires us at all times to maintain a minimum cash balance of $60.0 million (excluding proceeds of the 2029 Notes).
+Added: 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.
+Added: If we raise any additional debt financing, the terms of such additional debt could further restrict our operating and financial flexibility.
+Added: We may not have the ability to raise the funds necessary to settle conversions of our outstanding convertible debt securities and cash-settled warrants in cash or to repurchase our outstanding convertible debt securities upon a fundamental change, and
+Added: any future debt may contain limitations on our ability to pay cash upon conversion or repurchase of our outstanding convertible debt securities and cash-settled warrants.
+Added: Holders of our outstanding Notes have the right to require us to repurchase all or a portion of their 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 Notes to be repurchased, plus accrued and unpaid interest, (including cash and PIK components thereof in the case of the 2029 Notes), if any, plus, in the case of the 2029 Notes, an amount equal to 66% of the remaining future interest payments (including cash and PIK components thereof) that would have been payable through June 15, 2029, discounted at a rate equal to the comparable treasury rate plus 50 basis points.
+Added: In addition, upon conversion of the Notes, we are required to make cash payments in respect of the Notes being converted (except, in the case of the 2026 Notes, if 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)).
+Added: Further, upon the exercise of the cash-settled warrants, we are required to make cash payments in respect of the cash-settled warrants being exercised (except to the extent that, following payment, we would have “available cash” (as defined therein) of less than $100.0 million, in which case we may defer payment of the settlement amount at an annualized interest rate of 6.0%, compounded monthly).
+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 Notes surrendered therefor, to pay cash with respect to the Notes being converted or to pay cash with respect to the cash-settled warrants being exercised.
+Added: In addition, our ability to repurchase Notes, to pay cash upon conversions of Notes or to pay cash upon exercises of cash-settled warrants may be limited by law, regulatory authority, or agreements governing our indebtedness.
+Added: Our failure to repurchase Notes at a time when the repurchase is required by the governing indenture or to pay any cash upon conversions of Notes as required by the governing indenture would constitute a default under the governing indenture.
+Added: A default under the governing indenture or the fundamental change itself could also lead to a default under the indenture governing the other series of Notes or agreements governing any future indebtedness.
+Added: If the payment of either or both Series of Notes were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the Notes, to repurchase the Notes or to pay cash upon conversions of the Notes.
+Added: Provisions in the indentures for our outstanding convertible debt securities may deter or prevent a business combination that may be favorable to securityholders.
+Added: If a fundamental change occurs prior to the maturity date of the outstanding Notes, the holders of such Notes will have the right, at their option, to require us to repurchase all or a portion of their Notes.
+Added: In addition, if a make-whole fundamental change occurs prior to the maturity date of a series of Notes, we will in some cases be required to increase the conversion rate for a holder that elects to convert its Notes of such series in connection with such make-whole fundamental change.
+Added: Furthermore, the indentures governing the outstanding Notes prohibit us from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the relevant series of Notes.
+Added: These and other provisions in the indentures governing the Notes could deter or prevent a third party from acquiring us even when the acquisition may be favorable to securityholders.
The conditional conversion feature of our outstanding convertible debt securities, if triggered, may adversely affect our financial condition and operating results.
−Removed: 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.
−Removed: 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 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−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 changed the accounting for the convertible debt instruments described above.
−Removed: Under the new standard, an entity may no longer separately account for the liability and equity components of convertible debt instruments.
−Removed: Additionally, the treasury stock method for calculating earnings per share will no longer be allowed for convertible debt instruments the principal amount of which may be settled using shares.
−Removed: Rather, the “if-converted” method may be required.
−Removed: Application of the “if converted” method may reduce our reported diluted earnings per share.
−Removed: We adopted this standard on January 1, 2022, using the modified retrospective standard.
−Removed: 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 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.
−Removed: 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.
+Added: In the event the conditional conversion feature of an outstanding series of Notes is triggered, holders of the relevant series of Notes will be entitled to convert their Notes of such series at any time during specified periods at their option.
+Added: If one or more holders elect to convert their Notes (unless, in the case of the 2026 Notes, 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.
+Added: In addition, even if holders of the relevant series of Notes do not elect to convert their Notes of such series, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes of such series as a current rather than long-term liability, which would result in a material reduction of our net working capital.
The capped call transactions may affect the value of our outstanding convertible debt securities and our common stock.
5 unchanged sentences
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.
−Removed: Any of these activities could adversely affect the value of our common stock and the value of the 2026 Notes (and as a result, the amount and value of the consideration that a holder would receive upon the conversion of any 2026 Notes) and, under certain circumstances, a holder’s ability to convert his or her 2026 Notes.
+Added: Any of these activities could adversely affect the value of our common stock and the value of the 2026 Notes (and as a result, the amount and value of the consideration that a holder would receive upon the conversion of any 2026 Notes) and, under certain circumstances, a holder’s ability to convert 2026 Notes.
