19 unchanged sentences
• 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.
+Added: • There are risks related to our ability to successfully integrate Auth0 and realize potential benefits from the acquisition.
• 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.
1 unchanged sentence
• 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.
−Removed: • There are risks related to our proposed acquisition of Auth0, including our ability to complete the acquisition in a timely manner, successfully integrate Auth0 and realize potential benefits from the acquisition.
• 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 42.6% of the voting power of our capital stock as of January 31, 2022.
4 unchanged sentences
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.
−Removed: In December 2019, a novel coronavirus (COVID-19) was reported in China, in January 2020, the World Health Organization (WHO) declared it a Public Health Emergency of International Concern and in March 2020, the WHO declared it a pandemic.
−Removed: 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 became a global recession.
−Removed: 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 effectiveness, distribution and acceptance of COVID-19 vaccines, including the vaccines’ efficacy against emerging COVID-19 variants, related public health measures, and their impact on the global economy, our customers, employees and vendors.
−Removed: In the absence of mass distribution and acceptance of effective COVID-19 vaccines, we expect to see continued fluctuations in business openings and closures as communities respond to local outbreaks.
+Added: The extent of the impact of COVID-19 on our future operational and financial performance remains uncertain and will depend on certain developments, including the duration and spread of COVID-19 and variants of concern, the manufacture, distribution, efficacy and public acceptance of COVID-19 treatments and vaccines, related public health measures, including vaccine mandates, and their impact on the global economy, our customers, employees and vendors.
+Added: While some governments around the world have lifted restrictions and distributed vaccines, there remains significant uncertainty around the recovery due to the challenging logistics of distributing the vaccines globally, as well as the unknown impact of emerging variants of COVID-19.
This pandemic has resulted in a widespread health crisis that is adversely affecting broader economies and financial markets.
−Removed: As a result of the COVID-19 pandemic, we have temporarily closed our offices, required our employees to work from home and implemented significant travel restrictions.
−Removed: We shifted our annual user conference, Oktane20 Live, held in the spring of 2020, to a virtual-only conference and in the near-term we have changed our customer, employee and industry events, including Oktane21 Live, to virtual-only formats.
+Added: As a result of the COVID-19 pandemic, for most of fiscal 2021, we temporarily closed our offices, required our employees to work from home and implemented significant travel restrictions.
+Added: We shifted our customer, employee and industry events, including our annual user conferences Oktane20 Live and Oktane21 Live, to virtual-only formats.
+Added: In fiscal 2022, as the administration of vaccines increased, we reopened our offices to partial capacity, allowing our employees to voluntarily return, and in fiscal 2023, we are shifting to hybrid in-person and virtual sales formats and experiences for future annual user conferences.
The conditions caused by the COVID-19 pandemic have and may continue to affect the rate of IT spending and have and could adversely affect our current and potential customers’ ability or willingness to purchase our offerings.
It has and could continue to delay current and prospective customers’ purchasing decisions, adversely impact our ability to provide professional services to our customers, delay the provisioning of our offerings, lengthen payment terms, reduce the value or duration of our subscription contracts, or affect customer attrition rates, all of which could adversely affect our future sales, operating results and overall financial performance.
−Removed: Our operations have also begun to be negatively affected by a range of external factors related to the COVID-19 pandemic that are not within our control.
−Removed: For example, many cities, counties, states and countries have imposed or may impose a wide range of restrictions on our employees’, partners’, customers’ and potential customers’ physical movement to limit the spread of COVID-19.
+Added: Our operations have been and may continue to be affected by a range of external factors related to the COVID-19 pandemic that are not within our control.
+Added: For example, many cities, counties, states and countries imposed or may impose a wide range of restrictions on our employees’, partners’, customers’ and potential customers’ physical movement to limit the spread of COVID-19.
If the COVID-19 pandemic has a substantial impact on our employees’, partners’, customers’ or potential customers’ attendance or productivity, our results of operations and overall financial performance may be harmed.
−Removed: The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the efficacy, availability and acceptance of COVID-19 vaccines, the severity and transmission rate of the virus, and emerging variants, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, partners and vendors as well as the global economy.
+Added: The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the efficacy, global availability and acceptance of COVID-19 vaccines, the severity and transmission rate of the virus and emerging variants of concern, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, partners and vendors as well as the global economy.
Despite our best efforts to manage the impact of such events effectively, our business still may be harmed.
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Our revenue, results of operations and cash flows depend on the overall demand for our products.
−Removed: Concerns about the COVID-19 pandemic, the systemic impact of a related widespread recession (in the United States or internationally), energy costs, geopolitical issues or the availability and cost of credit have and could continue to lead to increased market volatility, decreased consumer confidence and diminished growth expectations in the U.S.
+Added: Concerns about the COVID-19 pandemic, the systemic impact of a widespread recession (in the United States or internationally), energy costs, geopolitical issues or the availability and cost of credit have and could continue to lead to increased market volatility, decreased consumer confidence and diminished growth expectations in the U.S.
economy and abroad, which in turn could result in reductions in workforce identity and customer identity spending by our existing and prospective customers.
1 unchanged sentence
Prolonged economic slowdowns may result in customers requesting us to renegotiate existing contracts on less advantageous terms to us than those currently in place or defaulting on payments due on existing contracts or not renewing at the end of the contract term.
−Removed: Our customers may merge with other entities who use alternative identity solutions and, during weak economic times, there is an increased risk that one or more of our customers will file for bankruptcy protection, either of which may harm our revenue, profitability and results of operations.
−Removed: We also face risk from international customers that file for bankruptcy protection in foreign jurisdictions, particularly given that the application of foreign
−Removed: bankruptcy laws may be more difficult to predict.
+Added: Our customers may merge with other entities who use alternative identity solutions and, during weak economic times, there is an increased risk that one or more of our customers will file for bankruptcy protection,
+Added: either of which may harm our revenue, profitability and results of operations.
+Added: We also face risk from international customers that file for bankruptcy protection in foreign jurisdictions, particularly given that the application of foreign bankruptcy laws may be more difficult to predict.
In addition, we may determine that the cost of pursuing any claim may outweigh the recovery potential of such claim.
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Because the market for our platform is rapidly evolving and has not yet reached widespread adoption, it is difficult for us to predict our future results of operations.
−Removed: We expect our operating expenses to significantly increase over the next several years as we hire additional personnel, particularly in sales and marketing, expand and improve the effectiveness of our distribution channels, expand our operations and infrastructure, both domestically and internationally, pursue business combinations and continue to develop our platform.
+Added: We expect our operating expenses to significantly increase over the next several years as a result of the Auth0 acquisition, and as we hire additional personnel, particularly in sales and marketing, expand and improve the effectiveness of our distribution channels, expand our operations and infrastructure, both domestically and internationally, pursue business combinations and continue to develop our platform.
