What changed in this filing

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Item 1A. Risk Factors

2021-08-05 compared with 2021-05-07 · 74 added, 81 removed, 704 unchanged (18% of the section changed)

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The ongoing COVID-19 pandemic could materially and adversely affect our business, results of operations and financial condition.

The COVID-19 pandemic has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.

We are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures.

Our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as that of our customers, partners, suppliers and others with whom we work, for an indefinite period of time.

We are unable to accurately predict the full impact that the COVID-19 pandemic will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures.

The implementation of measures to help contain the virus has impacted our day-to-day operations and could disrupt our business and operations, as well as that of our customers, partners, suppliers and others with whom we work, for an indefinite period of time.

To support the health and well-being of our employees, customers, partners and communities, a vast majority of our employees began working remotely as of late March 2020, and they continue to do so.

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In addition, given the economic uncertainty created by COVID-19, we have and may continue to see delays in our sales cycle, failures of customers to renew at all or to renew the anticipated scope their subscriptions with us, requests from customers for payment term deferrals as well as pricing or bundling concessions, which, if significant, could materially and adversely affect our business, results of operations and financial condition.

Negative conditions in the general economy both in the United States and abroad, including conditions resulting from the COVID-19 pandemic, changes in gross domestic product growth, financial and credit market fluctuations, energy costs, international trade relations and other geopolitical issues, the availability and cost of credit and the global housing and mortgage

markets could cause a decrease in consumer discretionary spending and business investment and diminish growth expectations in the U.S.

economy and abroad.

More generally, the COVID-19 pandemic raises the possibility of an extended global economic downturn and has caused volatility in financial markets, which could materially and adversely affect demand for our products and professional services and could materially and adversely impact our results and financial condition even after the pandemic is contained and the various pandemic-related orders are lifted.

More generally, the COVID-19 pandemic continues to present the possibility of an extended

global economic downturn and has caused volatility in financial markets, which could materially and adversely affect demand for our products and professional services and could materially and adversely impact our results and financial condition even after the pandemic is contained.

For example, we may be unable to collect receivables from those customers significantly impacted by COVID-19, which may be more pronounced in industry verticals more directly impacted by the COVID-19 pandemic.

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Although we expect that current cash and cash equivalent balances, including the proceeds of our convertible senior notes offering in March 2021, together with cash flows that are generated from operations and availability under our revolving credit facility, will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements for at least the next 12 months, if our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be adversely impacted.

The full extent of the COVID-19 pandemic’s impact on our operations and financial performance depends on future developments that are uncertain and unpredictable, including the ultimate duration, spread and reemergence of the pandemic, its impact on capital and financial markets, the timing of economic recovery and any new information that may emerge concerning the severity of the virus, its spread to or reemergence in other geographic regions as well as the actions taken to contain it, including the availability of vaccines, among others.

Any of these impacts could have a material adverse impact on our business, results of operations and financial condition and ability to execute and capitalize on our strategies.

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Our operating results, including the levels of our revenue, ARR, cash flow, deferred revenue and gross margins, have historically varied from period to period, and we expect that they will continue to do so as a result of a number of factors, many of which are outside of our control, including:

• quarantines, travel limitations, or business disruptions in regions affecting our operations, stemming from actual, imminent or perceived outbreak or reemergence of contagious disease, including the COVID-19 pandemic;

• business disruptions in regions affecting our operations, stemming from actual, imminent or perceived outbreak or reemergence of contagious disease, including the COVID-19 pandemic;

• the level of demand for our products and professional services;

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• price competition;

• our ability to successfully manage and integrate any acquired businesses, including Divvy Cloud Corporation (DivvyCloud) and Alcide.IO Ltd.

(Alcide), and including without limitation the amount and timing of expenses and potential future charges for impairment of goodwill from acquired companies;

• our ability to successfully manage and integrate any acquired businesses, including, Alcide.IO Ltd.

