What changed in this filing

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Item 1A. Risk Factors

2020-12-03 compared with 2020-08-28 · 358 added, 331 removed, 556 unchanged (55% of the section changed)

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In such an event, the market price of our Class A common stock could decline and you could lose all or part of your investment.

Risks Related to Our Business

Risk Factor Summary

This risk factor summary contains a high-level summary of risks associated with our business.

It does not contain all of the information that may be important to you, and you should read this risk factor summary together with the more detailed discussion of risks and uncertainties set forth following this summary.

A summary of our risks includes, but is not limited to, the following:

• The effects of the COVID-19 pandemic have affected how we and our customers are operating our businesses, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain.

• Adverse general economic and market conditions and reductions in workforce identity and customer identity spending may reduce demand for our products, which could harm our revenue, results of operations and cash flows.

• We have experienced rapid growth in recent periods, which makes it difficult to forecast our revenue and evaluate our business and future prospects.

• Our recent growth rates may not be indicative of our future growth.

As our costs increase, we may not be able to generate sufficient revenue to achieve and, if achieved, maintain profitability.

• We have a history of losses, and we expect to incur losses for the foreseeable future.

• If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction or adequately address competitive challenges.

• We face intense competition, especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position.

• If we are unable to attract new customers, sell additional products to our existing customers or develop new products and enhancements to our products that achieve market acceptance, our revenue growth and profitability will be harmed.

• Our business depends on our customers renewing their subscriptions and purchasing additional licenses or subscriptions from us.

Any material decline in our Dollar-Based Net Retention Rate would harm our future results of operations.

• Customer growth could fall below expectations.

• We may experience quarterly fluctuations in our results of operations due to a number of factors that make our future results difficult to predict and could cause our results of operations to fall below analyst or investor expectations.

• If there are interruptions or performance problems associated with our technology or infrastructure, our existing customers may experience service outages, and our new customers may experience delays in the deployment of our platform.

• An application, data security or network incident may allow unauthorized access to our systems or data or our customers’ data, disable access to our service, harm our reputation, create additional liability and adversely impact our financial results.

• Any actual or perceived failure by us to comply with the privacy or security provisions of our privacy policy, our contracts and/or legal or regulatory requirements could result in proceedings, actions or penalties against us.

• The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of our IPO, including our directors, executive officers, and their affiliates, who held in the aggregate 49% of the voting power of our capital stock as of October 31, 2020.

This will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.

• Servicing our debt may require a significant amount of cash.

We may not have sufficient cash flow from our business to pay our indebtedness.

Risks Related to Our Business and Industry

The effects of the COVID-19 pandemic have materially affected how we and our customers are operating our businesses, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain.

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This contagious disease outbreak has continued to spread across the globe and is impacting worldwide economic activity and financial markets, resulting in an economic downturn that may become a global recession.

The extent of the impact of COVID-19 on our future operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, related public health measures, and their impact on the global economy, our customers, employees and vendors.

The extent of the impact of COVID-19 on our future operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, the possibility and timing of any vaccine, treatment, or cure or stop to the spread, related public health measures, and their impact on the global economy, our customers, employees and vendors.

In the absence of a vaccine or effective therapeutics, we expect to see continued fluctuations in business openings and closures as communities respond to local outbreaks.

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We have experienced, and may continue to experience, rapid growth and organizational change, which has placed, and may continue to place, significant demands on our management and our operational and financial resources.

For example, our headcount has grown from 1,943 employees as of July 31, 2019 to 2,489 employees as of July 31, 2020 .

For example, our headcount has grown from 2,116 employees as of October 31, 2019 to 2,604 employees as of October 31, 2020.

We have also experienced significant growth in the number of customers, users and logins and in the amount of data that our Software-as-a-Service, or SaaS, infrastructure supports.

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If we fail to manage our anticipated growth and change in a manner that preserves the key aspects of our corporate culture, the quality of our platform may suffer, which could negatively affect our brand and reputation and harm our ability to retain and attract customers and employees.

We have established international offices, including offices in the United Kingdom, the Netherlands, Sweden, France, Germany, Canada, Australia, Singapore and Japan, and we may continue to expand our international operations into other countries in the future.

