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Our business, operating results, financial performance or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.
−Removed: Subscriptions to our Vulnerability Management solutions generate most of our revenues, and if we are unable to continue to renew and grow subscriptions for these solutions, our operating results would suffer.
−Removed: We derived approximately 73% , 74% and 74% of our revenues from subscriptions to our VM solutions for the years ended December 31, 2019 , 2018 and 2017 , respectively.
−Removed: We expect to continue to derive a significant majority of our revenues from subscriptions to our VM solutions.
−Removed: As a result, the market demand for our VM solutions is critical to our continued success.
−Removed: Demand for these solutions is affected by a number of factors beyond our control, including continued market acceptance of our solution for existing and new use cases, the timing of development and release of new products or services by our competitors, technological change, and growth or contraction in our market.
−Removed: Our inability to renew or increase subscriptions for this solution or a decline in price of this solution would harm our business and operating results more seriously than if we derived significant revenues from a variety of solutions.
+Added: Risks Related to Our Business and Industry
+Added: The continued spread of COVID-19, or any similar widespread infectious disease outbreak, could harm our business, financial condition and results of operations.
+Added: In December 2019, an outbreak of COVID-19 originated in Wuhan, China and has since spread to countries around the world.
+Added: On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.
+Added: The spread of COVID-19 has resulted in authorities imposing, and businesses and individuals implementing, numerous unprecedented measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, and shutdowns.
+Added: These measures have impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners.
+Added: The pandemic has significantly increased economic and demand uncertainty.
+Added: It is likely that the current outbreak and continued spread of COVID-19 will cause an economic slowdown, and it is possible that it could cause a global recession, which could decrease demand for our solutions and negatively impact our operating results.
+Added: There is a significant degree of uncertainty and lack of visibility as to the extent and duration of any such slowdown or recession.
+Added: The ultimate extent of the impact of COVID-19 on our business, financial position, results of operations and cash flows will depend on future developments, which are highly uncertain and cannot be predicted at this time.
+Added: These impacts, individually or in the aggregate, could have a material and adverse effect on our business, financial position, results of operations and cash flows.
+Added: Such effect may be exacerbated in the event the pandemic and the measures taken in response to it persist for an extended period of time.
+Added: Under any of these circumstances, the resumption of normal business operations may be delayed or hampered by lingering effects of COVID-19 on our operations, partners, and customers.
Our quarterly operating results may vary from period to period, which could result in our failure to meet expectations with respect to operating results and cause the trading price of our stock to decline.
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seasonal buying patterns of our customers;
−Removed: security breaches, technical difficulties or interruptions with our service;
+Added: actual or perceived security breaches, technical difficulties or interruptions with our service;
changes in the growth rate of the IT, security and compliance market;
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Further, the interpretation and application of international laws and regulations in many cases is uncertain, and our legal and regulatory obligations in foreign jurisdictions are subject to frequent and unexpected changes, including the potential for various regulatory or other governmental bodies to enact new or additional laws or regulations or to issue rulings that invalidate prior laws or regulations.
−Removed: For example, a Data Protection Act that substantially implements the European Union’s General Data Protection Regulation (GDPR) was implemented in the United Kingdom in May 2018, and "Brexit" could also lead to further legislative and regulatory changes.
+Added: For example, a Data Protection Act that substantially implements the European Union’s General Data Protection Regulation (GDPR) was implemented in the United Kingdom in May 2018, and "Brexit" could also lead to further legislative and regulatory changes.
It is unclear, however, how United Kingdom data protection laws or regulations will develop in the medium to longer term, and how data transfers to and from the United Kingdom will be regulated.
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To the extent that we do not effectively scale our platform to maintain performance as our customers expand their use of our platform, our operating results and our business may be harmed.
−Removed: If we are unable to sell subscriptions to additional solutions, our future revenue growth may be harmed and our business may suffer.
−Removed: We will need to increase the revenues that we derive from our current and future solutions other than VM for our business and revenues to grow as we expect.
−Removed: Revenues from our other solutions such as Policy Compliance, PCI Compliance, Web Application Scanning, Web Application Firewall, CMDB Sync, Security Assessment Questionnaire, File Integrity Monitoring, Indication of Compromise, Global IT Asset Inventory, Security Configuration Assessment, Cloud Security Assessment and Patch Management have been relatively modest compared to revenues from our VM solutions.
−Removed: Our future success depends in part on our ability to sell subscriptions to these additional solutions to existing and new customers.
−Removed: This may require more costly sales and marketing efforts and may not result in additional sales.
−Removed: If our efforts to sell subscriptions to additional solutions to existing and new customers are not successful, our business may suffer.
+Added: If we are unable to renew existing subscriptions for our IT, security and compliance solutions, sell additional subscriptions for our solutions and attract new customers, our operating results would be harmed.
+Added: We offer our Qualys Cloud Platform and integrated suite of solutions pursuant to a software-as-a-service model, and our customers purchase subscriptions from us that are generally one year in length.
+Added: Our customers have no obligation to renew their subscriptions after their subscription period expires, and they may not renew their subscriptions at the same or higher levels or at all.
+Added: As a result, our ability to grow depends in part on customers renewing their existing subscriptions and purchasing additional subscriptions and solutions.
+Added: Our customers may choose not to renew their subscriptions to our solutions or purchase additional solutions due to a number of factors, including their satisfaction or dissatisfaction with our solutions, the prices of our solutions, the prices of products or services offered by our competitors, reductions in our customers’
+Added: spending levels due to the macroeconomic environment or other factors.
+Added: If our customers do not renew their subscriptions to our solutions, renew on less favorable terms, or do not purchase additional solutions or subscriptions, our revenues may grow more slowly than expected or decline and our operating results would be harmed.
+Added: In addition, our future growth depends in part upon increasing our customer base.
+Added: Our ability to achieve significant growth in revenues in the future will depend, in large part, upon continually attracting new customers and obtaining subscription renewals to our solutions from those customers.
+Added: If we fail to attract new customers, our revenues may grow more slowly than expected and our operating results would be harmed.
If the market for cloud solutions for IT, security and compliance does not evolve as we anticipate, our revenues may not grow and our operating results would be harmed.
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Moreover, many organizations have invested substantial personnel and financial resources to integrate on-premise software into their businesses, and as a result may be reluctant or unwilling to migrate to a cloud solution.
−Removed: Organizations that use on-
−Removed: premise security products, such as network firewalls, security information and event management products or data loss prevention solutions, may also believe that these products sufficiently protect their IT infrastructure and deliver adequate security.
+Added: Organizations that use on-premise security products, such as network firewalls, security information and event management products or data loss prevention solutions, may also believe that these products sufficiently protect their IT infrastructure and deliver adequate security.
Therefore, they may continue spending their IT security budgets on these products and may not adopt our IT, security and compliance solutions in addition to or as a replacement for such products.
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Our platform, website and internal systems may be subject to intentional disruption or other security incidents that could result in liability and adversely impact our reputation and future sales.
−Removed: We and our service providers face threats from a variety of sources, including attacks on our networks and systems from numerous sources, including traditional “hackers,” sophisticated nation-state and nation-state supported actors, other sources of malicious code (such as viruses and worms), and phishing attempts.
+Added: We and our service providers face threats from a variety of sources, including attacks on our networks and systems from numerous sources, including traditional “hackers,”
+Added: sophisticated nation-state and nation-state supported actors, other sources of malicious code (such as viruses and worms), and phishing attempts.
We and our service providers could be a target of cyber-attacks or other malfeasance designed to impede the performance of our solutions, penetrate our network security or the security of our cloud platform or our internal systems, misappropriate proprietary information and/or cause interruptions to our services.
−Removed: Our solutions, platforms, and system, and those of our service providers, may also suffer security incidents as a result of non-technical issues, including intentional or inadvertent acts or omissions by our employees or service providers.
−Removed: Because our operations involve providing IT security solutions to our customers, we may be targeted for cyber-attacks and other security incidents.
+Added: Our solutions, platforms, and system, and those of our service providers, may also suffer security incidents as a result of non-technical issues, including intentional or inadvertent acts or omissions by our employees or service providers. With the increase in personnel working remotely during the current COVID-19 pandemic, we and our service providers are at increased risk for security breaches.
+Added: We are taking steps to monitor and enhance the security of our solutions, cloud platform, and other relevant systems, IT infrastructure, networks, and data;
+Added: however, the unprecedented scale of remote work may require additional personnel and resources, which nevertheless cannot be guaranteed to fully safeguard our solutions, our cloud platform, or any systems, IT infrastructure networks, or data upon which we rely.
+Added: Further, because our operations involve providing IT security solutions to our customers, we may be targeted for cyber-attacks and other security incidents.
A breach in our data security or an attack against our service availability, or that of our third-party service providers, could impact our networks or networks secured by our solutions, creating system disruptions or slowdowns and exploiting security vulnerabilities of our solutions, and the information stored on our networks or those of our third-party service providers could be accessed, publicly disclosed, altered, lost, or stolen, which could subject us to liability and cause us financial harm.
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The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material and adverse effect on our business, including our financial condition, operating results and reputation.
−Removed: Our business depends substantially on retaining our current customers, and any reduction in our customer renewals or revenues from such customers could harm our future operating results.
−Removed: We offer our Qualys Cloud Platform and integrated suite of solutions pursuant to a software-as-a-service model, and our customers purchase subscriptions from us that are generally one year in length.
−Removed: Our customers have no obligation to renew their subscriptions after their subscription period expires, and they may not renew their subscriptions at the same or higher levels or at all.
−Removed: As a result, our ability to grow depends in part on customers renewing their existing subscriptions and purchasing additional subscriptions and solutions.
−Removed: Our customers may choose not to renew their subscriptions to our solutions
−Removed: or purchase additional solutions due to a number of factors, including their satisfaction or dissatisfaction with our solutions, the prices of our solutions, the prices of products or services offered by our competitors, reductions in our customers’ spending levels due to the macroeconomic environment or other factors.
−Removed: If our customers do not renew their subscriptions to our solutions, renew on less favorable terms, or do not purchase additional solutions or subscriptions, our revenues may grow more slowly than expected or decline and our results of operations may be harmed.