(Alcide) and IntSights Cyber Intelligence Ltd.

(IntSights), and including without limitation the amount and timing of expenses and potential future charges for impairment of goodwill from acquired companies;

• our ability to increase, retain and incentivize the channel partners that market and sell our products and professional services;

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We have posted a net loss in each year since inception, including net losses of $98.8 million, $53.8 million and $55.5 million in the years ended December 31, 2020, 2019 and 2018, respectively.

As of March 31, 2021, we had an accumulated deficit of $619.5 million.

As of June 30, 2021, we had an accumulated deficit of $653.7 million.

While we have experienced significant revenue growth in recent periods, we may not obtain a high enough volume of sales of our products and professional services to sustain or increase our growth or achieve or maintain profitability in the future.

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If we are unable to continue to meet customer demands or to achieve more widespread market acceptance of our Insight Platform solutions, our business operations, financial results and growth prospects will be materially and adversely affected .

We spend substantial amounts of time and money to research and develop or acquire new offerings and enhanced versions of

our existing offerings to incorporate additional features, improve functionality or other enhancements in order to meet our customers’ rapidly evolving demands.

We spend substantial amounts of time and money to research and develop or acquire new offerings and enhanced versions of our existing offerings to incorporate additional features, improve functionality or other enhancements in order to meet our customers’ rapidly evolving demands.

In addition, we continue to invest in solutions that can be deployed on top of our platform to target specific use cases and to cultivate our community.

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Therefore, when we develop or acquire new or enhanced offerings, their introduction must achieve high levels of market acceptance in order to justify the amount of our investment in developing and bringing them to market.

For example, if our recent product expansions and offerings, such as our Cloud Security offerings, do not garner widespread market adoption and implementation, our financial results and competitive position could suffer.

For example, if our recent product expansions and offerings, such as our Cloud Security offerings, do not garner widespread market adoption and

implementation, our financial results and competitive position could suffer.

Further, we may make changes to our offerings that our customers do not like, find useful or agree with.

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As a result of such relationships and acquisitions, our current or potential competitors might be able to adapt more quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their products and services, initiate or withstand substantial price competition, take advantage of other opportunities more readily or develop and expand their product and service offerings more quickly than we do.

For all of these reasons, we may not be able to compete successfully against our current or future competitors, or we may be required to expend significant resources in order to remain competitive.

For all of these reasons, we may not be able to compete successfully against our current or future

competitors, or we may be required to expend significant resources in order to remain competitive.

If our competitors are more successful than we are in developing new product and service offerings or in attracting and retaining customers, our business, financial condition and results of operations could be adversely affected.

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Our failure to attract and retain personnel, especially those in sales and marketing and research and development positions for which we have historically had a high turnover rate, could have an adverse effect on our ability to execute our business objectives and, as a result, our ability to compete could decrease, our operating results could suffer and our revenue could decrease.

Even if we are able to identify and recruit a sufficient number of new hires, these new hires will require significant training before they achieve full productivity and they may not become productive as quickly as we would like or at all.

Even if we are able to identify and recruit a sufficient number

of new hires, these new hires will require significant training before they achieve full productivity and they may not become productive as quickly as we would like or at all.

We believe that our corporate culture has been a critical component to our success.

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We market and sell our products and professional services throughout the world and have personnel in many parts of the world.

For the three months ended March 31, 2021 and 2020, operations located outside of North America generated 18% and 17%, respectively, of our revenue.

For the six months ended June 30, 2021 and 2020, operations located outside of North America generated 18% and 17%, respectively, of our revenue.

Our growth strategy is dependent, in part, on our continued international expansion.

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regulations applicable to us.

Although we have implemented policies and procedures designed to comply with these laws and policies, there can be no assurance that our employees, contractors, channel partners and agents have complied, or will comply, with these laws and policies.

Although we have implemented policies and procedures designed to comply with these laws and policies, there can be no assurance that our employees, contractors, channel partners and agents have

complied, or will comply, with these laws and policies.

