Item 1A. Risk Factors
Item 1A. Risk Factors
Other than the addition of the risk factor set forth below to “Risk Factors—Risks Related to our Business and Strategy,” there have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our most recent Annual Report on Form 10-K.
Risks Related to Our Business and Strategy
Adverse developments affecting the banking system and financial institutions, including bank failures, could adversely affect our and our customers’ current and projected business operations and our financial condition and results of operations.
Concerns have recently emerged with respect to the financial condition of a number of banking organizations in the U.S. and abroad in the wake of the closures of Silicon Valley Bank (“SVB”), Signature Bank, Credit Suisse and First Republic Bank. The closures of SVB, Signature Bank, Credit Suisse and First Republic Bank have resulted in market disruption and volatility, a tightening of the credit markets and exposed potential vulnerabilities and systemic risk in the banking sector, including legal uncertainties. Future adverse developments vis-à-vis other banks and financial institutions or the broader financial services industry could lead to further liquidity shortages, impede our or our customers’ and vendors’ access to working capital, result in less favorable commercial financing terms, and create additional economic uncertainty.
Although we do not hold cash deposits or securities at, nor do we have a lending relationship or other business with, Credit Suisse, SVB, Signature Bank, First Republic Bank or any other regional bank, some of our customers and vendors have or had deposits with such banks. If other banks and financial institutions that we or our customers and vendors have banking and business relationships with enter receivership or become insolvent in the future due to the financial conditions affecting the banking system and financial markets, there are no assurances that we or our customers’ or vendors’ will have full access to their deposits or other sources of liquidity, such as committed credit facilities, nor is it possible to predict that any such bank or financial institution will be able to obtain required liquidity from other banks, government institutions or by acquisition.
While we have taken precautionary measures to mitigate the risk of potential loss related to our corporate banking relationships, such as migrating certain deposit account balances to Institutional Insured Liquid Deposits and utilizing nightly sweeps to U.S. government and treasury money market funds, a significant portion of our daily accessible domestic cash deposits reside in accounts that exceed the current FDIC insurance limits.
If we or our customers and vendors experience a decline in available funding or access to our cash and liquidity resources it could, among other risks, have an adverse impact on our ability to meet our financial obligations, operating expenses, or fulfil our other obligations. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our and our customers’ and vendors’ current and/or projected business operations, as well as our financial condition and results of operations.