Our expansion has placed, and our expected future growth will continue to place, a significant strain on our managerial, customer operations, research and development, marketing and sales, administrative, financial and other resources.

We have established international offices, including offices in the United Kingdom, the Netherlands, Sweden, France, Germany, Canada, Australia, Singapore and Japan, and we plan to continue to expand our international operations into other countries in the future.

Our expansion has placed, and our expected future growth will continue to place, a significant strain on our managerial, customer operations, research and development, marketing and

sales, administrative, financial and other resources.

If we are unable to manage our continued growth successfully, our business and results of operations could suffer.

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Furthermore, organizations may be more willing to incrementally add solutions to their existing infrastructure from competitors than to replace their existing infrastructure with our products.

These competitive pressures in our market or our failure to compete effectively may result in price reductions, fewer orders, reduced revenue and gross margins, increased net losses, and loss of market share.

These competitive pressures in our market or our failure to compete effectively may result in price

reductions, fewer orders, reduced revenue and gross margins, increased net losses, and loss of market share.

Any failure to meet and address these factors could harm our business, results of operations and financial condition.

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To increase our revenue and achieve and maintain profitability, we must add new customers or sell additional products to our existing customers.

Numerous factors, however, may impede our ability to add new customers and sell additional products to our existing customers, including our failure to convert new organizations into paying customers, failure to attract, effectively train, retain and motivate sales and marketing personnel, failure to develop or expand relationships with channel partners, failure to successfully deploy products for new customers and provide

quality customer support or failure to ensure the effectiveness of our marketing programs.

In addition, if prospective customers do not perceive our platform to be of sufficiently high value and quality, we will not be able to attract the number and types of new customers that we are seeking.

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These factors could cause customer growth to fall below analyst or investor expectations.

If we fail to meet or exceed such expectations for these or any

other reasons, the market price of our Class A common stock could fall substantially, and we could face costly lawsuits, including securities class action suits.

We may experience quarterly fluctuations in our results of operations due to a number of factors that make our future results difficult to predict and could cause our results of operations to fall below analyst or investor expectations.

Our quarterly results of operations fluctuate from quarter to quarter as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including, but not limited to:

• the level of demand for our platform;

• our ability to attract new customers, obtain renewals from existing customers and upsell or otherwise increase our existing customers’ use of our platform;

• health epidemics, such as COVID-19, influenza and other highly communicable diseases or viruses;

• the timing and success of new product introductions by us or our competitors or any other change in the competitive landscape of our market;

• pricing pressure as a result of competition, COVID-19 or otherwise;

• seasonal buying patterns for IT spending;

• the mix of revenue attributable to larger transactions as opposed to smaller transactions, and the associated volatility and timing of our transactions;

• changes in remaining performance obligations (RPO), due to seasonality, the timing of and compounding effects of renewals, invoice duration, size and timing, new business linearity between quarters and within a quarter, average contract term or fluctuations due to foreign currency movements, all of which may impact implied growth rates;

• errors in our forecasting of the demand for our products, which could lead to lower revenue, increased costs or both;

• increases in and timing of sales and marketing and other operating expenses that we may incur to grow and expand our operations and to remain competitive;

• significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform and products;

• our ability to comply with privacy laws and requirements, including the General Data Protection Regulation and California Consumer Privacy Act;

• costs related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs and possible write-downs;

• credit or other difficulties confronting our channel partners;

• adverse litigation judgments, settlements of litigation and other disputes or other litigation-related or dispute-related costs;

• the impact of new accounting pronouncements and associated system implementations;

• changes in the legislative or regulatory environment;

• fluctuations in foreign currency exchange rates;

• expenses related to real estate, including our office leases, and other fixed expenses;

• general economic conditions in either domestic or international markets, including geopolitical uncertainty and instability.

Any one or more of the factors above may result in significant fluctuations in our results of operations.

You should not rely on our past results as an indicator of our future performance.

The variability and unpredictability of our quarterly results of operations or other operating metrics could result in our failure to meet our expectations or those of analysts that cover us or investors with respect to revenue or other metrics for a particular period.

If we fail to meet or exceed such expectations for these or any other reasons, the market price of our Class A common stock could fall substantially, and we could face costly lawsuits, including securities class action suits.

