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Item 1A. Risk Factors

2024-03-27 compared with 2023-03-24 · 447 added, 449 removed, 658 unchanged (58% of the section changed)

Our operations and financial results are subject to various risks and uncertainties, including those described below.

You should consider and read carefully all of the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including the section titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and our consolidated financial statements and the related notes.

The reader should consider and read carefully all of the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including the section titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and our consolidated financial statements and the related notes.

The risks described below are those which we believe are the material risks we face.

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In such case, the trading price of our Class A common stock could decline.

Risk Factors Summary

The following is a summary of the principal risks associated with an investment in our Class A common stock:

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

Our limited operating history and recent rapid growth also make it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

• We may not be able to successfully manage our growth and, if we are not able to grow efficiently, we may not be able to reach or maintain profitability, and our business, financial condition, and results of operations could be harmed.

• Because we derive substantially all of our revenue from our automation platform, failure of this platform to satisfy customer demands could adversely affect our business, results of operations, financial condition, and growth prospects.

• Our business depends on our existing customers renewing their licenses and purchasing additional licenses and products from us and our channel partners.

Declines in renewals or purchases of additional licenses and products by our customers could harm our future operating results.

• If we are unable to attract new customers, our business, financial condition, and results of operations will be adversely affected.

• The markets in which we participate are competitive and, if we do not compete effectively, our business, financial condition, and results of operations could be harmed.

• If we fail to retain and motivate members of our management team or other key employees or to integrate new team members, fail to execute management transitions, or fail to attract additional qualified personnel to support our operations, our business and future growth prospects could be harmed.

• Unfavorable macroeconomic conditions, including those caused by inflation, the Russian military action in Ukraine and related geopolitical situation, bank failures, or reductions in customers' spending on software, could limit our ability to grow our business and negatively affect our results of operations.

• A limited number of customers represent a substantial portion of our revenue and ARR .

If we fail to retain these customers, our revenue and ARR could decline significantly.

• We rely on our channel partners, including our strategic alliances, to generate a substantial amount of our revenue, and if we fail to expand and manage our distribution channels or fulfill our future service obligations, our revenue could decline and our growth prospects could suffer.

• If we are not able to introduce new features or services successfully and to make enhancements to our platform or products, our business and results of operations could be adversely affected.

• Real or perceived errors, failures, or bugs in our platform and products could adversely affect our business, results of operations, financial condition, and growth prospects.

• Incorrect or improper implementation or use of our platform and products could result in customer dissatisfaction and harm our business, results of operations, financial condition, and growth prospects.

• We rely upon third-party providers of cloud-based infrastructure to host our cloud-based products.

Any disruption in the operations of these third-party providers, limitations on capacity, or interference with our use could adversely affect our business, financial condition, and results of operations.

• We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors with respect to our results of operations, our stock price could decline.

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

• We are subject to stringent and changing obligations related to data privacy and security, including laws, regulations and standards, information security policies, and contractual obligations.

Use and development of artificial intelligence and machine learning systems is also an area of developing laws, rules, and regulations.

Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions;

fines and penalties;

disruptions of our business operations;

reputational harm;

loss of revenue or profits;

loss of customers or sales;

and other adverse business consequences.

• If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions;

fines and penalties;

disruptions of our business operations;

reputational harm;

loss of revenue or profits;

loss of customers or sales;

and other adverse consequences.

• Any failure to obtain, maintain, protect, or enforce our intellectual property and proprietary rights could impair our ability to protect our proprietary technology and our brand.

• We may become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.

• Our current operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges.

• The Russian military action in Ukraine may produce near and longer term economic and geopolitical disruption which may harm our business.

• The dual class structure of our common stock has the effect of concentrating voting control with Daniel Dines, our Co-CEO , Co-Founder, and Chairman, which will limit your ability to influence the outcome of important decisions.

Risks Related to Our Business, Products, Operations, and Industry

Our recent rapid growth may not be indicative of our future growth.

Our limited operating history and recent rapid growth also make it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

We have experienced rapid growth.

Our ARR was $1,203.8 million and $925.3 million at January 31, 2023 and 2022, respectively, representing a growth rate of 30%.

We have incurred net losses in the past, anticipate continuing to incur significant operating expenses in the future, and may not achieve or sustain consistent profitability.

Although we generated GAAP profitability in the fourth quarter of our fiscal year 2024, we incurred a net loss in the year ended January 31, 2024, have incurred net losses in the past, and may continue to incur net losses in the future.

We expect to continue to incur significant operating expenses in the foreseeable future.

This involves leveraging the investments made in our organization in prior years and continuing to implement initiatives designed to grow our business in a disciplined manner.

These initiatives include increasing our overall customer base and expanding sales within our current customer base, continuing to penetrate international markets, investing in research and development to improve the capabilities of our platform (including AI capabilities), acquiring businesses, technology, talent, and related integration efforts, growing our distribution channels and channel partner ecosystem, deepening our user community, hiring additional employees and investing in our existing workforce, expanding our operations and infrastructures both domestically and internationally, and incurring expenses related to legal, accounting, and other administrative expenses aspects of operating as a public company.

In particular, we intend to continue to expend significant funds to further develop our platform.

This includes introducing new functionalities and adapting and growing our inside sales team and enterprise sales force.

These efforts are aimed at driving new customer adoption and expanding use cases and integrations.

We have entered into non-cancellable multi-year capacity commitments with certain third-party cloud providers for cloud infrastructure services.

These commitments require us to pay for such capacity irrespective of actual usage.

These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently, or at all, to offset these higher expenses, and achieve, or once achieved, sustain profitability.

We may delay or re-evaluate these efforts due to any anticipated or actual adverse impact to our business as a result of, among other things, global economic and geopolitical uncertainties, rising levels of inflation, interest rates, pandemics, government shutdowns, regional conflicts, or other similar events or circumstances.

In addition, growth of our revenue may slow, or revenue may decline for a number of reasons, including a decrease in our ability to attract and retain customers, a failure to increase our number of channel partners, an increase in competition, a decrease in growth of our overall market, a decrease in the term lengths of our contracts with customers, an inability to timely and cost-effectively introduce new products and services that are favorably received by customers and partners, and as a result of global economic conditions, such as rising inflation and interest rates, that could cause our customers to reduce their spending levels with us.

A shortfall in revenue could lead to operating results being below expectations because we may not be able to quickly reduce our fixed operating expenses in response to short-term business changes.

If we are unable to meet these risks and challenges as we encounter them, our business and operating results may be adversely affected.

These investments may not be successful on the timeline we anticipate, or at all, and may not result in revenue or ARR growth.

For instance, we anticipate that our customers will continue to increase adoption of our SaaS products in future periods.

We cannot predict how increased adoption of our SaaS products will change the buying patterns of our customers or impact our future revenue or ARR.

If we are unable to maintain or increase our revenue or ARR at a rate sufficient to offset the expected increase in our costs, our business, financial condition, and results of operations will be harmed, and we may not be able to achieve or maintain profitability over the long-term.

Additionally, we have encountered, and may in the future encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as unforeseen operating expenses, difficulties, complications, delays, and other known or unknown factors that may result in losses in future periods.

our revenue or ARR growth does not meet our expectations in future periods, our business, financial condition, and results of operations may be harmed, and we may not achieve or maintain profitability in the future.

If we are unable to sustain profitability, the value of our business and Class A common stock may significantly decrease.

We may not be able to successfully manage our growth.

If we are not able to grow efficiently, we may not be able to reach or sustain consistent profitability, and our business, financial condition and results of operations could be harmed, which has in the past caused and could in the future cause our stock price to decline.

We have experienced and may continue to experience rapid growth and organizational changes.

We generated revenue of $1,308.1 million and $1,058.6 million for fiscal years 2024 and 2023, respectively, representing a growth rate of 24%.

You should not, however, rely on the ARR or revenue growth of any prior quarterly or annual fiscal period as an indication of our future performance.

We were incorporated in June 2015, and as a result of our limited operating history, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth.

Even if our ARR and revenue continue to increase, our ARR and revenue growth rates may decline in the future as a result of a variety of factors, including the maturation of our business, increased competition, changes to technology, a decrease in the growth of our overall market, or our failure, for any reason, to continue to take advantage of growth opportunities.

Our ARR was $1,463.7 million and $1,203.8 million at January 31, 2024 and 2023, respectively, representing a growth rate of 22%.

However, the revenue or ARR growth of any prior quarterly or annual fiscal period should not be relied upon as an indication of our future performance.

Even if our revenue and ARR continue to increase, our revenue and ARR growth rates may decline in the future as a result of a variety of factors, including the maturation of our business, increased competition, changes to technology, a decrease in the growth of our overall market, or our failure, for any reason, to continue to take advantage of growth opportunities.

In addition, our past results may not be indicative of our future performance.

Overall growth of our business depends on a number of additional factors, including our ability to:

• price our products effectively so that we are able to attract new customers and expand sales to our existing customers;

• price our products that we offer on our platform effectively so that we are able to attract new customers and expand sales to our existing customers;

• expand the functionality and use cases for the products we offer on our platform;

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We may not successfully accomplish any of these objectives, and as a result, it is difficult for us to forecast our future results of operations.

If the assumptions that we use to plan our business are incorrect or change in reaction to changes in our market, or if we are unable to maintain consistent ARR, revenue, or ARR or revenue growth, our stock price could be volatile, and it may be difficult to achieve and maintain profitability.

In addition, we expect to continue to expend substantial financial and other resources on:

• our technology infrastructure, including systems architecture, scalability, availability, performance, and security;

• our sales and marketing organization to engage our existing and prospective customers, increase brand awareness, and drive adoption of our products;

• product development, including investments in our product development team and the development of new products and new functionality for our platform as well as investments in further optimizing our existing products and infrastructure;

• acquisitions or strategic investments;

• our international operations and continued international expansion;

• general administration, including increased legal and accounting expenses associated with being a public company.

These investments may not be successful on the timeline we anticipate or at all, and may not result in increased ARR or revenue growth.

For instance, we anticipate that our customers will continue to increase adoption of our SaaS products in future periods.

We have offered our SaaS products for only a short period of time, and we cannot predict how increased adoption of our SaaS products will change the buying patterns of our customers or impact our future ARR or revenue.

If we are unable to maintain or increase our ARR or revenue at a rate sufficient to offset the expected increase in our costs, our business, financial condition, and results of operations will be harmed, and we may not be able to achieve or maintain profitability over the long term.

If our ARR or revenue growth does not meet our expectations in future periods, our business, financial condition, and results of operations may be harmed, and we may not achieve or maintain profitability in the future.

If the assumptions that we use to plan our business are incorrect, or change in reaction to changes in our market, or if we are unable to maintain consistent revenue, ARR, or revenue or ARR growth, our stock price could be volatile, and it may be difficult to achieve and sustain profitability.

Macroeconomic conditions, including volatile and weakened global economic conditions, and geopolitical tensions and conflicts, including changes to trade policies and regulations, present significant risks to us in several jurisdictions.

Such conditions have in the past adversely affected and may in the future adversely affect our industry, business and results of operations.

We have sales, product, and engineering operations in many countries, and some of our business activities are concentrated in one or more geographic areas.

Moreover, sales outside the U.S.

accounted for 57% of our revenue for the fiscal year ended January 31, 2024.

As a result, our operations and our financial results, including our ability to execute our business strategy, design, develop, or sell products, and the demand for our products, are at times adversely affected by a number of global and regional factors outside of our control.

Adverse changes in global or regional economic conditions periodically occur, including recession or slowing growth;

changes or uncertainty in fiscal, monetary, or trade policy;

higher interest rates;

volatility in foreign exchange markets;

tighter credit;

lower capital expenditures by businesses, including on IT infrastructure;

increases in unemployment;

and lower consumer confidence and spending.

Adverse changes in macroeconomic conditions can significantly harm demand for our products and make it more challenging to forecast our operating results and make business decisions, including prioritization of investments in our business.

An economic downturn or increased uncertainty may also lead to increased credit and collectability risks, higher borrowing costs or reduced availability of the capital and credit markets, reduced liquidity, asset impairments, adverse impact on our partners or failures of counterparties including financial institutions and insurers.

Trade policies and disputes at times result in

increased tariffs, trade barriers, and other protectionist measures, which can make our products less competitive, reduce demand for our products, limit our ability to sell to certain customers, or impede or slow the movement of our products across borders.

Increasing protectionism and economic nationalism may lead to further changes in trade policies and regulations, domestic sourcing initiatives, or other formal and informal measures that could make it more difficult to sell our products in, or restrict our access to, some markets.

They can also result in declining consumer confidence and slowing economic growth or recession, and could cause our customers to reduce, cancel, or alter the timing of their purchases with us.

Sustained geopolitical tensions could lead to political instability and economic uncertainty globally, long-term changes in global trade and technology supply chains, domestic sourcing initiatives, and the decoupling of global trade networks, which could make it more difficult to sell our products in, or restrict our access to, some markets and have a material adverse effect on our business and growth prospects.

For example, these types of unfavorable conditions have in the past disrupted and could in the future, disrupt the timing and attendance of key industry events, which we rely upon in part to generate sales of our products.

If those events are disrupted in the future, our marketing investments, sales pipeline, and the ability to attract new customers and generate sales of our products could be negatively and adversely affected.

We can be adversely affected by other global and regional factors that periodically occur, including:

• inefficient infrastructure and other disruptions, such as supply chain interruptions, and large-scale outages, or unreliable provision of services from utilities, transportation, data hosting, or telecommunications providers;

• government restrictions on, or nationalization of, our operations in any country, or restrictions on our ability to repatriate earnings from or distribute compensations or other funds in a particular country;

• adverse changes relating to government grants, tax credits, or other government incentives, including more favorable incentives provided to competitors;

• differing employment practices and labor issues, including restricted access to talent;

• local business and cultural factors that differ from our current standards and practices;

• continuing uncertainty regarding social, political, immigration, tax, and trade policies in the U.S.

• global tensions and conflict in areas where we have customers or employees , and in surrounding areas, such as the Russian military operation in Ukraine, Israel-Hamas conflict, past conflicts in Lebanon and the current conflict in the Red Sea, and rising tensions between China and Taiwan.