We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of our common stock or the 2026 Notes.
16 unchanged sentences
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.
+Added: If our common stock continues to trade below $1.00, we may fail to meet the continued listing requirements of The Nasdaq Stock Market LLC (“Nasdaq”), which could result in a delisting of our common stock.
+Added: Our common stock currently is listed on The Nasdaq Global Select Market.
+Added: We are required to meet specified financial requirements in order to maintain such listing, including a closing bid price of at least $1.00.
+Added: If the closing bid price of our common stock is less than $1.00 for 30 consecutive trading days, then our common stock will be subject to delisting.
+Added: As of the date of the filing of this Form 10-K, the closing bid price of our common stock has been below $1.00 for six trading days (not including the date of filing of this Form 10-K).
+Added: Our common stock closing bid price also was below $1.00 on multiple occasions during 2024, including on March 14, 2024, from March 28, 2024 through July 17, 2024;
+Added: on July 19, 2024;
+Added: from November 8, 2024 through November 22, 2024 and from November 26, 2024 through December 27, 2024.
+Added: We can provide no assurance that we will be able to maintain or restore our compliance with the listing requirements or that any actions taken by us in an effort to maintain or restore our compliance would allow our common stock to remain listed, stabilize the market price of our common stock, improve the liquidity of our common stock, prevent our common stock from again dropping below the minimum bid price requirement, or prevent future non-compliance with the listing requirements.
+Added: In addition, to maintain a listing with Nasdaq, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding minimum stockholders’ equity, and certain corporate governance requirements.
+Added: If we are unable to satisfy these requirements or standards, we could be subject to delisting, which would have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so.
+Added: Further, the failure of our common stock to be listed or quoted on any of The Nasdaq Global Select Market, The Nasdaq Global Market or The New York Stock Exchange would constitute a “fundamental change” under the indentures governing the 2026 Notes and the 2029 Notes.
+Added: If our common stock is delisted from Nasdaq, it is unlikely that our common stock would qualify for listing on another national securities exchange in the United States, and trading of our common stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQX, the OTCQB or the Pink Market maintained by OTC Markets Group Inc.
+Added: We cannot assure you that our common stock, if delisted from Nasdaq, will ever be listed on another securities exchange or quoted on an over-the-counter quotation system.
+Added: An investor would likely find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common stock on an over-the-counter market, and many investors would likely not buy or sell our common stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or other reasons.
+Added: Accordingly, delisting from Nasdaq could make trading our common stock more difficult for investors, likely leading to declines in our share price, trading volume and liquidity.
+Added: Delisting from Nasdaq could also result in negative publicity and make it more difficult for us to raise additional capital.
+Added: The absence of such a listing may adversely affect the acceptance of our common stock as transaction consideration or the value accorded our common stock by other parties.
+Added: Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities.
+Added: These requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market.
+Added: If our common stock is delisted, it may come within the definition of “penny stock” as defined in the Exchange Act and would be covered by Rule 15g-9 of the Exchange Act.
+Added: This rule imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors which may further limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market.
+Added: The regulations relating to penny stocks, coupled with the typically higher cost per trade to the investor of penny stocks due to factors such as broker commissions generally representing a higher percentage of the price of a penny stock than of a higher-priced stock, would further limit the ability of investors to trade in our common stock.
Our common stock is traded on more than one market and this may result in price variations .
−Removed: Our common stock is currently traded on the Nasdaq and the TASE.
+Added: Our common stock is currently traded on The Nasdaq Global Select Market and the TASE.
Trading in our common stock on these markets takes place in different currencies (U.S.
−Removed: 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).
+Added: dollars on The Nasdaq Global Select Market 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.
2 unchanged sentences
Future sales of substantial amounts of our common stock may negatively affect our stock price.
−Removed: If we or our stockholders sell substantial amounts of our common stock, including shares issuable upon the exercise of outstanding options and warrants, or upon the conversion of the 2026 Notes, in the public market, or if the market perceives that these sales might occur, the market price of our common stock could fall.
−Removed: These sales also might make it more difficult for us to sell equity securities in the future at a time and price that we deem appropriate.
+Added: If we or our stockholders sell substantial amounts of our common stock, including shares issuable upon the exercise of outstanding options and warrants, or upon the conversion of 2026 Notes or 2029 Notes, in the public market, or if the market perceives that these sales might occur, the market price of our common stock could fall.
+Added: These sales also might make it more
+Added: difficult for us to sell equity securities in the future at a time and price that we deem appropriate.
No prediction can be made as to the effect, if any, that market sales of our common stock will have on the market price of our common stock.
11 unchanged sentences
As a Delaware corporation, we are also subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless certain conditions are met.
−Removed: 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.
+Added: These anti-takeover provisions 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.
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.