If we fail to adapt to rapid technological change, our ability to remain competitive could be impaired.

The industry in which we compete is characterized by rapid technological change, frequent introductions of new products and evolving industry standards.

Our ability to attract new customers and increase revenue from existing customers will depend in significant part on our ability to anticipate industry standards and trends and continue to enhance existing products or introduce or acquire new products on a timely basis to keep pace with technological developments.

The success of any enhancement or new product depends on several factors, including the timely completion and market acceptance of the enhancement or new product.

Any new product we develop or acquire might not be introduced in a timely or cost-effective manner and might not achieve the broad market acceptance necessary to generate significant revenue.

If any of our competitors implements new technologies before we are able to implement them, those competitors may be able to provide more effective products than ours at lower prices.

Any delay or failure in the introduction of new or enhanced products could harm our business, results of operations and financial condition.

Our financial results may fluctuate due to increasing variability in our sales cycles.

We plan our expenses based on certain assumptions about the length and variability of our sales cycle.

These assumptions are based upon historical trends for sales cycles and conversion rates associated with our existing customers.

As we continue to focus on sales to larger organizations and in light of the current COVID-19 environment, our sales cycles are lengthening in certain circumstances and becoming less predictable, which may harm our financial results.

Other factors that may influence the length and variability of our sales cycle include, among other things:

• the need to raise awareness about the uses and benefits of our platform, including our customer identity products;

• the need to allay privacy, regulatory and security concerns;

• the discretionary nature of purchasing and budget cycles and decisions;

• the competitive nature of evaluation and purchasing processes;

• announcements or planned introductions of new products, features or functionality by us or our competitors;

• often lengthy purchasing approval processes.

Our increasing focus on sales to larger organizations may further increase the variability of our financial results.

If we are unable to close one or more of such expected significant transactions in a particular period, or if such an expected transaction is delayed until a subsequent period, our results of operations for that period, and for any future periods in which revenue from such transaction would otherwise have been recognized, may be harmed.

Our growth depends, in part, on the success of our strategic relationships with third parties.

To grow our business, we anticipate that we will continue to depend on relationships with third parties, such as channel partners.

Identifying partners, and negotiating and documenting relationships with them, requires significant time and resources.

Our competitors may be effective in causing third parties to favor their products or services over subscriptions to our platform.

In addition, acquisitions of such partners by our competitors could result in a decrease in the number of our current and potential customers, as these partners may no longer facilitate the adoption of our applications by potential customers.

Further, some of our partners are or may become competitive with certain of our products and may elect to no longer integrate with our platform.

If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow

our revenue could be impaired, and our results of operations may suffer.

Even if we are successful, we cannot ensure that these relationships will result in increased customer usage of our applications or increased revenue.

Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products.

Our ability to increase our customer base and achieve broader market acceptance of our products will depend to a significant extent on our ability to expand our marketing and sales operations.

We plan to continue expanding our direct sales force and engaging additional channel partners, both domestically and internationally.

This expansion will require us to invest significant financial and other resources.

Our business will be harmed if our efforts do not generate a corresponding increase in revenue.

We may not achieve anticipated revenue growth from expanding our direct sales force if we are unable to hire and develop talented direct sales personnel, if our new direct sales personnel are unable to achieve desired productivity levels in a reasonable period of time or if we are unable to retain our existing direct sales personnel.

We also may not achieve anticipated revenue growth from our channel partners if we are unable to attract and retain additional motivated channel partners, if any existing or future channel partners fail to successfully market, resell, implement or support our products for their customers, or if they represent multiple providers and devote greater resources to market, resell, implement and support the products and solutions of these other providers.

For example, some of our channel partners also sell or provide integration and administration services for our competitors’ products, and if such channel partners devote greater resources to marketing, reselling and supporting competing products, this could harm our business, results of operations and financial condition.

Our ability to introduce new products and features is dependent on adequate research and development resources and our ability to successfully complete acquisitions.

If we do not adequately fund our research and development efforts or complete acquisitions successfully, we may not be able to compete effectively and our business and results of operations may be harmed.

To remain competitive, we must continue to develop new products, applications and enhancements to our existing platform.

This is particularly true as we further expand and diversify our capabilities.