Violations of laws or key control policies by our employees, contractors, channel partners or agents could result in delays in revenue recognition, financial reporting misstatements, fines, penalties or the prohibition of the importation or exportation of our products and could have a material adverse effect on our business and results of operations.

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Achieving the anticipated benefits of past or future acquisitions will depend in part upon whether we can integrate acquired operations, products and technology in a timely and cost-effective manner and successfully market and sell these as new product offerings, or as new features within our existing offerings.

For example, on May 1, 2020 we acquired Divvy Cloud

Corporation (DivvyCloud), a cloud security posture management platform, and on January 28, 2021 we acquired Alcide.IO Ltd.

(Alcide), a Kubernetes cloud workload protection platform.

For example, on January 28, 2021 we acquired Alcide.IO Ltd.

(Alcide), a Kubernetes cloud workload protection platform and on July 16, 2021, we acquired IntSights, a provider of contextualized external threat intelligence and proactive threat remediation.

Some of our acquisitions could improve the capabilities of our existing offerings or platform, as opposed to becoming a new offering.

The acquisitions of DivvyCloud and Alcide are intended to extend the cloud security capabilities of our Insight Platform, helping security and DevOps teams understand and manage governance, risk and security in their growing cloud environments, which may encounter difficulties or unforeseen expenditures.

The integration of Alcide and any other acquisition may prove to be difficult due to the necessity of coordinating geographically separate organizations and integrating personnel with disparate business backgrounds and accustomed to different corporate cultures and business operations and internal systems.

The acquisitions of Alcide and IntSights are intended to extend the cloud security capabilities of our Insight Platform, helping security and DevOps teams understand and manage governance, risk and security in their growing cloud environments, which may encounter difficulties or

unforeseen expenditures.

The integration of Alcide and IntSights and any other acquisition may prove to be difficult due to the necessity of coordinating geographically separate organizations and integrating personnel with disparate business backgrounds and accustomed to different corporate cultures and business operations and internal systems.

We may need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies.

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For the years ended December 31, 2020, 2019 and 2018, we derived approximately 47%, 43%, and 39%, respectively, of our revenue from sales of products and professional services through channel partners, and the percentage of revenue derived from channel partners may increase in future periods.

Our agreements with our channel partners are non-exclusive and do not prohibit them from working with our competitors or offering competing solutions, and some of our

channel partners may have more established relationships with our competitors.

If our channel partners choose to place greater emphasis on products of their own or those offered by our competitors or do not effectively market and sell our products and professional services, our ability to grow our business and sell our products and professional services, particularly in key international markets, may be adversely affected.

Our agreements with our channel partners are non-exclusive and do not prohibit them from working with our competitors or offering competing solutions, and some of our channel partners may have more established relationships with our competitors.

international markets, may be adversely affected.

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

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We use third-party software and data that may be difficult to replace or that may cause errors or failures of our solutions, which could lead to lost customers or harm to our reputation and our operating results.

We license third-party software and security and compliance data from various third parties that are used in our solutions in

order to deliver our offerings.

We license third-party software and security and compliance data from various third parties that are used in our solutions in order to deliver our offerings.

In the future, this software or data may not be available to us on commercially reasonable terms, or at all.

Any loss of the right to use any of this software or data could result in delays in the provisioning of our offerings until equivalent technology or data is either developed by us, or, if available, is identified, obtained and integrated, which could harm our business.

our business.

In addition, any errors or defects in or failures of this third-party software could result in errors or defects in our products or cause our products to fail, which could harm our business and be costly to correct.

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We generate a portion of our revenue from our vulnerability management offerings that help organizations achieve and maintain compliance with regulations and industry standards both domestically and internationally.

For example, many of our customers subscribe to our vulnerability management offerings to help them comply with the security standards developed and

maintained by the Payment Card Industry Security Standards Council (the PCI Council), which apply to companies that process, transmit or store cardholder data.