Although our operations in Belarus, China, Israel, Ukraine, and Russia rep resent an immaterial portion of our business, individually and in the aggregate, s uch global and regional factors may have adversely impacted and could adversely impact our customers and employees ;

• fluctuations in the market value of our domestic and international investments and in the capital and credit markets, which can be negatively affected by liquidity, credit deterioration or losses, interest rate changes, financial results, political risk, sovereign risk, or other factors.

Further, these conditions have affected and may continue to affect the rate of IT spending, could adversely affect our customers' ability or willingness to attend our events or to purchase our products and services, could have delayed and may delay customer purchasing decisions, could have reduced and may reduce the value and duration of customer subscription contracts, and may adversely affect our customer attrition rates.

All of these risks and conditions could materially adversely affect our future sales and operating results.

Our past results may not be indicative of our future performance.

We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors with respect to our results of operations, our stock price could decline.

Our results of operations have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control.

As a result, our past results may not be indicative of our future performance.

In addition to the other risks described herein, factors that may affect our results of operations include the following:

• fluctuations in demand for or usage of our platform and products;

• fluctuations in our mix of revenue from licenses and service arrangements;

• our ability to attract new customers and retain our existing customers;

• customer expansion rates and the pricing and quantity of licenses renewed;

• fluctuations in mix of revenue, cost of revenue, and gross margin from sales directly to end-customers and/or through channel partners including our strategic alliances;

• timing and amount of our investments to expand the capacity of our third-party cloud infrastructure providers;

• seasonality;

• the investment in new products and features relative to investments in our existing infrastructure and products;

• the timing of customer purchases;

• fluctuations or delays in purchasing decisions in anticipation of new products or enhancements by us or our competitors;

• changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions;

• our ability to control costs, including our operating expenses;

• the amount and timing of payment for operating expenses, particularly sales and marketing expenses, including commissions, and research and development expenses;

• the amount and timing of non-cash expenses, including stock-based compensation, impairments of goodwill or other assets, and other non-cash charges;

• the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining and motivating existing employees;

• the effects of acquisitions and their integration;

• general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate;

• the impact of new accounting pronouncements;

• changes in regulatory or legal environments that may impact us, including by causing us to incur additional compliance obligations and expenses;

• changes in the competitive dynamics of our market, including consolidation among competitors or customers;

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

We derive our revenue from the sale of our software licenses for use of our proprietary software, maintenance and support for our licenses, right to access certain products that are hosted by us (i.e., SaaS), and professional services.

Under ASC 606, Revenue from Contracts with Customers , we recognize revenue when a customer obtains control of promised goods or when services are rendered.

The amount of revenue recognized reflects the consideration that we expect to receive in exchange for these goods or services.

Licenses revenue (including the term license portion of Flex Offerings ) is recognized when we transfer control of the respective license to the customer.

Revenue from SaaS and revenue from maintenance and support are recognized ratably over time since control passes to our customers over the arrangement’s contractual period.

Professional services revenue is recognized as services are rendered.

The presentation of our financial results requires us to make estimates and assumptions that may affect revenue recognition.

In some instances, we could reasonably use different estimates and assumptions, and changes in estimates may occur from period to period.

Given the foregoing factors, our actual results could differ significantly from our estimates.

Comparing our revenue and operating results on a period-to-period basis may not be meaningful, and our past results may not be indicative of our future performance.

For more information on our revenue recognition policy, refer to Note 2, Summary of Significant Accounting Policies—Revenue Recognition , included in Part II, Item 8 of this Annual Report on Form 10-K.

Any of these and other factors, or the cumulative effect of some of these factors, may cause our results of operations to vary significantly.

If our quarterly or annual results of operations fall below the expectations of securities analysts or investors who follow our stock, the price of our Class A common stock could decline substantially, and we have faced and could in the future face lawsuits that are costly and may divert management’s attention, including securities class action suits and derivative actions.

We may not be able to successfully manage our growth and, if we are not able to grow efficiently, we may not be able to reach or maintain profitability, and our business, financial condition, and results of operations could be harmed.

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

Actions we may decide to take in the future in our attempt to achieve profitability may not be successful in yielding our intended results and may not appropriately address either or both of the short-term and long-term strategy of our business.

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

Actions we may decide to take in the future in our attempt to achieve or maintain profitability may not be successful in yielding our intended results and may not appropriately address either or both of the short-term and long-term strategy of our business.

Implementation of a go forward plan and any other cost-saving initiatives, including possible future restructuring efforts, may be costly and disruptive to our business, the expected costs and charges may be greater than forecasted, and the estimated cost savings may be lower than forecasted.

Finally, our organizational structure is becoming more complex as we improve our operational, financial and management controls as well as our reporting systems and procedures.

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

Because we derive substantially all of our revenue from our UiPath Business Automation Platform, failure of this platform to satisfy customer demands could adversely affect our business, financial condition, results of operations, and growth prospects.

We derive and expect to continue to derive substantially all of our revenue from our UiPath Business Automation Platform.

As such, market adoption of our automation platform is critical to our continued success.

Demand for our platform may be affected by a number of factors, many of which are beyond our control, including continued market acceptance and integration of our platform into our customers’ operations;

the continued volume, variety, and velocity of automations that are generated through use of our platform;

timing of development, and release of new offerings by our competitors;

technological change, including in the areas of AI and ML systems, and the rate of growth in our market.

Additionally, the utility of our platform and products relies in part on the ability of our customers to use our automation, AI and ML products in connection with other third-party software products that are important to our customers' businesses.

If these third-party software providers were to modify the terms of their licensing arrangements with our customers in a manner that would reduce the utility of our products, or increase the cost to use our products in connection with these third-party software products, then our customers may no longer choose to adopt our platform or continue to use our products.

If we are unable to continue to meet the demands of our customers and the developer community, our business operations, financial results, and growth prospects will be materially and adversely affected.

In addition, as we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction.

If we are not able to continue to provide high levels of customer service, our reputation, as well as our business, results of operations, and financial condition, could be harmed.

If we are not able to continue to provide high levels of customer service, our reputation, as well as our business, financial condition, and results of operations could be harmed.

As usage of our platform capabilities grow, we will need to continue to devote additional resources to improving and maintaining our infrastructure and integrating with third-party applications.

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We cannot be sure that the expansion of and improvements to our internal infrastructure will be effectively implemented on a timely basis, if at all, and such failures could harm our business, financial condition, and results of operations.

Because we derive substantially all of our revenue from our automation platform, failure of this platform to satisfy customer demands could adversely affect our business, results of operations, financial condition, and growth prospects.

We derive and expect to continue to derive substantially all of our revenue from our automation platform.

As such, market adoption of our automation platform is critical to our continued success.

Demand for our automation platform may be affected by a number of factors, many of which are beyond our control, including continued market acceptance and integration of our platform into our customers’ operations;

the continued volume, variety, and velocity of automations that are generated through use of our platform;

timing of development, and release of new offerings by our competitors;

technological change, including in the areas of AI and ML systems, and the rate of growth in our market.

Additionally, the utility of our automation platform and products relies in part on the ability of our customers to use our automation products in connection with other third-party software products that are important to our customers' businesses.

Our business depends on our existing customers renewing their licenses and purchasing additional licenses and products from us and our channel partners.

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Part of our growth strategy relies on our ability to deliver significant value in a short time to our customers, so that our customers will scale the use of our platform throughout their enterprise.

Accordingly, our future success depends in part on our ability to exhibit this value and sell additional licenses and products to our existing customers, and our customers renewing their licenses with us and our channel partners when contract terms expire.

Accordingly, our future success

depends in part on our ability to exhibit this value and sell additional licenses and products to our existing customers, and our customers renewing their licenses with us and our channel partners when contract terms expire.

Our license agreements primarily have annual terms, and some of our license agreements have multi-year terms.

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Our customers have no obligation to renew their licenses for our products after the expiration of their license period.

We provide some customers the opportunity to use our automation platform and products for free prior to purchasing a license.

We provide some customers the opportunity to use our platform and products for free prior to purchasing a license.

We also work with our customers to identify opportunities for follow-on sales to increase our footprint within their businesses.

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consolidation of affiliates’ multiple paid business accounts into a single paid business account or loss of business accounts in their entirety;

the effects of global economic conditions including the immediate and longer-term effects of the Russian military action in Ukraine, reductions in our customers’ spending on software solutions or their spending levels generally;

the effects of global economic conditions;

reductions in our customers’ spending on software solutions or their spending levels generally;

perceived security or data privacy risks from the use of our products;

changes in regulatory regimes that affect our customers or our ability to sell our products, including changes to sanctions and export control regimes;

or the views of the industry and public with regard to our products and automation products generally, including as a result of increased automation and displacement of human workforces.

or changes in the views of the industry and public with regard to our products and automation products generally, including as a result of increased automation, use of AI, and displacement of human workforces.

These factors may also be exacerbated if, consistent with our growth strategy, our customer base continues to grow to encompass larger enterprises, which may also require more sophisticated and costly sales efforts.

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A lack of education as to how our automation platform and solutions operate may cause potential customers to prefer more traditional methodologies or their limited, internally-developed automated processes, to be cautious about investing in our platform and products, or to have difficulty integrating our platform and products into their business architecture.

If we are unable to educate potential customers and change the market’s readiness to accept our technology, we may experience slower than projected growth and our business, results of operations, and financial condition may be harmed.

If we are unable to educate potential customers and change the market’s readiness to accept our technology, we may experience slower than projected growth and our business, financial condition, and results of operations may be harmed.

In addition, as our market matures, our products evolve, and competitors introduce lower cost or differentiated products that are perceived to be alternatives to our platform and products, our ability to sell licenses for our products could be impaired.

Further, as various forms of AI, including generative AI, become more widely adopted and acceptable, if customers were to feel that our technology was not developing apace, our business and growth prospects could be harmed.

Further, as various forms of AI, including generative AI, become more widely adopted

and acceptable, if customers were to feel that our technology was not developing apace, our business and growth prospects could be harmed.

The rapid evolution of AI may require the application of resources to develop, test, and maintain our products and services so that they are ethically designed to minimize unintended, harmful impacts.

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Our platform and products provide automation solutions that our customers can integrate throughout their businesses.

Accordingly, we compete with companies that provide RPA and other automation solutions, including Appian Corporation, Automation Anywhere, Inc., Blue Prism Group PLC, Celonis Inc., Kofax Inc., Microsoft Corporation, NICE LTD., NTT Ltd., Pegasystems Inc., and WorkFusion, Inc.

In addition to RPA software providers, we compete with automation lifecycle technology providers, such as low-code, iBPMS , iPaaS , process mining, IDP , and test automation vendors, which develop and market automation capabilities as extensions of their core

platforms, and enterprise platform vendors, which provide horizontal applications and productivity tools and are acquiring, building, or investing in automation functionality or partnering with automation providers.

Accordingly, we compete with RPA software providers and adjacent automation and integration platform companies in markets such as low-code, BPM, iPaaS, process mining, IDP, and test automation vendors, and with enterprise platform vendors that are acquiring, building, or investing in automation and AI functionality or partnering with automation and AI providers.

We also compete with companies that provide and support the traditional systems relying on manual tasks and processes that our platform and products are designed to replace, including companies that facilitate outsourcing of such tasks and processes to lower cost workers.

Our customers may also internally develop their own automated solutions to address tasks particular to their business.

The automation market is one of the fastest growing enterprise software markets and is increasingly competitive.

The automation market is a fast-growing enterprise software market and is increasingly competitive.

With the introduction of new technologies and market entrants, we expect that the competitive environment will remain intense going forward.

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Additionally, open source alternatives for automation that are offered at no cost may impact our ability to sell our products to certain customers who may prefer to rely on these tools.

Our competitors may be able to respond more quickly to new or expanding technology, such as newly emerging generative AI technologies, and devote more resources to product development that we can.

Our competitors may be able to respond more quickly to new or expanding technology, such as newly emerging generative AI technologies, and devote more resources to product development than we can.

The speed of technological development may prove disruptive to some of our markets if we are unable to maintain the pace of innovation.

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As we look to market and sell our products and platform capabilities to potential customers with existing internal solutions, we must convince their internal stakeholders that our products and platform capabilities are superior to their current solutions.

If we fail to do so, our business, results of operations, and financial condition may be harmed.

If we fail to continue to differentiate our platform and products from those offered by our competitors, then our business, results of operations, and financial condition may be harmed.

If we fail to do so, our business, financial condition, and results of operations may be harmed.

If we fail to continue to differentiate our platform and products from those offered by our competitors, our business, financial condition, and results of operations may be harmed.

Our competitors vary in size and in the breadth and scope of the products offered.

Many of our competitors and potential competitors have greater name recognition, longer operating histories, more established customer relationships and installed customer bases, larger marketing budgets, and greater resources than we do.

Many of our competitors and potential competitors have greater name recognition, longer operating histories, more established customer relationships, larger marketing budgets, and greater resources than we do.

Further, other potential competitors not currently offering competitive solutions may expand their product or service offerings to compete with our products and platform capabilities.

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Some of our competitors offer their on-premises or SaaS solutions at a lower price, which has resulted in, and may continue to result in, pricing pressures.

For all of these reasons, we may not be able to compete successfully against our current or future competitors, and this competition could result in the failure of our platform to continue to achieve or maintain market acceptance, which would harm our business, results of operations, and financial condition.

If we fail to retain and motivate members of our management team or other key employees or to integrate new team members, fail to execute management transitions, or fail to attract additional qualified personnel to support our operations, our business and future growth prospects could be harmed.

Our success and future growth depend largely upon the continued services of our executive officers, particularly Daniel Dines, our Co-Chief Executive Officer, Co-Founder, and Chairman, as well as our other key employees in the areas of research and development and sales and marketing.

Additionally, many members of our management team have been with us for a short period of time, including Robert Enslin, our Co-Chief Executive Officer, who joined us in May 2022;

and Brigette McGinnis-Day, our Chief People Officer, who joined us in August 2022.

Chris Weber, our former Chief Business Officer, recently announced his departure from UiPath after a year of service.

From time to time, there have been and may continue to be changes in our executive management team or

other key employees resulting from the hiring or the departure of these personnel.