As we continue to develop as a public company, we may incur additional legal, accounting and other expenses that we did not incur historically.
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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.
−Removed: 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.
+Added: We have established international offices in the Americas, Asia-Pacific and Europe, and we plan to continue to expand our international operations 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.
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The success of any enhancement to our products depends on several factors, including timely completion and delivery, competitive pricing, adequate quality testing, integration with existing technologies and our platform and overall market acceptance.
−Removed: If we are unable to successfully develop
−Removed: new products, enhance our existing products to meet customer requirements, or otherwise gain market acceptance, our business, results of operations and financial condition would be harmed.
+Added: If we are unable to successfully develop new products, enhance our existing products to meet customer requirements, or otherwise gain market acceptance, our business, results of operations and financial condition would be harmed.
Further, to grow our business, we must convince developers to adopt and build their applications using our APIs and products.
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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.
−Removed: Our failure to maintain adequate research and development resources or to compete effectively with the research and
−Removed: development programs of our competitors would give an advantage to such competitors and may harm our business, results of operations and financial condition.
+Added: 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.
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.
−Removed: For example, we have entered into the proposed acquisition of Auth0.
−Removed: If that transaction closes, our stockholders will incur substantial dilution.
−Removed: For further risks related to the proposed acquisition of Auth0, please see below under “Risks Related to the Acquisition of Auth0.” 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.
+Added: 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.
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• acquired technologies or products may not be able to provide the same support service levels that we generally offer with our other products;
−Removed: • they could be viewed unfavorably by our partners, our customers, our stockholders or securities analysts;
+Added: • acquired businesses, technologies or products could be viewed unfavorably by our partners, our customers, our stockholders or securities analysts;
• unforeseen integration or other expenses;
1 unchanged sentence
In addition, if an acquired business fails to meet our expectations, our business, results of operations and financial condition could suffer.
+Added: For further risks related to our acquisition of Auth0, please see below under “Risks Related to the Acquisition of Auth0.”
+Added: 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.
+Added: We currently have sales personnel outside the United States and maintain offices outside the United States in the Americas, Asia-Pacific and Europe, and we plan to expand our international operations.
+Added: We also have added several offices outside the United States through our acquisition of Auth0.
+Added: Our international revenue was 16% and 20% of our total revenue in fiscal 2021 and fiscal 2022, respectively.
+Added: Any international expansion efforts that we may undertake may not be successful.
+Added: In addition, conducting international operations subjects us to new risks, some of which we have not generally faced in the United States.
+Added: These risks include, among other things:
+Added: • health epidemics, such as COVID-19, influenza and other highly communicable diseases or viruses;
+Added: • macroeconomic conditions and the economic impact of the COVID-19 pandemic;
+Added: • unexpected costs and errors in the localization of our products, including translation into foreign languages and adaptation for local practices and regulatory requirements;
+Added: • lack of familiarity and burdens of complying with foreign laws, legal standards, privacy standards, regulatory requirements, tariffs and other barriers;
+Added: • laws and business practices favoring local competitors or commercial parties;
+Added: • costs and liabilities related to compliance with the numerous and ever-growing landscape of U.S.
+Added: and international data privacy and cybersecurity regimes, many of which involve disparate standards and enforcement approaches;
+Added: • greater risk that our foreign employees or partners will fail to comply with U.S.
+Added: and foreign laws;
+Added: • 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;
+Added: • 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;
+Added: • unexpected changes in legal and regulatory requirements;
+Added: • difficulties in managing systems integrators and technology partners;
+Added: • differing technology standards;
+Added: • longer accounts receivable payment cycles and difficulties in collecting accounts receivable;
+Added: • difficulties in managing and staffing international operations and differing employer/employee relationships and local employment laws;
+Added: • political, economic and social instability, war, terrorist activities or armed conflict, including Russia's invasion of Ukraine;
+Added: • global economic uncertainty caused by global political events, including the United Kingdom's exit from the European Union, and similar geopolitical developments;
+Added: • fluctuations in exchange rates that may increase the volatility of our foreign-based revenue and expense;
+Added: • potentially adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems and restrictions on the repatriation of earnings.
+Added: Additionally, operating in international markets also requires significant management attention and financial resources.
+Added: 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.
+Added: We have not engaged in currency hedging activities to limit risk of exchange rate fluctuations.
+Added: 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.
+Added: We have limited experience in marketing, selling and supporting our platform abroad.
+Added: 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.
+Added: 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.
If we fail to adapt to rapid technological change, our ability to remain competitive could be impaired.
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A portion of our revenues are generated by sales to government entities, which are subject to a number of challenges and risks.
−Removed: A portion of our sales are to partners that resell our services to government agencies, and we have made, and may continue to make, investments to support future sales opportunities in the government sector.
−Removed: Government demand for our products could be impacted by budgetary cycles, and there may be governmental certification requirements for our products.
−Removed: Further, we may be subject to audits and investigations regarding our role as a subcontractor in 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.
−Removed: 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.
−Removed: 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.
+Added: A portion of our sales are to partners that resell our services to government agencies, and we have made, and plan to continue to make, investments to support future sales opportunities in the government sector.
+Added: The sale of our services to government agencies is tied to budget cycles, and there are government requirements and authorizations that we may be required to meet.
+Added: Further, we may be subject to audits and investigations regarding our role as a subcontractor in government contracts, and violations could result in penalties and sanctions, including contract termination, refunding or forfeiting payments, fines, and suspension or debarment from future government business.
+Added: Selling to these entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense.
+Added: Government entities often require contract terms that differ from our standard arrangements and impose additional compliance requirements, require increased attention to pricing practices, 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.
−Removed: If we represent that we meet special standards or requirements and do not meet them, we could be subject to increased liability from our customers, investigation by regulators or termination rights.
+Added: If we represent that we meet certain standards or requirements and do not meet them, we could be subject to increased liability from our customers, investigation by 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.
−Removed: 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.
+Added: Moreover, changes in underlying regulatory requirements could be an impediment to our ability to efficiently provide our service to government customers 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 .
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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.
−Removed: 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.
−Removed: 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.
−Removed: In each of fiscal 2020 and 2021, our international revenue was 16% of our total revenue.
−Removed: Any international expansion efforts that we may undertake may not be successful.
−Removed: In addition, conducting international operations subjects us to new risks, some of which we have not generally faced in the United States.
−Removed: These risks include, among other things:
−Removed: • health epidemics, such as COVID-19, influenza and other highly communicable diseases or viruses;
−Removed: • macroeconomic conditions and the economic impact of the COVID-19 pandemic;
−Removed: • unexpected costs and errors in the localization of our products, including translation into foreign languages and adaptation for local practices and regulatory requirements;
−Removed: • lack of familiarity and burdens of complying with foreign laws, legal standards, privacy standards, regulatory requirements, tariffs and other barriers;
−Removed: • laws and business practices favoring local competitors or commercial parties;
−Removed: • costs and liabilities related to compliance with the EU General Data Protection Regulation 2016/679 and disparate data privacy standards and enforcement;
−Removed: • greater risk that our foreign employees or partners will fail to comply with U.S.