Maintaining adequate research and development resources, such as the appropriate personnel and development technology, to meet the demands of the market is essential.

If we elect not to or are unable to develop products internally, we may choose to expand into a certain market or strategy via an acquisition for which we could potentially pay too much or fail to successfully integrate into our operations.

Further, many of our competitors expend a considerably greater amount of funds on their respective research and development programs, and those that do not may be acquired by larger companies that could allocate greater resources to our competitors’ research and development programs.

Our failure to maintain adequate research and development resources or to compete effectively with the research and development programs of our competitors would give an advantage to such competitors and may harm our business, results of operations and financial condition.

Various factors may cause our product implementations to be delayed, inefficient or otherwise unsuccessful.

Our business depends upon the successful implementation of our products by our customers.

Increasingly, we, as well as our customers, rely on our network of partners to deliver implementation services, and there may not be enough qualified implementation partners available to meet customer demand.

Various factors may cause implementations to be delayed, inefficient or otherwise unsuccessful.

For example, changes in the functional requirements of our customers, delays in timeline, or deviation from recommended best practices may occur during the course of an implementation project.

As a result of these and other risks, we or our customers may incur significant implementation costs in connection with the purchase, implementation and enablement of our products.

Some customer implementations may take longer than planned or fail to meet our customers’ expectations, which may delay our ability to sell additional products or result in customers canceling or failing to renew their subscriptions before our products have been fully implemented.

Unsuccessful, lengthy, or costly customer implementation and integration projects could result in claims from customers, harm to our reputation, and opportunities for competitors to displace our products, each of which could have an adverse effect on our business and results of operations.

Future acquisitions, investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management personnel, disrupt our business, dilute stockholder value and harm our results of operations and financial condition.

We have in the past acquired, and we may in the future seek to acquire or invest in, businesses, products or technologies that we believe could complement or expand our current platform, enhance our technical capabilities or otherwise offer growth opportunities.

The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.

In addition, we have limited experience in acquiring other businesses.

If we acquire additional businesses, we may not be able to successfully integrate and retain the acquired personnel, integrate the acquired operations and technologies, adequately test and assimilate the internal control processes of the acquired business in accordance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or effectively manage the combined business following the acquisition.

We may not be able to find and identify desirable acquisition targets or we may not be successful in entering into an agreement with any particular target.

Acquisitions could also result in dilutive issuances of equity securities, use of our available cash or the incurrence of debt, or in adverse tax consequences or unfavorable accounting treatment, which could harm our results of operations.

In addition, from time to time we invest in private growth stage companies for strategic reasons and to support key business initiatives, and we may not realize a return on these investments.

All of our venture investments are subject to a risk of partial or total loss of investment capital.

Acquisitions and strategic transactions involve numerous risks, including:

• delays or reductions in customer purchases for both us and the acquired business;

• disruption of partner and customer relationships;

• potential loss of key employees of the acquired company;

• claims by and disputes with the acquired company’s employees, customers, stockholders or third parties;

• unknown liabilities or risks associated with the acquired business, product or technology, such as contractual obligations, potential security vulnerabilities of the acquired company and its products and services, potential intellectual property infringement, costs arising from the acquired company’s failure to comply with legal or regulatory requirements and litigation matters;

• acquired technologies or products may not comply with legal or regulatory requirements and may require us to make additional investments to make them compliant;

• acquired technologies or products may not be able to provide the same support service levels that we generally offer with our other products;

• they could be viewed unfavorably by our partners, our customers, our stockholders or securities analysts;

• unforeseen integration or other expenses;

• future impairment of goodwill or other acquired intangible assets.

In addition, if an acquired business fails to meet our expectations, our business, results of operations and financial condition could suffer.

A portion of our revenues are generated by sales to government entities, which are subject to a number of challenges and risks.

A portion of our sales are to government agencies, and we have made, and may continue to make, investments to support future sales opportunities in the government sector.

Government demand for our products could be impacted by budgetary cycles, and there may be governmental certification requirements for our products.

Further, we may be subject to audits and investigations regarding our government contracts, and violations could result in penalties and sanctions, including termination of the contract, refunding or forfeiting payments, fines and

suspension or debarment from future government business.