If we fail to retain and motivate members of our management team or other key employees or to integrate new team members, or fail to attract additional qualified personnel to support our operations, our business and future growth prospects could be harmed.

On July 7, 2023, Daniel Dines notified our board of directors that he would resign from his position as our Co-CEO , effective as of January 31, 2024.

Robert Enslin, then UiPath's Co-CEO, continued to serve in the Co-CEO role through January 31, 2024.

As of February 1, 2024, Mr.

Enslin assumed the role of our sole CEO .

Dines assumed the newly-created role of Chief Innovation Officer, and continues to serve as the Executive Chairman of the board of directors.

In his new capacity at UiPath as Chief Innovation Officer, Mr.

Dines plans to drive our AI and technology initiatives.

Our success and future growth depend largely upon the continued services of our executive officers, particularly Daniel Dines, Chief Innovation Officer, co-founder, and Chairman, as well as our other key employees in the areas of research and development, and sales and marketing.

Additionally, many members of our management team have been with us for a short period of time.

From time to time, there have been and may continue to be changes in our executive management team or other key employees resulting from the hiring or the departure of these personnel.

Our executive officers and other key employees are employed on an at-will basis, which means that these personnel could terminate their employment with us at any time.

The loss of one or more of our executive officers, or the failure by our executive team to effectively work with our employees and lead the Company, could harm our business.

Further, we have recently adopted a co-Chief Executive Officer structure and streamlined our senior management structure.

The loss of one or more of our executive officers, or the failure by our executive team to effectively work with our employees and lead UiPath, could harm our business.

Further, in fiscal year 2023 we streamlined our senior management structure.

Any of these changes may not achieve our desired results.

As we experience personnel turnover, we have experienced and may continue to experience some loss of internal knowledge from time to time.

The streamlining of our senior management team could introduce additional risk with fewer executives tasked with leading our organization.

We also are dependent on the continued service of our existing software engineers because of the complexity of our products and platform capabilities.

In addition, competition for these personnel is intense, especially for engineers experienced in designing and developing RPA , AI, and ML applications, and experienced sales professionals.

The streamlining of our senior management team could introduce additional risks with fewer executives tasked with leading our organization.

Because of the complexity of our products and platform capabilities, we also are dependent on the continued service of our existing software engineers and our ability to recruit qualified new engineers.

Competition for these personnel is intense, especially for engineers experienced in designing and developing RPA, AI, and ML applications.

From time to time, we have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications.

Potential candidates may not perceive our compensation package, including our equity awards, as favorably as employees hired in the past given the recent volatility in the price of our Class A common stock and in the public markets.

In addition, our recruiting personnel, methodology, and approach has been and may in the future need to be altered to address a changing candidate pool and profile.

In addition, our recruiting personnel, methodology, and approach has needed to be altered and may in the future need to be altered to address a changing candidate pool and profile.

We may not be able to identify or implement such changes in a timely manner.

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If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be harmed.

We have a history of operating losses and have not been profitable in the past.

We may not be able to reach and maintain profitability in the future.

While we have experienced significant revenue growth in recent periods, we have not been profitable in prior fiscal years, and we are not certain whether we will obtain a high enough volume of sales to sustain or increase our growth, or whether we will reach and maintain profitability in the future.

We also expect our costs and expenses to increase in future periods, which could negatively affect our future results of operations if our revenue does not increase.

In particular, we intend to continue to expend significant funds to further develop our platform, including by introducing new products and functionality, and to adapt and grow our inside sales team and enterprise sales force to drive new customer adoption, expand use cases and integrations, and support international expansion.

In particular, we have entered into non-cancelable multi-year capacity commitments with respect to cloud infrastructure services with certain third-party cloud providers, which require us to pay for such capacity irrespective of actual usage.

We will also face increased compliance costs associated with growth, the expansion of our customer base, and being a public company.

Our efforts to grow our business may be costlier than we expect, or the rate of our growth in revenue may be slower than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses.

We may incur significant losses in the future for a number of reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications, or delays, and other unknown events.

If we are unable to sustain profitability, the value of our business and Class A common stock may significantly decrease.

Unfavorable macroeconomic conditions, including those caused by inflation, the Russian military action in Ukraine and related geopolitical situation, or reductions in customers' spending on software, could limit our ability to grow our business and negatively affect our results of operations.

Our results of operations may vary based on the impact of changes in our industry or the macroeconomic environment on us or our customers and potential customers.

Negative macroeconomic conditions both in the U.S .

and abroad may include conditions resulting from changes in gross domestic product growth;

labor shortages;

supply chain disruptions;

inflationary pressures, including those caused by the recent strengthening of the U.S.

dollar against certain foreign currencies in the markets in which we operate (particularly against the Euro, British Pound Sterling, and Japanese Yen);

financial and credit market fluctuations, recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures;

international trade relations and/or the imposition of trade tariffs;

political turmoil;

natural catastrophes;

regional or global outbreaks of contagious diseases such as COVID-19;

and warfare and terrorist attacks on the U.S., Europe, the Asia Pacific region, or elsewhere, including military actions affecting Russia, Ukraine or elsewhere.

These negative macroeconomic conditions have caused and may continue to cause a decrease in business investments, including spending on software solutions, and disruption of the timing and cadence of key industry and marketing events, and could materially and adversely affect the growth of our business and our results of operations.

The global economy, including credit and financial markets, has experienced extreme volatility and disruptions.

As a result of these factors, our revenues may be affected by both decreased customer acquisition and lower than anticipated revenue growth from existing customers.

Any such volatility and disruptions may have material and adverse consequences on us, the third parties on whom we rely, or our customers.

Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs.

Any significant increases in inflation and related increase in interest rates could have a material and adverse effect on our business, financial condition, or results of operations.

For example, these types of unfavorable conditions have in the past disrupted and could in the future disrupt the timing and attendance of key industry events, which we rely upon in part to generate sales of our products.

If those events are disrupted in the future, our marketing investments, sales pipeline, and ability to generate new customers and sales of our products could be negatively and adversely affected.

In addition, the increased pace of consolidation in certain industries may result in reduced overall spending on our products.

Further, to the extent there is a general economic downturn and our platform is perceived by customers and potential customers as too costly or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in general software or services spending.

Also, competitors, many of whom are larger and more established than we are, may respond to market conditions by lowering prices and attempting to lure away our customers.

In addition, the increased pace of consolidation in certain industries may result in reduced overall spending on our subscription offerings and related services.

Geopolitical risks, including those arising from trade tension and/or the imposition of trade tariffs, terrorist activity, or acts of civil or international hostility, are increasing.

Similarly, the ongoing Russian military action in Ukraine has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets.

Further, other events outside of our control, including natural disasters, climate change-related events, pandemics (such as the COVID-19 pandemic), or health crises may arise from time to time and be accompanied by governmental actions that may increase international tension.

Any such events and responses, including regulatory developments, may cause significant volatility and declines in the global markets, disproportionate impacts to certain industries or sectors, disruptions to commerce (including to economic activity, travel, and supply chains), loss of life, and property damage, and may materially and adversely affect the global economy or capital markets, as well as our business and results of operations.

We cannot predict the timing, strength, or duration of any economic slowdown, instability, or recovery, generally or within any particular industry.

If the economic conditions of the general economy or markets in which we operate worsen from present levels, our business, results of operations, and financial condition could be adversely affected.

The Russian military action in Ukraine may produce near and longer term economic and geopolitical disruption which may harm our business.

Our operations in Russia, Belarus and Ukraine represent an immaterial amount of the Company's business.

Since February 2022, we have taken steps designed to ensure that we comply with applicable regulations and that these events will not affect the services that we offer customers, including pausing our business in Russia and Belarus.

The business in these areas has been and continues to be subject to regulatory and political risk and additional compliance costs in connection with sanctions and other trade controls imposed by the U.S .

and other governmental authorities in response to Russia’s military operations in Ukraine.

These government measures include (i) export controls restricting certain exports, re-exports, transfers or releases of commodities, software, and technology to Russia and Belarus, and (ii) sanctions targeting certain officials, individuals, entities, regions, and industries in Russia, Belarus, and Ukraine, including certain large Russian banks.

We have no way to predict the progress or outcome of the situation, as the conflict and government reactions continue to develop and are beyond our control.

Prolonged unrest, military activities, or additional sanctions, should they be implemented, could have a

material adverse effect on our operations and business outlook.

If the conflict were to expand to the countries that border Ukraine, including Romania, our business could be adversely impacted.

Although we have taken steps, these steps involve additional compliance costs and operational costs.

If the relationship between Russia and the U.S.

significantly worsens, or if Russia, the U.S., or other countries continue to impose additional economic sanctions, supply chain restrictions, or other restrictions on doing business, and we are restricted or precluded from continuing our software development operations in Ukraine, our costs could increase, and our product development efforts could be harmed, which could adversely impact our business, financial condition, and results of operations.

Changes in our management structure and in senior leadership could affect our business and financial results.

As of February 1, 2024, Robert Enslin succeeded Daniel Dines as our CEO, and Mr.

Dines became our Chief Innovation Officer, both as previously announced.

Senior leadership transitions can be difficult to manage and may cause disruptions to our operations.

A leadership transition may also increase the likelihood of turnover amongst our employees and result in changes in our business strategy, which may create uncertainty, and negatively impact our ability to execute our business strategy quickly and effectively.

Leadership transitions may also impact our relationships with our customers and other market participants, creating uncertainty among investors, employees, and others concerning our future direction and performance.

Any significant disruption, uncertainty, or change in

business strategy could adversely affect our business, financial condition, and operating results.

Finally, our organizational structure is becoming more complex as we continue to scale our operational, financial, and management controls as well as our reporting systems and procedures.

A limited number of customers represent a substantial portion of our revenue and ARR.

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We derive a substantial portion of our revenue and ARR from sales to our top 10% of customers.

As a result, our revenue and ARR could fluctuate materially and could be materially and disproportionately impacted by the purchasing decisions of these customers or any other significant future customer.

Any of our significant customers may decide to purchase less than they have in the past, may alter their purchasing patterns at any time with limited notice, or may decide not to continue to license our platform and products at all, any of which could cause our revenue and ARR to decline and adversely affect our financial condition and results of operations.

As a result, our revenue and ARR could fluctuate materially and could be materially and disproportionately impacted by the purchasing decisions of these customers or any other future large customer.

Any of our largest customers may decide to purchase less than they have in the past, may alter their purchasing patterns at any time with limited notice, or may decide not to continue to purchase our platform and products at all, any of which could cause our revenue and ARR to decline and adversely affect our financial condition and results of operations.

If we do not further diversify our customer base, we will continue to be susceptible to risks associated with customer concentration.

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Moreover, our ability to expand our distribution channels depends in part on our ability to educate our channel partners about our platform and products, which can be complex.

Our failure to recruit additional channel partners, or any reduction or delay in their sales of our products or conflicts between channel sales and our direct sales and marketing activities may harm our results of operations.

Even if we are successful, these relationships may not result in greater customer usage of our products or increased revenue.

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Further, we from time to time enter into strategic alliance arrangements wherein we sell our products and services to a partner.

These strategic alliances may include investments we make to enable the partner to create or enhance their RPA practice.

If the strategic alliance partner is unable to successfully create or expand their RPA practice, we may not realize the benefits we expect.

These strategic alliances may include investments we make to enable the partner to create or enhance their automation practice.

If the strategic alliance partner is unable to successfully create or expand their automation practice, we may not realize the benefits we expect.

These strategic alliances may also include non-cancelable commitments we make to these third-party alliance partners whereby we plan to leverage the partner’s products or services in arrangements with third-party customers.

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Finally, the investments required to meet the increased demand for our consulting services could strain our ability to deliver our consulting engagements at desired levels of profitability, thereby impacting our overall profitability and financial results.

If we are not able to introduce new features or services successfully and to make enhancements to our platform or products, our business and results of operations could be adversely affected.

If we are not able to introduce and release new features or services successfully and to make enhancements to our platform or products, particularly with respect to developing AI technologies, our business and results of operations could be adversely affected.

Our ability to attract new customers and increase revenue from existing customers depends in part on our ability to enhance and improve our platform and to introduce new features and services.

To grow our business and remain competitive, we must continue to enhance our platform with features that reflect the constantly evolving nature of automation and AI technology and our customers’ evolving needs.

For instance, with the development of next-generation solutions that utilize new and advanced features, including AI and ML, we may be required to commit significant resources to developing new products, enhancements and developments.

Other companies may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our financial results.

The success of new products, enhancements, and developments depends on several factors including, but not limited to:

our anticipation of market changes and demands for product features, including successful product design and timely product introduction, sufficient customer demand, cost effectiveness in our product development efforts, and the proliferation of new technologies that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently, or more securely.

In addition, because our platform is designed to operate with a variety of systems, applications, data, and devices, we will need to continuously modify and enhance our platform to keep pace with changes in such systems.

our anticipation of market changes and demands for product features, successful product design and timely release of new functionality, sufficient customer demand, and cost effectiveness of our product development efforts.

In addition, because our platform is designed to operate with a variety of third-party systems, applications, data, and devices, we will need to continuously modify and enhance our platform to keep pace with changes in such systems.

We may not be successful in developing these modifications and enhancements.

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Such uncertainty limits our ability to forecast our future results of operations and subjects us to a number of challenges, including our ability to plan for and model future growth.

In addition, significant delays between announcement and general availability of new functionality could adversely affect our business.

If we cannot address such uncertainties and successfully develop new features, enhance our software, or otherwise overcome technological challenges and competing technologies, our business and results of operations could be adversely affected.

We also offer professional services including consulting and training and must continually adapt to assist our customers in deploying our platform in accordance with their specific automation strategies.

If we cannot introduce new services or enhance our existing services to keep pace with changes in our customers’ deployment strategies,

we may not be able to attract new customers, retain existing customers, and expand their use of our software or secure renewal contracts, which are important for the future of our business.

If we cannot introduce new services or enhance our existing services to keep pace with changes in our customers’ deployment strategies, we may not be able to attract new customers, retain existing customers, and expand their use of our software or secure renewal contracts, which are important for the future of our business.