−Removed: and foreign laws;
−Removed: • 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;
−Removed: • 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;
−Removed: • unexpected changes in legal and regulatory requirements;
−Removed: • difficulties in managing systems integrators and technology partners;
−Removed: • differing technology standards;
−Removed: • longer accounts receivable payment cycles and difficulties in collecting accounts receivable;
−Removed: • difficulties in managing and staffing international operations and differing employer/employee relationships and local employment laws;
−Removed: • political, economic and social instability, war, armed conflict or terrorist activities;
−Removed: • global economic uncertainty caused by global political events, including the United Kingdom's exit from the European Union, and similar geopolitical developments;
−Removed: • fluctuations in exchange rates that may increase the volatility of our foreign-based revenue and expense;
−Removed: • potentially adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems and restrictions on the repatriation of earnings.
−Removed: Additionally, operating in international markets also requires significant management attention and financial resources.
−Removed: 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.
−Removed: We have not engaged in currency hedging activities to limit risk of exchange rate fluctuations.
−Removed: 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.
−Removed: We have limited experience in marketing, selling and supporting our platform abroad.
−Removed: 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.
−Removed: 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.
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In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all.
−Removed: 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.
+Added: Further, our insurance may not cover all
+Added: claims made against us and defending a suit, regardless of its merit, could be costly and divert management’s attention.
+Added: Risks Related to the Acquisition of Auth0
+Added: The ongoing integration of Auth0 may cause a disruption in our business.
+Added: The ongoing integration following the acquisition of Auth0 (the “Acquisition”) could cause disruptions to our business or business relationships, which could have an adverse impact on results of operations.
+Added: Parties with which we have business relationships may experience uncertainty as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us.
+Added: Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties.
+Added: The ongoing integration of Auth0 may place a significant burden on our management and internal resources.
+Added: The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the integration process could adversely affect our financial results.
+Added: We have incurred and expect to continue to incur significant costs, expenses and fees for professional services and other transaction costs in connection with the Acquisition.
+Added: We may also incur unanticipated costs in the integration of Auth0’s business with our business.
+Added: The substantial majority of these costs will be non-recurring expenses relating to the Acquisition.
+Added: We also could be subject to litigation related to the Acquisition, which could result in significant costs and expenses.
+Added: We may not realize potential benefits from the Acquisition because of difficulties related to integration, the achievement of synergies, and other challenges.
+Added: Prior to the consummation of the Acquisition, we and Auth0 operated independently, and there can be no assurances that our businesses can be combined in a manner that allows for the achievement of substantial benefits.
+Added: The ongoing integration process may require significant time and resources, and we may not be able to manage the process successfully as our ability to acquire and integrate larger or more complex companies, products or technologies in a successful manner is unproven.
+Added: If we are not able to successfully integrate Auth0’s businesses with ours or pursue our customer and product strategy successfully, the anticipated benefits of the Acquisition may not be realized fully or may take longer than expected to be realized.
+Added: Further, it is possible that there could be a loss of our and/or Auth0’s key employees and customers, disruption of either company’s or both companies’ ongoing businesses or unexpected issues, higher than expected costs and an overall post‑completion process that takes longer than originally anticipated.
+Added: Specifically, the following issues, among others, must be addressed in combining Auth0’s operations with ours in order to realize the anticipated benefits of the Acquisition:
+Added: • combining the companies’ corporate functions;
+Added: • combining Auth0’s business with our business in a manner that permits us to achieve the synergies anticipated to result from the Acquisition, the failure of which would result in the anticipated benefits of the Acquisition not being realized in the timeframe currently anticipated or at all;
+Added: • maintaining existing agreements with customers, distributors, providers, talent and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers, talent and vendors;
+Added: • determining whether and how to address possible differences in corporate cultures and management philosophies;
+Added: • integrating the companies’ administrative and information technology infrastructure;
+Added: • developing products and technology that allow value to be unlocked in the future;
+Added: • evaluating and forecasting the financial impact of the Acquisition transaction.
+Added: In addition, at times the attention of certain members of our management and resources may be focused on integration of the businesses of the two companies and diverted from day‑to‑day business operations, which may disrupt our ongoing business and the business of the combined company.
+Added: We may incur significant, non‑recurring costs in connection with the Acquisition and integrating the operations of Okta and Auth0, including costs to maintain employee morale and to retain key employees.
+Added: Management cannot ensure that the elimination of duplicative costs or the realization of other efficiencies will offset the transaction and integration costs in the long term or at all.
+Added: Purchase price accounting in connection with our Acquisition requires estimates that may be subject to change and could impact our consolidated financial statements and future results of operations and financial position.
+Added: Pursuant to the acquisition method of accounting, the purchase price we paid for Auth0 has been allocated to the underlying Auth0 tangible and intangible assets acquired and liabilities assumed based on their respective fair market values with any excess purchase price allocated to goodwill.
+Added: The acquisition method of accounting is dependent upon certain valuations and other studies that are preliminary.
+Added: Accordingly, the purchase price allocation as of the Acquisition date is preliminary.
+Added: We currently anticipate that all the information needed to identify and measure values assigned to the assets acquired and liabilities assumed will be obtained and finalized during the one‑year measurement period following the date of completion of the Acquisition.
+Added: Differences between these preliminary estimates and the final acquisition accounting may occur, and these differences could have a material impact on the consolidated financial statements and the combined company’s future results of operations and financial position.
+Added: Auth0 may have liabilities that are not known to us.
+Added: Auth0 may have liabilities that we failed, or were unable, to discover, or that we underestimated, in the course of performing our due diligence investigations of Auth0’s business and we, as the successor owner of such acquired company, might be responsible for those liabilities.
+Added: Such potential liabilities could include employment-related obligations under applicable law or other benefits arrangements, legal or regulatory claims, tax liabilities, warranty or similar liabilities to customers, product liabilities, claims related to infringement of third-party intellectual property rights, and claims by or amounts owed to vendors or other third parties.
+Added: We cannot assure you that the indemnification available to us under the Merger Agreement with respect to the Acquisition will be sufficient in amount, scope or duration to fully offset the possible liabilities associated with Auth0’s business or property that we assumed upon consummation of the Acquisition.
+Added: We may learn additional information about Auth0 that materially adversely affects us, such as unknown or contingent liabilities and liabilities related to compliance with applicable laws.
+Added: Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Intellectual Property, Infrastructure Technology, Data Privacy and Security
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In the future, these services may not be available to us on commercially reasonable terms, or at all.
−Removed: Any loss of the right to use any of these services could result in decreased functionality of our products until equivalent technology is either developed by us or, if available from another provider, is identified, obtained and integrated into our infrastructure.
+Added: Any loss of the right to use any of these services could result in decreased functionality of our products until equivalent technology is either developed by us or, if available from another provider, is identified, obtained and
+Added: integrated into our infrastructure.
If we do not accurately predict our infrastructure capacity requirements, our customers could experience service shortfalls.
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Increasingly, companies are subject to a wide variety of attacks on their systems and networks on an ongoing basis.
−Removed: In addition to threats from traditional computer “hackers,” malicious code (such as malware, viruses, worms and ransomware), employee or contractor theft or misuse, password spraying, phishing and denial-of-service attacks, we and our third-party service providers now also face threats from sophisticated nation-state and nation-state supported actors who engage in attacks (including advanced persistent threat intrusions) that add to the risks to our systems (including those hosted on AWS or other cloud services), internal networks, our customers’ systems
−Removed: and the information that they store and process.
+Added: In addition to threats from traditional computer “hackers,” malicious code (such as malware, viruses, worms and ransomware), employee or contractor theft or misuse, password spraying, phishing and denial-of-service attacks, we and our third-party service providers now also face threats from sophisticated nation-state and nation-state supported actors who engage in attacks (including advanced persistent threat intrusions) that add to the risks to our systems (including those hosted on AWS or other cloud services), internal networks, our customers’ systems and the information that they store and process.
+Added: For example, like other companies, we have experienced numerous cybersecurity attacks and have had to expend increasing amounts of human and financial capital to respond.
+Added: We expect that these cybersecurity attacks will continue and that the scope and sophistication of these efforts may increase in future periods.
Despite significant efforts to create security barriers to such threats, it is virtually impossible for us to entirely mitigate these risks.
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Security incidents may also cause us to incur significant investigation, mitigation, remediation, notification and other expenses.
−Removed: Furthermore, as a well-known provider of identity and security solutions, any such breach, including a breach of our customers’ systems, could compromise systems secured by our products, creating system disruptions or slowdowns and exploiting security vulnerabilities of our or our customers’ systems, and the information stored on our or our customers’ systems could be accessed, publicly disclosed, altered, lost or stolen, which could subject us to liability and cause us financial harm.
+Added: Furthermore, as a well-known provider of identity and security solutions, any such breach, including a breach of our customers’ systems, could compromise systems secured by our products, creating system disruptions or slowdowns and exploiting security vulnerabilities of our or our customers’ systems, and the information stored on our or our customers’ systems could be accessed, publicly disclosed, altered, lost or stolen, which could subject us
+Added: to liability and cause us financial harm.
+Added: For example, in December 2021, a third party reported a remote code execution vulnerability in the Java logging library known as “log4j” that affected many systems worldwide.
+Added: We have reviewed the use of this library within our software product portfolio and in our IT environment and have taken steps to mitigate the vulnerability.
+Added: There is no guarantee that our preventative and mitigation actions with respect to this vulnerability and others like it will fully eliminate the risk of a malicious compromise of our or our customers’ systems.
While we maintain cybersecurity insurance, our insurance may be insufficient to cover all liabilities incurred in these incidents, and any incidents may result in loss of, or increased costs of, our cybersecurity insurance.
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In addition, some of our customers rely on our authorization under FedRAMP to help satisfy their own legal and regulatory compliance requirements which, in addition to state or international regulations, may require us to undertake additional actions and expense to ensure compliance.
−Removed: We also expect that there will continue to be new proposed laws, regulations, self-regulatory and industry standards concerning privacy, data protection and information security in the United States, the European Union and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards may have on our business.
+Added: We also expect that there will continue to be new proposed laws, regulations, self-regulatory and industry standards concerning privacy, data protection and information security in the United States, China, the European Union and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards may have on our business.
For example, the California Consumer Privacy Act (“CCPA”) took effect on January 1, 2020, which broadly defines personal information and gives California residents expanded privacy rights and protections and provides for civil penalties for violations and a private right of action for data breaches.
−Removed: In addition, on November 3, 2020, California voters passed the California Privacy Rights Act (CPRA) into law.
+Added: on November 3, 2020, California voters passed the California Privacy Rights Act (“CPRA”) into law.
The CPRA will take substantial effect on January 1, 2023 with enforcement scheduled for July 1, 2023 and will significantly modify the CCPA and create a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA.
−Removed: Some observers have noted the CCPA and CPRA could mark the beginning of a trend toward more stringent United States federal privacy legislation, which could increase our potential liability and adversely affect our business.
+Added: Since the CPRA passed, in March 2021, Virginia enacted the Virginia Consumer Data Protection Act (“CDPA”) and, in June 2021, Colorado enacted the Colorado Privacy Act (“CPA”), both of which are comprehensive privacy statutes that share similarities with the CCPA and CPRA.
+Added: Some observers have noted the CCPA, CPRA, CDPA and CPA mark the beginning of a trend toward more stringent privacy legislation in the United States, including a potential federal privacy law, all of which could increase our potential liability and adversely affect our business.
+Added: Additionally, in August 2021, the National People’s Congress of the People's Republic of China adopted the Personal Information Protection Law (“PIPL”), which took effect on November 1, 2021.
+Added: The PIPL, which introduces a legal framework similar to the GDPR (as defined and further described below), marks the introduction of a comprehensive system for the protection of personal information in China.
+Added: We cannot yet determine the impact that the PIPL may have on our business;
+Added: however, we may incur substantial expense in complying with any new obligations, we could be subject to significant fines if we are found to not comply with the PIPL, and we may be required to make significant changes in our business operations and product and services development, all of which may adversely affect our revenues and our business overall.
Future laws, regulations, standards and other obligations, and changes in the interpretation of existing laws, regulations, standards and other obligations could impair our or our customers’ ability to collect, use or disclose information relating to consumers, which could decrease demand for our applications, restrict our business operations, or increase our costs and impair our ability to maintain and grow our customer base and increase our revenue.
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If we, or the third parties on which we rely, fail to comply with federal, state and international data privacy laws and regulations our ability to successfully operate our business and pursue our business goals could be harmed.
+Added: With respect to cybersecurity in the United States, we are closely monitoring the development of rules and guidance pursuant to various executive orders that may apply to us, including, for example, pursuant to Executive Order 14028 for “critical software.” While the rules and guidance coming from the Order are still being developed, we could be categorized as a provider of critical software, which may increase our compliance costs and delay or prevent our ability to execute contracts with customers, including in particular with government entities.
Any failure or perceived failure by us to comply with federal, state or foreign laws or regulations, industry standards, contractual obligations or other legal obligations, compliance frameworks that Okta has contractually committed to comply with, or any actual or suspected privacy or security incident, even if unfounded, whether or not resulting in unauthorized access to, or acquisition, release or transfer of personal data or other data, may result in enforcement actions and prosecutions, private litigation, fines, penalties and censure, claims for damages by customers and other affected individuals, or adverse publicity and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.
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data transfers.
−Removed: On July 16, 2020, the Court of Justice of the European Union (CJEU) invalidated the EU-U.S.
+Added: With regard to transfers to the United States of personal data from our employees and European customers and users, we rely upon the SCCs.
+Added: On July 16, 2020, in what is known as the “Schrems II” decision, the Court of Justice of the European Union (“CJEU”) invalidated the EU-U.S.
Privacy Shield Framework (“Privacy Shield”) under which personal data could be transferred from the EEA to U.S.
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While the CJEU upheld the adequacy of the SCCs (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances.
−Removed: Use of the SCCs must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals and additional measures and/or contractual provisions may need to be put in place, however, the nature of these additional measures is currently uncertain.
−Removed: The CJEU went on to state that if a competent supervisory authority believes that the standard contractual clauses cannot be complied with in the destination country and the required level of protection cannot be secured by other means, such supervisory authority is under an obligation to suspend or prohibit that transfer.
+Added: Use of the SCCs must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals and additional measures and/or contractual provisions may need to be put in place.
+Added: The European Commission has now issued new SCCs that account for the CJEU’s “Schrems II” decision.
+Added: Although we believe we continue to satisfy regulatory requirements through our use of SCCs, these latest developments may require major changes to our data transfer policy, including the need to conduct legal, technical, and security assessments for each data transfer from the EEA to a country outside of the EEA.
+Added: This means that we may be unsuccessful in maintaining legitimate means for our transfer and receipt of personal data from the EEA.
+Added: We may, in addition to other impacts, experience additional costs associated with increased compliance burdens, and we and our customers face the potential for regulators in the EEA to apply different standards to the transfer of personal data from the EEA to the United States, and to block, or require ad hoc verification of measures taken with respect to, certain data flows from the EEA to the United States.
+Added: We also anticipate being required to engage in new contract negotiations with third parties that aid in processing data on our behalf, and entering into the new SCCs.
+Added: We may experience reluctance or refusal by current or prospective European customers to use our products, and we may find it necessary or desirable to make further changes to our handling of personal data of EEA residents.
There are few viable alternatives to the SCCs, and the law in this area remains dynamic.
These recent developments will require us to review and may require us to amend the legal mechanisms by which we make and/or receive personal data transfers to/in the United States.
+Added: The regulatory environment applicable to the handling of EEA residents' personal data, and our actions taken in response, may cause us to assume additional liabilities or incur additional costs and could result in our business, operating results and financial condition being harmed.
+Added: We and our customers may face a risk of enforcement actions by data protection authorities in the EEA relating to personal data transfers to us and by us from the EEA.
+Added: Any such enforcement actions could result in substantial costs and diversion of resources, distract management and technical personnel and negatively affect our business, operating results and financial condition.
We also continue to see jurisdictions imposing data localization laws, which require personal information, or certain subcategories of personal information to be stored in the jurisdiction of origin.
−Removed: These regulations may deter customers from using cloud-based services such as ours, and may inhibit our ability to expand into those markets or prohibit us from continuing to offer services in those markets without significant additional costs.
−Removed: We and our customers are at risk of enforcement actions taken by certain EU data protection authorities until such point in time that we may be able to ensure that all transfers of personal data to us in the United States from
−Removed: the EU are conducted in compliance with all applicable regulatory obligations, the guidance of data protection authorities and evolving best practices.
+Added: These regulations may deter
+Added: customers from using cloud-based services such as ours, and may inhibit our ability to expand into those markets or prohibit us from continuing to offer services in those markets without significant additional costs.
+Added: We and our customers are at risk of enforcement actions taken by certain EU data protection authorities until such point in time that we may be able to ensure that all transfers of personal data to us in the United States from the EU are conducted in compliance with all applicable regulatory obligations, the guidance of data protection authorities and evolving best practices.
Any investigation or charges by EU data protection authorities could have a negative effect on our existing business and on our ability to attract and retain new customers.
−Removed: We may find it necessary to establish systems to maintain EU personal data within in the EU, which may involve substantial expense and may cause us to need to divert resources from other aspects of our business, all of which may adversely affect our business.
+Added: We may find it necessary to establish systems to maintain EU personal data within the EU, which may involve substantial expense and may cause us to need to divert resources from other aspects of our business, all of which may adversely affect our business.
We function as a HIPAA Business Associate for certain of our customers and, as such, are subject to strict privacy and data security requirements.
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In addition, the U.S.
−Removed: Department of Health & Human Services recently proposed additional draft HIPAA guidance which is subject to public comment before being finalized.
−Removed: We will continue to monitor whether the final guidance may obligate us to change our practices.
+Added: Department of Health & Human Services recently proposed modifications to the HIPAA privacy regulations (“Privacy Rule”), including certain changes designed to strengthen individuals’ right to access their own health information, improve information sharing for care coordination and case management, and reduce administrative burdens on HIPAA covered entities, while continuing to protect individuals’ health information privacy interests.
+Added: The proposed rulemaking has not yet been finalized.
+Added: We will continue to monitor whether any final modifications to the Privacy Rule may obligate us to change our practices.
Significant changes to HIPAA, including interpretation and application of HIPAA, could negatively impact our business.
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Interruptions or delays in the services provided by third-party data centers or internet service providers could impair the delivery of our platform and our business could suffer.
−Removed: We host our platform using AWS data centers, a provider of cloud infrastructure services.
+Added: We rely on a number of third-party service providers to operate our services, any of which, if it encountered interruptions or delays, could negatively affect our platform, damage our reputation, expose us to liability, cause us to lose customers or otherwise harm our business.
+Added: For example, we host our platform using AWS data centers and other third-party cloud infrastructure services.
All of our products use resources operated by us in these locations.
−Removed: Our operations depend on protecting the virtual cloud infrastructure hosted in AWS by maintaining its configuration, architecture and interconnection specifications, as well as the information stored in these virtual data centers and which third-party internet service providers transmit.
−Removed: Although we have disaster recovery plans that use multiple AWS locations, any incident affecting their infrastructure that may be caused by fire, flood, severe storm, earthquake, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters, war, criminal act, military actions, terrorist attacks and other similar events beyond our control could negatively affect our platform.
−Removed: A prolonged AWS service disruption affecting our platform for any of the foregoing reasons could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers or otherwise harm our business.
−Removed: We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the AWS services we use.
−Removed: AWS enables us to order and reserve server capacity in varying amounts and sizes distributed across multiple regions.
−Removed: AWS provides us with computing and storage capacity pursuant to an agreement that continues until terminated by either party.
−Removed: AWS may terminate the agreement by providing 30 days prior written notice and may, in some cases, terminate the agreement immediately for cause upon notice.
+Added: Our operations depend on protecting the virtual cloud infrastructure hosted in AWS or other cloud services by maintaining its configuration, architecture and interconnection specifications, as well as the information stored in these virtual data centers and which third-party internet service providers transmit.
+Added: Although we have disaster recovery plans that use multiple virtual data center locations, any incident affecting their infrastructure that may be caused by fire, flood, severe storm, earthquake, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters, war, criminal act, military actions, terrorist attacks and other similar events beyond our control could negatively affect our platform.
+Added: A prolonged third-party service disruption affecting our platform for any of the foregoing reasons could be detrimental to our business.
+Added: We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the third-party services we use.
+Added: Our cloud infrastructure services enable us to order and reserve server capacity in varying amounts and sizes distributed across multiple regions.
+Added: These cloud infrastructure services provide us with computing and storage capacity pursuant to agreements which may be terminated under specified circumstances.
Our platform is accessed by a large number of customers, often at the same time.
As we continue to expand the number of our customers and products available to our customers, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or delays in service.
−Removed: In addition, the failure of AWS data centers, or third-party internet service providers, or other third-party service providers whose services are integrated with our platform, to meet our capacity requirements could result in interruptions or delays in access to our platform or impede our ability to scale our operations.
−Removed: In the event that our AWS service agreements are terminated, or there is a lapse of service, interruption of internet service provider connectivity or damage to such facilities, we could experience interruptions in access to our platform as well as delays and additional expense in arranging new facilities and services.
+Added: In addition, the failure of third-party virtual data centers, or third-party internet service providers, or other third-party service providers whose services are integrated with our platform, to meet our capacity requirements could result in interruptions or delays in access to our platform or impede our ability to scale our operations.
+Added: In the event that our third-party service agreements are terminated, or there is a lapse of service, interruption of internet service provider connectivity or damage to such facilities, we could experience interruptions in access to our platform as well as delays and additional expense in arranging new facilities and services.
Our success depends, in part, on the integrity and scalability of our systems and infrastructures.
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Any assertions by a third party, whether or not successful, with respect to such indemnification obligations could subject us to costly and time-consuming litigation, expensive remediation and licenses, divert management attention and financial resources, harm our relationship with that customer and other current and prospective customers, reduce demand for our platform, and harm our brand, business, results of operations and financial condition.
−Removed: Risks Related to the Acquisition of Auth0
−Removed: The proposed acquisition of Auth0 may cause a disruption in our business.
−Removed: The proposed acquisition (the Acquisition) of Auth0 could cause disruptions to our business or business relationships, which could have an adverse impact on results of operations.
−Removed: Parties with which we have business relationships may experience uncertainty as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us.
−Removed: Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties.
−Removed: The pursuit of the Acquisition, the preparation for the transition and the integration of Auth0 may place a significant burden on our management and internal resources.
−Removed: The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could adversely affect our financial results.
−Removed: We have incurred and expect to continue to incur significant costs, expenses and fees for professional services and other transaction costs in connection with the Acquisition.
−Removed: We may also incur unanticipated costs in the integration of Auth0’s business with our business.
−Removed: The substantial majority of these costs will be non-recurring expenses relating to the Acquisition, and many of these costs are payable regardless of whether or not the Acquisition is consummated.
−Removed: We also could be subject to litigation related to the proposed Acquisition, which could result in significant costs and expenses.
−Removed: Failure to complete the Acquisition in a timely manner or at all could negatively impact the market price of our Class A common stock, as well as our future business and our financial condition, results of operations and cash flows.
−Removed: We currently anticipate the Acquisition will be completed in the second quarter of fiscal 2022, the quarter ending July 31, 2021, but we cannot be certain when or if the conditions for the Acquisition will be satisfied or (if permissible under applicable law) waived.
−Removed: The Acquisition cannot be completed until certain customary conditions to closing are satisfied or (if permissible under applicable law) waived.
−Removed: Our obligation to complete the Acquisition is also subject to, among other conditions, the absence of regulatory authorities requiring certain actions on our part.
−Removed: The satisfaction of the required conditions could delay the completion of the Acquisition for a significant period of time or prevent it from occurring.
−Removed: Further, there can be no assurance that the conditions to the closing of the Acquisition will be satisfied or waived or that the Acquisition will be completed.
−Removed: If the Acquisition is not completed in a timely manner or at all, our ongoing business may be adversely affected as follows:
−Removed: • we may experience negative reactions from the financial markets, and our stock price could decline to the extent that the current market price reflects an assumption that the transaction will be completed;
−Removed: • we may experience negative reactions from employees, customers, suppliers or other third parties;
−Removed: • management’s focus may have been diverted from pursuing other opportunities that could have been beneficial to us;
−Removed: • our costs of pursuing the Acquisition may be higher than anticipated.
−Removed: If the Acquisition is not consummated, there can be no assurance that these risks will not materialize and will not materially adversely affect our stock price, business, financial condition, results of operations or cash flows.
−Removed: We may not realize potential benefits from the Acquisition because of difficulties related to integration, the achievement of synergies, and other challenges.
−Removed: We and Auth0 have operated and, until completion of the Acquisition, will continue to operate, independently, and there can be no assurances that our businesses can be combined in a manner that allows for the achievement of substantial benefits.
−Removed: Any integration process may require significant time and resources, and we may not be able to manage the process successfully as our ability to acquire and integrate larger or more complex companies, products or technologies in a successful manner is unproven.
−Removed: If we are not able to successfully integrate Auth0’s businesses with ours or pursue our customer and product strategy successfully, the anticipated benefits of the Acquisition may not be realized fully or may take longer than expected to be realized.
−Removed: Further, it is possible that there could be a loss of our and/or Auth0’s key employees and customers, disruption of either company’s or both companies’ ongoing businesses or unexpected issues, higher than expected costs and an overall post‑completion process that takes longer than originally anticipated.
−Removed: Specifically, the following issues, among others, must be addressed in combining Auth0’s operations with ours in order to realize the anticipated benefits of the Acquisition so the combined company performs as the parties hope:
−Removed: • combining the companies’ corporate functions;
−Removed: • combining Auth0’s business with our business in a manner that permits us to achieve the synergies anticipated to result from the Acquisition, the failure of which would result in the anticipated benefits of the Acquisition not being realized in the timeframe currently anticipated or at all;
−Removed: • maintaining existing agreements with customers, distributors, providers, talent and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers, talent and vendors;
−Removed: • determining whether and how to address possible differences in corporate cultures and management philosophies;
−Removed: • integrating the companies’ administrative and information technology infrastructure;
−Removed: • developing products and technology that allow value to be unlocked in the future;
−Removed: • evaluating and forecasting the financial impact of the Acquisition transaction, including accounting charges;
−Removed: • effecting potential actions that may be required in connection with obtaining regulatory approvals.
−Removed: In addition, at times the attention of certain members of our management and resources may be focused on completion of the Acquisition and integration planning of the businesses of the two companies and diverted from day‑to‑day business operations, which may disrupt our ongoing business and the business of the combined company.
−Removed: We may incur significant, non‑recurring costs in connection with the Acquisition and integrating the operations of Okta and Auth0, including costs to maintain employee morale and to retain key employees.
−Removed: Management cannot ensure that the elimination of duplicative costs or the realization of other efficiencies will offset the transaction and integration costs in the long term or at all.
−Removed: Purchase price accounting in connection with our Acquisition requires estimates that may be subject to change and could impact our consolidated financial statements and future results of operations and financial position .
−Removed: Pursuant to the acquisition method of accounting, the purchase price we will pay for Auth0 will be allocated to the underlying Auth0 tangible and intangible assets acquired and liabilities assumed based on their respective fair market values with any excess purchase price allocated to goodwill.
−Removed: The acquisition method of accounting is dependent upon certain valuations and other studies that are preliminary.
−Removed: Accordingly, the purchase price allocation as of the Acquisition date will be preliminary.
−Removed: We currently anticipate that all the information needed to identify and measure values assigned to the assets acquired and liabilities assumed will be obtained and finalized during the one‑year measurement period following the date of completion of the Acquisition.
−Removed: Differences between these preliminary estimates and the final acquisition accounting may occur, and these differences could have a material impact on the consolidated financial statements and the combined company’s future results of operations and financial position.
−Removed: Auth0 may have liabilities that are not known to us.
−Removed: Auth0 may have liabilities that we failed, or were unable, to discover, or that we underestimated, in the course of performing our due diligence investigations of Auth0’s business and we, as the successor owner of such acquired company, might be responsible for those liabilities.
−Removed: Such potential liabilities could include employment-, retirement- or severance-related obligations under applicable law or other benefits arrangements, legal or regulatory claims, tax liabilities, warranty or similar liabilities to customers, product liabilities, claims related to infringement of third-party intellectual property rights, and claims by or amounts owed to vendors or other third parties.
−Removed: We cannot assure you that the indemnification available to us under the Merger Agreement with respect to the Acquisition in connection with such agreement will be sufficient in amount, scope or duration to fully offset the possible liabilities associated with Auth0’s business or property that we will assume upon consummation of the Acquisition.
−Removed: We may learn additional information about Auth0 that materially adversely affects us, such as unknown or contingent liabilities and liabilities related to compliance with applicable laws.
−Removed: Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, results of operations and financial condition.
−Removed: While the Acquisition is pending, we and Auth0 will be subject to business uncertainties that could adversely affect our respective businesses, results of operations and financial conditions.
−Removed: Our success following the announcement of the Acquisition will depend in part upon the ability of us and Auth0 to maintain our respective business relationships.
−Removed: Uncertainty about the effect of the Acquisition on customers, suppliers, employees and other constituencies may have a material adverse effect on us and Auth0.
−Removed: Customers, suppliers and others who deal with us or Auth0 may delay or defer business decisions, decide to terminate, modify or renegotiate their relationships or take other actions as a result of the Acquisition that could negatively affect the revenues, earnings and cash flows of our company or Auth0.
−Removed: If we are unable to maintain these business and operational relationships, our financial position, results of operations or cash flows could be materially affected.
Risks Related to Legal, Accounting and Tax Matters
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Additionally, due to the complexity of certain of our customer contracts, the actual revenue recognition treatment required under Accounting Standards Update No.
−Removed: 2014-09, Revenue from Contracts with Customers (Topic 606) , or ASC 606, will depend on contract-specific terms and may result in greater variability in revenue from period to period.
+Added: 2014-09, Revenue from Contracts with Customers (Topic 606) , will depend on contract-specific terms and may result in greater variability in revenue from period to period.
In addition, a decrease in new subscriptions or renewals in a reporting period may not have an immediate impact on billings for that period.
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In addition, we use channel partners to sell our products and conduct business on our behalf abroad.
−Removed: We or such partners may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and under certain circumstances we could be held liable for the corrupt or other illegal activities of such partners and our employees, representatives, contractors, partners and agents, even if we do not explicitly authorize such activities.
+Added: We or such partners may have direct or indirect interactions with officials and employees of government agencies or state-
+Added: owned or affiliated entities and under certain circumstances we could be held liable for the corrupt or other illegal activities of such partners, and our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.
We have implemented an anti-corruption compliance program but cannot ensure that all our employees and agents, as well as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
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Changes in tax laws or regulations in the various tax jurisdictions we are subject to that are applied adversely to us or our customers could increase the costs of our products and harm our business.
−Removed: New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time.
+Added: New income, sales, use, value-added or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time.
Those enactments could harm our domestic and international business operations, and our business and financial performance.
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If we raise our prices to offset the costs of these changes, existing and potential future customers may elect not to purchase our products in the future.
−Removed: Additionally, new, changed, modified or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and other costs, as well as the costs of our products.
+Added: Additionally,
+Added: new, changed, modified or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and other costs, as well as the costs of our products.
Further, these events could decrease the capital we have available to operate our business.
Any or all of these events could harm our business and financial performance.
−Removed: As a multinational organization, we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain.
+Added: For example, various legislative and regulatory actions and proposals, such as in the United States, the Organisation for Economic Co-operation and Development and the EU, have increasingly focused on future tax reform and contemplate changes to long-standing tax principles, which could adversely affect our liquidity and results of operations.
+Added: As a multinational organization, we may be subject to taxation in certain jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain.
The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could harm our liquidity and results of operations.
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Any successful action by state, foreign or other authorities to collect additional or past sales tax could harm our business.
−Removed: States and some local taxing jurisdictions have differing rules and regulations governing sales and use taxes, and these rules and regulations are subject to varying interpretations that may change over time.
−Removed: In particular, the applicability of sales taxes to our platform in various jurisdictions is unclear.
−Removed: It is possible that we could face sales tax audits and that our liability for these taxes could exceed our estimates as state tax authorities could still assert that we are obligated to collect additional amounts as taxes from our customers and remit those taxes to those authorities.
+Added: State, foreign and local taxing jurisdictions have differing rules and regulations governing sales, use and other indirect taxes, and these rules and regulations are subject to varying interpretations that may change over time.
+Added: In particular, the applicability of sales and value-added taxes to our platform in various jurisdictions is unclear.
+Added: It is possible that we could face tax audits and that our liability for these taxes could exceed our estimates as tax authorities could still assert that we are obligated to collect additional amounts as taxes from our customers and remit those taxes to those authorities.
We could also be subject to audits in states and international jurisdictions for which we have not accrued tax liabilities.
−Removed: A successful assertion that we should be collecting additional sales or other taxes on our service in jurisdictions where we have not historically done so and do not accrue for sales taxes could result in substantial tax liabilities for past sales, discourage customers from purchasing our products or otherwise harm our business, results of operations and financial condition.
+Added: A successful assertion that we should be collecting additional sales or other taxes on our service in jurisdictions where we have not historically done so and do not accrue for such taxes could result in substantial tax liabilities for past sales, discourage customers from purchasing our products or otherwise harm our business, results of operations and financial condition.
We file sales tax returns in certain states within the United States as required by law and certain customer contracts for a portion of the products that we provide.
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Liability for past taxes may also include substantial interest and penalty charges.
−Removed: Any successful action by state,
−Removed: foreign or other authorities to compel us to collect and remit sales tax, use tax or other taxes, either retroactively, prospectively or both, could harm our business, results of operations and financial condition.
−Removed: Our ability to use our net operating loss carry-forwards and certain other tax attributes may be limited.
+Added: Any successful action by state, foreign or other authorities to compel us to collect and remit sales tax, use tax or other taxes, either retroactively, prospectively or both, could harm our business, results of operations and financial condition.
+Added: Our ability to use our U.S.
+Added: net operating loss carry-forwards and certain other tax attributes may be limited.
Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three year period, the corporation’s ability to use its pre-change net operating loss carry-forwards and other pre-change tax attributes, such as research tax credits and distributed interest deduction carryover, to offset its post-change income may be limited.
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We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
−Removed: Significant assumptions and estimates used in preparing our consolidated financial statements include, but are not limited to those related to revenue recognition, period of benefit for deferred commissions, incremental borrowing rates for operating leases, effective interest rates for convertible notes, valuation of deferred income taxes, business combination and valuation of goodwill and purchased intangible assets.
+Added: Significant assumptions and estimates used in preparing our consolidated financial statements include, but are not limited to those related to the valuation of goodwill and purchased intangible assets arising from business combinations, revenue recognition, period of benefit for deferred commissions, incremental borrowing rates for operating leases, effective interest rates for convertible notes, valuation of deferred income taxes and valuation of certain equity awards assumed.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our Class A common stock.
21 unchanged sentences
In the past, stockholders have instituted securities class action litigation following periods of market volatility.
−Removed: If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and harm our business.
+Added: If we were to
+Added: become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and harm our business.
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 42.6% of the voting power of our capital stock as of January 31, 2022.
1 unchanged sentence
Our Class B common stock has ten votes per share, and our Class A common stock has one vote per share.
−Removed: As of January 31, 2021, our directors, executive officers and their affiliates held in the aggregate 48% the voting power of our capital stock.
+Added: As of January 31, 2022, our directors, executive officers and their affiliates held in the aggregate 42.6% of the voting power of our capital stock.
Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively could continue to control nearly a majority of the combined voting power of our common stock and be able to effectively control all matters submitted to our stockholders for approval until April 12, 2027, the date that is the ten year anniversary of the closing of our IPO.
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We may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered or Notes being converted.
−Removed: addition, our ability to repurchase the Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.
+Added: In addition, our ability to repurchase the Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.
Our failure to repurchase Notes at a time when the repurchase is required by the indenture governing such notes or to pay any cash payable on future conversions of the Notes as required by such indenture would constitute a default under such indenture.
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If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A 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: As disclosed in Note 9 to our consolidated financial statements, the conditional conversion features of the 2023 Notes and 2025 Notes were triggered as of January 31, 2021, and the 2023 Notes and 2025 Notes are currently convertible at the option of the holders, in whole or in part, between February 1, 2021 and April 30, 2021.
−Removed: Whether the 2023 Notes or 2025 Notes will be convertible following such fiscal quarter will depend on the continued satisfaction of this condition or another conversion condition in the future.
+Added: As disclosed in Note 9 to our consolidated financial statements, the conditional conversion features of the 2023 Notes were triggered as of January 31, 2022, and the 2023 Notes are currently convertible at the option of the holders, in whole or in part, between February 1, 2022 and April 30, 2022.
+Added: Whether the 2023 Notes will be convertible following such fiscal quarter will depend on the continued satisfaction of this condition or another conversion condition in the future.
+Added: The conditional conversion features of the 2025 Notes were triggered as of January 31, 2021 and the 2025 Notes were convertible at the option of the holders between February 1, 2021 and April 30, 2021;
+Added: however, as of January 31, 2022, the conditions allowing holders of the 2025 Notes to convert were not met.
From the date of issuance through January 31, 2022, the conditions allowing holders of the 2026 Notes to convert were not met.
In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
−Removed: The 2023 Notes and 2025 Notes were classified as current liabilities on the consolidated balance sheet as of January 31, 2021.
+Added: The 2023 Notes were classified as current liabilities on the consolidated balance sheet as of January 31, 2022.
Transactions relating to our Notes may affect the value of our Class A common stock.
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We also entered into warrant transactions with the 2023 Notes Option Counterparties pursuant to which we sold warrants for the purchase of our Class A common stock (“Warrants”).
−Removed: The Note Hedges are expected generally to reduce the potential dilution to our Class A common stock upon any conversion or settlement of the 2023 Notes and/or offset any cash payments we
−Removed: are required to make in excess of the principal amount of converted 2023 Notes, as the case may be.
+Added: The Note Hedges are expected generally to reduce the potential dilution to our Class A common stock upon any conversion or settlement of the 2023 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2023 Notes, as the case may be.
The Warrant transactions could separately have a dilutive effect to the extent that the market price per share of our Class A common stock exceeds the strike price of any Warrants unless, subject to the terms of the Warrant transactions, we elect to cash settle the Warrants.
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ASC 470-20 requires the value of the conversion options of the Notes, representing the equity component, to be recorded as additional paid-in capital within stockholders’ equity in our consolidated balance sheet and as a discount to the Notes, which reduces their initial carrying value.
−Removed: The carrying value of the Notes, net of the applicable discount recorded, will be accreted up to the principal amount of the Notes, as the case may be, from the issuance date until maturity, which will result in non-cash charges to interest expense in our consolidated statement of operations.
+Added: The carrying value of the Notes, net of the applicable discount recorded, will be accreted up to the principal amount of the Notes, as the case may be, from the issuance date until maturity, which will result in non-cash charges to interest expense in our consolidated statements of operations.
Accordingly, we will report lower net income or higher net loss in our financial results because ASC 470-20 requires interest to include both the current period’s accretion of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results, the trading price of our Class A common stock and the respective trading price of the Notes.
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We rely on our leadership team in the areas of research and development, operations, security, marketing, sales, customer support, general and administrative functions, and on individual contributors in our research and development and operations functions.
−Removed: From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, such as the recent retirement of our former President, Worldwide Field Operations and upcoming retirement of our Chief Financial Officer, which could disrupt our business.
+Added: From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives.
+Added: For example, our former Chief Financial Officer stepped down from his role in June 2021, and our current Chief Financial Officer served on an interim basis from June 2021 until his permanent appointment in January 2022.
+Added: Such changes in our executive management team may be disruptive to our business.
We do not have employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period and they could terminate their employment with us at any time.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.