−Removed: If we are unable to continue to attract new customers and grow our customer base, our growth could be slower than we expect and our business may be harmed.
−Removed: We believe that our future growth depends in part upon increasing our customer base.
−Removed: Our ability to achieve significant growth in revenues in the future will depend, in large part, upon continually attracting new customers and obtaining subscription renewals to our solutions from those customers.
−Removed: If we fail to attract new customers our revenues may grow more slowly than expected and our business may be harmed.
Our sales cycle can be long and unpredictable, and our sales efforts require considerable time and expense.
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Future or continued economic weakness for us or our customers, failure of our customers and markets to recover from such weakness, customer financial difficulties, and reductions in spending on IT security could have a material adverse effect on demand for our platform and consequently on our business, financial condition and results of operations.
−Removed: Our IT, security and compliance solutions are delivered from six data centers, and any disruption of service at these facilities would interrupt or delay our ability to deliver our solutions to our customers which could reduce our revenues and harm our operating results.
−Removed: We currently host substantially all of our solutions from third-party data centers located in the United States, Canada, Switzerland, the Netherlands and India.
+Added: Our IT, security and compliance solutions are delivered from eight data centers, and any disruption of service at these facilities would interrupt or delay our ability to deliver our solutions to our customers which could reduce our revenues and harm our operating results.
+Added: We currently host substantially all of our solutions from third-party data centers located in the United States, Canada, Switzerland, the Netherlands, United Arab Emirates and India.
These facilities are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cybersecurity attacks, terrorist attacks, employee negligence, power losses, telecommunications failures and similar events.
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If we are unable to renew our agreements with the facilities providers on commercially reasonable terms or if in the future we add additional data center facility providers, we may experience costs or downtime in connection with the loss of an existing facility or the transfer to, or addition of, new data center facilities.
−Removed: Any disruptions or other performance problems with our solutions could harm our reputation and business and may damage our customers’ businesses.
+Added: Any disruptions or other performance problems with our solutions could harm our reputation and business and may damage our customers’
Interruptions in our service delivery might reduce our revenues, cause us to issue credits to customers, subject us to potential liability and cause customers to terminate their subscriptions or not renew their subscriptions.
−Removed: If we are unable to increase market awareness of our company and our new solutions, our revenues may not continue to grow, or may decline.
−Removed: We have a limited operating history, particularly in certain markets and solution offerings, and we believe that we need to continue to develop market awareness in the IT, security and compliance market.
−Removed: Market awareness of our capabilities and solutions is essential to our continued growth and success in all of our markets, particularly for the large enterprise, service provider and government markets.
−Removed: If our marketing programs are not successful in creating market awareness of our company and our full suite of solutions, our business, financial condition and results of operations may be adversely affected, and we may not be able to achieve our expected growth.
We face competition in our markets, and we may lack sufficient financial or other resources to maintain or improve our competitive position.
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We face significant competition for each of our solutions from companies with broad product suites and greater name recognition and resources than we have, as well as from small companies focused on specialized security solutions.
−Removed: We compete with large and small public companies, such as Belden (Tripwire), Broadcom (Symantec Enterprise Security), CrowdStrike, F5 Networks, FireEye, Forescout Technologies, International Business Machines, Micro Focus International, Rapid7, Palo Alto Networks, and Tenable Holdings, as well as privately held security providers including Barracuda Networks, BeyondTrust Software, Flexera, Imperva, McAfee, Tanium, Trustwave Holdings, Venafi, and Veracode.
−Removed: We also s eek to replace IT, security and compliance solutions that organizations have developed internally.
−Removed: As we continue to extend our cloud platform’s functionality by further developing IT, security and compliance solutions, such as web application scanning and firewalls, we expect to face additional competition in these new markets.
+Added: We compete with large and small public companies, such as Belden (Tripwire), Broadcom (Symantec Enterprise Security), CrowdStrike, F5 Networks, FireEye, International Business Machines, McAfee, Micro Focus International, Palo Alto Networks, Rapid7, Tenable Holdings and VMware, as well as privately held security providers including Barracuda Networks, BeyondTrust Software, Flexera, Forescout Technologies, Imperva, SentinelOne, Tanium, Trustwave Holdings, Venafi, and Veracode.
+Added: We also seek to replace IT, security and compliance solutions that organizations have developed internally.
+Added: As we continue to extend our cloud platform’s functionality by further developing IT, security and compliance solutions, such as web application scanning and firewalls, we expect to face additional competition in these new markets.
Our competitors may also attempt to further expand their presence in the IT, security and compliance market and compete more directly against one or more of our solutions.
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For all of these reasons, we may not be able to compete successfully against our current or future competitors.
−Removed: If our solutions fail to help our customers achieve and maintain compliance with regulations and industry standards, our revenues and operating results could be harmed.
−Removed: We generate a portion of our revenues from solutions that help organizations achieve and maintain compliance with regulations and industry standards.
−Removed: For example, many of our customers subscribe to our IT, security and compliance solutions to help them comply with the security standards developed and maintained by the Payment Card Industry Security Standards Council, or the PCI Council, which apply to companies that store cardholder data.
−Removed: Industry organizations like the PCI Council may significantly change their security standards with little or no notice, including changes that could make their standards more or less onerous for businesses.
−Removed: Governments may also adopt new laws or regulations, or make changes to existing laws or regulations, that could impact the demand for or value of our solutions.
−Removed: If we are unable to adapt our solutions to changing regulatory standards in a timely manner, or if our solutions fail to assist with or expedite our customers’ compliance initiatives, our customers may lose confidence in our solutions and could switch to products offered by our competitors.
−Removed: In addition, if regulations and standards related to data security, vulnerability management and other IT, security and compliance requirements are relaxed or the penalties for non-compliance are changed in a manner that makes them less onerous, our customers may view government and industry regulatory compliance as less critical to their businesses, and our customers may be less willing to purchase our solutions.
−Removed: In any of these cases, our revenues and operating results could be harmed.
−Removed: We may not maintain profitability in the future.
−Removed: We may not be able to sustain or increase our growth or maintain profitability in the future.
−Removed: We plan to continue to invest in our infrastructure, new solutions, research and development and sales and marketing, and as a result, we cannot assure you that we will maintain profitability.
−Removed: We may incur losses in the future for a number of reasons, including without limitation, the other risks and uncertainties described in this Annual Report on Form 10-K.
−Removed: Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays and other unknown factors that may result in losses in future periods.
−Removed: If our revenue growth does not meet our expectations in future periods, our financial performance may be harmed and we may not again achieve or maintain profitability in the future.
The sales prices of our solutions are subject to competitive pressures and may decrease, which may reduce our gross profits and adversely impact our financial results.
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We cannot assure you that we will be successful in developing and introducing new offerings with enhanced functionality on a timely basis, or that our new product and subscription offerings, if introduced, will enable us to maintain our prices and gross profits at levels that will allow us to maintain positive gross margins and profitability.
+Added: If our solutions fail to help our customers achieve and maintain compliance with regulations and industry standards, our revenues and operating results could be harmed.
+Added: We generate a portion of our revenues from solutions that help organizations achieve and maintain compliance with regulations and industry standards.
+Added: For example, many of our customers subscribe to our IT, security and compliance solutions to help them comply with the security standards developed and maintained by the Payment Card Industry Security Standards Council, or the PCI Council, which apply to companies that store cardholder data.
+Added: Industry organizations like the PCI Council may significantly change their security standards with little or no notice, including changes that could make their standards more or less onerous for businesses.
+Added: Governments may also adopt new laws or regulations, or make changes to existing laws or regulations, that could impact the demand for or value of our solutions.
+Added: If we are unable to adapt our solutions to changing regulatory standards in a timely manner, or if our solutions fail to assist with or expedite our customers’
+Added: compliance initiatives, our customers may lose confidence in our solutions and could switch to products offered by our competitors.
+Added: In addition, if regulations and standards related to data security, vulnerability management and other IT, security and compliance requirements are relaxed or the penalties for non-compliance are changed in a manner that makes them less onerous, our customers may view government and industry regulatory compliance as less critical to their businesses, and our customers may be less willing to purchase our solutions.
+Added: In any of these cases, our revenues and operating results could be harmed.
If our solutions fail to detect vulnerabilities or incorrectly detect vulnerabilities, our brand and reputation could be harmed, which could have an adverse effect on our business and results of operations.
−Removed: If our solutions fail to detect vulnerabilities in our customers’ IT infrastructures, or if our solutions fail to identify and respond to new and increasingly complex methods of attacks, our business and reputation may suffer.
+Added: If our solutions fail to detect vulnerabilities in our customers’
+Added: IT infrastructures, or if our solutions fail to identify and respond to new and increasingly complex methods of attacks, our business and reputation may suffer.
There is no guarantee that our solutions will detect all vulnerabilities.
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In addition, our solutions do not currently extend to cover mobile devices or personal devices that employees may bring into an organization.
−Removed: As such, our solutions would not identify or address vulnerabilities in mobile devices, such as mobile phones or tablets, or personal devices, and our customers’ IT infrastructures may be compromised by attacks that infiltrate their networks through such devices.
−Removed: An actual or perceived security breach or theft of the sensitive data of one of our customers, regardless of whether the breach is attributable to the failure of our solutions, could adversely affect the market’s perception of our security solutions.
−Removed: Incorrect or improper implementation or use of our solutions could result in customer dissatisfaction and harm our business and reputation.
−Removed: If our customers are unable to implement our solutions successfully, customer perceptions of our platform and solutions may be impaired or our reputation and brand may suffer.
−Removed: Our customers have in the past inadvertently misused our solutions, which triggered downtime in their internal infrastructure until the problem was resolved.
−Removed: Additionally, any failure to implement and configure our solutions correctly may result in our solutions failing to detect vulnerabilities or compliance issues, or otherwise to perform effectively, and may result in disruptions to our customers’ IT environments and businesses.
−Removed: Any misuse of our solutions, including any failure to implement and configure them appropriately, could result in disruption to our customers’ businesses, customer dissatisfaction, negative impacts on the perceived reliability or effectiveness of our solutions, and claims and litigation, and may result in negative press coverage, negative effects on our reputation and competitive position, a loss of sales, customers, and channel partners, and harm our financial results.