For example, many of our customers subscribe to our vulnerability management offerings to help them comply with the security standards developed and maintained by the Payment Card Industry Security Standards Council (the PCI Council), which apply to companies that process, transmit or store cardholder data.

In addition, our vulnerability management offerings are used by customers in the health care industry to help them comply with numerous federal and state laws and regulations related to patient privacy.

In particular, HIPAA, and the 2009 Health Information Technology for Economic and Clinical Health Act include privacy standards that protect individual privacy by limiting the uses and disclosures of individually identifiable health information and implementing data security standards.

particular, HIPAA, and the 2009 Health Information Technology for Economic and Clinical Health Act include privacy standards that protect individual privacy by limiting the uses and disclosures of individually identifiable health information and implementing data security standards.

The foregoing and other state, federal and international legal and regulatory regimes may affect our customers’ requirements for, and demand for, our products and professional services.

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dollar and we generate a majority of our revenue in U.S.

However, for the three months ended March 31, 2021 and 2020 we incurred 14%, and 12%, respectively, of our expenses outside of the United States in foreign currencies, primarily the British pound sterling and euro, principally with respect to salaries and related personnel expenses associated with our sales and research and development operations.

Additionally, for the three months ended March 31, 2021 and 2020, 9% and 8%, respectively, of our revenue was generated in foreign currencies.

However, for the six months ended June 30, 2021 and 2020 we incurred 16%, and 12%, respectively, of our expenses outside of the United States in foreign currencies, primarily the British pound sterling and euro, principally with respect to salaries and related personnel expenses associated with our sales and research and development operations.

Additionally, for the six months ended June 30, 2021 and 2020, 9% and 8%, respectively, of our revenue was generated in foreign currencies.

Accordingly, changes in exchange rates may have an adverse effect on our business, operating results and financial condition.

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Exports of these products must be made in compliance with these laws and regulations.

Although we take precautions to prevent our products from being provided in violation of these laws, our products could be provided inadvertently in violation of such laws, despite the precautions we take.

Compliance with these laws and regulations is complex, and if we were to fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil and criminal penalties, including fines for our company and responsible employees or managers, and, in extreme cases, incarceration of responsible employees and managers and the possible loss of export privileges.

Complying with export control laws and regulations, including obtaining the necessary licenses or authorizations, for a particular sale may be time-consuming, is not guaranteed and may result in the delay or loss of sales opportunities.

Changes in export or import laws and regulations, shifts in the enforcement or scope of existing laws and regulations, or changes in the countries, governments, persons, products or services targeted by such laws and regulations, could also result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers.

A decreased use of our products or limitation on our ability to export or sell our

products could adversely affect our business, financial condition and results of operations.

could also result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers.

A decreased use of our products or limitation on our ability to export or sell our products could adversely affect our business, financial condition and results of operations.

We also incorporate encryption technology into our products.

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Compliance with applicable laws and regulations regarding the export and import of our products, including with respect to new products or changes in existing products, may create delays in the introduction of our products in international markets, prevent our customers with international operations from deploying our products globally or, in some cases, could prevent the export or import of our products to certain countries, governments, entities or persons altogether.

Further, U.S.

export control laws and economic sanctions prohibit the shipment of certain products and services to U.S.

embargoed or sanctioned countries, governments or persons.

Although we take precautions to prevent our products from being provided to those subject to U.S.

sanctions, such measures may be circumvented and we have in the past identified limited instances of non-compliance with these rules.

After these instances were disclosed to U.S.

authorities, those authorities decided to not bring enforcement actions against or impose penalties on us.

Our ability to use net operating losses to offset future taxable income may be subject to certain limitations.

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Risks Related to Data Privacy and Cybersecurity

Real or perceived failures, errors or defects in our solutions could adversely affect our brand and reputation, which could

have an adverse effect on our business and results of operations.