Risks associated with the use of AI (including ML and large language models) in our platforms may result in reputational harm or liability.

AI is enabled by or integrated into parts of our technology platform and remains a significant and growing element of our business.

As with many developing technologies, AI presents risks and challenges that could affect its further development, adoption, use, and therefore, our business.

AI algorithms and models may be flawed.

Our AI-related efforts, particularly those related to generative AI, or the datasets that we use in training our systems, subject us to risks related to harmful or illegal content, accuracy, bias, intellectual property infringement or misappropriation, defamation, data privacy, cybersecurity, sanctions, and export controls, among others.

Third-party AI capabilities that can be integrated with our platform, including generative AI, could also produce false or "hallucinatory" inferences about customer data, enterprises, other information, or subject matter.

The use of generative AI processes at scale is relatively new, and may lead to challenges, concerns, and risks that are significant, or that we may not be able to predict, especially if our use of these technologies in our products and services were to become more important to us over time.

If the recommendations, forecasts, or analyses that AI applications assist in producing are deficient or inaccurate, we could be subject to competitive harm, potential legal liability, including under existing and future legislation or regulations, including in the U.S.

The rapid evolution of AI may also require additional resources to develop, test, and maintain our platforms and products to help ensure that AI is implemented appropriately in order to minimize unintended or harmful impact, which may be costly, and may not produce the benefits and results that we expect.

Some AI scenarios may present ethical issues, and the enablement or integration of AI into our platform may subject us to new or heightened legal, regulatory, ethical, or other challenges, as this is an area of rapid development.

We take into consideration these challenges when designing our technologies and implementing our business practices.

For example, our platform includes data governance tools and other tools, which are intended to regulate and limit user access.

In addition, we have developed internal responsible AI guidelines.

However, we have no assurance that these tools or guidelines, nor their implementation, will be sufficient to protect us against evolving AI-related risks.

As a result, if we face any claims or litigation relating to our use of AI, including its purported, or real impact to, human rights, data privacy, employment, or other societal issues, we may experience brand or reputational harm, as well as regulatory or legal scrutiny, which could have a material adverse effect on our operations, and business outlook.

We are subject to numerous risks associated with the evolving market for products with AI capabilities.

The markets and use cases for products with AI capabilities have been rapidly evolving, are difficult to predict, and may impact demand for our products.

The significant investments we have made to develop products and software to address what we believe will be increasing demand for AI capabilities may be insufficient, and we face significant hurdles, including whether demand will materialize, whether third-party developers will develop the software to utilize the AI capabilities of our products, and whether we will be successful in developing products that can compete with offerings by established competitors.

Our use of AI technology may subject us to reputational, financial, legal, or regulatory risks.

As we continue to incorporate AI technology into our products and services, any failures to address concerns relating to the responsible use of the evolving AI technology in our products and services may cause harm to our reputation or result in financial liability, and as such, may increase our costs to address or mitigate such risks and issues.

AI technology may create ethical issues, generate defective algorithms, and present other risks that create challenges with respect to its adoption.

In addition, evolving rules, regulations, and industry standards governing AI may require us to expend significant resources to modify, maintain, or align our business practices or products, to comply with U.S.

rules and regulations, the nature of which cannot be determined at this time.

Several jurisdictions around the globe, including the EU and certain U.S.

states, have already proposed or enacted laws governing AI.

federal agencies are likely to release AI regulations in the near future in light of the Biden administration's October 30, 2023 Executive Order on AI.

The regulatory environment surrounding the impact of the implementation

of AI on our products and services may adversely affect our ability to produce and export products, and as a result, may cause harm to our reputation and result in financial liability.

We offer free trials and a free tier of our platform to drive awareness of our products, and encourage use and adoption.

If these marketing strategies fail to lead to customers purchasing paid licenses, our ability to grow our revenue will be adversely affected.

To encourage awareness, use, familiarity, and adoption of our platform and products, we offer a community edition and enterprise trial version of our software, each of which provides free, online access to certain of our products.

To encourage awareness, use, and adoption of our platform and products, we offer a community edition and enterprise trial version of our software, each of which provides free, online access to certain of our products.

This “try-before-you-buy” strategy may not be successful in driving developer education regarding or leading customers to purchase our products.

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Moreover, large enterprise customers often begin to deploy our products on a limited basis, but nevertheless demand configuration, integration services, and pricing negotiations, which increase our upfront investment in the sales effort with no guarantee that these customers will deploy our products widely enough across their organization to justify our substantial upfront investment.

Real or perceived errors, failures, or bugs in our platform and products could adversely affect our business, results of operations, financial condition, and growth prospects.

Real or perceived errors, failures, or bugs in our platform and products could adversely affect our business, financial condition, results of operations, and growth prospects.

Our platform and products are complex and use novel technology.

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In such an event, we may be required, or may choose, for customer relations or other reasons, to expend significant additional resources in order to help correct the problem.

Any errors, failures, or bugs in our platform or products could also impair our ability to attract new customers, retain existing customers, or expand their use of our software, which would adversely affect our business, results of operations, and financial condition.

Incorrect or improper implementation or use of our platform and products could result in customer dissatisfaction and harm our business, results of operations, financial condition, and growth prospects.

Incorrect or improper implementation or use of our platform and products could result in customer dissatisfaction and harm our business, financial condition, results of operations, and growth prospects.

Our automation platform and products and related services are designed to be deployed in a wide variety of technology environments, including in large-scale, complex technology environments across a wide range of use cases.

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In addition, any incident affecting our third-party hosting services’ infrastructure that may be caused by cyberattacks, natural disasters, fire, flood, severe storm, earthquake, power loss, telecommunications failures, outbreaks of contagious diseases, military actions, terrorist or other attacks, and other similar events beyond our control could negatively affect our cloud-based products.

If our cloud-based products are unavailable or if our users are unable to access our cloud-based products within a reasonable amount of time or at all, we may experience a loss of customers, loss or delay of market acceptance of our platform and products, delays in payment to us by customers, injury to our reputation and brand, legal claims against us, and the diversion of our resources.

If our cloud-based products are unavailable, or if our users are unable to access our cloud-based products within a reasonable amount of time or at all, we may experience a loss of customers, loss or delay of market acceptance of our platform and products, delays in payment to us by customers, harm to our reputation and brand, legal claims against us, and the diversion of our resources.

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 hosting services we use.

In the event that our service agreements with our third-party hosting services are terminated, or there is a lapse of service, elimination of services or features that we utilize, interruption of internet service provider connectivity, or damage to such facilities, we could experience interruptions in access to our cloud-based products as well as significant delays and additional expense in arranging or creating new facilities and services, and/or re-architecting our cloud-based products for deployment on a different cloud infrastructure service provider, which could adversely affect our business, financial condition, and results of operations.

Our results of operations have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control.

As a result, our past results may not be indicative of our future performance.

In addition to the other risks described herein, factors that may affect our results of operations include the following:

• fluctuations in demand for or pricing of our platform and products;

• fluctuations in usage of our platform and products;

• fluctuations in our mix of revenue from licenses and service arrangements;

• our ability to attract new customers;

• our ability to retain our existing customers;

• customer expansion rates and the pricing and quantity of licenses renewed;

• fluctuations in mix of revenue, cost of revenue, and gross margin from sales directly to end-customers and/or through channel partners including our strategic alliances;

• timing and amount of our investments to expand the capacity of our third-party cloud infrastructure providers;

• seasonality;

• the investment in new products and features relative to investments in our existing infrastructure and products;

• the timing of customer purchases;

• fluctuations or delays in purchasing decisions in anticipation of new products or enhancements by us or our competitors;

• changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions;

• our ability to control costs, including our operating expenses;

• the amount and timing of payment for operating expenses, particularly sales and marketing and research and development expenses, including commissions;

• the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges;

• the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining and motivating existing employees;

• the effects of acquisitions and their integration;

• general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate;

• the impact of new accounting pronouncements;

• changes in regulatory or legal environments that may cause us to incur, among other elements, expenses associated with compliance;

• changes in the competitive dynamics of our market, including consolidation among competitors or customers;

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

Any of these and other factors, or the cumulative effect of some of these factors, may cause our results of operations to vary significantly.

If our quarterly or annual results of operations fall below the expectations of investors or securities analysts who follow our stock, the price of our Class A common stock could decline substantially, and we could face lawsuits that are costly and may divert management’s attention, including securities class action suits.

Seasonality may cause fluctuations in our sales and results of operations.

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Seasonal fluctuations in our sales means that our revenue may not be consistent from period to period.

Accordingly, you should not expect our quarterly or annual results to be predictive of any future period.

Accordingly, our quarterly or annual results should not be expected to be predictive of any future period.

Our key performance metric, ARR, and certain other operational data in this report are subject to assumptions and limitations and may not provide an accurate indication of our future or expected results.

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ARR does not include the costs we may incur to obtain such subscription licenses or provide such maintenance and support, and does not include invoiced amounts associated with perpetual licenses or professional services.

ARR is not a forecast of future revenue and does not reflect any actual or anticipated reductions in invoiced value due to contract non-renewals or service cancellations other than for specific reserves, such as those for credit losses or disputed amounts.

ARR is not a forecast of future revenue and does not reflect any actual or anticipated reductions in invoiced value due to contract non-renewals or service cancellations other than for certain reserves, such as those for credit losses or disputed amounts.

As a result, ARR and our other operational data may not reflect our actual performance, and investors should consider these metrics in light of the assumptions used in calculating such metrics and limitations as a result thereof.

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We cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations, our planned investments, or the growth of our business.

Following our initial public offering, we focused on growing our business to take advantage of our market opportunities.

Following our IPO, we focused on growing our business to take advantage of our market opportunities.

While growth remains important, we are also focused on the path to profitability.

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The effects of the disruptions to and volatility in the credit and financial markets in the U.S.

and worldwide from geopolitical and macroeconomic events, including the COVID-19 pandemic, the ongoing Russia-Ukraine conflict and related sanctions, and bank failures, could limit our access to financing and increase our costs of borrowing.

If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, results of operations, and financial condition.

and worldwide from geopolitical and macroeconomic events could limit our access to financing and increase our costs of borrowing.

If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, financial condition, and results of operations.

If we incur debt, the debt holders would have rights senior to holders of Class A common stock to make claims on our assets, and the terms of any future debt could restrict our operations, including our ability to pay dividends on our Class A common stock.

Furthermore, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our Class A common stock.

Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or

estimate the amount, timing, or nature of any future issuances of debt or equity securities.

Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities.

As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of our Class A common stock and diluting their interests.

Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.

Adverse developments that affect financial institutions, such as events involving liquidity that are rumored or actual, have in the past and may in the future lead to bank failures and market-wide liquidity problems.

For example, on March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver.

Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp.

were each swept into receivership.The Department of the Treasury, the Federal Reserve and the FDIC released a statement that indicated that all depositors of Silicon Valley Bank would have access to all of their funds, including funds held in uninsured deposit accounts, after only one business day of closure.

Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediately liquidity may exceed the capacity of such program.

There is no guarantee, however, that the U.S.

Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.

We do not hold material cash deposits or securities at Silicon Valley Bank and have not experienced any adverse impact to our liquidity or to our current and projected business operations, financial condition or results of operations.

However, uncertainty remains over liquidity concerns in the broader financial services industry, and our business, our business partners, or industry as a whole may be adversely impacted in ways that we cannot predict at this time.

Uncertainty remains over liquidity concerns in the broader financial services industry, and there may be additional impacts to our business and our industry that we cannot predict at this time.

Further, a significant portion of our assets are held in cash, cash equivalent and marketable securities.

If the financial uncertainty were to impact a broad segment of the financial services environment, our enterprise value and our future prospects could be negatively impacted.

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

We believe that maintenance and enhancement of the UiPath brand is important to support the marketing and sale of our existing and future products to new customers and expand sales of our platform and products to existing customers.

We believe that maintenance and enhancement of UiPath brand is important to support the marketing and sale of our existing and future products to new customers and expand sales of our platform and products to existing customers.

We also believe that the importance of brand recognition will increase as competition in our market increases.

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We may not be able to protect all of our registered or unregistered trademarks or trade names relevant to our brand, and our rights may be challenged, infringed, circumvented, declared generic, lapsed, or determined to be infringing on or dilutive of other marks.

If we are unable to protect our rights in these trademarks and trade names, third parties may file for registration of trademarks similar or identical to our trademarks, thereby impeding our ability

to build brand identity and possibly leading to market confusion.

If we are unable to protect our rights in these trademarks and trade names, third parties may file for registration of trademarks similar or identical to our trademarks, thereby impeding our ability to build brand identity and possibly leading to market confusion.

If we fail to successfully promote and maintain our brand, our business, financial condition, and results of operations may suffer.

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Any dispute with a customer or other third-party with respect to such obligations could have adverse effects on our relationship with such customer or other third-party and other existing or prospective customers, reduce demand for our products and services, and adversely affect our business, financial condition, and results of operations.

In addition, although we carry general liability and cybersecurity insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed or otherwise protect us from liabilities or damages with respect to claims alleging compromises of customer data, and any such coverage may not continue to be available to us on acceptable terms or at all.

In addition, although we carry general liability and cybersecurity insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed or otherwise

protect us from liabilities or damages with respect to claims alleging compromises of customer data, and any such coverage may not continue to be available to us on acceptable terms or at all.

We have in the past engaged, and may in the future engage, in acquisition and investment activities, which could divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our results of operations and financial condition.

As part of our business strategy, we continually evaluate opportunities to acquire or invest in businesses, products, or technologies that we believe could complement or expand our products and solutions, enhance our technical capabilities, or otherwise offer growth opportunities.

For example, in March 2021, we acquired Cloud Elements , a provider of a leading application programming interface integration platform for SaaS application providers and the digital enterprise.

For example, in March 2021, we acquired Cloud Elements, Inc., a provider of a leading API integration platform for SaaS application providers and the digital enterprise.

In July 2022, we acquired Re:infer, an NLP company for unstructured documents and communications.

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• cause us to incur liabilities for activities of the acquired company before the acquisition;

• cause us to record impairment charges associated with goodwill and other acquired intangible assets;

• cause us to record impairment charges associated with goodwill or acquired intangible assets;

• cause other unforeseen operating difficulties and expenditures.