−Removed: Undetected software errors or flaws in our solutions could harm our reputation, decrease market acceptance of our solutions or result in liability.
−Removed: Our solutions may contain undetected errors or defects when first introduced or as new versions are released.
−Removed: We have experienced these errors or defects in the past in connection with new solutions and solution upgrades and we expect that these errors or defects will be found from time to time in the future in new or enhanced solutions after commercial release of these solutions.
−Removed: Since our customers use our solutions for security and compliance reasons, any errors, defects, disruptions in service or other performance problems with our solutions, or any other failure of our solutions to detect vulnerabilities or compliance problems or otherwise to perform effectively, may result in disruptions or damage to the business of our customers, including security breaches or compliance failures.
−Removed: Additionally, any such issues, or the perception that they have occurred, whether or not relating to any actual or perceived error or defect in our solutions, could hurt our reputation and competitive position and we may incur significant costs, the attention of key personnel could be diverted, our customers may delay or withhold payment to us or elect not to renew, we could face a loss of sales, customers, and channel partners, and other significant problems with our relationships with customers and channel partners may arise.
−Removed: We may also be subject to liability claims for damages related to actual or perceived errors or defects in our solutions.
−Removed: A material liability claim or other occurrence that harms our reputation or decreases market acceptance of our solutions may harm our business, competitive and financial position, and operating results.
−Removed: Although we maintain insurance coverage that may be applicable to certain liabilities in connection with these matters, we cannot be certain that our insurance coverage will be adequate for liabilities that actually are incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
−Removed: The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material and adverse effect on our business, including our financial condition, operating results and reputation.
−Removed: Our solutions could be used to collect and store personal information of our customers’ employees or customers, and therefore privacy and other data handling concerns could result in additional cost and liability to us or inhibit sales of our solutions.
−Removed: We collect the names and email addresses of our customers in connection with subscriptions to our solutions.
−Removed: Additionally, the data that our solutions collect to help secure and protect the IT infrastructure of our customers may include additional personal or confidential information of our customers’ employees and their customers.
−Removed: Personal privacy has become a significant issue in the United States and in many other countries where we offer our solutions.
−Removed: The regulatory framework for privacy issues worldwide is currently evolving and is likely to remain uncertain for the foreseeable future.
−Removed: Many federal, state and foreign government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, use, disclosure and retention of personal information.
−Removed: In the United States, these include, for example, rules and regulations promulgated under the authority of the Federal Trade Commission, the Health Insurance Portability and Accountability Act of 1996, the Gramm-Leach-Bliley Act, and state breach notification laws.
−Removed: Internationally, virtually every jurisdiction in which we operate has established its own data security and privacy legal framework with which we or our customers must comply.
−Removed: These privacy, data protection and information security laws and regulations may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.
−Removed: Additionally, new laws and regulations relating to privacy and data protection continue to be proposed and enacted.
−Removed: For example, the European Union has adopted the GDPR.
−Removed: This regulation, which took effect in May of 2018, causes EU data protection requirements to be more stringent and provides for greater penalties.
−Removed: The GDPR may be subject to new or changing interpretations by courts, and our interpretation of the law and efforts to comply with the rules and regulations of the law may be ruled invalid.
−Removed: Noncompliance with the GDPR can trigger fines of up to €20 million or 4% of global annual revenues, whichever is higher.
−Removed: Similarly, California recently enacted the California Consumer Privacy Act (“CCPA”), which, among other things, requires covered companies to provide new disclosures to California consumers and afford such consumers new rights to opt-out of certain sales of personal information.
−Removed: The CCPA creates a private right of action for statutory damages for certain breaches of information.
−Removed: The CCPA has been amended on multiple occasions and is the subject of proposed regulations of the California Attorney General that were released on February 7, 2020.
−Removed: Aspects of the CCPA and its interpretation remain unclear.
−Removed: In addition, other states have enacted or proposed legislation that regulates the collection, use, and sale of personal information, and such regimes might not be compatible with either the GDPR or the CCPA or may require us to undertake additional practices.
−Removed: We cannot yet predict the impact of the CCPA or impending legislation on our business or operations, but it may require us to modify our data processing practices and policies and incur substantial costs and expenses in an effort to comply .
−Removed: The privacy, data protection, and information security laws and regulations we must comply with also are subject to change.
−Removed: For example, the United Kingdom enacted a Data Protection Act in May 2018 that substantially implements the
−Removed: GDPR, but the United Kingdom’s exit from the European Union, commonly referred to as “Brexit,” could lead to further legislative and regulatory changes, it remains unclear how United Kingdom data protection laws or regulations will develop in the medium to longer term and how data transfers to and from the United Kingdom will be regulated.
−Removed: Additionally, U.S.
−Removed: and EU authorities reached a political agreement in February 2016 regarding a means for legitimizing personal data transfers from the EEA to the U.S., the EU-U.S.
−Removed: Privacy Shield Framework, replacing a prior program that was invalidated.
−Removed: We have joined the EU-U.S.
−Removed: Privacy Shield Framework and a related program, the Swiss-U.S.
−Removed: Privacy Shield Framework.
−Removed: Privacy Shield Framework is subject to legal challenge, however, and it or the Swiss-U.S.
−Removed: Privacy Shield Framework may be modified or invalidated.
−Removed: We may be unsuccessful in maintaining legitimate means for our transfer and receipt of personal data from the EEA or Switzerland.
−Removed: We may experience reluctance or refusal by current or prospective European customers to use our products, and we may find it necessary or desirable to make further changes to our handling of personal data of European residents.
−Removed: In addition to laws and regulations, privacy advocacy and industry groups or other private parties may propose new and different privacy standards that either legally or contractually apply to us.
−Removed: Because the interpretation and application of privacy and data protection laws, regulations, standards and contractual obligations are uncertain, it is possible that they may be interpreted and applied in a manner that is, or perceived to be, inconsistent with our data management practices or the features of our solutions.
−Removed: If so, in addition to the possibility of regulatory investigations and enforcement actions, fines, lawsuits and other claims, other forms of injunctive or operations-limiting relief, and damage to our reputations and loss of goodwill, we could be required to fundamentally change our business activities and practices or modify our solutions and may face limitations in our ability to develop new solutions and features, any of which could have an adverse effect on our business.
−Removed: Any inability to adequately address privacy concerns, even if unfounded, or any actual or perceived inability to comply with applicable privacy or data protection laws, regulations and privacy standards, could result in cost and liability to us, damage our reputation, inhibit sales of subscriptions and harm our business.
−Removed: Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and privacy standards that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our solutions.
−Removed: Privacy concerns, whether valid or not valid, may inhibit market adoption of our solutions particularly in certain industries and foreign countries.
+Added: As such, our solutions would not identify or address vulnerabilities in mobile devices, such as mobile phones or tablets, or personal devices, and our customers’
+Added: IT infrastructures may be compromised by attacks that infiltrate their networks through such devices.
+Added: An actual or perceived security breach or theft of the sensitive data of one of our customers, regardless of whether the breach is attributable to the failure of our solutions, could adversely affect the market’s perception of our security solutions.
If we are unable to continue the expansion of our sales force, sales of our solutions and the growth of our business would be harmed.
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Additionally, if our efforts do not result in increased revenues, our operating results could be negatively impacted due to the upfront operating expenses associated with expanding our sales force.
+Added: We rely on third-party channel partners to generate a substantial amount of our revenues, and if we fail to expand and manage our distribution channels, our revenues could decline and our growth prospects could suffer.
+Added: Our success significantly depends upon establishing and maintaining relationships with a variety of channel partners and we anticipate that we will continue to depend on these partners in order to grow our business.
+Added: For the years ended December 31, 2020, 2019 and 2018, we derived approximately 42%, 42% and 41%, respectively, of our revenues from sales of subscriptions for our solutions through channel partners, and the percentage of revenues derived from channel partners may increase in future periods.
+Added: Our agreements with our channel partners are generally non-exclusive and do not prohibit them from working with our competitors or offering competing solutions, and many of our channel partners have more established relationships with our competitors.
+Added: If our channel partners choose to place greater emphasis on products of their own or those offered by our competitors, do not effectively market and sell our solutions, or fail to meet the needs of our customers, then our ability to grow our business and sell our solutions may be adversely affected.
+Added: In addition, the loss of one or more of our larger channel partners, who may cease marketing our solutions with limited or no notice, and our possible inability to replace them, could adversely affect our sales.
+Added: Moreover, our ability to expand our distribution channels depends in part on our ability to educate our channel partners about our solutions, which can be complex.
+Added: Our failure to recruit additional channel partners, or any reduction or delay in their sales of our solutions or conflicts between channel sales and our direct sales and marketing activities may harm our results of operations.
+Added: Even if we are successful, these relationships may not result in greater customer usage of our solutions or increased revenues.
+Added: In addition, the financial health of our channel partners and our continuing relationships with them are important to our success.
+Added: Some of these channel partners may be unable to withstand adverse changes in economic conditions, which could result in insolvency and/or the inability of such distributors to obtain credit to finance purchases of our products and services.
+Added: In addition, weakness in the end-user market could negatively affect the cash flows of our channel partners who could, in turn, delay paying their obligations to us, which would increase our credit risk exposure.
+Added: Our business could be harmed if the financial condition of some of these channel partners substantially weakened and we were unable to timely secure replacement channel partners.
A significant portion of our customers, channel partners and employees are located outside of the United States, which subjects us to a number of risks associated with conducting international operations, and if we are unable to successfully manage these risks, our business and operating results could be harmed.
4 unchanged sentences
trade and foreign exchange restrictions;
−Removed: economic or political instability in foreign markets;
+Added: economic or political instability in foreign markets, including as a result of increasing tensions between India and China;
greater difficulty in enforcing contracts, accounts receivable collection and longer collection periods;
18 unchanged sentences
If we are unable to successfully manage the challenges of international operations, our business and operating results could be adversely affected.
−Removed: In addition, as of December 31, 2019 , approximately 70% of our employees were located outside of the United States, and 61% of our employees were located in Pune, India.
+Added: In addition, as of
+Added: December 31, 2020
+Added: , approximately 73% of our employees were located outside of the United States, of which 63% of our employees were located in Pune, India.
Accordingly, we are exposed to changes in laws governing our employee relationships in various U.S.