Real or perceived failures, errors or defects in our solutions could adversely affect our brand and reputation, which could have an adverse effect on our business and results of operations.

If our products or professional services fail to detect vulnerabilities in our customers’ cyber security infrastructure, or if our products or professional services fail to identify and respond to new and increasingly complex methods of cyber attacks, our business and reputation may suffer.

There is no guarantee that our products or professional services will detect all vulnerabilities and threats, especially in light of the rapidly changing security landscape to which we must respond, including the constantly evolving techniques used by attackers to access or sabotage data.

If we fail to update our solutions in a timely or effective manner to respond to these threats, our customers could experience security breaches.

If we fail to update our solutions in a timely or

effective manner to respond to these threats, our customers could experience security breaches.

Many federal, state and foreign governments have enacted laws requiring companies to notify individuals of data security breaches involving their personal data.

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In addition, with so many of our employees now working remotely due to the global COVID-19 pandemic, we may face an increased risk of attempted security breaches and incidents.

Also, as more of our customers move to working remotely for extended periods of time during the global COVID-19 pandemic we expect there will be an increased amount of personal, confidential and proprietary information that is stored in our solutions, which increases the exposure and risk of cyberattacks and other malicious internet-based activity.

Also, since many of our customers continue to working remotely, we expect there will continue to be an increased amount of personal, confidential and proprietary information that is stored in our solutions, which increases the exposure and risk of cyberattacks and other malicious internet-based activity.

While we have taken steps to protect such information that we have access to, including information we may obtain through our customer support services or customer usage of our offerings, our security measures or those of our third-party service providers could be breached or otherwise fail to prevent unauthorized access to or disclosure, modification, misuse, loss or destruction of such information.

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Any actual or perceived security breach, malicious intrusion or theft of sensitive data in which Metasploit is believed to have been used could adversely affect perception of, and demand for, our offerings.

Further, the identification of new exploits and vulnerabilities by the Metasploit community may enhance the knowledge base of cyber attackers or enable them to undertake new forms of attacks.

Further, the identification of new exploits and

vulnerabilities by the Metasploit community may enhance the knowledge base of cyber attackers or enable them to undertake new forms of attacks.

If any of the foregoing were to occur, we could suffer negative publicity and loss of customers and sales, as well as possible legal claims.

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Non-compliance with these laws could result in penalties or significant legal liability.

We could be adversely affected if legislation or regulations are expanded to require changes in our business

practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business, results of operations or financial condition.

We could be adversely affected if legislation or regulations are expanded to require changes in our business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business, results of operations or financial condition.

European Data Protection Laws generally prohibit the transfer of personal data from the European Economic Area (EEA), the UK and Switzerland (Europe), to the United States and most other countries unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data.

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To facilitate the transfer of both customer and employee personal data from Europe to the United States, we self-certified under the EU-US Privacy Shield framework on December 20, 2016.

However, this framework was recently invalidated by a decision of the EU’s highest court in July 2020 and authorities in the UK and Switzerland have similarly invalidated use of the Privacy Shield as a vehicle for lawful data transfers from those countries to the United States.

The same decision also cast doubt on the ability to use one of the primary alternatives to the Privacy Shield, namely, the European Commission’s Standard Contractual Clauses (SCCs), to lawfully transfer personal data from Europe to the United States and most other countries.

However, this framework was invalidated by a decision of the EU’s highest court in July 2020 and authorities in the UK and Switzerland have similarly invalidated use of the

Privacy Shield as a vehicle for lawful data transfers from those countries to the United States.

The same decision also required parties using one of the primary alternatives to the Privacy Shield, namely, the European Commission’s Standard Contractual Clauses (SCCs), to lawfully transfer personal data from Europe to the United States and most other countries, to adopt additional safeguards to protect personal data being transferred.

At present, there are few if any viable alternatives to the SCCs.

As such, our processing of personal data from Europe may not comply with European Data Protection Law.