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Our limited experience acquiring companies increases these risks.

If we are unable to achieve the anticipated strategic benefits of an acquisition or if the integration or the anticipated financial and strategic benefits, including any anticipated cost savings, revenue opportunities, or operational synergies, of such an acquisition are not realized as rapidly as or to the extent anticipated by us, our business, results of operations, and financial condition could suffer.

Our aspirations and disclosures related to environmental, social, and governance matters expose us to risks that could adversely affect our reputation and performance.

We have issued a baseline ESG report, and are in the process of determining emissions baselines and plan to set corporate goals.

If we are unable to achieve the anticipated strategic benefits of an acquisition, or if the integration, or the anticipated financial and strategic benefits, including any anticipated cost savings, revenue opportunities, or operational synergies, of such an acquisition are not realized as rapidly as or to the extent anticipated by us, our business, financial condition, and results of operations, could suffer.

Our aspirations and disclosures related to ESG matters expose us to risks that could adversely affect our reputation and performance.

We have issued baseline ESG impact reports, and are in the process of determining emissions baselines and plan to set corporate goals.

Our reports and statements reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.

Our failure to accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial performance, and growth, and expose us to increased scrutiny from the investment community as well as enforcement authorities.

Standards for tracking and reporting ESG matters continue to evolve.

Standards for tracking and reporting ESG (including sustainability, climate and human capital) matters continue to evolve.

Our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from those of others.

This may result in a lack of consistent comparative data from period to period or between UiPath and other companies in the same industry.

In addition, our processes and controls may not comply with evolving standards for identifying, measuring, and reporting ESG metrics, including ESG-related disclosures that may be required of public companies by the SEC and other regulatory agencies to which we may be subject, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.

If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, our reputation, our ability to attract or retain employees, and our attractiveness as an investment, business partner, acquirer, or service provider could be negatively impacted.

related disclosure requirements and the EU's CSRD which is still subject to member country adoption;

such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.

If our ESG practices do not meet evolving investor, customer, or other stakeholder expectations and standards, our reputation, our ability to attract or retain employees, and our attractiveness as an investment, business partner, acquirer, or service provider could be negatively impacted.

Further, our failure or perceived failure to pursue or fulfill our goals and objectives, or to satisfy various reporting standards on a timely basis, or at all could have similar negative impacts or expose us to government enforcement actions and private litigation.

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In November 2022, our board of directors approved further restructuring actions to reduce our global workforce across functions by an additional 6%.

The aforementioned workforce restructuring actions were completed during the second quarter of fiscal year 2024.

We incur substantial costs to implement restructuring plans, and our restructuring activities may subject us to reputational risks and litigation risks and expenses.

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Internal restructurings can also require a significant amount of time and focus from management and other employees, which may divert attention from commercial operations.

If any internal restructuring activities we

have undertaken or undertake in the future fail to achieve some or all of the expected benefits, our business, results of operations, and financial condition could be materially and adversely affected.

Our business, financial condition, results of operations, or cash flows could be significantly hindered by the occurrence of a natural disaster, military action, terrorist attack, or other catastrophic event.

Our business operations may be susceptible to outages due to fire, floods, unusual weather conditions, power loss, telecommunications failures, military actions, terrorist attacks, and other events beyond our control.

Natural disasters including tornados, hurricanes, floods, and earthquakes may damage the facilities of our customers or those of their suppliers or retailers or their other operations, which could lead to reduced revenue for our customers and thus reduced spending on our platform and products.

In addition, a substantial portion of our operations rely on support from our headquarters in New York City and our office in Bucharest, Romania.

To the extent that fire, floods, unusual weather conditions, power loss, telecommunications failures, military actions, terrorist attacks, and other events beyond our control materially impacts our ability to operate those offices, it may have a material impact on our business operations as a whole.

To the extent that such events disrupt our business or the business of our current or prospective customers, or adversely impact our reputation, such events could adversely affect our business, financial condition, results of operations, and cash flows.

If any internal restructuring activities we have undertaken or undertake in the future fail to achieve some or all of the expected benefits, our business, financial condition, and results of operations could be materially and adversely affected.

Any future litigation against us could be costly and time-consuming to defend.

We are and may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought by our customers in connection with commercial disputes or employment claims made by our current or former employees.

We are subject and may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought by our customers in connection with commercial disputes or employment claims made by our current or former employees.

In addition, we have been sued by potential class action plaintiffs and have been sued in several potential derivative actions in connection therewith.

Litigation might result in substantial costs and may divert management’s attention and resources, which might seriously harm our business, financial condition, and results of operations.

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A claim brought against us that is uninsured or underinsured could result in unanticipated costs, potentially harming our business, financial condition, and results of operations.

Pursuant to the terms of our outstanding indebtedness, we may be limited in our ability to incur future debt.

In October 2020, we entered into the Credit Facility with HSBC Ventures USA Inc., Silicon Valley Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, LTD.

Our obligations under the Credit Facility are secured by substantially all of our assets, except for our intellectual property.

As of January 31, 2023 and 2022, there were no amounts outstanding under the Credit Facility.

Although we had a banking relationship with Silicon Valley Bank as of March 10, 2023, we did not experience any adverse impact to our liquidity or to our current and projected business operations, financial condition, or results of operations as a result of the closure of Silicon Valley Bank on March 10, 2023.

Pursuant to the terms of the Credit Facility, we are limited in our ability to incur additional indebtedness other than on the terms and conditions thereof.

In addition, a failure to comply with the covenants under the Credit Facility could result in an event of default by us and an acceleration of amounts due.

If an event of default occurs that is not waived by the lenders, and the lenders accelerate any amounts due, we may not be able to make accelerated payments, and the lender could seek to enforce their security interests in the collateral securing such indebtedness, which could have a material adverse effect on our business and results of operations.

Risks Related to Data Privacy and Cybersecurity

We are subject to stringent and changing obligations related to data privacy and security, including laws, regulations and standards, information security policies, and contractual obligations.

Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions;

We are subject to stringent and evolving U.S.

and foreign laws, regulations, and rules, contractual obligations, industry standards, policies, and other obligations related to data privacy and security.

Our actual or perceived failure to comply with such obligations could lead to adverse business consequences, including regulatory investigations or actions;

litigation (including class claims) and mass arbitration demands;

fines and penalties;

disruptions of our business operations;

business disruptions;

reputational harm;

loss of revenue or profits;

loss of customers or sales;

and other adverse business consequences.

In the ordinary course of business, we collect, receive, access, generate, transfer, store, disclose, share, make accessible, protect, secure, dispose of, use, and otherwise process personal data and other sensitive

information, including proprietary and confidential business data, trade secrets, intellectual property, sensitive third- party data about employees, contractors, customers, suppliers, and others.

Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, codes, regulations, industry standards, external and internal privacy and security policies, contracts, and other obligations that govern the processing of personal data by us and on our behalf.

and loss of customers or sales.

In the ordinary course of business, we collect, receive, access, generate, transfer, store, disclose, share, make accessible, protect, secure, dispose of, and use (collectively, process) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, financial information, geolocation information, social security numbers, government-issued identification information, and sensitive third-party data about employees, contractors, customers, suppliers, and others (collectively, sensitive information).

Our data processing activities subject us to numerous data privacy and security obligations, such as

various laws, codes, regulations, industry standards, external and internal privacy and security policies, contracts, and other obligations.

In the U.S., federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, and consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).

The CCPA applies to personal information of consumers, business representatives, and employees, and requires businesses to provide specific disclosure in privacy notices and honor requests of California residents to exercise certain privacy rights.

The CCPA provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages.

In addition, the CPRA expands the CCPA’s requirements, including by establishing a new California Privacy Protection Agency to implement and enforce the law and adding a new right for individuals to correct their personal information.

In addition, data privacy and security laws have been proposed at the federal, state, and local levels in recent years, which could further complicate compliance efforts.

For example, Virginia, Colorado, Utah, and Connecticut have similarly enacted comprehensive privacy laws, effective in 2023.

For example, HIPAA , as amended by the HITECH , imposes specific requirements relating to the privacy, security, and transmission of individually identifiable protected health information.

In the past few years, numerous U.S.

states—including California, Virginia, Colorado, Connecticut, and Utah—have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.

As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making.

The exercise of these rights may impact our business and our ability to provide products and services.

Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments.

These state laws allow for statutory fines for non-compliance.

For example, the CCPA, as amended by the California Privacy Rights Act of 2020 (CPRA) (collectively CCPA), applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosure in privacy notices and honor requests of such individuals to exercise certain privacy rights.

The CCPA provides for fines of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages.

Similar laws are being considered in several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future.

These developments further complicate our compliance efforts, and increase legal risk and compliance costs for us, the third parties upon whom we rely, and our customers.

Additionally, under various privacy laws and other obligations, we may be required to obtain certain consents to process personal data.

For example, some of our data processing practices may be challenged under wiretapping laws, if we obtain consumer information from third parties through various methods, including chatbot and session replay providers, or via third-party marketing pixels.

These practices may be subject to increased challenges by class action plaintiffs.

Our inability or failure to obtain consent for these practices could result in adverse consequences, including class action litigation and mass arbitration demands.

In the E EA , the Collective Redress Directive (effective June 2023) will allow collective actions to be brought by a representative body against businesses if they breach legislation intended to protect EU consumers, including for data protection matters.

Outside the U.S., an increasing number of laws, regulations, and industry standards apply to data privacy and security.

The E U GDPR , the U.K .

GDPR , Brazil’s LGPD , and China’s PIPL impose strict requirements for processing personal data.

Under the EU GDPR, government regulators may impose temporary or definitive bans on data processing, as well as fines of up to 20 million euros or 4% of annual global revenue, whichever is greater;

The EU GDPR , the U.K.

GDPR (collectively, "GDPR"), Brazil’s LGPD , India's Digital Personal Data Protection Act, and China’s PIPL impose strict requirements for processing personal data.

For example, under the GDPR, companies may face temporary or definitive bans on data processing;

fines of up to 20 million euros under the EU GDPR, 17.5 million pounds sterling under the U.K.

GDPR or, in each case 4% of annual global revenue, whichever is greater;

or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized by law to represent their interest.

Furthermore, in Europe, there is a proposed regulation related to AI that, if adopted, could impose onerous obligations related to the use of AI-related systems.

We may have to change our business practices to comply with such obligations.

In Canada, PIPEDA and various related provincial laws, as well as CASL , applies to our operations.

In Canada, the Personal Information Protection and Electronic Documents Act and various related provincial laws, as well as Canada's Anti-Spam Legislation, apply to our operations.

As another example, the LGPD applies to our operations.

The LGPD broadly regulates processing personal data of individuals in Brazil and imposes compliance obligations and penalties comparable to those of the EU GDPR.

We also target customers in Asia and have operations in Japan, Singapore, India, Hong Kong, and Australia and are subject to new and emerging data privacy regimes in Asia, including China’s PIPL, Japan’s Act on the Protection of Personal Information, and Singapore’s Personal Data Protection Act.

We also target customers in Asia, have operations Asia including in Japan, Singapore, India, and Hong Kong, and are subject to new and emerging data privacy regimes including China’s PIPL, Japan’s Act on the Protection of Personal Information, and Singapore’s Personal Data Protection Act.

We are also subject to the EU DSA , which requires us to further change our products, policies, and procedures.

These new regulations create additional reporting obligations and oblige us to enhance our content moderation practices, update our internal procedures to allow users to notify of illegal content, and create internal mechanisms to handle complaints.

Failures to comply with the DSA obligations may result in fines up to 6% of global turnover.

In addition, privacy advocates and industry groups have proposed, and may propose, standards with which we are legally or contractually bound to comply.

Our employees and personnel may use generative AI technologies to perform their work, and the disclosure and use of personal data in generative AI technologies is subject to various privacy laws and other privacy obligations.

Governments have passed and are likely to pass additional laws regulating generative AI.

this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits.

We also use AI/ML to assist us in making certain decisions, which is regulated by certain privacy laws.

For example, certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision-making, which may be incompatible with our use of AI/ML.

These obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI/ML, or prevent, or limit our use of AI/ML.

Furthermore, the FTC has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI/ML, where the FTC alleges those companies have violated privacy and consumer protection laws.

If we cannot use AI/ML, or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.

Furthermore, in Europe, the proposed European Artificial Intelligence Regulation (EU AI Act), which has extraterritorial scope, will impose onerous obligations for providers and deployers of AI-related systems.

Certain jurisdictions have enacted data localization laws and cross-border personal data transfer laws, which could make it more difficult to transfer information across jurisdictions (such as transferring or receiving personal data that originates in the EU or in other foreign jurisdictions).

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Additionally, the SCCs impose additional compliance burdens, such as conducting transfer impact assessments to determine whether additional security measures are necessary to protect the at-issue personal data.

Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating the GDPR's cross-border data transfer limitations.

In addition, Switzerland and the U.K.

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that do not provide an adequate level of personal data protection, and certain countries outside Europe (e.g.

Russia, China, Brazil) have also passed or are considering laws requiring local data residency, or otherwise impeding the transfer of personal data across borders, any of which could increase the cost and complexity of doing business.

If we cannot implement a valid compliance mechanism for cross-border data transfers, we may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal data from Europe or other foreign jurisdictions.

Brazil, China, Russia) have also passed or are considering laws requiring local data residency, or otherwise impeding the transfer of personal data across borders, any of which could increase the cost and complexity of doing business.

Although there are currently various mechanisms that may be used to transfer personal data from the EEA, U.K., and Switzerland to the U.S.

in compliance with law, such as the U.K.'s International Data Transfer Agreement / Addendum, the EU-U.S.

Data Privacy Framework, and the Swiss-U.S.

Data Privacy Framework and the U.K.

extensions thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the U.S.

If we were unable to implement or maintain a valid compliance mechanism for cross-border data transfers, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as the EEA) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, and injunctions against processing or transferring personal data from the EEA or other foreign jurisdictions.

The inability to import personal data to the U.S.

could significantly and negatively impact our business operations, including by limiting our ability to collaborate with parties that are subject to such cross-border data transfer or localization laws, by or requiring us to increase our personal data processing capabilities and infrastructure in foreign jurisdictions at significant expense.

Our obligations related to data privacy and security are quickly changing in an increasingly stringent fashion, creating some uncertainty as to the effective future legal framework.

Use and development of AI and ML systems is also an area of developing laws, rules, and regulations.

Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions.

Preparing for and complying with these obligations requires significant resources and may necessitate changes to our information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.

In addition, these obligations may require us to change our business model.

Additionally, companies that transfer personal data out of the EEA and U.K.

to other jurisdictions, particularly to the U.S., are subject to increased scrutiny from regulators, individual litigants, and activist groups.

Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of the EEA for allegedly violating the GDPR's cross-border data transfer limitations.

In addition to data privacy and security laws, we are contractually subject to industry standards adopted by industry groups, and we may become subject to additional such obligations in the future.

Our obligations related to data privacy and security (and consumers' data privacy expectations) are quickly changing, becoming increasingly stringent, and creating uncertainty.

Our business model materially depends on our ability to process personal data, so we are particularly exposed to the risks associated with the rapidly changing legal landscape.

For example, we may be at heightened risk of regulatory scrutiny, and any changes in the regulatory framework could require us to fundamentally change our business model.

Moreover, despite our efforts, our personnel or third parties upon whom we rely may fail to comply with such obligations, which could negatively impact our business operations and compliance posture.

For example, we may be at heightened

risk of regulatory scrutiny, and any changes in the regulatory framework could require us to fundamentally change our business model.

We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations.

Moreover, despite our efforts, our personnel or the third parties upon whom we rely may fail to comply with such obligations, which could negatively impact our business operations and compliance posture.

For example, any failure by a third-party processor to comply with applicable laws, regulations, or contractual obligations could result in adverse effects, including inability to or interruption in our ability to operate our business and proceedings against us by governmental entities or others.

If we fail, or are perceived to have failed, to address or comply with data privacy and security obligations, we could face significant consequences.

These consequences may include, but are not limited to, government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar);

litigation (including class- related claims);

If we or the third parties upon whom we rely fail, or are perceived to have failed, to address or comply with data privacy and security obligations, we could face significant consequences, including, but not limited to:

government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar);

litigation (including class action claims) and mass arbitration demands;

additional reporting requirements and/or oversight;

bans on processing personal data;

temporary or permanent bans on processing personal data;

orders to destroy or not use personal data;

and imprisonment of company officials.

In particular, plaintiffs have become increasingly more active in bringing privacy-related claims against companies, including class action claims and mass arbitration demands.

Some of these claims allow for the recovery of statutory damages on a per violation basis, and if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations.

Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to:

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adverse publicity;

or revision or restructuring of our operations.

Additionally, we publish privacy policies and other documentation regarding our processing of personal data.

or substantial changes to our business model or operations.

Additionally, we publish privacy policies, marketing materials and other statements, such statements regarding our compliance with certain certifications or self-regulatory principles, regarding data privacy and security.

If these policies, material, or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.

Although we endeavor to comply with our privacy policies and other data protection obligations, we may at times fail to do so or may be perceived to have failed to do so.

Moreover, despite our efforts, we may not be successful in achieving compliance if our employees, contractors, service providers, or vendors fail to comply with our published policies and documentation.

Such failures can subject us to potential foreign, federal, state, and local action if they are found to be deceptive, unfair, or misrepresentative of our actual practices.

Such failures could subject us to potential foreign, federal, state, and local action..

Claims that we have violated individuals’ privacy rights or failed to comply with privacy policies and other data protection obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.

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however, we have remediated the incident and notified all affected individuals and relevant data protection authorities as required under applicable privacy laws.

While we do not consider this to be a material event, the investigations are still ongoing.

Both investigations were recently finalized.

The Turkish authority imposed a fine of approximated $4 thousand.

The Romanian investigation resulted in the imposition of a 70 thousand Euro penalty in addition to various reporting and oversight obligations.

The result of these investigations could impact our brand reputation, subject us to monetary remedies and costs, interrupt or require us to change our business practices, divert resources and the attention of management from our business, or subject us to other remedies that adversely affect our business .

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and other adverse consequences.

In the ordinary course of our business, we may process proprietary, confidential, and sensitive data, including personal data, intellectual property, and trade secrets.

We may rely on third-party service providers, sub-processors, and technologies to operate critical business systems to process sensitive information in a variety of contexts, including without limitation, third-party providers of cloud-based infrastructure, encryption and authentication technology, employee email, content delivery to customers, and other functions.

In the ordinary course of our business, we and the third parties upon which we rely process proprietary, confidential, and sensitive information, including personal data, intellectual property, and trade secrets.

Cyberattacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems and those of the third parties upon which we rely.

Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer "hackers", threat actors, "hacktivists", organized criminal threat actors, personnel (such as employee theft or misuse), and sophisticated nation-state and nation-state supported actors.

Some actors now engage and are expected to continue to engage in cyberattacks, including without limitation, nation-state actors for geopolitical reasons, in conjunction with military conflicts and defense activities.

During times of geopolitical and other major conflicts, we, the third-party service providers upon which we rely, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory cyberattacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell, and distribute our goods and services.

We and the third parties upon which we rely may be subject to a variety of evolving threats.

These include but are not limited to;

social-engineering attacks (including through deepfakes, which may be increasingly difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, ransomware attacks, supply chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, attacks enhanced or facilitated by AI, and other similar threats.

In particular, severe ransomware attacks have become increasingly prevalent and can lead to significant interruptions in our operations, ability to provide our products or services, loss of sensitive data and income, reputational harm, and diversion of resources.

Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.

We are incorporated into the supply chain of a large number of companies worldwide and, as a result, if our solutions are compromised, a significant number or, in some instances, all of our customers, and their data could be simultaneously affected.

The potential liability and associated consequences we could suffer as a result of such a large-scale event could be catastrophic, and result in irreparable harm.

In addition, remote work has become more common, and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers, and devices outside of our premises or network, including working at home, while in transit, and in public locations.

Future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities' systems and technologies.

Furthermore, we may discover security issues that were not found during due diligence of such acquired, or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program,

We rely on third-party service providers, sub-processors, and technologies to operate critical business systems to process sensitive information in a variety of contexts, including without limitation, third-party providers of cloud-based infrastructure, encryption and authentication technology, employee email, content delivery to customers, and other functions.

Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.

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While we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.

Cyberattacks, malicious internet-based activity, and online and offline fraud are prevalent and continue to increase.

These threats come from a variety of sources, including traditional computer “hackers,” threat actors, "hacktivists," organized criminal threat actors, personnel (such as employee theft or misuse), and sophisticated nation-state and nation-state supported actors.

We and the third parties upon which we rely may be subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, and other similar threats.

Some actors now engage and are expected to continue to engage in cyberattacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.

During times of war and other major conflicts, we, the third-party service providers upon which we rely, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory cyberattacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell, and distribute our goods and services.

Ransomware attacks have become increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds.

Similarly, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems (including our products/services) or the third- party information technology systems that support us and our services.

We are incorporated into the supply chain of a large number of companies worldwide and, as a result, if our solutions are compromised, a significant number of companies could be simultaneously affected.

The potential liability and associated consequences we could suffer as a result of such a large-scale event could be catastrophic and result in irreparable harm.

Remote work has become more common and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit, and in public locations.

Future business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.

Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.

Any of the previously identified or similar threats could cause a security incident or other interruption.

A security incident or other interruption could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information.

A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our platform.

In addition, supply chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners' supply chains have not been compromised.

While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.

While we take steps to detect and remediate vulnerabilities, we may be unable in the future to detect vulnerabilities in our information technology systems because such threats and techniques change frequently, are often sophisticated in nature, and may not be detected until after a security incident has occurred.

Despite our efforts to identify and remediate vulnerabilities, if any, in our information

technology systems (including our products), our efforts may not be successful.

These vulnerabilities may pose material risks to our business.

Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.

Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents.

We take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of third parties upon which we rely).

We may not, however, detect and remediate all such vulnerabilities including on a timely basis.

Even if we have issued or otherwise made available patches or information to address vulnerabilities in our software applications, products, or services, our customers may be unwilling or unable to deploy such patches and use such

information effectively and in a timely manner.

Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities, which could lead to such vulnerabilities being exploited and result in a security incident.

Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, or disclosure of, or access to, our sensitive information or information technology systems, or those of the third parties upon which we rely.

A security incident or other interruption could disrupt our ability (and that of third parties upon which we rely) to provide our platform.

We may expend significant resources or modify our business activities to try to protect against security incidents.

Certain data privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive information.

Applicable data privacy and security obligations may require us to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents.

Such disclosures are costly, and the disclosures or the failure to comply with such requirements could lead to adverse consequences.

If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences.

These consequences may include:

government enforcement actions (for example, investigations, fines, penalties, audits, and inspections);

If we (or a third-party upon which we rely) experience a security incident, or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections);

additional reporting requirements and/or oversight;

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monetary fund diversions;

diversion of management attention;

interruptions in our operations (including availability of data);

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and other similar harms.

Security incidents and attendant consequences may cause customers to stop using our platform and products, deter new customers from using our platform and products, and negatively impact our ability to grow and operate our business.

A security breach may cause us to breach customer contracts.

For example, the investigation conducted by Romanian regulatory authorities in connection with our 2020 security incident resulted in the imposition of a 70 thousand Euro penalty in addition to various reporting and oversight obligations.

Security incidents and attendant consequences may prevent customers from using or cause customers to stop using our platform and products, deter new customers from using our platform and products, and negatively impact our ability to grow and operate our business.

A security incident may cause us to breach customer contracts.

Our agreements with certain customers may require us to use industry-standard or reasonable measures to safeguard personal information.

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There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages, and in some cases our customer agreements do not limit our remediation costs or liability with respect to data breaches.

In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.

Further, sensitive information belonging to us or our customers could be leaked, disclosed, or revealed as a result of, or in connection with, our employees', personnel's, or vendors' use of generative AI technologies.

Any sensitive information (including confidential, competitive, proprietary, or personal data) that we input into a third-party generative AI/ML model could be leaked or disclosed to others, including if sensitive information is used to train the third party's AI/ML model.

Additionally, where an AI/ML model ingests personal data and makes connections using such data, those technologies may reveal other personal or sensitive information generated by the model.

Additionally, we face unique threats and vulnerabilities as a SaaS company, including, but not limited to, adverse consequences resulting from any vulnerabilities in our platform and products and customer misuse of our platform and products.

The reliability and continuous availability of our platform and products is critical to our success.

However, software such as ours can contain errors, defects, security vulnerabilities, or software bugs that are difficult to detect and correct, particularly when such vulnerabilities are first introduced, or when new versions or enhancements of our platform or products are released.

Additionally, even if we are able to develop a patch or other fix to address such vulnerabilities, such fix may be difficult to push out to our customers, or otherwise be delayed.

Additionally, our business depends upon the appropriate and successful implementation of our platform and products by our customers.

If our customers fail to use our platform or products according to our specifications, our customers may suffer a security incident on their own systems or other adverse consequences.

Even if such an incident is unrelated to our security practices, it could result in us incurring significant economic and operational costs in investigating, remediating, and implementing additional measures to further protect our customers from their own vulnerabilities and could result in reputational harm.

Litigation resulting from security breaches may adversely affect our business.

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We could be required to fundamentally change our business activities and practices or modify our products and/or platform capabilities in response to such litigation, which could have an adverse effect on our business.

If a security breach were to occur and the confidentiality, integrity, or availability of personal information was disrupted, we could incur significant liability or our platform, systems, or networks may be perceived as less desirable, which could negatively affect our business and damage our reputation.

We may not have adequate insurance coverage for security incidents or breaches.

The successful assertion of one or more large claims against us that exceeds our available insurance coverage or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements) could have an adverse effect on our business.

In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.

If a security breach were to occur and the confidentiality, integrity, or availability of personal data or sensitive information was disrupted, we could incur significant liability or our platform, systems, or networks may be perceived as less desirable, which could negatively affect our business and damage our reputation.

We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.

Risks Related to Regulatory Compliance and Governmental Matters

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We are subject to the U.S.

domestic bribery laws, the United Kingdom Bribery Act, and other anti-corruption and anti-money laundering laws in the countries in which we conduct activities.

domestic bribery laws, the U.K.

Bribery Act, and other anti-corruption and anti-money laundering laws in the countries in which we conduct activities.

Due to the international scope of our operations, we must comply with these laws in each jurisdiction where we operate.

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Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.

As we increase our international sales and business and sales to the

public sector, we may engage with business partners and third-party intermediaries to market our products and to obtain necessary permits, licenses, and other regulatory approvals.

As we increase our international sales and business and sales to the public sector, we may engage with business partners and third-party intermediaries to market our products and to obtain necessary permits, licenses, and other regulatory approvals.

In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities.

We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.

While we have policies and procedures to address compliance with such laws, we cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.

While we have policies and procedures to address compliance with such laws, we cannot provide assurance that all of our employees and agents will not take actions in violation of our policies and applicable law for which we may be ultimately held responsible.

As we increase our international sales and business, our risks under these laws may increase.

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

If we are unable to enhance our platform and products to keep pace with evolving customer requirements, or if new technologies emerge that are able to deliver competitive products at lower prices, more efficiently, more conveniently, or more securely than our platform, our business, financial condition, and results of operations could be adversely affected.

If we are unable to enhance our platform and products to keep pace with evolving requirements, or if new technologies emerge that are able to deliver competitive products at lower prices, more efficiently, more conveniently, or more securely than our platform, our business, financial condition, and results of operations could be adversely affected.

Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and are less favorable than terms agreed with private sector customers, including preferential pricing or “most favored nation” terms and conditions or contract provisions that are otherwise time-consuming and expensive to satisfy.

In the U.S., applicable federal contracting regulations change frequently, and the President may issue executive orders requiring federal contractors to adhere to new compliance requirements after a contract

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

Even if we do meet these special standards or requirements, the additional costs associated with providing our platform to government and highly regulated customers could harm our results of operations.

In addition, engaging in sales activities to foreign governments introduces additional compliance risks specific to the FCPA, the United Kingdom Bribery Act, and other similar statutory requirements prohibiting bribery and corruption in the jurisdictions in which we operate.

In addition, engaging in sales activities to foreign governments introduces additional compliance risks specific to the FCPA, the U.K.

Bribery Act, and other similar statutory requirements prohibiting bribery and corruption in the jurisdictions in which we operate.

Such entities may have statutory, contractual, or other legal rights to terminate contracts with us or our partners for convenience or for other reasons.

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We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls.

Our business activities are subject to various export, import, and trade and economic sanction laws and regulations, including, among others, the U.S.

Export Administration Regulations, administered by the U.S.

Department of Commerce’s Bureau of Industry and Security, and economic and trade sanctions regulations maintained by the U.S.

Department of the Treasury’s Office of Foreign Assets Control, which we refer to collectively as Trade Controls.

Trade Controls may prohibit or restrict the sale or supply of certain products, including encryption items and other technology, and services to certain governments, persons, entities, countries, and territories, including those that are the target of comprehensive sanctions.

Our business activities are subject to Trade Controls which may prohibit or restrict the sale or supply of certain products, including encryption items and other technology, and services to certain governments, persons, entities, countries, and territories, including those that are the target of comprehensive sanctions.

While we have implemented controls designed to promote and achieve compliance with applicable Trade Controls, our platform and products may have been provided in the past and could in the future be provided in violation of such laws, despite the precautions we take.

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Any change in Trade Controls could result in decreased use of our platform and products by, or decrease in our ability to export or sell our platform and products to, existing or potential customers.

Any decreased use of our platform or products or limitation on our ability to export or sell our platform and products would adversely affect our business, results of operations, and growth prospects.

The evolving geopolitical situation in Ukraine has resulted in Trade Controls being implemented by the U.S., the United Kingdom, the EU, Australia, and Japan and other countries against officials, individuals, entities, regions, and industries in Russia, Ukraine, and Belarus, as well as counter sanctions by Russia.

Any decreased use of our platform or products or limitation on our ability to export or sell our platform and products would adversely affect our business, financial condition, results of operations, and growth prospects.

For example, over time, the U.S.

has imposed Trade Controls that restrict the export of U.S.-regulated products and technology in response to geopolitical actions.

Specifically, in 2022, the U.S.

significantly increased U.S.

export controls on AI and advanced computing products.

In 2023, the U.S.

added to the restrictions in those areas.

During this time, the U.S.

has increasingly added Chinese companies to the prohibited lists.

These and potential future restrictions could adversely affect our financial performance and result in reputational harm to us.

The Russian military operation in Ukraine, initiated in 2022, resulted in the imposition of financial and other sanctions and Trade Controls against Russia and Belarus.

(We had no exports to Russia and Belarus in fiscal year 2024).

Such Trade Controls and any further restrictions that may be promulgated by relevant governmental authorities could adversely affect our business.

See "—Risks Related to Our Business, Products, Operations, and Industry—The Russian military action in Ukraine may produce near and longer term economic and geopolitical disruption which may harm our business." for additional information.

Risks Related to Our Intellectual Property

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We may not be able to protect our intellectual property rights if, for example, we are unable to enforce our rights against infringement or misappropriation, or if we do not detect unauthorized use of our intellectual property rights.

If we fail to protect our intellectual property rights adequately, our competitors may gain access to our proprietary technology

and develop and commercialize substantially identical products, services, or technologies and our business, financial condition, results of operations, or prospects may be harmed.

If we fail to protect our intellectual property rights adequately, our competitors may gain access to our proprietary technology and develop and commercialize substantially identical products, services, or technologies, and our business, financial condition, results of operations, or growth prospects may be harmed.

In addition, defending our intellectual property rights may entail significant expense.

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Further, intellectual property law, including statutory and case law, particularly in the U.S., is constantly developing, and any changes in the law could make it harder for us to enforce our rights.

The value of our intellectual property could diminish if others assert rights in or ownership of our trademarks, patents, and other intellectual property rights, or adopt trademarks that are similar to our trademarks.

The value of our intellectual property could diminish if

others assert rights in or ownership of our trademarks, patents, and other intellectual property rights, or adopt trademarks that are similar to our trademarks.

We may be unable to successfully resolve these types of conflicts to our satisfaction.

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Companies in the software industry are often required to defend against litigation claims based on allegations of infringement, misappropriation, or other violations of intellectual property rights.

Our technologies may not be able to withstand any third-party

claims against their use.

Our technologies may not be able to withstand any third-party claims against their use.

In addition, many companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them than we can.

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Conversely, the patent owner need only prove infringement by a preponderance of the evidence, which is a lower burden of proof.

We do not currently have a large number of issued patents, which could prevent us from deterring patent infringement claims through our own patent portfolio, and our competitors and others may now and in the future have significantly larger and more mature patent portfolios than we have.

Competitors and others may now and in the future have significantly larger and more mature patent portfolios than we have, which could prevent us from deterring patent infringement claims through our own patent portfolio,.

Any litigation may also involve patent holding companies or other adverse patent owners that have no relevant product revenue, and therefore, our patents may provide little or no deterrence as we would not be able to assert them against such entities or individuals.

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Although we carry general liability and intellectual property insurance, our insurance may not cover potential claims of this type or may not be adequate to indemnify us for all liability that may be imposed.

We cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on our business, financial condition, or results of operations.

We cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on our business, financial condition, or results of

Any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more of the following:

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• limit the manner in which we use our brands, or prevent us from using our brands in particular jurisdictions.

Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and results of operations.

Even if the claims do not result in litigation or are resolved in our favor, these claims and the time and resources necessary to resolve them could divert the resources of our management and harm our business, financial condition, and results of operations.

Moreover, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our Class A common stock.

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If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our Class A common stock.

Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products and platform capabilities, impair the functionality of our products and platform capabilities, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our products, or injure our reputation.

Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products and platform capabilities, impair the functionality of our products and platform capabilities, delay introductions of new functionality, result in our substituting inferior or more costly technologies into our products, or injure our reputation.

Any of the foregoing could adversely impact our business, financial condition, and results of operations.

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We rely heavily on trade secrets and confidentiality agreements to protect our unpatented know-how, technology, and other proprietary information and to maintain our competitive position.

However, trade secrets and know-how can be difficult to protect.

However, trade secrets

and know-how can be difficult to protect.

We seek to protect these trade secrets and other proprietary technology, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, consultants, and other third parties, including suppliers and other partners.

However, we cannot guarantee that we have entered into such agreements with each party that has or may have had access to our proprietary information, know-how, and trade secrets.

Moreover, no assurance can be given that these agreements will be effective in controlling access to, distribution, use, misuse, misappropriation, reverse engineering, or disclosure of our proprietary information, know-how, and trade secrets.

Moreover, no assurance can be given that these agreements will be effective in controlling access to, or distribution, use, misuse, misappropriation, reverse engineering, or disclosure of our proprietary information, know-how, and trade secrets.

Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our products and platform capabilities.

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Any of the foregoing could adversely impact our business, financial condition, and results of operations.

We use open source software in our products, which could negatively affect our ability to sell our services or subject us to litigation or other actions.

We use open source software in our products, which could negatively affect our ability to sell our platform and products or subject us to litigation or other actions.

We use open source software in our products and we expect to continue to incorporate open source software into our products in the future.

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If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of our products that contained the open source software, and required to comply with onerous conditions or restrictions on these products, which could disrupt the distribution and sale of these products.

From time to time, there have been claims challenging the ownership rights in open source software against companies that incorporate it into their products and the licensors of such open source software provide no warranties or indemnities with respect to such claims.

warranties or indemnities with respect to such claims.

As a result, we and our customers could be subject to lawsuits by parties claiming ownership of what we believe to be open source software.

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Risks Related to Our International Operations

Our current operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges.

Our current operations are international in scope, and we may pursue further geographic expansion, creating a variety of operational challenges.

We currently operate internationally, and a component of our growth strategy involves the further expansion of our operations and customer base internationally.

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generated 57% and 54% of our revenue for fiscal years 2024 and 2023, respectively.

Beyond the U.S., we have operational presence internationally, including in Romania, the United Kingdom, and a number of other countries in Europe, Australia, Brazil, Canada, China, India, Israel, Japan, Mexico, Singapore, South Korea, Turkey, and the United Arab Emirates,

among others.

Beyond the U.S., we have operational presence internationally, including in Romania, the U.K., and a number of other countries in Europe, Australia, Brazil, Canada, China, India, Israel, Japan, Mexico, Singapore, South Korea, Turkey, and the United Arab Emirates, among others.

We are continuing to adapt to and develop strategies to further address international markets, but there is no guarantee that such efforts will have the desired effect.

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• unexpected changes in laws or regulatory requirements, including tax laws and regulations;

• more stringent regulations relating to privacy and data security and the unauthorized use of or access to commercial and personal data, particularly in Europe;

• more stringent regulations relating to privacy and data security and the unauthorized use of or access to commercial and personal data, particularly in the EU;

• differing and potentially more onerous labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the U.S., including deemed hourly wage and overtime regulations in these locations;

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• limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents;

• political instability or terrorist activities;

• the impacts of political instability, military conflicts, or terrorist activities on our employees, our business, and the global economic environment;

• an outbreak of a contagious disease, which may cause us or our third-party providers and/or customers to temporarily suspend our or their respective operations in the affected city or country;

• exposure to liabilities under anti-corruption and anti-money laundering laws, including the FCPA, U.S.

bribery laws, the United Kingdom Bribery Act, and similar laws and regulations in other jurisdictions;

bribery laws, the U.K.

Bribery Act, and similar laws and regulations in other jurisdictions;

• exposure to anti-competition laws in foreign jurisdictions that may conflict with or be more restrictive than similar U.S.

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• adverse changes to domestic and foreign tax laws and regulations, and the requirements of foreign exchange controls, which could make it difficult to repatriate earnings and cash.

• the impact of the Russian military action and evolving geopolitical situation in Ukraine and the near- and longer-term effects on our employees, our business, and the global economic environment.

Although we have taken steps designed to ensure that UiPath complies with applicable regulations including evolving U.S.

Although we have taken steps designed to ensure that we comply with applicable regulations including evolving U.S.

and international sanctions, these steps involve additional compliance costs and operational costs.

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If we fail to maintain effective internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.

We are subject to the reporting requirements of the Exchange Ac t , SO X , the rules and regulations of the New York Stock Exchange, and other securities rules and regulations that impose various requirements on public companies.

We are subject to the reporting requirements of the Exchange Act, SOX , the rules and regulations of the New York Stock Exchange, and other securities rules and regulations that impose various requirements on public companies.

Our management and other personnel devote substantial time and resources to comply with these rules and regulations.

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We are also required to have our independent registered public accounting firm attest to, and issue an opinion on, the effectiveness of our internal control over financial reporting.

If we are unable to assert that our internal control over financial reporting is effective, or if, when required, our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our Class A common stock to decline.

Any failure to maintain effective disclosure controls and procedures and internal control over financial reporting could have a material and adverse effect on our business and results of operations.

If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our Class A common stock to decline.

Any failure to maintain effective disclosure controls and procedures and internal control over financial reporting could have a material and adverse effect on our business, financial condition, and results of operations.

We are exposed to fluctuations in currency exchange rates, which affect our results of operations.

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Changes in exchange rates can also affect our results of operations when the value of sales and expenses of foreign subsidiaries are translated to U.S.

We cannot accurately predict the impact of future

exchange rate fluctuations on our results of operations.

We cannot accurately predict the impact of future exchange rate fluctuations on our results of operations.

Given the volatility of exchange rates, we may not be able to effectively manage our currency risks, and any volatility in currency exchange rates may have an adverse effect on our financial condition, cash flows, and profitability.

Our corporate structure and intercompany arrangements cause us to be subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which could materially adversely affect our business, financial condition, results of operations, and prospects.

Our international operations and personnel have rapidly expanded to support our business in numerous international markets.

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For example, the IRS or another tax authority could challenge our allocation of income by tax jurisdiction and the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property in connection with our intercompany research and development cost sharing arrangement and legal structure.

The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of the various jurisdictions, including the U.S., to our international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.

The authorities in these jurisdictions could review our tax returns or require us to file tax returns in jurisdictions in which we are not currently filing and could impose additional tax, interest, and penalties.

We are currently under audit in certain jurisdictions, and topics as described above have been raised in the tax audits in Romania and India.

We believe our position is reasonable, however, the administrative procedures in finalizing the tax audits are in process and potential disputes and/or litigation may follow.

tax laws or interpretations of existing tax laws and policies, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.

The authorities in these jurisdictions could audit our tax returns or require us to file tax returns in jurisdictions in which we are not currently filing and could impose additional tax, interest, and penalties.

In addition, the authorities could claim that various withholding requirements apply to us or our subsidiaries, assert that benefits of tax treaties are not available to us or our subsidiaries, or challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing.

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Our financial statements could fail to reflect adequate reserves to cover such contingencies.

Furthermore, we are subject to periodic audits in the various jurisdictions in which we operate, which if determined aversely could have an adverse impact on our financial conditions.

Furthermore, we are subject to periodic audits in the various jurisdictions in which we operate.

We regularly assess the likelihood of an adverse outcome resulting from these audits to determine the adequacy of our accruals for taxes.

Although we believe our estimates are reasonable, the final outcome of audits could materially differ from our expectations.

Changes in tax laws or tax rulings could materially affect our financial condition, results of operations, and cash flows.

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Changes in tax laws, regulations, or rulings, or changes in interpretations of existing laws and regulations, could materially affect our financial condition and results of operations and we must monitor such changes closely.

For example, the T CJA , the Coronavirus Aid, Relief, and Economic Security Act enacted in 2020 and the Inflation Reduction Act enacted in 2022, made many significant changes to the U.S.

For example, the TCJA , the Coronavirus Aid, Relief, and Economic Security Act enacted in 2020, and the Inflation Reduction Act enacted in 2022, made many significant changes to the U.S.

tax laws, especially with regard to international aspects of taxation.

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and over 15 years for research activities conducted outside the U.S.

Although there have been legislative proposals to repeal or defer the capitalization requirement to later years, there can be no assurance that the provision will be repealed or otherwise modified.

Although there has been legislative adoption in the U.S.

House of Representatives to amend the capitalization requirement, there can be no assurance that the provision will be further adopted by the U.S.

Senate or otherwise modified.

Similarly, as our operations are material in Romania, legislative changes have been introduced to enact for fiscal years starting after January 1, 2024 an Alternative Minimum Corporate Tax and we will be subject to this legislation in the future.

Future guidance from the IRS and other tax authorities with respect to any existing or new laws may affect us, and certain aspects of such laws could be repealed or modified in future legislation.

In addition, it is uncertain if and to what extent various states in the U.S.

will conform to U.S.

federal tax laws.

In addition, the OEC D has been working on a BEPS Project and issued a report in 2015, an interim report in 2018, and has issued additional guidelines, model rules, and final proposals that may change various aspects of the existing framework under which our tax obligations are determined in many of the countries in which we do business.

In addition, the OECD has been working on a BEPS Project and issued a report in 2015, an interim report in 2018, and has issued additional guidelines, model rules, and final proposals that may change various aspects of the existing framework under which our tax obligations are determined in many of the countries in which we do business.

In particular, the OECD is coordinating the implementation of rules to be adopted from 2023 for taxing the digital economy, specifically with respect to nexus and profit allocation (Pillar One), and for a global minimum tax (Pillar Two).

While these and other BEPS initiatives are in the final stages of approval and/or implementation, we

cannot predict their outcome or what potential impact they may have on our tax obligations and operations or our financial statements, up to their final enactment in national and international legislation.

Additionally, the European Commission and several countries have issued (and continue to issue) proposals that could change various aspects of the current tax framework under which we are taxed.

These proposals include changes to the existing framework to calculate income tax, as well as proposals to change or impose new types of non-income taxes, including taxes based on a percentage of revenue or online sale.

As these and other BEPS initiatives are subject to further final negotiation and implementation by each member country, we cannot predict the timing and ultimate outcome or the potential impact it may have on our tax obligations, operations, or our financial statements.

Additionally, the European Commission and several countries have issued (and continue to issue) legislation and proposals that could change various aspects of the current tax framework under which we are taxed.

Romanian Alternative Minimum Corporate Tax).

For example, several countries have proposed or enacted taxes applicable to digital services which could apply to our business (subject to any scaling back or withdrawal of such proposals or enactments following the implementation of Pillar One and Pillar Two and/or the introduction of mechanisms to avoid double taxation currently being assessed).

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Such changes may also apply retroactively to our historical operations and result in taxes greater than the amounts estimated and recorded in our financial statements.

Changes in our effective tax rate or tax liability may have an adverse effect on our results of operations.

We are subject to income taxes in the U.S.

and various foreign jurisdictions.

The determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment by management, and there are many transactions where the ultimate tax determination is uncertain.

We believe that our provision for income taxes is reasonable, but the ultimate tax outcome may differ from the amounts recorded in our consolidated financial statements and may materially affect our financial results in the period or periods in which such outcome is determined.

Our effective tax rate could increase due to several factors, including:

• changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates;

• changes in tax laws, tax treaties, and regulations or the interpretation of them;

• changes to our assessment about our ability to realize our DTAs that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business;

• the outcome of current and future tax audits, examinations, or administrative appeals;

• changes international tax frameworks;

• the effects of acquisitions.

Any of these developments could adversely affect our results of operations.

We could be required to collect additional sales, use, transfer, or other indirect taxes or be subject to other tax liabilities that may increase the costs our customers would have to pay for our products and adversely affect our results of operations.

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In response to this ruling, or otherwise, states or local governments may adopt, or begin to enforce, laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions.

A successful assertion

by one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest.

A successful assertion by one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest.

The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us and put us at a competitive disadvantage if they do not impose similar obligations on our competitors.

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Moreover, under current law, NOLs generated in taxable years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such NOLs generally will be limited to 80% of current year taxable income.

The extent to which state income tax law will conform to federal is uncertain.

NOLs generated in taxable years beginning before January 1, 2024 are permitted to be carried forward for 7 taxable years under the Romania income tax law.

In 2023, the Romanian government approved Emergency Ordinance No.

Under the Ordinance, NOLs generated in taxable years beginning after January 1, 2024 can be carried forward for 5 years, and the utilization of the NOLs is limited to 70% of current year taxable income.

In general, under Section 382 of the IRC , a corporation that undergoes an “ownership change” (as defined under Section 382 of the IRC and applicable Treasury Regulations) is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income.

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There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities, including for state tax purposes.

For these reasons, we may not be able to utilize a material portion of our NOLs, even if we attain profitability, which could potentially result in increased future tax liability to us and could adversely affect our results of operations and financial condition.

Our reported financial results may be adversely affected by changes in GAAP.

GAAP is subject to interpretation by the F ASB , SEC, and various bodies formed to promulgate and interpret appropriate accounting principles.

A change in these principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions already completed before the announcement of a change.

If our estimates or judgments relating to our critical accounting estimates prove to be incorrect, our results of operations could be adversely affected.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

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.

Significant estimates and judgments involve revenue recognition and stock-based compensation.

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 market price of our Class A common stock.

Our revenue recognition policy and other factors may cause variability of our financial results in any given period and make them difficult to predict.

Under AS C 606, Revenue from Contracts with Customers , we recognize revenue when a customer obtains control of promised goods or services are delivered.

The amount of revenue recognized reflects the consideration that we expect to receive in exchange for these goods or services.

Licenses revenue (including the term license portion of Flex Offerings ) is recognized when we transfer control of the respective license to the customer.

Revenue from SaaS and revenue from maintenance and support are recognized ratably over time since

control passes to our customers over the arrangement’s contractual period.

Professional services revenue is recognized as services are rendered.

Furthermore, the presentation of our financial results requires us to make estimates and assumptions that may affect revenue recognition.

In some instances, we could reasonably use different estimates and assumptions, and changes in estimates may occur from period to period.

Given the foregoing factors, our actual results could differ significantly from our estimates.

Comparing our revenue and operating results on a period-to-period basis may not be meaningful, and our past results may not be indicative of our future performance.

For more information on our revenue recognition policy, refer to Note 2, Summary of Significant Accounting Policies —Reven ue Recognition , included in Part II, Item 8 of this Annual Report on Form 10-K.

For these reasons, we may not be able to utilize a material portion of our NOLs, even if we achieve or sustain profitability, which could potentially result in increased future tax liability to us and could adversely affect our results of operations and financial condition.

Risks Related to Ownership of Our Class A Common Stock

The dual class structure of our common stock has the effect of concentrating voting control with Daniel Dines, our Co-Chief Executive Officer, Co-Founder, and Chairman, which will limit your ability to influence the outcome of important decisions.

The dual class structure of our common stock has the effect of concentrating voting control with Daniel Dines, our Chief Innovation Officer, co-founder, and Chairman, which will limit stockholders' ability to influence the outcome of important decisions.

Our Class B common stock has 35 votes per share and our Class A common stock has one vote per share.

Our Co-Chief Executive Officer, Co-Founder, and Chairman, Daniel Dines, collectively with his controlled entities, holds all our outstanding shares of Class B common stock, and beneficially owned shares representing approximately 87% voting power of our outstanding capital stock as of January 31, 2023.

Our Chief Innovation Officer, co-founder, and Chairman, Daniel Dines, collectively with his controlled entities, holds all our outstanding shares of Class B common stock, and beneficially owned shares representing approximately 86% voting power of our outstanding capital stock as of January 31, 2024.

As a result, Mr.

Dines has the ability to control the outcome of matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or our assets, even if his stock ownership represents less than 50% of the outstanding aggregate number of shares of our capital stock.

This concentration of ownership will limit the ability of other stockholders to influence corporate matters and may cause us to make strategic decisions that could involve risks to you or that may not be aligned with your interests.

This concentration of ownership will limit the ability of other stockholders to influence corporate matters and may cause us to make strategic decisions that could involve risks to other stockholders or that may not be aligned with other stockholders' interests.

As a board member, Mr.

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We have not elected to take advantage of the “controlled company” exemption to the corporate governance rules for publicly-listed companies but may do so in the future.

Because our Co-Chief Executive Officer, Co-Founder, and Chairman, Daniel Dines, who, collectively with his controlled entities, holds all our outstanding shares of Class B common stock, and beneficially owns shares representing in excess of 50% of the voting power of our outstanding capital stock, we are eligible to elect the “controlled company” exemption to the corporate governance rules for publicly-listed companies.

Because our Chief Innovation Officer, co-founder, and Chairman, Daniel Dines, who, collectively with his controlled entities, holds all our outstanding shares of Class B common stock, and beneficially owns shares representing in excess of 50% of the voting power of our outstanding capital stock, we are eligible to elect the “controlled company” exemption to the corporate governance rules for publicly-listed companies.

We have not elected to do so.

If we decide to rely on the “controlled company” exemption, then under the corporate governance rules for publicly-listed companies, we would not be required to have a majority of our board of directors be independent, nor would we be required to have a compensation committee or an independent nominating function.

If we choose controlled company status in the future, our status as a controlled company could cause our Class A common stock to be less attractive to certain investors or otherwise harm our trading price.

If we choose controlled company status in the future, our status as a controlled company could cause our Class A common stock to be less attractive to certain investors and adversely affect the market price of our Class A common stock.

We cannot predict the impact our dual class structure may have on the market price of our Class A common stock.

We cannot predict whether our dual class structure, combined with the concentrated control of our Co-Chief Executive Officer, Co-Founder, and Chairman, Daniel Dines, who holds all of the outstanding shares of our Class B common stock, will result in a lower or more volatile market price of our Class A common stock or in adverse publicity or other adverse consequences.

We cannot predict whether our dual class structure, combined with the concentrated control of our Chief Innovation Officer, co-founder, and Chairman, Daniel Dines, who holds all of the outstanding shares of our Class B common stock, will result in a lower or more volatile market price of our Class A common stock or in adverse publicity or other adverse consequences.

Certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indexes.

For example, in July 2017, FTSE Russell and Standard & Poor’s announced that they would cease to allow most newly public companies utilizing dual or

multi-class capital structures to be included in their indices.

Under the announced policies, our dual class capital structure would make us ineligible for inclusion in any of these indices.

Given the sustained flow of investment funds into passive strategies that seek to track certain indexes, exclusion from stock indexes would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors.

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In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.

Any of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our Class A common stock, and they could deter potential acquirers of our company, thereby reducing the likelihood that you would receive a premium for your shares of our Class A common stock in an acquisition.

Any of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our Class A common stock, and they could deter potential acquirers of our company, thereby reducing the likelihood that stockholders would receive a premium for their shares of our Class A common stock in an acquisition.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the U.S.

will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our amended and restated certificate of incorporation provides the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

• any derivative claim or cause of action brought on our behalf;

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will be the exclusive forum for resolving any complaint asserting a cause or causes of action arising under the Securities Act, including all causes of action asserted against any defendant to such complaint.

For the avoidance of doubt, this provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint, and any other professional entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering.

profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering.

While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions.

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• technical factors in the public trading market for our Class A common stock that may produce price movements that may or may not comport with macro, industry, or company-specific fundamentals, including, without limitation, the sentiment of retail investors, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock, and other technical trading factors.

Accordingly, we cannot assure you of the liquidity of an active trading market, your ability to sell your shares of our Class A common stock when desired, or the prices that you may obtain for your shares of our Class A common stock.

The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable.

The lack of an active market may also reduce the fair value of your shares.

Accordingly, we cannot assure stockholders of the liquidity of an active trading market, the ability to sell their shares of our Class A common stock when desired, or the prices that they may obtain for their shares of our Class A common stock.

The lack of an active market may impair stockholders' ability to sell their shares at the time they wish to sell them or at a price that they consider reasonable.

The lack of an active market may also reduce the fair value of their shares.

An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.

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In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation.

We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.

We have been and may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.

Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute all other stockholders.

We expect to issue additional capital stock in the future that will result in dilution to all other stockholders.

We expect to continue to grant equity awards to employees, directors, and consultants under our equity incentive plans.

We expect to continue to grant equity awards to employees and directors under our equity incentive plans.

We may also raise capital through equity financings in the future.

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Any such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the per share value of our Class A common stock to decline.

We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.

As a public company, we incur significant legal, accounting, and other expenses.

SOX, the Dodd-Frank Act , the listing requirements of the New York Stock Exchange, and other applicable securities rules and regulations impose various requirements on public companies.

Our management and other personnel devote a substantial amount of time to compliance with these requirements.

The increased compliance burden as we transition into large accelerated filer status from “emerging growth company” status and these rules and regulations contribute to increased legal and financial compliance costs and make some activities time-consuming.

As of January 31, 2023, we are no longer an emerging growth company, as defined under the JOBS Act , and will no longer be able to take advantage of certain exemptions from various reporting requirements that are applicable to emerging growth companies.

In particular, we will now be required to, among other things, comply with the auditor attestation requirements of Section 404 of SOX, provide additional disclosure regarding executive compensation in our periodic reports and proxy statements, and hold a nonbinding advisory vote on executive compensation.

In addition, we will no longer be able to use the extended transition period for complying with new or revised accounting standards available to emerging growth companies and will be required to adopt new or revised accounting standards as of the effective dates for public companies.

Such changes may require us to incur additional costs for compliance.

Unresolved Staff Comments

Not applicable.

Our business, financial condition, results of operations, or cash flows could be significantly hindered by the occurrence of a natural disaster, public health crisis, military action, terrorist attack, or other catastrophic event.

In addition, a substantial portion of our operations rely on support from our headquarters in New York City and our office in Bucharest, Romania.

To the extent that such events disrupt our business or the businesses of our current or prospective customers, or adversely impact our reputation, such events could adversely affect our business, financial condition, results of operations, and cash flows.

If our estimates or judgments relating to our critical accounting estimates prove to be incorrect, our results of operations could be adversely affected.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Significant estimates and judgments relate to revenue recognition and stock-based compensation.

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.

What changed 10-K

Item 1A. Risk Factors