−Removed: and foreign jurisdictions, including laws and regulations regarding wage and hour requirements, fair labor standards, employee data privacy, unemployment tax rates, workers’ compensation rates, citizenship requirements and payroll and other taxes which may have a direct impact on our operating costs.
+Added: and foreign jurisdictions, including laws and regulations regarding wage and hour requirements, fair labor standards, employee data privacy, unemployment tax rates, workers’
+Added: compensation rates, citizenship requirements and payroll and other taxes which may have a direct impact on our operating costs.
We may continue to expand our international operations and international sales and marketing activities.
1 unchanged sentence
We may be unable to scale our infrastructure effectively or as quickly as our competitors in these markets and our revenues may not increase to offset any increased costs and operating expenses, which would cause our results to suffer.
−Removed: Disruptive technologies could gain wide adoption and supplant our cloud security and compliance solutions, thereby weakening our sales and harming our results of operations.
−Removed: The introduction of products and services embodying new technologies could render our existing solutions obsolete or less attractive to customers.
−Removed: Our business could be harmed if new security and compliance technologies are widely adopted.
−Removed: We may not be able to successfully anticipate or adapt to changing technology or customer requirements on a timely basis, or at all.
−Removed: If we fail to keep up with technological changes or to convince our customers and potential customers of the value of our solutions even in light of new technologies, our business could be harmed and our revenues may decline.
+Added: We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and results of operations.
+Added: Our reporting currency is the U.S.
+Added: dollar and we generate a majority of our revenues in U.S.
+Added: However, for the year ended
+Added: December 31, 2020, we incurred approximately 28% of our expenses in foreign currencies, primarily Euros, British Pounds, and Indian Rupee, principally with respect to salaries and related personnel expenses associated with our European and Indian operations.
+Added: Additionally, for the year ended
+Added: December 31, 2020, approximately 21% of our revenues were generated in foreign currencies.
+Added: Accordingly, changes in exchange rates may have a material adverse effect on our business, operating results and financial condition.
+Added: The exchange rate between the U.S.
+Added: dollar and foreign currencies has fluctuated substantially in recent years and may continue to fluctuate substantially in the future.
+Added: We expect that a majority of our revenues will continue to be generated in U.S.
+Added: dollars for the foreseeable future and that a significant portion of our expenses, including personnel costs, as well as capital and operating expenditures, will continue to be denominated in the Euro, British Pound and Indian Rupee.
+Added: The results of our operations may be adversely affected by foreign exchange fluctuations.
+Added: We use derivative financial instruments to reduce our foreign currency exchange risks.
+Added: We use foreign currency forward contracts to mitigate the impact of foreign currency fluctuations of certain non-U.S.
+Added: dollar denominated net asset positions, to date primarily cash, accounts receivable and operating lease liabilities (non-designated), as well as to manage foreign currency fluctuation risk related to forecasted transactions (designated).
+Added: However, we may not be able to purchase derivative instruments that are adequate to insulate ourselves from foreign currency exchange risks.
+Added: Additionally, our hedging activities may contribute to increased losses as a result of volatility in foreign currency markets.
Our business and operations have experienced significant growth, and if we do not appropriately manage any future growth, or are unable to improve our systems and processes, our operating results may be negatively affected.
8 unchanged sentences
Failure to manage any future growth effectively could result in increased costs, harm our results of operations and lead to investors losing confidence in our internal systems and processes.
−Removed: Forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, there can be no assurance that our business will grow at similar rates, or at all.
−Removed: Growth forecasts relating to the expected growth in the market for IT, security and compliance and other markets are subject to significant uncertainty and are based on assumptions and estimates which may prove to be inaccurate.
−Removed: Even if these markets experience the forecasted growth, we may not grow our business at similar rates, or at all.
−Removed: Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.
−Removed: Accordingly, forecasts of market growth should not be taken as indicative of our future growth.
−Removed: We rely on third-party channel partners to generate a substantial amount of our revenues, and if we fail to expand and manage our distribution channels, our revenues could decline and our growth prospects could suffer.
−Removed: Our success significantly depends upon establishing and maintaining relationships with a variety of channel partners and we anticipate that we will continue to depend on these partners in order to grow our business.
−Removed: For the years ended December 31, 2019 , 2018 and 2017 , we derived approximately 42% , 41% and 39% , respectively, of our revenues from sales of subscriptions for our solutions through channel partners, and the percentage of revenues derived from channel partners may increase in future periods.
−Removed: Our agreements with our channel partners are generally non-exclusive and do not prohibit them from working with our competitors or offering competing solutions, and many of our channel partners have more established relationships with our competitors.
−Removed: If our channel partners choose to place greater emphasis on products of their own or those offered by our competitors, do not effectively market and sell our solutions, or fail to meet the needs of our customers, then our ability to grow our business and sell our solutions may be adversely affected.
−Removed: In addition, the loss of one or more of our larger channel partners, who may cease marketing our solutions with limited or no notice, and our possible inability to replace them, could adversely affect our sales.
−Removed: Moreover, our ability to expand our distribution channels depends in part on our ability to educate our channel partners about our solutions, which can be complex.
−Removed: Our failure to recruit additional channel partners, or any reduction or delay in their sales of our solutions or conflicts between channel sales and our direct sales and marketing activities may harm our results of operations.
−Removed: Even if we are successful, these relationships may not result in greater customer usage of our solutions or increased revenues.
−Removed: In addition, the financial health of our channel partners and our continuing relationships with them are important to our success.
−Removed: Some of these channel partners may be unable to withstand adverse changes in economic conditions, which could result in insolvency and/or the inability of such distributors to obtain credit to finance purchases of our products and services.
−Removed: In addition, weakness in the end-user market could negatively affect the cash flows of our channel partners who could, in turn, delay paying their obligations to us, which would increase our credit risk exposure.
−Removed: Our business could be harmed if the financial condition of some of these channel partners substantially weakened and we were unable to timely secure replacement channel partners.
+Added: We depend on the continued services and performance of our senior management and other key employees, the loss of any of whom could adversely affect our business, operating results and financial condition.
+Added: Our future performance depends on the continued services and continuing contributions of our senior management, particularly Philippe F.
+Added: Courtot, our Chairman and Chief Executive Officer, and other key employees, to execute on our business plan and to identify and pursue new opportunities and product innovations.
+Added: We do not maintain key-man insurance for Mr.
+Added: Courtot or for any other member of our senior management team.
+Added: From time to time, there may be changes in our senior management team resulting from the termination or departure of executives.
+Added: Our senior management and key employees are generally employed on an at-will basis, which means that they could terminate their employment with us at any time. In February 2021, we announced that Mr.
+Added: Courtot was taking a medical leave of absence and Sumedh Thakar, our President and Chief Product Officer, had been appointed interim Chief Executive Officer and principal executive officer. The loss of the services of our senior management, particularly Mr.
+Added: Courtot, or other key employees for any reason could significantly delay or prevent the achievement of our development and strategic objectives and harm our business, financial condition and results of operations.
+Added: If we are unable to hire, retain and motivate qualified personnel, our business may suffer.
+Added: Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel.
+Added: The loss of the services of any of our key personnel, the inability to attract or retain qualified personnel or delays in hiring required personnel, particularly in engineering and sales, may seriously harm our business, financial condition and results of operations.
+Added: Any of our employees may terminate their employment at any time.
+Added: Competition for highly skilled personnel is frequently intense, especially in the San Francisco Bay Area and Pune, India, locations in which we have a substantial presence and need for highly skilled personnel and we may not be able to compete for these employees.
+Added: We are required under accounting principles generally accepted in the United States (U.S.
+Added: GAAP) to recognize compensation expense in our operating results for employee stock-based compensation under our equity grant programs, which may negatively impact our operating results and may increase the pressure to limit stock-based compensation that we might otherwise offer to current or potential employees, thereby potentially harming our ability to attract or retain highly skilled personnel.
+Added: In addition, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or divulged proprietary or other confidential information, which could result in a diversion of management's time and our resources.
+Added: A portion of our revenues are generated by sales to government entities, which are subject to a number of challenges and risks.
+Added: Government entities have historically been particularly concerned about adopting cloud-based solutions for their operations, including security solutions, and increasing sales of subscriptions for our solutions to government entities may be more challenging than selling to commercial organizations.
+Added: Selling to government entities can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that we will win a sale.
+Added: We have invested in the creation of a cloud offering certified under the Federal Information Security Management Act for government usage but we cannot be sure that we will continue to sustain or renew this certification, that the government will continue to mandate such certification or that other government agencies or entities will use this cloud offering.
+Added: Government demand and payment for our solutions may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions.
+Added: Government entities may have contractual or other legal rights to terminate contracts with our channel partners for convenience or due to a default, and any such termination may adversely impact our future results of operations.
+Added: Governments routinely investigate and audit government contractors’
+Added: administrative processes, and any unfavorable audit could result in the government refusing to continue buying our solutions, a reduction of revenues or fines or civil or criminal liability if the audit uncovers improper or illegal activities.
+Added: Any such penalties could adversely impact our results of operations in a material way.
+Added: Our success in acquiring and integrating other businesses, products or technologies could impact our financial position.
+Added: In order to remain competitive, we have in the past and may in the future seek to acquire additional businesses, products, services or technologies.
+Added: For example, we acquired 1Mobility on April 1, 2018, Layered Insight on October 16, 2018, Adya on January 10, 2019, and certain intellectual property of Spell Security on July 24, 2020. The environment for acquisitions in our industry is very competitive and acquisition candidate purchase prices may exceed what we would prefer to pay.
+Added: Moreover, achieving the anticipated benefits of future acquisitions will depend in part upon whether we can integrate acquired operations, products and technology in a timely and cost-effective manner, and even if we achieve benefits from acquisitions, such acquisitions may still be viewed negatively by customers, financial markets or investors.
+Added: The acquisition and integration process is complex, expensive and time-consuming, and may cause an interruption of, or loss of momentum in, product development and sales activities and operations of both companies, as well as divert the attention of management, and we may incur substantial cost and expense.
+Added: We may issue equity securities which could dilute current stockholders’
+Added: ownership, incur debt, assume contingent or other liabilities and expend cash in acquisitions, which could negatively impact our financial position, stockholder equity and stock price.
+Added: We may not find suitable acquisition candidates, and acquisitions we complete may be unsuccessful.
+Added: If we consummate a transaction, we may be unable to integrate and manage acquired products and businesses effectively or retain key personnel.
+Added: If we are unable to effectively execute acquisitions, our business, financial condition and operating results could be adversely affected.
+Added: We rely on software-as-a-service vendors to operate certain functions of our business and any failure of such vendors to provide services to us could adversely impact our business and operations.
+Added: We rely on third-party software-as-a-service vendors to operate certain critical functions of our business, including financial management and human resource management.
+Added: If these services become unavailable due to extended outages or interruptions or because they are no longer available on commercially reasonable terms or prices, our expenses could increase, our ability to manage our finances could be interrupted and our processes for managing sales of our solutions and supporting our customers could be impaired until equivalent services, if available, are identified, obtained and integrated, all of which could harm our business.
+Added: Delays or interruptions in the manufacturing and delivery of our physical scanner appliances by our sole source manufacturer may harm our business.
+Added: Upon customer request, we provide physical or virtual scanner appliances on a subscription basis as an additional capability to the customer’s subscription for use during their subscription term.
+Added: Our physical scanner appliances are built by a single manufacturer.
+Added: Our reliance on a sole manufacturer involves several risks, including a potential inability to obtain an adequate supply of physical scanner appliances and limited control over pricing, quality and timely deployment of such scanner appliances.
+Added: In addition, replacing this manufacturer may be difficult and could result in an inability or delay in deploying our solutions to customers that request physical scanner appliances as part of their subscriptions.
+Added: Furthermore, our manufacturer’s ability to timely manufacture and ship our physical scanner appliances depends on a variety of factors, such as the availability of hardware components, supply shortages or contractual restrictions.
+Added: In the event of an interruption from this manufacturer, we may not be able to develop alternate or secondary sources in a timely manner.
+Added: If we are unable to purchase physical scanner appliances in quantities sufficient to meet our requirements on a timely basis, we may not be able to effectively deploy our solutions to new customers that request physical scanner appliances, which could harm our business.
+Added: Incorrect or improper implementation or use of our solutions could result in customer dissatisfaction and harm our business and reputation.
+Added: If our customers are unable to implement our solutions successfully, customer perceptions of our platform and solutions may be impaired or our reputation and brand may suffer.
+Added: Our customers have in the past inadvertently misused our solutions, which triggered downtime in their internal infrastructure until the problem was resolved.
+Added: Additionally, any failure to implement and configure our solutions correctly may result in our solutions failing to detect vulnerabilities or compliance issues, or otherwise to perform effectively, and may result in disruptions to our customers’
+Added: IT environments and businesses.
+Added: Any misuse of our solutions, including any failure to implement and configure them appropriately, could result in disruption to our customers’
+Added: businesses, customer dissatisfaction, negative impacts on the perceived reliability or effectiveness of our solutions, and claims and litigation, and may result in negative press coverage, negative effects on our reputation and competitive position, a loss of sales, customers, and channel partners, and harm our financial results.
+Added: We recognize revenues from subscriptions over the term of the relevant service period, and therefore any decreases or increases in bookings are not immediately reflected in our operating results.
+Added: We recognize revenues from subscriptions over the term of the relevant service period, which is typically one year.
+Added: As a result, most of our reported revenues in each quarter are derived from the recognition of deferred revenues relating to subscriptions entered into during previous quarters.
+Added: Consequently, a shortfall in demand for our solutions in any period may not significantly reduce our revenues for that period, but could negatively affect revenues in future periods.
+Added: Accordingly, the effect of significant downturns in bookings may not be fully reflected in our results of operations until future periods.
+Added: We may be unable to adjust our costs and expenses to compensate for such a potential shortfall in revenues.
+Added: Our subscription model also makes it difficult for us to rapidly increase our revenues through additional bookings in any period, as revenues are recognized ratably over the subscription period.
+Added: Our business is subject to the risks of earthquakes, fire, power outages, floods and other catastrophic events, and to interruption by man-made problems such as terrorism.
+Added: A significant natural disaster, such as an earthquake, fire or a flood, or a significant power outage could have a material adverse impact on our business, operating results and financial condition.
+Added: Our corporate headquarters and a significant portion of our operations are located in the San Francisco Bay Area, a region known for seismic activity.
+Added: In addition, natural disasters could affect our business partners’
+Added: ability to perform services for us on a timely basis.
+Added: In the event we or our business partners are hindered by any of the events discussed above, our ability to provide our solutions to customers could be delayed, resulting in our missing financial targets, such as revenues and net income, for a particular quarter.
+Added: Further, if a natural disaster occurs in a region from which we derive a significant portion of our revenues, customers in that region may delay or forego subscriptions of our solutions, which may materially and adversely impact our results of operations for a particular period.
+Added: In addition, acts of terrorism could cause disruptions in our business or the business of our business partners, customers or the economy as a whole.
+Added: All of the aforementioned risks may be exacerbated if the disaster recovery plans for us and our suppliers prove to be inadequate.
+Added: To the extent that any of the above results in delays of customer subscriptions or commercialization of our solutions, our business, financial condition and results of operations could be adversely affected.
+Added: Risks Related to Intellectual Property, Legal, Tax and Regulatory Matters
+Added: Undetected software errors or flaws in our solutions could harm our reputation, decrease market acceptance of our solutions or result in liability.
+Added: Our solutions may contain undetected errors or defects when first introduced or as new versions are released.
+Added: We have experienced these errors or defects in the past in connection with new solutions and solution upgrades and we expect that these errors or defects will be found from time to time in the future in new or enhanced solutions after commercial release of these solutions.
+Added: Since our customers use our solutions for IT, security and compliance reasons, any errors, defects, disruptions in service or other performance problems with our solutions, or any other failure of our solutions to detect vulnerabilities or compliance problems or otherwise to perform effectively, may result in disruptions or damage to the business of our customers, including security breaches or compliance failures.
+Added: Additionally, any such issues, or the perception that they have occurred, whether or not relating to any actual or perceived error or defect in our solutions, could hurt our reputation and competitive position and we may incur significant costs, the attention of key personnel could be diverted, our customers may delay or withhold payment to us or elect not to renew, we could face a loss of sales, customers, and channel partners, and other significant problems with our relationships with customers and channel partners may arise.
+Added: We may also be subject to liability claims for damages related to actual or perceived errors or defects in our solutions.
+Added: A material liability claim or other occurrence that harms our reputation or decreases market acceptance of our solutions may harm our business, competitive and financial position, and operating results.
+Added: Although we maintain insurance coverage that may be applicable to certain liabilities in connection with these matters, we cannot be certain that our insurance coverage will be adequate for liabilities that actually are incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
+Added: The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material and adverse effect on our business, including our financial condition, operating results and reputation.
+Added: Our solutions could be used to collect and store personal information of our customers’
+Added: employees or customers, and therefore privacy and other data handling concerns could result in additional cost and liability to us or inhibit sales of our solutions.
+Added: We collect the names and email addresses of our customers in connection with subscriptions to our solutions.
+Added: Additionally, the data that our solutions collect to help secure and protect the IT infrastructure of our customers may include additional personal or confidential information of our customers’
+Added: employees and their customers.
+Added: Personal privacy has become a significant issue in the United States and in many other countries where we offer our solutions.
+Added: The regulatory framework for privacy issues worldwide is currently evolving and is likely to remain uncertain for the foreseeable future.
+Added: Many federal, state and foreign government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, use, disclosure and retention of personal information.
+Added: In the United States, these include, for example, rules and regulations promulgated under the authority of the Federal Trade Commission, the Health Insurance Portability and Accountability Act of 1996, the Gramm-Leach-Bliley Act, and state breach notification laws.
+Added: Internationally, virtually every jurisdiction in which we operate has established its own data security and privacy legal framework with which we or our customers must comply.
+Added: These privacy, data protection and information security laws and regulations may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.
+Added: Additionally, new laws and regulations relating to privacy and data protection continue to be proposed and enacted.
+Added: For example, the European Union has adopted the GDPR.
+Added: This regulation, which took effect in May of 2018, causes EU data protection requirements to be more stringent and provides for greater penalties.
+Added: The GDPR may be subject to new or changing interpretations by courts, and our interpretation of the law and efforts to comply with the rules and regulations of the law may be ruled invalid.
+Added: Noncompliance with the GDPR can trigger fines of up to €20 million or 4% of global annual revenues, whichever is higher.
+Added: Similarly, California recently enacted the California Consumer Privacy Act (“CCPA”), which, among other things, requires covered companies to provide new disclosures to California consumers and afford such consumers new rights to opt-out of certain sales of personal information.
+Added: The CCPA creates a private right of action for statutory damages for certain breaches of information. Aspects of the CCPA and its interpretation remain unclear. 
+Added: Additionally, a new privacy law, the California Privacy Rights Act (“CPRA”), was approved by voters in the November 3, 2020 election.
+Added: The CPRA modifies the CCPA significantly, creating obligations relating to consumer data beginning on January 1, 2022, with implementing regulations expected on or before July 1, 2022, and enforcement beginning July 1, 2023.
+Added: Passage of the CPRA has resulted in further uncertainty and may require us to incur additional costs and expenses in an effort to comply.
+Added: In addition, other states have enacted or proposed legislation that regulates the collection, use, and sale of personal information, and such regimes might not be compatible with the GDPR, the CCPA or the CPRA or may require us to undertake additional practices.
+Added: Accordingly, we cannot yet predict the impact of the CCPA, CRPA or other evolving privacy and data protection obligations on our business or operations, but it may require us to modify our data processing practices and policies and incur substantial costs and expenses in an effort to comply.
+Added: The privacy, data protection, and information security laws and regulations we must comply with also are subject to change.
+Added: For example, the United Kingdom enacted a Data Protection Act in May 2018 that substantially implements the GDPR, but the United Kingdom's exit from the European Union, commonly referred to as “Brexit,”
+Added: could lead to further legislative and regulatory changes.
+Added: It remains unclear how United Kingdom data protection laws or regulations will develop in the medium to longer term and how data transfers to and from the United Kingdom will be regulated.
+Added: Additionally, we have joined the EU-U.S.
+Added: Privacy Shield Framework and a related program, the Swiss-U.S.
+Added: Privacy Shield Framework and make use of certain model clauses approved by the European Commission (the “SCCs”), with regard to certain transfers of personal data from the European Economic Area (“EEA”) to the U.S.
+Added: Both the EU-U.S.
+Added: Privacy Shield Framework and SCCs have been subject to legal challenge, however, and on July 16, 2020, the Court of Justice of the European Union (“CJEU”) issued a decision that invalidated the EU-U.S.
+Added: Privacy Shield and imposed additional obligations on companies when relying on the SCCs.
+Added: This CJEU decision may result in European data protection regulators applying differing standards for, and requiring ad hoc verification of, transfers of personal data from Europe to the U.S.
+Added: We are analyzing the impacts of this decision, and we may find it necessary or appropriate to take different or additional steps with respect to transfers of personal data, which may result in increased costs of compliance and limitations on our customers and us. We may be unsuccessful in maintaining legitimate means for our transfer and receipt of personal data from the EEA or Switzerland.
+Added: We may experience reluctance or refusal by current or prospective European customers to use our products, and we and our customers may face a risk of enforcement actions by data protection authorities in the EEA relating to personal data transfers to us and by us from the EEA.
+Added: Any such enforcement actions could result in substantial costs and diversion of resources, distract management and technical personnel and negatively affect our business, operating results and financial condition.
+Added: Some countries also are considering or have passed legislation requiring local storage and processing of data, or similar requirements, which could increase the cost and complexity of delivering our services.
+Added: In addition to laws and regulations, privacy advocacy and industry groups or other private parties may propose new and different privacy standards that either legally or contractually apply to us.
+Added: Because the interpretation and application of privacy and data protection laws, regulations, standards and contractual obligations are uncertain, it is possible that they may be interpreted and applied in a manner that is, or perceived to be, inconsistent with our data management practices or the features of our solutions.
+Added: If so, in addition to the possibility of regulatory investigations and enforcement actions, fines, lawsuits and other claims, other forms of injunctive or operations-limiting relief, and damage to our reputations and loss of goodwill, we could be required to fundamentally change our business activities and practices or modify our solutions and may face limitations in our ability to develop new solutions and features, any of which could have an adverse effect on our business.
+Added: Any inability to adequately address privacy concerns, even if unfounded, or any actual or perceived inability to comply with applicable privacy or data protection laws, regulations and privacy standards, could result in cost and liability to us, damage our reputation, inhibit sales of subscriptions and harm our business.
+Added: Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and privacy standards that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our solutions.
+Added: Privacy concerns, whether valid or not valid, may inhibit market adoption of our solutions particularly in certain industries and foreign countries.
Our solutions contain third-party open source software components, and our failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our solutions.
−Removed: Our solutions contain software licensed to us by third-parties under so-called “open source” licenses, including the GNU General Public License, the GNU Lesser General Public License, the BSD License, the Apache License and others.
−Removed: From time to time, there have been claims against companies that distribute or use open source software in their products and services, asserting that such open source software infringes the claimants’ intellectual property rights.
+Added: Our solutions contain software licensed to us by third-parties under so-called “open source”
+Added: licenses, including the GNU General Public License, the GNU Lesser General Public License, the BSD License, the Apache License and others.
+Added: From time to time, there have been claims against companies that distribute or use open source software in their products and services, asserting that such open source software infringes the claimants’
+Added: intellectual property rights.
We could be subject to suits by parties claiming that what we believe to be licensed open source software infringes their intellectual property rights.
8 unchanged sentences
courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our solutions.
−Removed: In this event, we could be required to seek l icenses from third parties to continue offering our solutions, to make our proprietary code generally available in source code form, to re-engineer our solutions or to discontinue the sale of our solutions if re-engineering could not be accomplished on a timely basis, any of which could adversely affect our business, operating results and financial condition.
−Removed: We rely on software-as-a-service vendors to operate certain functions of our business and any failure of such vendors to provide services to us could adversely impact our business and operations.
−Removed: We rely on third-party software-as-a-service vendors to operate certain critical functions of our business, including financial management and human resource management.
−Removed: If these services become unavailable due to extended outages or interruptions or because they are no longer available on commercially reasonable terms or prices, our expenses could increase, our ability to manage our finances could be interrupted and our processes for managing sales of our solutions and supporting our customers could be impaired until equivalent services, if available, are identified, obtained and integrated, all of which could harm our business.
+Added: In this event, we could be required to seek licenses from third parties to continue offering our solutions, to make our proprietary code generally available in source code form, to re-engineer our solutions or to discontinue the sale of our solutions if re-engineering could not be accomplished on a timely basis, any of which could adversely affect our business, operating results and financial condition.
We use third-party software and data that may be difficult to replace or cause errors or failures of our solutions that could lead to lost customers or harm to our reputation and our operating results.
6 unchanged sentences
Any failure to do so could adversely impact our ability to deliver effective solutions to our customers and could harm our operating results.
−Removed: Delays or interruptions in the manufacturing and delivery of our physical scanner appliances by our sole source manufacturer may harm our business.
−Removed: Upon customer request, we provide physical or virtual scanner appliances on a subscription basis as an additional capability to the customer’s subscription for use during their subscription term.
−Removed: Our physical scanner appliances are built by a single manufacturer.
−Removed: Our reliance on a sole manufacturer involves several risks, including a potential inability to obtain an adequate supply of physical scanner appliances and limited control over pricing, quality and timely deployment of such scanner appliances.
−Removed: In addition, replacing this manufacturer may be difficult and could result in an inability or delay in deploying our solutions to customers that request physical scanner appliances as part of their subscriptions.
−Removed: Furthermore, our manufacturer’s ability to timely manufacture and ship our physical scanner appliances depends on a variety of factors, such as the availability of hardware components, supply shortages or contractual restrictions.
−Removed: In the event of an interruption from this manufacturer, we may not be able to develop alternate or secondary sources in a timely manner.
−Removed: If we are unable to purchase physical scanner appliances in quantities sufficient to meet our requirements on a timely basis, we may not be able to effectively deploy our solutions to new customers that request physical scanner appliances, which could harm our business.
−Removed: We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and results of operations.
−Removed: Our reporting currency is the U.S.
−Removed: Dollar and we generate a majority of our revenues in U.S.
−Removed: However, for the year ended December 31, 2019 , we incurred approximately 25% of our expenses outside of the United States in foreign currencies, primarily Euros, British Pounds, and Indian Rupee, principally with respect to salaries and related personnel expenses associated with our European and Indian operations.
−Removed: Additionally, for the year ended December 31, 2019 , approximately 21% of our revenues were generated in foreign currencies.
−Removed: Accordingly, changes in exchange rates may have a material adverse effect on our business, operating results and financial condition.
−Removed: The exchange rate between the U.S.
−Removed: Dollar and foreign currencies has fluctuated substantially in recent years and may continue to fluctuate substantially in the future.
−Removed: We expect that a majority of our revenues will continue to be generated in U.S.
−Removed: Dollars for the foreseeable future and that a significant portion of our expenses, including personnel costs, as well as capital and operating expenditures, will continue to be denominated in the Euro, British Pound and Indian Rupee.
−Removed: The results of our operations may be adversely affected by foreign exchange fluctuations.
−Removed: We use derivative financial instruments to reduce our foreign currency exchange risks.
−Removed: We use foreign currency forward contracts to mitigate the impact of foreign currency fluctuations of certain non-U.S.
−Removed: Dollar denominated asset positions, to date primarily cash and accounts receivable (non-designated), as well as to manage foreign currency fluctuation risk related to forecasted transactions (designated).
−Removed: However, we may not be able to purchase derivative instruments that are adequate to insulate ourselves from foreign currency exchange risks.
−Removed: Additionally, our hedging activities may contribute to increased losses as a result of volatility in foreign currency markets.
Failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results.
6 unchanged sentences
We may be unable to determine the extent of any unauthorized use or infringement of our solutions, technologies or intellectual property rights.
−Removed: As of December 31, 2019 , we had 18 issued patents and several pending U.S.
−Removed: patent applications, and we may file additional patent applications in the future.
−Removed: Additionally, we have an exclusive license to four third-party patents.
−Removed: The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or
−Removed: desirable patent applications at a reasonable cost or in a timely manner, if at all.
+Added: The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner, if at all.
We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions.
17 unchanged sentences
An adverse outcome of a dispute may require us to:
−Removed: pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights;
+Added: pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights;
cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others;
5 unchanged sentences
Any of the foregoing events could seriously harm our business, financial condition and results of operations.
−Removed: If we are required to collect sales and use or other taxes on the solutions we sell, we may be subject to liability for past sales and our future sales may decrease.
−Removed: Taxing jurisdictions, including state and local entities, have differing rules and regulations governing sales and use or other taxes, and these rules and regulations are subject to varying interpretations that may change over time.
−Removed: In particular, the applicability of sales taxes to our subscription services in various jurisdictions is unclear.
−Removed: It is possible that we could face sales tax audits and that our liability for these taxes could exceed our estimates as tax authorities could still assert that we are obligated to collect additional amounts as taxes from our customers and remit those taxes to those authorities.
−Removed: We could also be subject to audits with respect to state and international jurisdictions for which we may not accrued tax liabilities.
−Removed: A successful assertion that we should be collecting additional sales or other taxes on our services in jurisdictions where we have not historically done so and do not accrue for sales taxes could result in substantial tax liabilities for past sales, discourage customers from purchasing our solutions or otherwise harm our business and operating results.
−Removed: We depend on the continued services and performance of our senior management and other key employees, the loss of any of whom could adversely affect our business, operating results and financial condition.
−Removed: Our future performance depends on the continued services and continuing contributions of our senior management, particularly Philippe F.
−Removed: Courtot, our Chairman, President and Chief Executive Officer, and other key employees, to execute on our business plan and to identify and pursue new opportunities and product innovations.
−Removed: We do not maintain key-man insurance for Mr.
−Removed: Courtot or for any other member of our senior management team.
−Removed: From time to time, there may be changes in our senior management team resulting from the termination or departure of executives.
−Removed: Our senior management and key employees are generally employed on an at-will basis, which means that they could terminate their employment with us at any time.
−Removed: The loss of the services of our senior management, particularly Mr.
−Removed: Courtot, or other key employees for any reason could significantly delay or prevent the achievement of our development and strategic objectives and harm our business, financial condition and results of operations.
−Removed: If we are unable to hire, retain and motivate qualified personnel, our business may suffer.
−Removed: Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel.
−Removed: The loss of the services of any of our key personnel, the inability to attract or retain qualified personnel or delays in hiring required personnel, particularly in engineering and sales, may seriously harm our business, financial condition and results of operations.
−Removed: Any of our employees may terminate their employment at any time.
−Removed: Competition for highly skilled personnel is frequently intense, especially in the San Francisco Bay Area and Pune, India, locations in which we have a substantial presence and need for highly skilled personnel and we may not be able to compete for these employees.
−Removed: We are required under accounting principles generally accepted in the United States (U.S.
−Removed: GAAP) to recognize compensation expense in our operating results for employee stock-based compensation under our equity grant programs, which may negatively impact our operating results and may increase the pressure to limit stock-based compensation that we might otherwise offer to current or potential employees, thereby potentially harming our ability to attract or retain highly skilled personnel.
−Removed: In addition, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or divulged proprietary or other confidential information, which could result in a diversion of management's time and our resources.
−Removed: Changes in laws or regulations related to the Internet may diminish the demand for our solutions and could have a negative impact on our business.
−Removed: We deliver our solutions through the Internet.
−Removed: Federal, state or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting data privacy and the use of the Internet.
−Removed: In addition, government agencies or private organizations may begin to impose taxes, fees or other charges for accessing the Internet or on commerce conducted via the Internet.
−Removed: These laws or charges could limit the viability of Internet-based solutions such as ours and reduce the demand for our solutions.
−Removed: A portion of our revenues are generated by sales to government entities, which are subject to a number of challenges and risks.
−Removed: Government entities have historically been particularly concerned about adopting cloud-based solutions for their operations, including security solutions, and increasing sales of subscriptions for our solutions to government entities may be more challenging than selling to commercial organizations.
−Removed: Selling to government entities can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that we will win a sale.
−Removed: We have invested in the creation of a cloud offering certified under the Federal Information Security Management Act for government usage but we cannot be sure that we will continue to sustain or renew this certification, that the government will continue to mandate such certification or that other government agencies or entities will use this cloud offering.
−Removed: Government demand and payment for our solutions may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions.
−Removed: Government entities may have contractual or other legal rights to terminate contracts with our channel partners for convenience or due to a default, and any such termination may adversely impact our future results of operations.
−Removed: Governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our solutions, a reduction of revenues or fines or civil or criminal liability if the audit uncovers improper or illegal activities.
−Removed: Any such penalties could adversely impact our results of operations in a material way.
Governmental export or import controls could subject us to liability if we violate them or limit our ability to compete in foreign markets.
6 unchanged sentences
Compliance with applicable regulatory requirements regarding the export of our solutions, including with respect to new releases of our solutions, may create delays in the introduction of our solutions in international markets, prevent our customers with international operations from deploying our solutions throughout their globally-distributed systems or, in some cases, prevent the export of our solutions to some countries altogether.
−Removed: In addition, various countries regulate the import of our appliance-based solutions and have enacted laws that could limit our ability to distribute solutions or could limit our customers’ ability to implement our solutions in those countries.
+Added: In addition, various countries regulate the import of our appliance-based solutions and have enacted laws that could limit our ability to distribute solutions or could limit our customers’
+Added: ability to implement our solutions in those countries.
Any new export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or in the countries, persons or technologies targeted by such regulations, could result in decreased use of our solutions by existing customers with international operations, declining adoption of our solutions by new customers with international operations and decreased revenues.
If we fail to comply with export and import regulations, we may be fined or other penalties could be imposed, including denial of certain export privileges.
−Removed: Our success in acquiring and integrating other businesses, products or technologies could impact our financial position.
−Removed: In order to remain competitive, we have in the past and may in the future seek to acquire additional businesses, products, services or technologies.
−Removed: For example, we acquired 1Mobility on April 1, 2018, Layered Insight on October 16, 2018 and Adya on January 10, 2019.
−Removed: The environment for acquisitions in our industry is very competitive and acquisition candidate purchase prices may exceed what we would prefer to pay.
−Removed: Moreover, achieving the anticipated benefits of future acquisitions will depend in part upon whether we can integrate acquired operations, products and technology in a timely and cost-effective manner , and even if we achieve benefits from acquisitions, such acquisitions may still be viewed negatively by customers, financial markets or investors.
−Removed: The acquisition and integration process is complex, expensive and time-consuming, and may cause an interruption of, or loss of momentum in, product development and sales activities and operations of both companies, as well as divert the attention of management, and we may incur substantial cost and expense.
−Removed: We may issue equity securities which could dilute current stockholders’ ownership, incur debt, assume contingent or other liabilities and expend cash in acquisitions, which could negatively impact our financial position, stockholder equity and stock price.
−Removed: We may not find suitable acquisition candidates, and acquisitions we complete may be unsuccessful.
−Removed: If we consummate a transaction, we may be unable to integrate and manage acquired products and businesses effectively or retain key personnel.
−Removed: If we are unable to effectively execute acquisitions, our business, financial condition and operating results could be adversely affected.
−Removed: Our financial results are based in part on our estimates or judgments relating to our critical accounting policies.
−Removed: These estimates or judgments may prove to be incorrect, which could harm our operating results and result in a decline in our stock price.
−Removed: The preparation of financial statements in conformity with U.S.
−Removed: GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
−Removed: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenues and expenses that are not readily apparent from other sources.
−Removed: Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in our stock price.
−Removed: Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, accounting for income taxes, stock-based compensation, and fair value measurement.
−Removed: Changes in financial accounting standards may cause adverse and unexpected revenue fluctuations and impact our reported results of operations.
−Removed: We prepare our financial statements in accordance with U.S.
−Removed: These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles.
−Removed: A change in these accounting standards or practices could harm our operating results and could have a significant effect on our reporting of transactions and reported results and may even retroactively affect previously reported transactions.
−Removed: New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future.
−Removed: Changes to existing rules or the questioning of current practices may harm our operating results or require that we make significant changes to our systems, processes and controls or the way we conduct our business.
−Removed: We have historically expensed commissions associated with sales of our solutions immediately upon receipt of a subscription order from a customer and generally recognize the revenues associated with such sale over the term of the agreement.
−Removed: Accordingly, our historical operating income in any period may not be indicative of our financial health and future performance.
−Removed: With the adoption of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers effective January 1, 2018, we commenced capitalizing our commissions but elected to use the practical expedient in ASC 606 and expense commissions related to contracts with a renewal contract term of one year or less.
−Removed: As a result of the adoption of ASC 606, our future operating results may vary from period to period as our commission expense will not be directly comparable to historical periods.
−Removed: Through December 2017, we expensed commissions paid to our sales personnel in the quarter in which the related order was received.
−Removed: In contrast, we have generally recognized the revenues associated with a sale of our solutions ratably over the term of the subscription, which is typically one year.
−Removed: Accordingly, our historical results may have fluctuated based on timing of commission expenses as compared to revenue recognized.
−Removed: With the adoption of ASC 606, our operating results will also fluctuate and not be comparable to historical periods, and will continue to fluctuate as we will general ly capitalize commissions for new and upsell contracts except for renewal sales that are one year or less.
−Removed: In addition, amortization of expense from previously capitalized contracts is expected to increase over time as our opening capitalized commission asset balance upon adoption of ASC 606 only included open contracts as of December 31, 2017.
−Removed: Accordingly, we expect our commission expense to grow in future periods as a result of the adoption of ASC 606.
−Removed: Without the adoption of ASC 606, commission expenses would have been $2.6 milli on and $2.5 million higher for the years ended December 31, 2019 and 2018, respectively.
−Removed: We recognize revenues from subscriptions over the term of the relevant service period, and therefore any decreases or increases in bookings are not immediately reflected in our operating results.
−Removed: We recognize revenues from subscriptions over the term of the relevant service period, which is typically one year.
−Removed: As a result, most of our reported revenues in each quarter are derived from the recognition of deferred revenues relating to subscriptions entered into during previous quarters.
−Removed: Consequently, a shortfall in demand for our solutions in any period may not significantly reduce our revenues for that period, but could negatively affect revenues in future periods.
−Removed: Accordingly, the effect of significant downturns in bookings may not be fully reflected in our results of operations until future periods.
−Removed: We may be unable to adjust our costs and expenses to compensate for such a potential shortfall in revenues.
−Removed: Our subscription model also makes it difficult for us to rapidly increase our revenues through additional bookings in any period, as revenues are recognized ratably over the subscription period.
+Added: If we are required to collect higher sales and use or other taxes on the solutions we sell, we may be subject to liability for past sales and our future sales may decrease.
+Added: Taxing jurisdictions, including state and local entities, have differing rules and regulations governing sales and use or other taxes, and these rules and regulations are subject to varying interpretations that may change over time.
+Added: In particular, the applicability of sales taxes to our subscription services in various jurisdictions is unclear.
+Added: It is possible that we could face sales tax audits and that our liability for these taxes could exceed our estimates as tax authorities could still assert that we are obligated to collect additional amounts as taxes from our customers and remit those taxes to those authorities.
+Added: We could also be subject to audits with respect to state and international jurisdictions for which we may not accrued tax liabilities.
+Added: A successful assertion that we should be collecting additional sales or other taxes on our services in jurisdictions where we have not historically done so and do not accrue for sales taxes could result in substantial tax liabilities for past sales, discourage customers from purchasing our solutions or otherwise harm our business and operating results.
Changes in our provision for income taxes or adverse outcomes resulting from examination of our income tax returns could adversely affect our operating results.
1 unchanged sentence
We are subject to income taxes in the United States and various foreign jurisdictions, and our domestic and international tax liabilities are subject to the allocation of expenses in differing jurisdictions.
−Removed: Our tax rate is affected by changes in the mix of earnings and losses in countries with differing statutory tax rates, certain non-deductible expenses arising from the requirement to expense stock options, excess tax benefits from stock-based compensation, and the valuation of deferred tax assets and liabilities, including our ability to utilize our federal and state net operating losses, which were $5.0 million and $2.1 million, respectively, as of December 31, 2019 .
+Added: Our tax rate is affected by changes in the mix of earnings and losses in countries with differing statutory tax rates, certain non-deductible expenses arising from the requirement to expense stock options, excess tax benefits from stock-based compensation, and the valuation of deferred tax assets and liabilities, including our ability to utilize our federal and state net operating losses, which were $1.4 million and $0.1 million, respectively, as of December 31, 2020.
Increases in our effective tax rate could harm our operating results.
4 unchanged sentences
Although we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions and accruals, which could have a material adverse effect on our operating results or cash flows in the period or periods for which a determination is made.
−Removed: Our business is subject to the risks of earthquakes, fire, power outages, floods and other catastrophic events, and to interruption by man-made problems such as terrorism.
−Removed: A significant natural disaster, such as an earthquake, fire or a flood, or a significant power outage could have a material adverse impact on our business, operating results and financial condition.
−Removed: Our corporate headquarters and a significant portion of our operations are located in the San Francisco Bay Area, a region known for seismic activity.
−Removed: In addition, natural disasters could affect our business partners’ ability to perform services for us on a timely basis.
−Removed: In the event we or our business partners are hindered by any of the events discussed above, our ability to provide our solutions to customers could be delayed, resulting in our missing financial targets, such as revenues and net income, for a particular quarter.
−Removed: Further, if a natural disaster occurs in a region from which we derive a significant portion of our revenues, customers in that region may delay or forego subscriptions of our solutions, which may materially and adversely impact our results of operations for a particular period.
−Removed: In addition, acts of terrorism could cause disruptions in our business or the business of our business partners, customers or the economy as a whole.
−Removed: All of the aforementioned risks may be exacerbated if the disaster recovery plans for us and our suppliers prove to be inadequate.
−Removed: To the extent that any of the above results in delays of customer subscriptions or commercialization of our solutions, our business, financial condition and results of operations could be adversely affected.
−Removed: If we fail to maintain an effective system of internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
−Removed: As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and the rules and regulations of the NASDAQ Stock Market.
−Removed: To continue to comply with the requirements of being a public company, we may need to undertake various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit staff.
−Removed: Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S.
−Removed: Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
−Removed: Any failure to maintain effective controls, or any difficulties encountered in their improvement, could harm our operating results or cause us to fail to meet our reporting obligations.
−Removed: Any failure to maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports we file with the SEC under Section 404 of the Sarbanes-Oxley Act.
−Removed: While we were able to assert in this Annual Report on Form 10-K that our internal control over financial reporting was effective as of December 31, 2019 , we cannot predict the outcome of our testing in future periods.
−Removed: If we are unable to assert in any future reporting period 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 controls), investors may lose confidence in our operating results and our stock price could decline.
−Removed: In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NASDAQ Stock Market.
+Added: Risks Related to Ownership of Our Common Stock
Market volatility may affect our stock price and the value of an investment in our common stock and could subject us to litigation.
5 unchanged sentences
variations in our operating results, or the operating results of our competitors;
−Removed: changes in our financial guidance or securities analysts’ estimates of our financial performance;
+Added: changes in our financial guidance or securities analysts’
+Added: estimates of our financial performance;
changes in accounting principles;
8 unchanged sentences
We may become involved in this type of litigation in the future.
−Removed: Any securities litigation claims brought against us could result in substantial expenses and the diversion of our management’s attention from our business.
+Added: Any securities litigation claims brought against us could result in substantial expenses and the diversion of our management’s attention from our business.
Our actual operating results may differ significantly from our guidance.
11 unchanged sentences
In light of the foregoing, investors are urged not to rely upon our guidance in making an investment decision regarding our common stock.
−Removed: Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in this “Risk Factors” section in this Annual Report on Form 10-K could result in our actual operating results being different from our guidance, and the differences may be adverse and material.
−Removed: Concentration of ownership among our existing executive officers, directors and holders of 10% or more of our outstanding common stock may prevent new investors from influencing significant corporate decisions.
+Added: Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in this “Risk Factors”
+Added: section in this Annual Report on Form 10-K could result in our actual operating results being different from our guidance, and the differences may be adverse and material.
+Added: Concentration of ownership among our existing executive officers, directors and holders of 10% or more of
+Added: our outstanding common stock may prevent new investors from influencing significant corporate decisions.
As of December 31, 2020, our executive officers, directors and holders of 10% or more of our outstanding common stock beneficially owned, in the aggregate, approximately 27.7% of our outstanding common stock.
6 unchanged sentences
If such options are exercised and restricted stock units are released, these additional shares will become available for sale.
−Removed: As of December 31, 2019, we had an aggregate of 5.2 million shares of our common stock reserved for future issuance under our 2012 Equity Incentive Plan, which can be freely sold in the public market upon issuance.
+Added: As of December 31, 2020 , we had an aggregate of 6.6 million shares of our common stock reserved for future issuance under our 2012 Equity Incentive Plan, which can be freely sold in the public market upon issuance.
If a large number of these shares are sold in the public market, the sales could reduce the trading price of our common stock.
1 unchanged sentence
In February 2018, we announced a $100.0 million stock repurchase program.
−Removed: In October 2018 and 2019, we announced that our authorization under this program had increased by $100.0 million and $100.0 million, respectively.
−Removed: Although our board of directors authorized this stock repurchase program, we are not obligated to repurchase any specific dollar amount or to acquire any specific number of shares.
+Added: On each of October 30, 2018, October 30, 2019, May 7, 2020 and February 10, 2021, we announced that our board of directors had authorized an increase of $100.0 million to the share repurchase program, resulting in an aggregate authorization of $500.0 million. Although our board of directors authorized this stock repurchase program, we are not obligated to repurchase any specific dollar amount or to acquire any specific number of shares.
The stock repurchase program could affect the price of our common stock, increase volatility and diminish our cash reserves.
1 unchanged sentence
In the year ended December 31, 2020, we repurchased 352,000 shares of our common stock for an aggregate purchase price of approximately $126.7 million.
−Removed: As of December 31, 2019, approximately $128.5 million remained available for share repurchases pursuant to our stock repurchase program.
We do not intend to pay dividends on our common stock and therefore any returns will be limited to the value of our stock.
5 unchanged sentences
These provisions include:
−Removed: authorizing “blank check” preferred stock, which could be issued by the board without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock, which would increase the number of outstanding shares and could thwart a takeover attempt;
+Added: authorizing “blank check”
+Added: preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock, which would increase the number of outstanding shares and could thwart a takeover attempt;
a classified board of directors whose members can only be dismissed for cause;
6 unchanged sentences
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.
+Added: General Risk Factors
+Added: Disruptive technologies could gain wide adoption and supplant our cloud-based IT, security and compliance solutions, thereby weakening our sales and harming our results of operations.
+Added: The introduction of products and services embodying new technologies could render our existing solutions obsolete or less attractive to customers.
+Added: Our business could be harmed if new IT, security and compliance technologies are widely adopted.
+Added: We may not be able to successfully anticipate or adapt to changing technology or customer requirements on a timely basis, or at all.
+Added: If we fail to keep up with technological changes or to convince our customers and potential customers of the value of our solutions even in light of new technologies, our business could be harmed and our revenues may decline.
+Added: We may not maintain profitability in the future.
+Added: We may not be able to sustain or increase our growth or maintain profitability in the future.
+Added: We plan to continue to invest in our infrastructure, new solutions, research and development and sales and marketing, and as a result, we cannot assure you that we will maintain profitability.
+Added: We may incur losses in the future for a number of reasons, including without limitation, the other risks and uncertainties described in this Annual Report on Form 10-K.
+Added: Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays and other unknown factors that may result in losses in future periods.
+Added: If our revenue growth does not meet our expectations in future periods, our financial performance may be harmed and we may not again achieve or maintain profitability in the future.
+Added: Forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, there can be no assurance that our business will grow at similar rates, or at all.
+Added: Growth forecasts relating to the expected growth in the market for IT, security and compliance and other markets are subject to significant uncertainty and are based on assumptions and estimates which may prove to be inaccurate.
+Added: Even if these markets experience the forecasted growth, we may not grow our business at similar rates, or at all.
+Added: Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.
+Added: Accordingly, forecasts of market growth should not be taken as indicative of our future growth.
+Added: Our financial results are based in part on our estimates or judgments relating to our critical accounting policies.
+Added: These estimates or judgments may prove to be incorrect, which could harm our operating results and result in a decline in our stock price.
+Added: The preparation of financial statements in conformity with U.S.
+Added: GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
+Added: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
+Added: the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenues and expenses that are not readily apparent from other sources.
+Added: Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in our stock price.
+Added: Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, accounting for income taxes, stock-based compensation, and fair value measurement.
+Added: Changes in financial accounting standards may cause adverse and unexpected revenue fluctuations and impact our reported results of operations.
+Added: We prepare our financial statements in accordance with U.S.
+Added: These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles.
+Added: A change in these accounting standards or practices could harm our operating results and could have a significant effect on our reporting of transactions and reported results and may even retroactively affect previously reported transactions.
+Added: New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future.
+Added: Changes to existing rules or the questioning of current practices may harm our operating results or require that we make significant changes to our systems, processes and controls or the way we conduct our business.
+Added: If we fail to maintain an effective system of internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
+Added: As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and the rules and regulations of the NASDAQ Stock Market.
+Added: To continue to comply with the requirements of being a public company, we may need to undertake various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit staff.
+Added: Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S.
+Added: Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
+Added: Any failure to maintain effective controls, or any difficulties encountered in their improvement, could harm our operating results or cause us to fail to meet our reporting obligations.
+Added: Any failure to maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports we file with the SEC under Section 404 of the Sarbanes-Oxley Act.
+Added: While we were able to assert in this Annual Report on Form 10-K that our internal control over financial reporting was effective as of December 31, 2020, we cannot predict the outcome of our testing in future periods.
+Added: If we are unable to assert in any future reporting period 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 controls), investors may lose confidence in our operating results and our stock price could decline.
+Added: In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NASDAQ Stock Market.
Unresolved Staff Comments
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.