This may increase our exposure to the GDPR’s and UK GDPR’s heightened sanctions for violations of its cross-border data transfer restrictions, including injunctions against transferring personal data subject to the GDPR.

As such, our transfer and processing of personal data from Europe may not comply with European Data Protection Law.

This may also reduce demand for our services from companies subject to European Data Protection Laws.

Loss of our ability to import personal data from Europe may also require us to increase our data processing capabilities in the EEA at significant expense.

Although by virtue of the UK GDPR, the GDPR applies in the UK in substantially unvaried form, going forward there will be increasing scope for divergence in application, interpretation and enforcement of the data protection law as between the UK and the EEA.

under the post-Brexit Trade and Cooperation Agreement between, on the one hand, the EU and the European Atomic Energy Community and, on the other, the UK, it has been agreed that transfers of personal data to the UK from EU member states will not be treated as “restricted transfers” to a non-EEA country for a period of up to four months from January 1, 2021, plus a potential further two months extension (the adequacy assessment period).

This will also apply to transfers to the UK from EEA member states, assuming those states accede to the relevant provision of the Trade and Cooperation Agreement.

This adequacy assessment period may end sooner, if the European Commission adopts an adequacy decision in respect of the UK.

On February 19, 2021, the European Commission issued a draft an ‘adequacy decision’ in respect of the UK for a period of four years.

This decision is expected to be formally adopted prior to the expiry of the adequacy assessment period.

Loss of our ability to import personal data from the EU and UK may also require us to increase our data processing capabilities in the EEA at significant expense.

On June 28, 2021 the European Commission adopted an adequacy decision in respect of the UK allowing transfers of personal data to the UK from EU member states for a period of four years.

Additionally, other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our services and operating our business.

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The market price of our common stock may be highly volatile and may fluctuate substantially as a result of a variety of factors, some of which are related in complex ways.

Since shares of our common stock were sold in our initial public offering, or IPO, in July 2015 at a price of $16.00 per share, our stock price has ranged from an intraday low of $9.05 to an intraday high of $94.60 through April 30, 2021.

Factors that may affect the market price of our common stock include:

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We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future.

We anticipate that we will retain all of our future earnings for use in the development of our business and for

general corporate purposes.

We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes.

Any determination to pay dividends in the future will be at the discretion of our board of directors.

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If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.

Any such event of default under our senior secured credit facility would give the lenders

the right to terminate their commitments to provide additional loans under our senior secured credit facility and to declare any and all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.

Any such event of default under our senior secured credit facility would give the lenders the right to terminate their commitments to provide additional loans under our senior secured credit facility and to declare any and all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.

In addition, the lenders under our senior secured credit facility would have the right to proceed against the collateral in which we granted a security interest to them, which consists of substantially all our assets.

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In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to convert their Notes at any time during specified periods at their option.

If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.

As disclosed in Note 10 to our unaudited consolidated financial statements, the conditional conversion feature of the 2023 Notes was triggered as of March 31, 2021, and the 2023 Notes are convertible at the option of the holders, in whole or in part, between April 1, 2021 and June 30, 2021.

As of March 31, 2021, an immaterial principal amount of the 2023 Notes was requested for conversion, which is expected to be settled during the quarter ended June 30, 2021.

In addition, from April 1, 2021 to the date of this filing, we have not received any additional conversion requests for the 2023 Notes.

Whether the 2023 Notes will be convertible following such fiscal quarter will depend on the continued satisfaction of this condition or another conversion condition in the future.

As of March 31, 2021, the 2025 Notes and the 2027 Notes are not convertible at the option of the holder.

If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering

any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.

As disclosed in Note 10 to our unaudited consolidated financial statements, the conditional conversion features of the 2023 Notes and the 2025 Notes were triggered as of June 30, 2021, and the 2023 Notes and 2025 Notes are convertible at the option of the holders, in whole or in part, between July 1, 2021 and September 30, 2021.