Selling to these entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that we will successfully complete a sale.

Government entities often require contract terms that differ from our standard arrangements and impose compliance requirements that are complicated, increased attention to pricing practices, termination rights tied to funding availability, or are otherwise time consuming and expensive to satisfy.

Government entities may also have statutory, contractual, or other legal rights to terminate contracts with our partners for convenience, for lack of funding, or due to a default, and any such termination may adversely impact our future results of operations.

If we undertake to meet special standards or requirements and do not meet them, we could be subject to increased liability from our customers or regulators or termination rights.

Even if we do meet them, the additional costs associated with providing our service to government entities could harm our margins.

Moreover, changes in the underlying regulatory conditions that affect these types of customers could harm our ability to efficiently provide our service to them and to grow or maintain our customer base.

Any of these risks related to contracting with government entities could adversely impact our future sales and results of operations, or make them more difficult to predict .

If we fail to enhance our brand cost-effectively, our ability to expand our customer base will be impaired and our business, results of operations and financial condition may suffer.

We believe that developing and maintaining awareness of our brand in a cost-effective manner is critical to achieving widespread acceptance of our existing and future products and is an important element in attracting new customers.

Furthermore, we believe that the importance of brand recognition will increase as competition in our market increases.

Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts and on our ability to provide reliable and useful products at competitive prices.

In the past, our efforts to build our brand have involved significant expenses.

Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand.

If we fail to successfully promote and maintain our brand, or incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, we may fail to attract new customers or retain our existing customers to the extent necessary to realize a sufficient return on our brand-building efforts, and our business, results of operations and financial condition could suffer.

We may not set optimal prices for our products.

In the past, we have at times adjusted our prices either for individual customers in connection with long-term agreements or for a particular product.

We expect that we may need to change our pricing in future periods and potentially in response to COVID-19 pricing pressures.

Further, as competitors introduce new products that compete with ours or reduce their prices, we may be unable to attract new customers or retain existing customers based on our historical pricing.

As we expand internationally, we also must determine the appropriate price to enable us to compete effectively internationally.

In addition, if our mix of products sold changes, then we may need to, or choose to, revise our pricing.

As a result, we may be required or choose to reduce our prices or change our pricing model, which could harm our business, results of operations and financial condition.

Because our long-term success depends, in part, on our ability to expand the sales of our products to customers located outside of the United States, our business will be susceptible to risks associated with international operations.

We currently have sales personnel outside the United States and maintain offices outside the United States in the United Kingdom, the Netherlands, Sweden, France, Germany, Canada, Australia, Singapore and Japan, and we plan to expand our international operations.

In each of fiscal 2019 and 2020, our international revenue was 16% of our total revenue.

Any international expansion efforts that we may undertake may not be successful.

In addition, conducting international operations subjects us to new risks, some of which we have not generally faced in the United States.

These risks include, among other things:

• health epidemics, such as the coronavirus outbreak (COVID-19), influenza and other highly communicable diseases or viruses;

• macroeconomic conditions and the economic impact of the COVID-19 pandemic;

• unexpected costs and errors in the localization of our products, including translation into foreign languages and adaptation for local practices and regulatory requirements;

• lack of familiarity and burdens of complying with foreign laws, legal standards, privacy standards, regulatory requirements, tariffs and other barriers;

• laws and business practices favoring local competitors or commercial parties;

• costs and liabilities related to compliance with the GDPR and disparate data privacy standards and enforcement;

• greater risk that our foreign employees or partners will fail to comply with U.S.

and foreign laws;

• practical difficulties of enforcing intellectual property rights in countries with fluctuating laws and standards and reduced or varied protection for intellectual property rights in some countries;

• restrictive governmental actions focusing on cross-border trade, including taxes, trade laws, tariffs, import and export restrictions or quotas, barriers, sanctions, custom duties or other trade restrictions;

• unexpected changes in legal and regulatory requirements;

• difficulties in managing systems integrators and technology partners;

• differing technology standards;

• longer accounts receivable payment cycles and difficulties in collecting accounts receivable;

• difficulties in managing and staffing international operations and differing employer/employee relationships and local employment laws;

• political, economic and social instability, war, armed conflict or terrorist activities;

• fluctuations in exchange rates that may increase the volatility of our foreign-based revenue and expense;

• potentially adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems and restrictions on the repatriation of earnings.

Additionally, operating in international markets also requires significant management attention and financial resources.

We cannot be certain that the investment and additional resources required in establishing operations in other countries will produce desired levels of revenue or profitability.

We have not engaged in currency hedging activities to limit risk of exchange rate fluctuations.

Changes in exchange rates affect our costs and earnings, and may also affect the book value of our assets located outside the United States and the amount of our stockholders’ equity.

We have limited experience in marketing, selling and supporting our platform abroad.

Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we may undertake will not be successful.

If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business and results of operations will suffer.

Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results of operations.

We may need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all.

If we raise additional equity or convertible debt financing, our security holders may experience significant dilution of their ownership interests.

If we engage in additional debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions.

If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among other things:

• develop and enhance our products;

• continue to expand our product development, sales and marketing organizations;

• hire, train and retain employees;

• respond to competitive pressures or unanticipated working capital requirements;

• pursue acquisition opportunities.

Our inability to do any of the foregoing could reduce our ability to compete successfully and harm our business, results of operations and financial condition.

We may be subject to liability claims if we breach our contracts and our insurance may be inadequate to cover our losses.

We are subject to numerous obligations in our contracts with our customers and partners.

Despite the procedures, systems and internal controls we have implemented to comply with our contracts, we may breach these commitments, whether through a weakness in these procedures, systems and internal controls, negligence or the willful act of an employee or contractor.

Our insurance policies, including our errors and omissions insurance, may be inadequate to compensate us for the potentially significant losses that may result from claims arising from breaches of our contracts, disruptions in our service, including those caused by cybersecurity incidents, failures or disruptions to our infrastructure, catastrophic events and disasters or otherwise.

In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all.

Further, our insurance may not cover all claims made against us and defending a suit, regardless of its merit, could be costly and divert management’s attention.

Risks Related to Intellectual Property, Infrastructure Technology, Data Privacy and Security

If there are interruptions or performance problems associated with our technology or infrastructure, our existing customers may experience service outages, and our new customers may experience delays in the deployment of our platform.

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In some instances, we may not be able to identify the cause or causes of these performance problems immediately or in short order.

We may not be able to maintain the level of service uptime and performance required by our customers, especially during peak usage times and as our

products become more complex and our user traffic increases.

We may not be able to maintain the level of service uptime and performance required by our customers, especially during peak usage times and as our products become more complex and our user traffic increases.

For example, in October 2016, a distributed denial-of-service attack against Dyn, a domain name service vendor we use (since acquired by Oracle), prevented many of our customers and their users in the United States from accessing our platform or applications authenticated by our platform and resulted in our failing to meet certain contracted uptime levels under our service level agreements and the issuance of service credits to some of our customers, although the dollar value of such credits were not material.

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These breaches, or any perceived breach, of our systems, our customers’ systems, or other systems or networks secured by our products, whether or not any such breach is due to a vulnerability in our platform, may also undermine confidence in our platform or our industry and result in damage to our reputation and brand, negative publicity, loss of ISVs and other channel partners, customers and sales, increased costs to remedy any problem, costly litigation and other liability.

In addition, a breach of the security measures of one of our key ISVs or other channel partners could result in the exfiltration of confidential corporate information or other data that may provide additional avenues of attack, and if a high profile security breach occurs with respect to a comparable cloud technology provider, our customers and potential customers may lose trust in the security of the cloud business model generally, which could adversely impact our ability to retain existing customers or attract new ones, potentially causing a negative impact on our business.

In addition, a breach of the security measures of one of our key ISVs or other channel partners could result in the exfiltration of confidential corporate

information or other data that may provide additional avenues of attack, and if a high profile security breach occurs with respect to a comparable cloud technology provider, our customers and potential customers may lose trust in the security of the cloud business model generally, which could adversely impact our ability to retain existing customers or attract new ones, potentially causing a negative impact on our business.

Any of these negative outcomes could adversely impact market acceptance of our products and could harm our business, results of operations and financial condition.

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We may be required to expend significant capital and financial resources to protect against such threats or to alleviate problems caused by breaches in security.