During the first quarter of 2021, an immaterial principal amount of the 2023 Notes was requested for conversion, which was settled during the quarter ended June 30, 2021.

In addition, from July 1, 2021 to the date of this filing, we have not received any additional conversion requests for the 2023 Notes or the 2025 Notes.

Whether the 2023 Notes or the 2025 Notes will be convertible following such fiscal quarter will depend on the continued satisfaction of this condition or another conversion condition in the future.

As of June 30, 2021, the 2027 Notes are not convertible at the option of the holder.

In addition, even if holders of Notes do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

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If a fundamental change occurs prior to the maturity date of the Notes, holders of the Notes, will have the right, at their option, to require us to repurchase all or a portion of their Notes.

In addition, if a “make-whole fundamental change” (as defined in the indentures) occurs prior the maturity date, we will in some cases be required to increase the conversion rate of the Notes for a holder that elects to convert its Notes in connection with such make-whole fundamental change.

In addition, if a “make-whole fundamental change” (as defined in the

indentures) occurs prior the maturity date, we will in some cases be required to increase the conversion rate of the Notes for a holder that elects to convert its Notes in connection with such make-whole fundamental change.

Furthermore, the indentures governing the Notes prohibit us from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the Notes.

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The conversion of some or all of the Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares of our common stock upon conversion of any of the Notes.

As disclosed in Note 10 to our consolidated financial statements, the conditional conversion feature of the 2023 Notes was triggered as of March 31, 2021, and the 2023 Notes are convertible at the option of the holders, in whole or in part, between April 1, 2021 and June 30, 2021.

Whether the Notes will be convertible following such fiscal quarter will depend on the continued satisfaction of this condition or another conversion condition in the future.

As of March 31, 2021, the 2025 Notes and the 2027 Notes are not convertible at the option of the holder.

As disclosed in Note 10 to our consolidated financial statements, the conditional conversion features of the 2023 Notes and the 2025 Notes were triggered as of June 30, 2021, and the 2023 Notes and the 2025 Notes are convertible at the option of the holders, in whole or in part, between July 1, 2021 and September 30, 2021.

Whether the 2023 Notes and the 2025 Notes will be convertible following such fiscal quarter will depend on the continued satisfaction of this condition or another conversion condition in the future.

As of June 30, 2021, the 2027 Notes are not convertible at the option of the holder.

Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

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In addition, our facilities and those of our third-party data centers and hosting providers are vulnerable to damage or interruption from human error, intentional bad acts, pandemics, earthquakes, hurricanes, floods, fires, war, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar events.

The occurrence of a public

health crisis, natural disaster, power failure or an act of terrorism, vandalism or other misconduct, a decision by a third party to close a facility on which we rely without adequate notice, or other unanticipated problems could result in lengthy interruptions in provision or delivery of our products, potentially leaving our customers vulnerable to cyber attacks.

The occurrence of a public health crisis, natural disaster, power failure or an act of terrorism, vandalism or other misconduct, a decision by a third party to close a facility on which we rely without adequate notice, or other unanticipated problems could result in lengthy interruptions in provision or delivery of our products, potentially leaving our customers vulnerable to cyber attacks.

The occurrence of any of the foregoing events could damage our systems and hardware or could cause them to fail completely, and our insurance may not cover such events or may be insufficient to compensate us for the potentially significant losses, including the potential harm to the future growth of our business, that may result from interruptions in our service as a result of system failures.

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We have been and are required, pursuant to Section 404 of the Sarbanes-Oxley Act (Section 404), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting on an annual basis.

This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.

This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial

During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal controls are effective.

20 unchanged sentences

Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Pursuant to our amended and restated certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws or (4) any action asserting a claim governed by the internal affairs doctrine.

Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws or (4) any action asserting a claim governed by the internal affairs doctrine.

Our amended and restated certificate of incorporation further provides that any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the foregoing provision.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors