Investing in our Class A common stock involves a high degree of risk.
−Removed: You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the accompanying notes.
+Added: You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the accompanying notes included before making a decision to invest in our Class A common stock.
Our business, financial condition, operating results, or prospects could also be adversely affected by risks and uncertainties that are not presently known to us or that we currently believe are not material.
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◦ Our operating results may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below expectations.
+Added: ◦ Adverse economic conditions or reduced information technology spending could adversely affect our business, operating results and financial condition.
◦ A network or data security incident against us, whether actual, alleged, or perceived, would harm our reputation, create liability, and regulatory exposure, and adversely affect our business, operating results, and financial condition.
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• The market price of our Class A common stock may be volatile, and you could lose all or part of your investment.
−Removed: • The dual class structure of our common stock has the effect of concentrating voting control with certain stockholders who held our capital stock prior to the completion of our initial public offering (IPO), including our directors, executive officers, and beneficial owners of 5% or greater of our outstanding capital stock who hold in the aggregate approximately 89% of the voting power of our capital stock, which will limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.
+Added: • The dual class structure of our common stock has the effect of concentrating voting control with certain stockholders who held our capital stock prior to the completion of our IPO, including our directors, executive officers, and other beneficial owners who hold in the aggregate approximately 85% of the voting power of our capital stock, which will limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.
+Added: General Risk Factors
+Added: • Adverse economic conditions or reduced information technology spending could adversely affect our business, operating results, and financial condition.
Risks Related to Our Business and Industry
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Any predictions about our future revenue and expenses may not be as accurate as they would be if we had a longer operating history or operated in a more predictable or established market.
−Removed: If our assumptions regarding these risks and uncertainties are incorrect or change due to fluctuations in our markets or otherwise, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business and operating results would
−Removed: be adversely affected.
+Added: If our assumptions regarding these risks and uncertainties are incorrect or change due to fluctuations in our markets or otherwise, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business and operating results would be adversely affected.
We cannot assure you that we will be successful in addressing these and other challenges we may face in the future.
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We have incurred net losses in all periods since our inception, and we may not achieve or maintain profitability in the future.
−Removed: We experienced a net loss of $271.1 million, $117.6 million, and $76.6 million for fiscal 2022, 2021, and 2020, respectively.
+Added: We experienced a net loss of $378.7 million and $271.1 million for the fiscal years ended January 31, 2023 and 2022, respectively.
As of January 31, 2023, we had an accumulated deficit of $1,000.4 million.
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• our ability to attract, train, retain, and motivate talented employees;
−Removed: • the budgeting cycles, seasonal buying patterns, and purchasing practices of our customers, including any slowdown in technology spending due to the continuing COVID-19 pandemic and market downturns;
+Added: • the budgeting cycles, seasonal buying patterns, and purchasing practices of our customers, including any slowdown in technology spending due to U.S.
+Added: and global macro-economic issues, including global banking and finance related issues, rising interest rates, overall market downturns, inflation, supply chain disruptions, the COVID-19 pandemic or otherwise;
• changes in customer, distributor or reseller requirements or market needs;
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• our ability to successfully and continuously expand our business domestically and internationally;
−Removed: • changes in the growth rate of the endpoint security market or endpoint and cloud security solutions sectors;
+Added: • changes in the growth rate of endpoint security, cloud security and overall cybersecurity product platform and services sectors;
• deferral of orders from customers in anticipation of new or enhanced products and services announced by us or our competitors;
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• timing of revenue recognition and revenue deferrals;
−Removed: • insolvency or credit difficulties confronting our customers, which could increase due to the continuing effects of the on-going COVID-19 pandemic and adversely affect their ability to purchase or pay for our platform, products, and services in a timely manner or at all;
−Removed: • the cost and potential outcomes of litigation, which could have a material adverse effect on our business;
+Added: • insolvency or credit difficulties confronting our customers, which could increase due to U.S.
+Added: and global macro-economic issues, including global banking and finance related issues, inflation, rising interest rates, market downturns and the effects of the COVID-19 pandemic, which would adversely affect their ability to purchase or pay for our platform, products, and services in a timely manner or at all;
+Added: • the cost and potential outcomes of litigation or other proceedings, which could have a material adverse effect on our business;
• future accounting pronouncements or changes in our accounting policies;
• increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates; and
−Removed: • general macroeconomic conditions, both domestically and in our foreign markets that could impact some or all regions where we operate, including any global economic slowdown, increased risk of inflation, and potential global recession.
+Added: • general macroeconomic conditions, both domestically and in our foreign markets that could impact some or all regions where we operate, including global economic slowdowns, global banking and finance related issues, increased risk of inflation, rising interest rates, labor shortages and potential global recession.
Many of our competitors have greater financial, technical, marketing, sales, and other resources, greater name recognition, longer operating histories, and a larger base of customers than we do.
−Removed: Our competitors may be able to devote greater resources to the development, promotion and sale of their products and services than we can, and they may offer lower pricing than we do or bundle certain competing products and services at lower price.
−Removed: Our competitors may also have greater resources for
−Removed: research and development of new technologies, customer support and to pursue acquisitions, or they may have other financial, technical, or other resource advantages.
+Added: Our competitors may be able to devote greater resources to the development, promotion and sale of their products and services than we can, and they may offer lower pricing than we do or bundle certain competing products and services at lower prices.
+Added: Our competitors may also have greater resources for research and development of new technologies, customer support and to pursue acquisitions, or they may have other financial, technical, or other resource advantages.
Our larger competitors have substantially broader and more diverse product and service offerings and more mature distribution and go-to-market strategies, which allows them to leverage their existing customer and distributor relationships to gain business in a manner that discourages potential customers from purchasing our platform.
−Removed: Conditions in our market could change rapidly and significantly as a result of technological advancements, partnering or acquisitions by our competitors or continuing market consolidation.
+Added: Conditions in our market could change rapidly and significantly as a result of technological advancements, including but not limited to increased advancements and proliferation in the use of open artificial intelligence applications, partnering or acquisitions by our competitors or continuing market consolidation.
Some of our competitors have recently made or could make acquisitions of businesses or have established cooperative relationships that may allow them to offer more directly competitive and comprehensive products and services than were previously offered and adapt more quickly to new technologies and customer needs.
These competitive pressures in our market or our failure to compete effectively may result in price reductions, fewer orders, reduced revenue and gross margin, increased net losses and loss of market share.
−Removed: Even if there is significant demand for endpoint security solutions like ours, if our competitors include functionality that is, or is perceived to be, equivalent to or better than ours in legacy products that are already generally accepted as necessary components of an organization’s IT security architecture, we will have difficulty increasing the market penetration of our platform.
+Added: Even if there is significant demand for endpoint and cloud security solutions like ours, if our competitors include functionality that is, or is perceived to be, equivalent to or better than ours in legacy products that are already generally accepted as necessary components of an organization’s IT security architecture, we will have difficulty increasing the market penetration of our platform.
Furthermore, even if the functionality offered by other cybersecurity providers is different and more limited than the functionality of our platform, organizations may elect to accept such limited functionality in lieu of purchasing products and services from additional vendors like us.
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Accordingly, our financial results in any one quarter should not be relied upon as indicative of future performance.
−Removed: Fluctuation in quarterly results may negatively impact the trading price of our Class A common stock.
+Added: Fluctuations in quarterly results may negatively impact the trading price of our Class A common stock.
Our quarterly financial results may fluctuate as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including, without limitation:
−Removed: • the continuing impact of the on-going COVID-19 pandemic on our operations, financial results, and liquidity and capital resources, including on customers, sales, expenses, and employees;
+Added: • general economic, macroeconomic and political conditions, both domestic and in our foreign markets, that could impact some or all regions where we operate, including any global economic slowdown, global banking and finance related issues, increased risk of inflation, rising interest rates, labor shortages and potential global recession, war, terrorism or armed conflict, including Russia’s invasion of Ukraine, or instability in the global system;
• our ability to attract new and retain existing customers or sell additional features to existing customers;
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• extraordinary expenses such as litigation or other dispute-related settlement payments or outcomes, taxes, regulatory fines or penalties;
−Removed: • general political, economic and macroeconomic conditions, both domestic and in our foreign markets, including as a result of war, terrorism or armed conflict, including Russia’s invasion of Ukraine;
+Added: • the impact of the COVID-19 pandemic on our operations, financial results, and liquidity and capital resources, including on customers, sales, expenses, and employees;
• future accounting pronouncements or changes in our accounting policies or practices;
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Any expansion in our market depends on a number of factors, including the cost, performance and perceived value associated with, and customer adoption of, our platform.
−Removed: If the market for our platform does not achieve widespread adoption or there is a reduction in demand for our software or our services in our market caused by a lack of customer acceptance, implementation challenges for deployment, technological challenges, competing technologies and services, decreases in corporate spending, weakening
−Removed: economic conditions, or otherwise, it could result in reduced customer orders and decreased revenue, which would adversely affect our business operations and financial condition.
+Added: If the market for our platform does not achieve widespread adoption or there is a reduction in demand for our software or our services caused by a lack of customer acceptance, implementation challenges for deployment, technological challenges, competing technologies and services, decreases in corporate spending, weakening economic conditions, or otherwise, it could result in reduced customer orders and decreased revenue, which would adversely affect our business operations and financial condition.
Our platform interoperates with, but does not necessarily replace, other security products.
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If businesses do not continue to adopt our platform for any of the reasons discussed above or for other reasons not contemplated, our sales would not grow as quickly as anticipated, or at all, and our business, operating results, and financial condition would be adversely affected.
−Removed: A network or data security incident against us, whether actual, alleged, or perceived, would harm our reputation, create liability, and regulatory exposure, and adversely affect our business, operating results, and financial condition.
+Added: A network or data security incident against us, whether actual, alleged, or perceived, would harm our reputation, create liability and regulatory exposure, and adversely impact our business, operating results, and financial condition.
Companies are subject to an increasing number and wide variety of attacks on their networks on an ongoing basis.
−Removed: Traditional computer “hackers,” malicious code (such as viruses and worms), phishing attempts, employee theft or misuse, denial of service attacks, and sophisticated nation-state and nation-state supported actors engage in intrusions and attacks that create risks for our internal networks and cloud deployed products and the information they store and process.
+Added: Traditional computer “hackers,” malicious code (such as viruses and worms), phishing attempts, ransomware, account takeover, business email compromise, employee fraud, theft or misuse, denial of service attacks, and sophisticated nation-state and nation-state supported actors engage in intrusions and attacks that create risks for our internal networks and cloud deployed products and the information they store and process.
Cybersecurity companies face particularly intense attack efforts, and we have faced, and will continue to face, cyber threats and attacks from a variety of sources.
−Removed: The research that we conduct and report may make us, or our customers, a further target for attacks for all kinds.
+Added: The research that we conduct and report may make us, or our customers, a further target for attacks of all kinds.
State-supported and geopolitical-related cyberattacks may increase in connection with Russia’s invasion of Ukraine and any related political or economic responses and counter-responses.
−Removed: Although we have implemented security measures to prevent such attacks, our networks and systems may be breached due to the actions of outside parties, employee error, malfeasance, a combination of these, or otherwise, and as a result, an unauthorized party may obtain access to our systems, networks, or data.
+Added: The war in Ukraine and associated activities in Ukraine and Russia has increased the risk of cyberattacks on various types of infrastructure and operations, and the United States government has warned companies to be prepared for a significant increase in Russian cyberattacks in response to the sanctions on Russia.
+Added: Although we have implemented security measures to prevent such attacks, our networks and systems may be breached due to the actions of outside parties, employee error, malfeasance, a combination of these, or otherwise, and as a result, an unauthorized party may obtain access to our and/or our customers’ systems, networks, or data.
We may face difficulties or delays in identifying or otherwise responding to any attacks or actual or potential security breaches or threats.
−Removed: A breach in our data security or an attack against our platform could impact our networks or the networks of our customers that are secured by our platform, creating system disruptions or slowdowns and providing access to malicious parties to information stored on our networks or the networks of our customers, resulting in data being publicly disclosed, altered, lost, or stolen, which could subject us to liability and adversely affect our financial condition.
−Removed: The COVID-19 pandemic may have generally increased the attack surface available to criminals, as companies and individuals work online and work remotely, and as such, the risk of a cybersecurity incident potentially occurring, and our investment in risk mitigations against such an incident, is increasing.
−Removed: Moreover, globally there has been an increase in cybersecurity attacks since Russia invaded Ukraine.
+Added: A breach in our data security or an attack against our platform could impact our networks or the networks and data of our customers that are secured by our platform, creating system disruptions or slowdowns and providing access to malicious parties to information stored on our networks or the networks of our customers, resulting in data being publicly disclosed, misused, altered, lost, or stolen, which could subject us to liability and adversely affect our financial condition.
+Added: The COVID-19 pandemic may have generally increased the attack surface available to criminals, as companies and individuals work online and remotely, which has increased the risk of a successful cyber security attack.
+Added: We have accordingly increased our investments in protective measures and risk mitigation strategies, but we cannot guarantee that our efforts, or the efforts of those upon whom we rely and partner with, will be successful in preventing any such information security incidents.
+Added: Protecting our own assets has become more expensive from a dollar investment and time perspective.
Any actual, alleged or perceived security breach in our systems or networks, or any other actual, alleged or perceived data security incident we suffer, could result in damage to our reputation, negative publicity, loss of customers and sales, loss of competitive advantages over our competitors, increased costs to remedy any problems and otherwise respond to any incident, regulatory investigations and enforcement actions, costly litigation, and other liability.
−Removed: We would also be exposed to a risk of loss or litigation and potential liability under laws, regulations and contracts that protect the privacy and security of personal information.
+Added: We would also be exposed to a risk of loss or litigation and potential liability under laws, regulations and
+Added: contracts that protect the privacy and security of personal information.
For example, the California Consumer Privacy Act of 2018 (CCPA), imposes a private right of action for security breaches that could lead to some form of remedy including regulatory scrutiny, fines, private right of action settlements, and other consequences.
−Removed: Where a security incident involves a breach of security leading to the accidental or unlawful destruction, loss, alternation, unauthorized disclosure of, or access to, personal data in respect of which we are a controller or processor under the GDPR (U.K.
+Added: Where a security incident involves a breach of security leading to the accidental or unlawful destruction, loss, alternation, unauthorized disclosure of, or access to, personal data in respect of which we are a controller or processor under the GDPR and U.K.
GDPR (as defined below), this could result in fines of up to €20 million or 4% of annual global turnover under the GDPR or £17 million and 4% of total annual revenue in the case of the U.K.
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Any of these negative outcomes could adversely affect the market perception of our platform and customer and investor confidence in our company, and would adversely affect our business, operating results, and financial condition.
−Removed: Defects, errors, or vulnerabilities in our platform, the failure of our platform to block malware or prevent a security breach, misuse of our platform, or risks of product liability claims would harm our reputation and adversely affect our business, operating results, and financial condition.
+Added: Defects, errors, or vulnerabilities in our platform, the failure of our platform to block malware or prevent a security breach, misuse of our platform, or risks of product liability claims would harm our reputation and adversely impact our business, operating results, and financial condition.
Our platform and product features are multi-faceted and may be deployed with material defects, software “bugs” or errors that are not detected until after their commercial release and deployment to our customers.
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Furthermore, as a well-known provider of security solutions, our networks, platform, products, including cloud-based technology, and customers could be targeted by attacks specifically designed to disrupt our business and harm our reputation.
+Added: In addition, due to the Russian invasion there could be a significant increase in Russian cyberattacks against our customers, resulting in an increased risk of a security breach of our customers’ systems.
In addition, defects or errors in our platform could result in a failure to effectively update customers’ cloud-based products.
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We or our service providers may also suffer security breaches or unauthorized access to personal information, financial account information, and other confidential information due to employee error, rogue employee activity, unauthorized access by third parties acting with malicious intent or who commit an inadvertent mistake or social engineering.
−Removed: If we experience, or our service provides experience any breaches of security measures or sabotage or otherwise suffer unauthorized use or disclosure of, or access to, personal information, financial account information or other confidential information, we might be required to expend significant capital and resources to address these problems.
+Added: If we experience, or our service providers experience, any breaches of security
+Added: measures or sabotage or otherwise suffer unauthorized use or disclosure of, or access to, personal information, financial account information or other confidential information, we might be required to expend significant capital and resources to address these problems.
We may not be able to remedy any problems caused by hackers or other similar actors in a timely manner, or at all.
To the extent potential customers, industry analysts or testing firms believe that the failure to detect or prevent any particular threat is a flaw or indicates that our platform does not provide significant value, our reputation and business would be harmed.
−Removed: Any real or perceived defects,
−Removed: errors or vulnerabilities in our platform, or any other failure of our platform to detect an advanced threat, could result in:
+Added: Any real or perceived defects, errors or vulnerabilities in our platform, or any other failure of our platform to detect an advanced threat, could result in:
• a loss of existing or potential customers;
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In the last few years there have been many successful advanced cybersecurity incidents that have damaged several prominent companies in spite of strong information security measures.
−Removed: For example, SolarWinds Corporation, a provider of IT monitoring and management products and services, experienced a cyberattack that appears likely to be the result of a supply chain attack by an outside nation state, resulting in vulnerabilities being included in software updates related to its Orion Platform products delivered between March and June 2020.
We expect that the risks associated with cybersecurity incidents and the costs of preventing such attacks will continue to increase in the future.
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As part of our business strategy, we have in the past and expect to continue to make investments in and/or acquire complementary companies, services, products, technologies, or talent.
−Removed: For example, in fiscal 2022 we acquired Scalyr, a data analytics company, and invested in certain private companies.
−Removed: In March 2022, we also announced that we signed a definitive agreement to acquire Attivo, a leading security and lateral movement protection company.
+Added: For example, in February 2021 we acquired Scalyr, a data analytics company and in May 2022 we acquired Attivo, a leading identity security and
+Added: lateral movement protection company.
+Added: We have also invested in certain privately held companies through our S Ventures fund.
Our ability as an organization to acquire and integrate other companies, services or technologies in a successful manner is not guaranteed.
In the future, we may not be able to find suitable acquisition candidates, and we may not be able to complete such acquisitions on favorable terms, if at all.
−Removed: Our due diligence efforts may fail to identify all of the problems, liabilities or other shortcomings or challenges involved in an acquisition.
+Added: Our due diligence efforts may fail to identify all of the challenges, problems, liabilities or other shortcomings involved in an acquisition.
If we do complete acquisitions, we may not ultimately strengthen our competitive position or ability to achieve our business objectives, and any acquisitions we announce or complete could be viewed negatively by our customers or investors.
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• unexpected security risks or higher than expected costs to improve the security posture of the acquired company;
+Added: • higher than expected costs to bring the acquired company’s IT infrastructure up to our standards;
• additional legal, regulatory or compliance requirements;
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• failing to achieve the expected benefits of the acquisition or investment;
−Removed: • litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, current and former stockholders or other third parties.
+Added: • litigation or other claims in connection with the acquired company, including claims from or against terminated employees, customers, current and former stockholders or other third parties.
Our failure to address these risks or other problems encountered in connection with acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.
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If our efforts to maintain and expand our relationships with our existing customers are not successful, our business, operating results, and financial condition will materially suffer.
−Removed: If our platform is not effectively interoperated within our customers’ IT infrastructure, deployments could be delayed or canceled, which would adversely affect our business, operating results, and financial condition.
+Added: If our platform is not effectively interoperated within our customers’ IT infrastructure, deployments could be delayed or canceled, which would adversely impact our business, operating results, and financial condition.
Our platform must effectively interoperate with our customers’ existing IT infrastructure, which often has different specifications, utilizes multiple protocol standards, deploys products and services from multiple vendors, and contains multiple generations of products and services that have been added over time.
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In addition, government and other customers may require our platform to comply with certain security or other certifications and standards.
−Removed: If we are unable to achieve, or are delayed in achieving, compliance with these certifications and standards, we may be disqualified from selling our platform to such customers, or may otherwise be at a competitive disadvantage, either of which could adversely affect our business, operating results, and financial condition.
−Removed: Disruptions or other business interruptions that affect the availability of our platform could adversely affect our customer relationships and overall business.
−Removed: Our platform is hosted through AWS.
−Removed: Our software and systems are designed to use computing, storage capabilities, bandwidth, and other services provided by AWS, and currently our cloud service infrastructure is run on AWS.
+Added: If we are unable to achieve, or are delayed in achieving, compliance with these certifications and standards, we may be disqualified from selling our
+Added: platform to such customers, or may otherwise be at a competitive disadvantage, either of which could adversely affect our business, operating results, and financial condition.
+Added: Disruptions or other business interruptions that affect the availability of our platform could adversely impact our customer relationships and overall business.
+Added: Our platform is hosted by third-party cloud hosting providers including Amazon Web Services (AWS).
+Added: Our software and systems are designed to use computing, storage capabilities, bandwidth, and other services provided by such cloud hosting providers, and currently our cloud service infrastructure is primarily run on AWS.
We have experienced, and expect in the future that we may experience from time to time, interruptions, delays or outages in service availability due to a variety of factors.
Capacity constraints could arise from a number of causes such as technical failures, natural disasters, fraud, or security attacks.
−Removed: The level of service provided by AWS, or regular or prolonged interruptions in that service, could also impact the use of, and our customers’ satisfaction with, our platform and could harm our business and reputation.
−Removed: In addition, hosting costs will increase as our customer base grows, which could adversely affect our business, operating results and financial condition.
+Added: The level of service provided by our cloud hosting providers, or regular or prolonged interruptions in that service, could also impact the use of, and our customers’ satisfaction with, our platform and could harm our business and reputation.
+Added: In addition, hosting costs are expected to increase as our customer base grows, which could adversely affect our business, operating results and financial condition.
Furthermore, AWS has discretion to change and interpret its terms of service and other policies with respect to us, including on contract renewal, and those actions may be unfavorable to our business operations.
−Removed: AWS may also take actions beyond our control that could seriously harm our business, including discontinuing or limiting our access to one or more AWS services, increasing pricing terms, competing with us, terminating or seeking to terminate our contractual relationship altogether, or altering how we are able to process data on AWS in a way that is unfavorable or costly to us.
−Removed: Although we expect to obtain similar services from other third parties, if our arrangement with AWS were terminated, we could experience interruptions on our platform and in our ability to make our content available to customers, as well as delays and additional expenses in arranging for alternative cloud infrastructure services.
−Removed: Such a transition may require technical changes to our platform, including, but not limited to, our cloud service infrastructure which was designed to run on AWS.
+Added: AWS, and other cloud hosting providers, may also take actions beyond our control that could seriously harm our business, including discontinuing or limiting our access to one or more services, increasing pricing terms, competing with us, terminating or seeking to terminate our contractual relationship altogether, or altering how we are able to process data on their system in a way that is unfavorable or costly to us.
+Added: Although we obtain services from other cloud hosting providers, if our current arrangement with AWS were terminated, we could experience interruptions on our platform and in our ability to make our content available to customers, as well as delays and additional expenses in arranging for expansion and transition to alternative cloud hosting and infrastructure services.
+Added: Such a transition could require further technical changes to our platform, including, but not limited to, our cloud service infrastructure which was initially designed to run on AWS.
Making such changes could be costly in terms of time and financial resources.
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These technologies, which include databases, applications, and server optimizations, network and hosting strategies, and automation, are often advanced, complex, new and untested.
−Removed: We may not be successful in developing or implementing
−Removed: these technologies.
+Added: We may not be successful in developing or implementing these technologies.
In addition, it takes a significant amount of time to plan, develop and test improvements to our technologies and infrastructure, and we may not be able to accurately forecast demand or predict the results we will realize from such improvements.
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To the extent that we do not effectively scale our operations to meet the needs of our growing customer base and to maintain performance as our customers expand their use of our solution, we will not be able to grow as quickly as we anticipate, our customers may reduce or cancel use of our solutions and we will be unable to compete as effectively and our business and operating results will be adversely affected.
−Removed: If we do not accurately anticipate and promptly respond to changes in our customers’ technologies, business plans or security needs, our competitive position and prospects will be adversely affected.
+Added: If we do not accurately anticipate and promptly respond to changes in our customers’ technologies, business plans or security needs, our competitive position and prospects will be adversely impacted.
The cybersecurity market has grown quickly and is expected to continue to evolve rapidly.
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If these reviews are negative, or less positive as compared to those of our competitors’ products, our brand may be adversely affected.
−Removed: Our solutions may fail to detect or prevent threats in any particular test for a number of reasons that may or may not be related
−Removed: to the efficacy of our solutions in real world environments.
+Added: Our solutions may fail to detect or prevent threats in any particular test for a number of reasons that may or may not be related to the efficacy of our solutions in real world environments.
To the extent potential customers, industry analysts or research firms believe that the occurrence of a failure to detect or prevent any particular threat is a flaw or indicates that our solutions or services do not provide significant value, we may lose customers, and our reputation, financial condition and business would be harmed.
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Our channel partners generated 90%, 92%, and 96% of our revenue for fiscal 2023, 2022, and 2021, respectively.
−Removed: Our two largest channel partners for fiscal 2022, 2021, and 2020 were Exclusive Networks and SHI International Corp.
+Added: Our largest channel partner for fiscal 2023, 2022, and 2021, was Exclusive Networks.
We generated 18%, 18%, and 19% of our revenue from Exclusive Networks for fiscal 2023, 2022, and 2021, respectively.
−Removed: We generated *, 13%, and 14% of our revenue from SHI International for fiscal 2022, 2021, and 2020, respectively.
−Removed: Our agreements with our channel partners, including agreements with Exclusive Networks and SHI International, are non-exclusive, do not last for set terms, and may be terminated by either party at any time.
+Added: Our agreements with our channel partners, including agreements with Exclusive Networks, are non-exclusive, do not last for set terms, and may be terminated by either party at any time.
Further, channel partners fulfill our sales on a purchase order basis and do not impose minimum purchase requirements or related terms on sales.
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Our ability to achieve revenue growth in the future will depend in part on our ability to maintain successful relationships with our channel partners and in training our channel partners to independently sell and deploy our platform.
−Removed: We are also exposed to credit and liquidity risks and our operating results will be harmed if our partners were to become unable or unwilling to pay us, terminated their relationships with us or went out of business.
+Added: We are also exposed to credit and liquidity risks and our operating results will be harmed if our partners were to become unable or unwilling to pay us at all or in a timely manner, terminate their relationships with us or go out of business.
Although we have programs in place that are designed to monitor and mitigate such risks, we cannot guarantee these programs will be effective in reducing our risks.
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In such instances, we may experience changes to our overall business and operational relationships due to dealing with a larger combined entity, and our ability to maintain such relationships on favorable contractual terms may be more limited.
−Removed: We may also become increasingly dependent on a more limited number of channel partners, as consolidation
−Removed: increases the relative proportion of our business for which each channel partner is responsible, which may magnify the risks described in the preceding paragraphs.
+Added: We may also become increasingly dependent on a more limited number of channel partners, as consolidation increases the relative proportion of our business for which each channel partner is responsible, which may magnify the risks described in the preceding paragraphs.
Our business depends, in part, on sales to government organizations, and significant changes in the contracting or fiscal policies of such government organizations could adversely affect our business and operating results.
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• government certification, software supply chain or source code transparency requirements applicable to us or our platform may change and, in doing so, restrict our ability to sell into the governmental sector until we have attained the revised certification or meet other new requirements.
−Removed: For example, although we are currently FedRAMP certified, such certification is costly to maintain and subject to rigorous compliance and if we lose our certification, it would restrict our ability to sell to government customers;
−Removed: • government demand and payment for our platform may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our platform, including as a result of abrupt events such as government shut downs, war, incidents of terrorism, natural disasters, and public health concerns or epidemics;
+Added: For example, although SentinelOne is currently FedRAMP authorized, such authorization is costly to maintain and subject to rigorous compliance and if we lose our authorization, it would restrict our ability to sell to government customers;
+Added: • government demand and payment for our platform may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our platform, including as a result of sudden, unforeseen and disruptive events such as government shut downs, war, incidents of terrorism, natural disasters, and public health concerns or epidemics;
• governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our platform, which would adversely impact our revenue and operating results, or institute fines or civil or criminal liability if an investigation, audit, or other review, were to uncover improper or illegal activities;
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The occurrence of any of the foregoing could cause governmental organizations to delay or refrain from purchasing our solutions in the future or otherwise adversely affect our business and operating results.
−Removed: Our long-term success depends, in part, on our ability to expand the sale of our platform to customers located outside of the United States and our current, and any further, expansion of our international
−Removed: operations exposes us to risks that could have a material adverse effect on our business, operating results, and financial condition.
+Added: Our long-term success depends, in part, on our ability to expand the sale of our platform to customers located outside of the United States and our current, and any further, expansion of our international operations exposes us to risks that could have a material adverse effect on our business, operating results, and financial condition.
We are generating a growing portion of our revenue outside of the United States, and conduct our business activities in various foreign countries, including some emerging markets where we have limited experience, where the challenges of conducting our business can be significantly different from those we have faced in more developed markets and where business practices may create internal control risks including:
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• tariffs, export and import restrictions, restrictions on foreign investments, sanctions, and other trade barriers or protection measures;
−Removed: • we consider ourselves to be a processor under the GDPR/U.K.
−Removed: GDPR in some instances and a controller of personal data in other circumstances.
−Removed: For example, by expanding into the European Union (E.U.), and the United Kingdom (U.K.), we may also trigger Article 3(2) of the GDPR/U.K.
−Removed: GDPR as we may be considered to be monitoring data subjects.
−Removed: Additionally, where processing personal data on behalf of our E.U./U.K.
−Removed: customers or processing personal data of E.U./U.K.
−Removed: end users, we may be required to sign data processing agreements which comply with Article 28 of the GDPR/U.K.
−Removed: Likewise, to the extent any of our E.U./U.K.
−Removed: entities directly contract with E.U./U.K.
−Removed: customers for the provision of services, we will be directly subject to the GDPR/U.K.
−Removed: GDPR as a processor when processing this personal data;
+Added: • exposure to numerous, increasing, stringent (particularly in the European Union), and potentially inconsistent laws and regulations relating to privacy, data protection, and information security;
• costs of localizing products and services;
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• economic weakness or currency-related crises;
−Removed: • compliance with multiple, conflicting, ambiguous or evolving governmental laws and regulations, including employment, tax, privacy, anti-corruption, import/export, antitrust, data transfer, storage and protection, and industry-specific laws and regulations, including rules related to compliance by our third-party resellers and our ability to identify and respond timely to compliance issues when they occur, and regulations applicable to us and our third-party data providers from whom we purchase and resell syndicated data;
−Removed: • vetting and monitoring our third-party resellers in new and evolving markets to confirm they maintain standards consistent with our brand and reputation;
+Added: • compliance with multiple, conflicting, ambiguous or evolving governmental laws and regulations, including employment, tax, data privacy, anti-corruption, import/export, antitrust, data transfer, storage and protection, and industry-specific laws and regulations, including rules related to compliance by our third-party resellers and our ability to identify and respond timely to compliance issues when they occur;
+Added: • vetting and monitoring our third-party channel partners in new and evolving markets to confirm they maintain standards consistent with our brand and reputation;
• generally longer payment cycles and greater difficulty in collecting accounts receivable;
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• the lack of reference customers and other marketing assets in regional markets that are new or developing for us, as well as other adaptations in our market generation efforts that we may be slow to identify and implement;
−Removed: • dependence on certain third parties, including resellers with whom we do not have extensive experience;
−Removed: • natural disasters, acts of war, terrorism, or pandemics, including the ongoing COVID-19 pandemic and the conflict in Ukraine;
+Added: • dependence on certain third parties, including channel partners with whom we do not have extensive experience;
+Added: • natural disasters, acts of war, terrorism, or pandemics, including the COVID-19 pandemic and the conflict in Ukraine;
+Added: • instability in the global banking system;
• corporate espionage;
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To manage any future growth effectively, we must continue to improve and expand our information technology and financial infrastructure, our operating and administrative systems and controls, and our ability to manage headcount, capital, and processes in an efficient manner.
−Removed: Effectively managing our growth may also be more difficult to accomplish the longer that our employees work remotely due to the COVID-19 pandemic.
If we continue to experience rapid growth, we may not be able to successfully implement or scale improvements to our systems, processes, and controls in an efficient or timely manner.
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Any future growth will continue to add complexity to our organization and require effective coordination throughout our organization.
−Removed: Failure to manage any future growth effectively could result in increased costs, cause difficulty or delays in deploying new customers, reduce demand for our platform, cause
−Removed: difficulties in introducing new features or other operational difficulties, and any of these difficulties would adversely affect our business, operating results, and financial condition.
+Added: Failure to manage any future growth effectively could result in increased costs, cause difficulty or delays in deploying new customers, reduce demand for our platform, cause difficulties in introducing new features or other operational difficulties, and any of these difficulties would adversely affect our business, operating results, and financial condition.
Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense.
Our revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for our platform, particularly with respect to large organizations and government entities.
+Added: For example, in light of current macroeconomic conditions, we have observed a lengthening of the sales cycle for some prospective customers that we attribute to higher cost-consciousness around IT budgets.
Customers often view the subscription to our platform as a significant strategic decision and, as a result, frequently require considerable time to evaluate, test and qualify our platform prior to entering into or expanding a relationship with us.
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We have limited experience with respect to determining the optimal prices for our platform.
−Removed: As the market for endpoint security matures, or as new competitors introduce new products or services that are similar to or compete with ours, we may be unable to attract new customers at the same price or based on the same pricing model as we have used historically.
+Added: As the market for endpoint security matures, or as new competitors introduce new products or services that are similar to or compete with ours, we may be unable to effectively optimize our prices through increases or decreases, attract new customers at our offered prices or based on the same pricing model as we have used historically.
Further, competition continues to increase in the market segments in which we participate, and we expect competition to further increase in the future, thereby leading to increased pricing pressures.
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We generally recognize revenue from customers ratably over the term of their subscription, which is generally one to three years.
−Removed: As a result, a substantial portion of the revenue we report in each period is attributable to the recognition of deferred revenue relating to agreements that we entered into during previous periods.
+Added: As a result, a substantial portion of the revenue we report in each period is attributable to the
+Added: recognition of deferred revenue relating to agreements that we entered into during previous periods.
Consequently, any increase or decrease in new sales or renewals in any one period will not be immediately reflected in our revenue for that period.
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Certain of our customer agreements contain service level commitments, which contain specifications regarding the availability of our platform and our support services.
−Removed: Failure of or disruption to our infrastructure could impact the performance of our platform and the availability of services to customers.
−Removed: we are unable to meet our stated service level commitments or if we suffer extended periods of poor performance or unavailability of our platform, we may be contractually obligated to provide affected customers with partial refunds or termination rights.
+Added: Failure of or disruption to our infrastructure or third-party hosting service providers could impact the performance of our platform and the availability of services to customers.
+Added: If we are unable to meet our stated service level commitments or if we suffer extended periods of poor performance or unavailability of our platform, we may be contractually obligated to provide affected customers with credit, partial refunds or termination rights.
To date, there has not been a material failure to meet our service level commitments, and we do not currently have any material liabilities accrued on our consolidated balance sheets for such commitments.
Our business, operating results, and financial condition would be adversely affected if we suffer performance issues or downtime that exceeds the service level commitments under our agreements with our customers.
−Removed: Our business is subject to the risks of warranty claims and product liability claims from real or perceived defects in our solutions or their misuse by our customers or third parties and indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
+Added: Our business is subject to the risks of warranty claims, product returns and product defects from real or perceived defects in our solutions or their misuse by our customers or third parties and indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
We may be subject to liability claims for damages related to errors or defects in our solutions.
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The sale and support of our platform also entails the risk of product liability claims.
−Removed: Additionally, we typically provide indemnification to customers for certain losses suffered or expenses incurred as a result of third-party claims arising from our infringement of a third party’s intellectual property.
−Removed: We also provide unlimited liability for certain breaches of confidentiality, as defined in our terms of service.
−Removed: We also provide limited liability in the event of certain breaches of our terms of service.
+Added: We employ measures in the form of policy and technical controls to limit unauthorized access to our platform by our employees, customers and third-parties, however, these measures may not fully or effectively protect our platform from unauthorized access.
+Added: Additionally, we typically provide indemnification to customers, partners or other third parties we do business with for certain losses suffered or expenses incurred as a result of third-party claims arising from our infringement of a third party’s intellectual property.
+Added: We also provide unlimited liability for certain breaches of confidentiality, as defined in our master subscription agreement.
+Added: We also provide limited liability in the event of certain breaches of our master subscription agreement.
Certain of these contractual provisions survive termination or expiration of the applicable agreement.
−Removed: We have not to date received any indemnification claims from third parties.
−Removed: However, as we continue to grow, the possibility of these claims against us will increase.
−Removed: If our customers or other third parties we do business with make intellectual property rights or other indemnification claims against us, we will incur significant legal expenses and may have to pay damages, license fees and/or stop using technology found to be in violation of the third party’s rights.
+Added: To date, we have not incurred any material costs because of such obligations.
+Added: However, as we continue to grow, indemnification claims against us for the obligations listed will increase.
+Added: When our customers or other third parties we do business with make intellectual property rights or other indemnification claims against us, we will incur significant legal expenses and may have to pay damages, license fees and/or stop using technology found to be in violation of the third party’s rights.
We may also have to seek a license for the technology.
−Removed: Such license may not be available on reasonable terms, if at all, and may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deliver certain solutions or features.
+Added: Such licenses may not be available on reasonable terms, if at all, and may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deliver certain solutions or features.
We may also be required to develop alternative non-infringing technology, which could require significant effort and expense and/or cause us to alter our platform, which could harm our business.
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We have offered some of our customers a limited warranty, subject to certain conditions.
−Removed: For example, in limited circumstances, we offer certain customers ransomware warranty in addition to their subscriptions, providing coverage in the form of a limited monetary payment, if they are affected by a ransomware attack (as specified in our ransomware warranty agreement).
−Removed: The ransomware warranty coverage provides that we will pay $1,000 per endpoint affected by a ransomware-based breach subject to the terms and limitations of the warranty, and is further capped at $1 million for every consecutive 12 months in which the customer subscribes to the solutions with respect to the affected endpoint.
−Removed: While we maintain insurance relating to our warranty, we cannot be certain that our insurance coverage will be adequate to cover such claims, that such insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage
−Removed: as to any claim.
−Removed: Any failure or refusal of our insurance providers to provide the expected insurance benefits to us after we have paid the ransomware warranty claims would cause us to incur significant expense or cause us to cease offering this warranty which could damage our reputation, cause us to lose customers, expose us to liability claims by our customers, negatively impact our sales and marketing efforts, and have an adverse effect on our business, operating results, and financial condition.
+Added: Any failure or refusal of our insurance providers to provide the expected insurance benefits to us after we have remediated warranty claims would cause us to incur significant expense or cause us to cease offering warranties which could damage our reputation, cause us to lose customers, expose us to liability claims by our customers, negatively impact our sales and marketing efforts, and have an adverse effect on our business, operating results, and financial condition.
Further, although the terms of the warranty do not allow those customers to use warranty claim payments to fund payments to persons on the U.S.
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Our future success is dependent, in part, on our ability to hire, integrate, train, manage, retain, and motivate the members of our management team and other key employees throughout our organization.
−Removed: The loss of key personnel, including key members of our management team or members of our board of directors, as well as certain of our key marketing, sales, finance, support, product development, human resources, or technology personnel, could disrupt our operations and have an adverse effect on our ability to grow our business.
+Added: The loss of key personnel, including key members of our management team or members of our board of directors, as well as certain of our key marketing, sales, finance, support, product development, people team, or technology personnel, could disrupt our operations and have an adverse effect on our ability to grow our business.
In particular, we are highly dependent on the services of Tomer Weingarten, our co-founder, Chairman of the Board of Directors, President, and Chief Executive Officer, who is critical to the development of our technology, platform, future vision, and strategic direction.
+Added: From time to time, there have been and may in the future be changes in our management team.
+Added: While we seek to manage any such transitions carefully, such changes may result in a loss of institutional knowledge, cause disruptions to our business and negatively affect our business.
Competition for highly skilled personnel is intense, especially in the San Francisco Bay Area and in Israel, where we have a substantial presence and need for highly skilled personnel, and we may not be successful in hiring or retaining qualified personnel to fulfill our current or future needs.
More generally, the technology industry, and the cybersecurity industry more specifically, is also subject to substantial and continuous competition for engineers with high levels of experience in designing, developing and managing software and related services.
+Added: Moreover, the industry in which we operate generally experiences high employee attrition.
We have, from time to time, experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications.
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We may be required to provide more training to our personnel than we currently anticipate.
+Added: Further, labor is subject to external factors that are beyond our control, including our industry’s highly competitive market for skilled workers and leaders, cost inflation, the continuing effects of the COVID-19 pandemic, overall macroeconomics and workforce participation rates.
Restrictive immigration policies or legal or regulatory developments relating to immigration may also negatively affect our efforts to attract and hire new personnel as well as retain our existing personnel.
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Moreover, many of the companies with which we compete for experienced personnel have greater resources than we have.
−Removed: Our competitors also may be successful in recruiting and hiring members of our management team or other key employees, and it may be difficult for us to find suitable replacements on a timely basis, on competitive terms, or at all.
+Added: Our competitors also may be successful in recruiting and hiring members of our management team, sales team or other key employees, and it may be difficult for us to find suitable replacements on a timely basis, on competitive terms, or at all.
We have in the past, and may in the future, be subject to allegations that employees we hire have been improperly solicited, or that they have divulged proprietary or other confidential information or that their former employers own such employees’ inventions or other work product, or that they have been hired in violation of non-compete provisions or non-solicitation provisions.
In addition, job candidates and existing employees often consider the value of the equity awards and other compensation they receive in connection with their employment.
−Removed: If the perceived value of our compensatory packages declines, it may adversely affect our ability to attract and retain highly skilled employees.
+Added: If the perceived value of our compensatory package declines, it may adversely affect our ability to attract and retain highly skilled employees.
If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be severely harmed.
Further, our competitors may be successful in recruiting and hiring members of our management team or other key employees, and it may be difficult for us to find suitable replacements on a timely basis, on competitive terms, or at all.
+Added: In recent years, the increased availability of hybrid or remote working arrangements has expanded the pool of companies that can compete for our employees and employment candidates.
Although we have entered into employment agreements with our key employees, these agreements are on an “at-will” basis, meaning they are able to terminate their employment with us at any time.
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Once our platform is deployed within our customers’ computing environments, our customers rely on our technical support services to assist with service customization and optimization and to resolve certain issues relating to the implementation and maintenance of our platform and advanced services.
−Removed: If we do not effectively assist our customers in deploying our platform, succeed in helping our customers quickly resolve technical issues, or provide effective ongoing support, our ability to sell additional products and services as part of our platform to existing customers would be adversely affected and our reputation with potential customers could be damaged.
+Added: If we do not effectively assist our customers in deploying our platform, succeed in helping our customers quickly resolve technical issues, or provide
+Added: effective ongoing support, our ability to sell additional products and services as part of our platform to existing customers would be adversely affected and our reputation with potential customers could be damaged.
In addition, our sales process is highly dependent on our product and business reputation and on positive recommendations, referrals, and peer promotions from our existing customers.
−Removed: Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality
−Removed: support, could adversely affect our reputation, our ability to sell our services to existing and prospective customers, and our business, operating results and financial condition.
+Added: Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our services to existing and prospective customers, and our business, operating results and financial condition.
We believe that our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity, and teamwork fostered by our culture, and our business may be harmed.
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We generally enter into confidentiality or license agreements with our employees, consultants, vendors, and customers, and generally limit access to and distribution of our proprietary information.
−Removed: However, such agreements may not be enforceable in full or in part in all jurisdictions and any breach could negatively affect on our business and our remedy for such breach may be limited.
+Added: However, such agreements may not be enforceable in full or in part in all jurisdictions and any breach could negatively affect our business and our remedy for such breach may be limited.
The contractual provisions that we enter into may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or intellectual property rights.
+Added: Lastly, the measures we employ to limit the access and distribution of our proprietary information may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property.
As such, we cannot guarantee that the steps taken by us will prevent misappropriation of our technology.
Policing unauthorized use of our technology or platform is difficult.
−Removed: In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the United States, and many foreign countries do not enforce these laws as diligently as government agencies and private parties in the United States.
+Added: In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the United
+Added: States, and many foreign countries do not enforce these laws as diligently as government agencies and private parties in the United States.
For example, many foreign countries limit the enforceability of patents against certain third parties, including government agencies or government contractors.
In these countries, patents may provide limited or no benefit.
−Removed: Effective trade secret protection
−Removed: may also not be available in every country in which our products are available or where we have employees or independent contractors.
+Added: Effective trade secret protection may also not be available in every country in which our products are available or where we have employees or independent contractors.
The loss of trade secret protection could make it easier for third parties to compete with our products by copying functionality.
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Moreover, we may need to expend additional resources to defend our intellectual property rights in foreign countries, and our inability to do so could impair our business or adversely affect our international expansion.
−Removed: Third parties have claimed and may claim in the future that our platform infringes their intellectual property rights and this may create liability for us or otherwise adversely affect our business, operating results, and financial condition.
−Removed: Third parties have, and may claim in the future, that our current or future products and services infringe their intellectual property rights, and such claims may result in legal claims against our channel partners, our alliance partners, our customers and us.
+Added: Third parties have claimed and may claim that our platform infringes their intellectual property rights and this may create liability for us or otherwise adversely affect our business, operating results, and financial condition.
+Added: Third parties have claimed, and may claim in the future, that our current or future products and services infringe their intellectual property rights, and such claims may result in legal claims against our channel partners, our alliance partners, our customers and us.
These claims may damage our brand and reputation, harm our customer relationships, and create liability for us.
We expect the number of such claims to increase as the number of products and services and the level of competition in our market grows, as the functionality of our platform overlaps with that of other products and services, and as the volume of issued software patents and patent applications continues to increase.
−Removed: We generally agree in our customer contracts to indemnify customers for certain expenses or liabilities they incur as a result of third-party intellectual property infringement claims associated with our platform.
+Added: We generally agree in our customer and partner contracts to indemnify customers for certain expenses or liabilities they incur as a result of third-party intellectual property infringement claims associated with our platform.
To the extent that any claim arises as a result of third-party technology we have licensed for use in our platform, we may be unable to recover from the appropriate third party any expenses or other liabilities that we incur.
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We have received, and may in the future receive, notices that claim we have misappropriated, misused, or infringed other parties’ intellectual property rights, and, to the extent we gain greater market visibility, we face a higher risk of being the subject of intellectual property infringement claims.
−Removed: Prior to publicly filing our registration statement in connection with our IPO, in May 2021, we received a letter from International Business Machines Corporation (IBM), alleging that we infringe on three U.S.
+Added: In May 2021, and thereafter, we have received communications from International Business Machines Corporation (IBM), alleging that we infringe on U.S.
patents held by IBM.
−Removed: To date, no litigation has been filed by IBM against us regarding the IBM patents.
−Removed: Based on our review of these patents, we believe we have meritorious defenses to IBM’s allegations, although there can be no assurance that IBM will refrain from suing us, or that we will be successful in defending against these allegations or reaching a business resolution that is satisfactory to us.
+Added: We have also asserted that IBM infringes certain patents held by us.
+Added: To date, no litigation has been filed in this matter.
+Added: Based on our review of the patents at issue, we believe we have meritorious defenses to IBM’s allegations, although there can be no assurance that litigation will not commence, or that we will be successful in such litigation or reaching a business resolution that is satisfactory to us.
+Added: In November 2022 we received communications from AT&T alleging that our platform integrated into an AT&T offering is subject to a third-party patent infringement claim and that we may be required to indemnify AT&T.
+Added: To date, no litigation has been filed in this matter.
+Added: Based on our review and analysis of the matter and allegations at issue, we are vigorously contesting the indemnity claim, although, there can be no assurances that litigation will not commence, that we will be successful in such litigation, or that we will reach a satisfactory business resolution.
There may be third-party intellectual property rights, including issued or pending patents and trademarks, that cover significant aspects of our technologies or business methods and assets.
−Removed: We may also face exposure to third-party intellectual property infringement, misappropriation, or violation actions if we
−Removed: engage software engineers or other personnel who were previously engaged by competitors or other third parties and those personnel inadvertently or deliberately incorporate proprietary technology of third parties into our products.
+Added: We may also face exposure to third-party intellectual property infringement, misappropriation, or violation actions if we engage software engineers or other personnel who were previously engaged by competitors or other third parties and those personnel inadvertently or deliberately incorporate proprietary technology of third parties into our products.
In addition, we may lose valuable intellectual property rights or personnel.
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We currently incorporate, and will in the future incorporate, technology that we license from third parties, including software, into our solutions.
−Removed: Licensing technologies from third parties exposes us to increased risk of being the subject of intellectual property infringement due to, among other things, our lower level of visibility into the development process with respect to such technology and the care taken to safeguard against infringement risks.
+Added: Licensing technologies from third parties exposes us to increased risk of being the subject of intellectual property infringement and vulnerabilities due to, among other things, our lower level of visibility into the development process with respect to such technology and the care taken to safeguard against risks.
We cannot be certain that our licensors do not or will not infringe on the intellectual property rights of third parties or that our licensors have or will have sufficient rights to the licensed intellectual property in all jurisdictions in which we may sell our platform.
Some of our agreements with our licensors may be terminated by them for convenience, or otherwise provide for a limited term.
−Removed: If we are unable to continue to license technology because of intellectual property infringement claims brought by third parties against our licensors or against us, or if we are unable to continue our license agreements or enter into new licenses on commercially reasonable terms, our ability to develop and sell solutions and services containing or dependent on that technology would be limited, and our business could be harmed.
+Added: If we are unable to continue to license technology because of intellectual property infringement claims brought by third parties against our licensors or against us, or if we are unable to continue our license agreements or enter into new licenses on commercially reasonable terms, our ability to develop and sell solutions and services containing or dependent on that technology would be limited, and our business, including our financial conditions, cash flows and results of operations could be harmed.
Additionally, if we are unable to license technology from third parties, we may be forced to acquire or develop alternative technology, which we may be unable to do in a commercially feasible manner, or at all, and may require us to use alternative technology of lower quality or performance standards.
This could limit or delay our ability to offer new or competitive solutions and increase our costs.
+Added: Third-party software we rely on may be updated infrequently, unsupported or subject to vulnerabilities that may not be patched in a timely manner, any of which may expose our solutions to vulnerabilities.
As a result, our business, operating results, and financial condition would be adversely affected.
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Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our products and subscriptions.
−Removed: The use and distribution of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code and they can change the license terms on which they offer the open source software.
−Removed: Although we monitor our use of open source software in an effort both to comply with the terms of the applicable open source licenses and to avoid subjecting our products to conditions we do not intend, many of the risks associated with use of open source software cannot be eliminated and could negatively affect our business.
+Added: The use and distribution of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code, which they are not typically required to maintain and update, and they can change the license terms on which they offer the open source software.
+Added: Although we monitor our use of open source software in an effort both to comply with the terms of the applicable open source licenses and to avoid subjecting our products to conditions we do not intend, many of the risks associated with use of open source software cannot be
+Added: eliminated and could negatively affect our business.
In addition, the wide availability of source code used in our solutions could expose us to security vulnerabilities.
−Removed: Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use.
−Removed: If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public, including authorizing further modification and redistribution, or otherwise be limited in the licensing of our services, each of which could provide an advantage to our competitors or other entrants to the market, create security vulnerabilities in our solution, require us to re-engineer all or a portion of our platform, and reduce or eliminate the value of our services.
+Added: Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon our use and distribution of the open source software.
+Added: If we combine and distribute our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release combined the source code of our proprietary software to the public, including authorizing further modification and redistribution, or otherwise be limited in the licensing of our services, each of which could provide an advantage to our competitors or other entrants to the market, create security vulnerabilities in our solution, require us to re-engineer all or a portion of our platform, and reduce or eliminate the value of our services.
This would allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of sales for us.
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From time to time, we may face claims from third parties asserting ownership of, or demanding release of, the open source software or derivative works that we developed using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open source license.
−Removed: These claims could result in litigation.
−Removed: Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition, or require us to devote additional research and development resources to change our solution.
−Removed: Responding to any infringement or noncompliance claim by an open source vendor, regardless of its validity, discovering certain open source software code in our platform, or a finding that we have breached the terms of an open source software license, could harm our business, operating results, and financial condition, by, among other things:
−Removed: • resulting in time-consuming and costly litigation;
−Removed: • diverting management’s time and attention from developing our business;
−Removed: • requiring us to pay monetary damages or enter into royalty and licensing agreements that we would not normally find acceptable;
−Removed: • causing delays in the deployment of our platform or service offerings to our customers;
−Removed: • requiring us to stop offering certain services or features of our platform;
−Removed: • requiring us to redesign certain components of our platform using alternative non-infringing or non-open source technology, which could require significant effort and expense;
−Removed: • requiring us to disclose our software source code and the detailed program commands for our software;
−Removed: • requiring us to satisfy indemnification obligations to our customers.
+Added: These claims, regardless of validity, could result in time consuming and costly litigation, divert management’s time and attention away from developing the business, expose us to customer indemnity claims, or force us to disclose source code.
+Added: Litigation could be costly for us to defend, result in paying damages, entering into unfavorable licenses, have a negative effect on our operating results and financial condition, or cause delays by requiring us to devote additional research and development resources to change our solution.
Risks Related to Legal and Regulatory Matters
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export controls, including the U.S.
−Removed: Department of Commerce’s Export Administration Regulations (EAR), and we and our employees, representatives, contractors, agents, intermediaries, and other third parties are also subject to various economic and trade sanctions regulations administered by OFAC.
+Added: Department of Commerce’s Export Administration Regulations (EAR), and we and our employees, representatives, contractors, agents, intermediaries, and other third parties are also subject to various economic and trade sanctions regulations administered by OFAC and other U.S.
+Added: government agencies.
We incorporate standard encryption algorithms into our platform, which, along with the underlying technology, may be exported outside of the U.S.
−Removed: only with the required export authorizations, including by
−Removed: license, license exception or other appropriate government authorizations, which may require the filing of an encryption registration and classification request.
+Added: only with the required export authorizations, including by license, license exception or other appropriate government authorizations, which may require the filing of an encryption registration and classification request.
We also offer certain customers a ransomware warranty in addition to their subscriptions, providing coverage in the form of a limited monetary payment if they are affected by a ransomware attack (as specified in our ransomware warranty agreement), and though the terms of the warranty do not allow those customers to use warranty claim payments to fund payments to persons on OFAC’s list of Specially Designated Nationals and Blocked Persons or who are otherwise prohibited to receive such payments under U.S.
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Furthermore, U.S.
−Removed: export control laws and economic sanctions prohibit the shipment of certain hardware and software and the provision of certain cloud-based solutions to certain countries, governments and persons targeted by U.S.
+Added: export control laws and economic sanctions prohibit the export and re-export of certain hardware and software and the provision of certain cloud-based solutions to certain countries, governments and persons targeted by U.S.
sanctions and for certain end-uses.
−Removed: As an example, following Russian’s invasion of Ukraine, the United States and other countries imposed economic sanctions and severe export control restrictions against Russia and Belarus, and the United States and other countries could impose wide sanctions and export restrictions and take other actions should the conflict further escalate.
−Removed: Any exports or sales of our software and services into Russia and Belarus as well as our ability to use developers in Russia and Belarus may be impacted by these restrictions.
−Removed: We also collect information about cyber threats from open sources, intermediaries and third parties that we make available to our customers in our threat industry publications.
+Added: As an example, following Russia’s invasion of Ukraine, the United States and other countries imposed economic sanctions and severe export control restrictions against Russia and Belarus.
+Added: The United States and its allies could expand and strengthen these sanctions and export restrictions and take other actions should the conflict further escalate.
+Added: These restrictions would further impact our ability to do business in certain parts of the world and to do business with certain persons and entities, including selling our services and using local developers.
+Added: We also collect information about cyber threats from open sources, intermediaries and third parties that we make available to our customers in
+Added: our threat industry publications.
While we have implemented certain procedures to facilitate compliance with applicable laws and regulations in connection with the collection and distribution of this information, we cannot assure you that these procedures have been effective or that we, or third parties who we do not control, have complied with all laws or regulations in this regard.
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We are also subject to the United States Foreign Corrupt Practices Act of 1977 (FCPA), as amended, the United Kingdom Bribery Act 2010 (the Bribery Act), and other anti-corruption, sanctions, anti-bribery, anti-money laundering and similar laws in the United States and other countries in which we conduct activities.
−Removed: Anti-corruption and anti-bribery laws, which have been enforced aggressively and are interpreted broadly, prohibit companies and their employees, agents, intermediaries and other third parties from
−Removed: promising, authorizing, making or offering improper payments or other benefits to government officials and others in the public sector.
+Added: Anti-corruption and anti-bribery laws, which have been enforced aggressively and are interpreted broadly, prohibit companies and their employees, agents, intermediaries and other third parties from promising, authorizing, making or offering improper payments or other benefits to government officials and others in the public, and in certain cases, private sector.
We leverage third parties, including intermediaries, agents and channel partners, to conduct our business in the United States and abroad, to sell subscriptions to our platform and to collect information about cyber threats.
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Noncompliance with these laws could subject us to investigations, severe criminal or civil sanctions, settlements, prosecution, loss of export privileges, suspension or debarment from U.S.
−Removed: government contracts, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, whistleblower complaints, adverse media coverage and other consequences.
+Added: government contracts, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, whistleblower complaints, adverse media coverage and
+Added: other consequences.
Any investigations, actions or sanctions could harm our reputation, business, operating results, and financial condition.
If we fail to adequately protect personal information or other information we collect, process, share or maintain under applicable laws, our business, operating results, and financial condition could be adversely affected.
−Removed: We receive, store, and process some personal information from our employees, customers, and the employees of our customers, and our end users.
−Removed: This personal information is hosted by third party service providers.
+Added: We receive, store, and process some personal information from our employees, customers, the employees of our customers, and our end users.
+Added: This personal information is hosted by our third-party service providers.
A wide variety of state, national, and international laws, as well as regulations and industry standards apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal information and other information, the scope of which are changing, subject to differing interpretations, and may be inconsistent across countries or conflict with other rules.
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Notably, but not necessarily limited to, we may be subject to:
−Removed: • Controlling the Assault of Non-Solicited Pornography And Marketing Act (CAN-SPAM) and similar state consumer protection laws regarding the use telephones and text messaging for marketing purposes.
+Added: • Controlling the Assault of Non-Solicited Pornography And Marketing Act (CAN-SPAM) and similar state consumer protection laws regarding the use of telephones and text messaging for marketing purposes.
• Section 5(a) of the Federal Trade Commission (FTC) Act for violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure, resulting in a finding of an unfair act or practice.
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The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
−Removed: A ballot initiative called the California Privacy Rights Act, or CPRA, was passed in November 2020 and will take effect in January 2023 (with a look back to January 2022).
−Removed: The CPRA will significantly modify the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal data.
−Removed: The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA.
+Added: A ballot initiative called the California Privacy Rights Act, or CPRA, took effect January 1, 2023 (with a look back to January 2022), with enforcement beginning on July 1, 2023, and significantly modifies the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal data.
+Added: The CPRA also creates a new state agency, known as the California Privacy Protection Agency, that will be vested with authority to implement and enforce the CCPA and the CPRA.
Potential uncertainty surrounding the CCPA and CPRA may increase our compliance costs and potential liability, particularly in the event of a data breach, and could have a material adverse effect on our business.
• Other states have followed California:
−Removed: Virginia enacted the Virginia Consumer Data Protection Act that will also be effective January 1, 2023;
−Removed: Colorado recently enacted its Colorado Privacy Act, which will be effective July 1, 2023;
−Removed: and as the year 2022 began, fourteen states had pending consumer privacy legislation under review, which if enacted would add additional costs and expense of resources to maintain compliance.
+Added: Virginia enacted the Virginia Consumer Data Protection Act that also became effective January 1, 2023;
+Added: Colorado enacted its Colorado Privacy Act, which will become effective July 1, 2023;
+Added: Connecticut passed the Connecticut Data Privacy Act (CDPA), which will become effective July 1, 2023;
+Added: and Utah enacted the Utah Consumer Privacy Act (UCPA), which will become effective December 31, 2023;
+Added: and as the year 2023 began, four states had pending consumer privacy legislation under review, which if enacted, would add additional costs and expense of resources to maintain compliance.
In certain circumstances, we may be subject to the EU General Data Protection Regulation (GDPR) (established in 2018 and implemented by countries in the EEA) and the U.K.
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Data Protection Act 2018 (U.K.
−Removed: GDPR), which respectively govern the collection, use, disclosure, transfer or other processing of personal data of natural persons, and it applies extra-territorially and imposes onerous requirements on controllers and processors of personal data, including, for example:
+Added: GDPR), which respectively govern the collection, use, disclosure, transfer or other processing of personal data of natural persons, and it applies extra-territorially and imposes onerous requirements on
+Added: controllers and processors of personal data, including, for example:
(i) accountability and transparency requirements, and enhanced requirements for obtaining valid consent;
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Privacy Shield framework to provide a mechanism for the transfer of data from E.U.
−Removed: Member States to the United States, but this was invalidated by the European Court of Justice, or the CJEU, on July 16, 2020, on the grounds that the Privacy Shield failed to offer adequate protections to E.U.
−Removed: personal information transferred to the United States We previously relied on our own, as well as our vendors’, Privacy Shield certification for the purposes of transferring personal data from the EEA to the United States in compliance with the GDPR/U.K.
+Added: Member States to the United States, but this was invalidated by the European Court of Justice (CJEU) on July 16, 2020, on the grounds that the Privacy Shield failed to offer adequate protections to E.U.
+Added: personal information transferred to the United States.
+Added: We previously relied on our own, as well as our vendors’, Privacy Shield certification for the purposes of transferring personal data from the EEA to the United States in compliance with the GDPR/U.K.
GDPR’s data export conditions, which are no longer allowed.
One such alternative to the Privacy Shield is the use of Standard Contractual Clauses (SCCs), a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, may not be alone sufficient to protect data transferred to the United States or other Third Countries under certain circumstances without making a case-by-case basis assessment of the legal regime applicable in the destination country according to the CJEU.
−Removed: At this time though, we use the versions of the European Commission SCCs released under the Implementing Decision in June 2021.
−Removed: Under the Implementing Decision, data exporters and data importers have until December 27, 2022 to update any existing agreements, or any new agreements executed before September 27, 2021 that rely on SCCs as the data transfer mechanism by replacing the old SCCs with new ones.
−Removed: We have already commenced this process by asking each of our affected customers to execute the new SCCs.
−Removed: To comply with the Implementing Decision and the new SCCs, we implemented additional safeguards to further enhance the security of data transferred out of the EEA, which could increase our compliance costs, expose us to further regulatory scrutiny and liability, and adversely affect our business.
On June 28, 2021, the European Commission issued an adequacy decision for personal information transfers from the EEA to the U.K., with a sunset clause of four years, meaning that the European Commission will review and renew only if the European Commission considers that the U.K.
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If this adequacy decision is reversed by the European Commission, we would have to implement protection measures such as the SCCs for data transfers between the E.U.
−Removed: or find alternative solutions for the complaint transfer of personal data from the E.U.
+Added: or find alternative solutions for the compliant transfer of personal data from the E.U.
into the U.K.
+Added: Some countries (including some outside the EEA) 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 products and services if we were to operate in those countries.
+Added: If we are required to implement additional measures to transfer data from the EEA, this could increase our compliance costs, and could adversely affect our business, financial condition and results of operations.
+Added: The myriad international and U.S.
+Added: privacy and data breach laws are not consistent, and compliance in the event of a widespread data breach is difficult and may be costly.
+Added: In many jurisdictions, enforcement actions and consequences for noncompliance are also rising.
+Added: In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us.
As supervisory authorities continue to issue further guidance on personal information transfers (including regarding data export and circumstances in which we cannot use the SCCs), we could suffer additional costs, complaints, or regulatory investigations or fines.
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We are also subject to evolving E.U.
−Removed: privacy laws on cookies and e-marketing.
−Removed: and the U.K., informed consent is required for the placement of a cookie or similar technologies on a user’s device and for direct electronic marketing.
+Added: privacy laws on cookies and electronic marketing.
+Added: and the U.K., informed opt-in consent is required for the placement of a cookie or similar technologies on a user’s device and for direct electronic marketing.
The GDPR also imposes conditions on obtaining valid consent, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of cookie or similar technology.
−Removed: While we anticipate the development of a ePrivacy Regulation to govern cookies and e-marketing, recent European court decisions and regulators’ guidance are driving increased attention to cookies and tracking technologies.
+Added: While we anticipate the development of the ePrivacy Regulation to govern cookies and e-marketing, recent European court decisions and regulators’ guidance are driving increased attention to cookies and tracking technologies.
If regulators start to enforce the strict approach in recent guidance, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities.
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GDPR outlined above.
−Removed: Broader data processing regulations affecting our business, the cybersecurity industry may face direct regulation.
In recent years, some regulators have proposed or introduced cybersecurity licensing requirements or certification regimes for specific sectors, such as critical infrastructure.
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Our failure to comply with applicable laws, directives, and regulations may result in enforcement action against us, including fines, and damage to our reputation, any of which may have an adverse effect on our business and operating results.
−Removed: Any failure or perceived failure by us, even if unfounded, to comply with applicable privacy and data security laws and regulations, our privacy policies, or our privacy-related obligations to users or other third parties, or any compromise of security that results in the unauthorized release or transfer of personal information or other customer data, may result in governmental enforcement actions, litigation, or public statements against us by consumer advocacy groups or others and could cause our users to lose trust in us, which would have an adverse effect on our reputation and business.
−Removed: For example, in 2017, we reached a consent agreement with the Federal Trade Commission (FTC), to resolve an investigation relating to certain disclosures in our privacy policy.
+Added: Any failure or perceived failure by us, even if unfounded, to comply with applicable privacy and data security laws and regulations, our privacy policies, or our privacy-related obligations to customers, users or other third
+Added: parties, or any compromise of security that results in the unauthorized release or transfer of personal information or other customer data, may result in governmental enforcement actions, litigation, or public statements against us by consumer advocacy groups or others and could cause our users to lose trust in us, which would have an adverse effect on our reputation and business.
+Added: For example, in 2017, we reached a consent agreement with the FTC, to resolve an investigation relating to certain disclosures in our privacy policy.
The consent agreement requires us, among other things, to provide information about our compliance with the FTC order and about representations made in our marketing materials.
−Removed: To date, we remain fully complaint with the FTC, though we may be subject to future investigations and legal proceedings by the FTC or other regulators.
+Added: We may be subject to future investigations and legal proceedings by the FTC or other regulators.
A such, it is possible that a regulatory inquiry might result in changes to our policies or business practices.
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In addition, it is possible that future orders issued by, or enforcement actions initiated by, regulatory authorities could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business.
−Removed: Any significant change to applicable laws, regulations or industry practices regarding the use or disclosure of our users’ data, or regarding the manner in which the express or implied consent of users for the use and disclosure of such data is obtained – or in how these applicable laws, regulations or industry practices are interpreted and enforced by state, federal and international privacy regulators – could require us to modify our services and features, possibly in a material manner, may subject us to regulatory enforcement actions and fines, and may limit our ability to develop new services and features that make use of the data that our users voluntarily share with us.
+Added: Any significant change to applicable laws, regulations or industry practices regarding the use or disclosure of our customers’ data, or regarding the manner in which the express or implied consent of customers for the use and disclosure of such data is obtained – or in how these applicable laws, regulations or industry practices are interpreted and enforced by state, federal and international privacy regulators – could require us to modify our services and features, possibly in a material manner, may subject us to regulatory enforcement actions and fines, and may limit our ability to develop new products, services and features that make use of the data that our customers voluntarily share with us.
+Added: Any security breach or incident, including those resulting from a cybersecurity attack, phishing attack, unauthorized access, unauthorized usage, virus, malware, ransomware, denial of service, credential stuffing attack, supply chain attack, hacking or similar breach involving our networks and systems, or those of third parties upon which we rely, could result in the loss of customer data, including personal information, disruption to our operations, significant remediation costs, lost revenue, increased insurance premiums, damage to our reputation, litigation, regulatory investigations, or other liabilities.
+Added: These attacks may come from individual hackers, criminal groups, and state-sponsored organizations, and security breaches and incidents may arise from other sources, such as employee or contractor error or malfeasance.
+Added: Cyber threats are evolving and becoming increasingly sophisticated and complex, increasing the difficulty of detecting and successfully defending against them.
+Added: As a cybersecurity company, we have been and may continue to be specifically targeted by bad actors for attacks intended to circumvent our security capabilities as an entry point into customers’ endpoints, networks, or systems.
+Added: Our industry is experiencing an increase in phishing attacks and unauthorized scans of systems searching for vulnerabilities or misconfigurations to exploit.
+Added: If our security measures are breached or otherwise compromised as a result of third-party action, employee or contractor error, defect, vulnerability or bug in our products or products of third parties upon which we rely, malfeasance or otherwise, including any such breach or compromise resulting in someone obtaining unauthorized access to our confidential information, including personal information or the personal information of our customers or others, or if any of these are perceived or reported to occur, we may suffer the loss, compromise, corruption, unavailability, or destruction of our or others’ confidential information and personal information, we may face a loss in intellectual property protection, our reputation may be damaged, our business may suffer and we could be subject to claims, demands, regulatory investigations and other proceedings, indemnity obligations, and otherwise incur significant liability.
+Added: Even the perception of inadequate security may damage our reputation and negatively impact our ability to win new customers and retain existing customers.
+Added: Further, we could be required to expend significant capital and other resources to address any security incident or breach, and we may face difficulties or delays in identifying and responding to any security breach or incident.
+Added: Techniques used to sabotage or obtain unauthorized access to systems or networks are constantly evolving and, in some instances, are not identified until launched against a target.
+Added: We and our third-party vendors and service providers may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventative measures.
+Added: Due to political uncertainty and military actions associated with Russia’s invasion of Ukraine, we and our third-party vendors and service providers are vulnerable to a heightened risk of cybersecurity attacks, phishing attacks, viruses, malware, ransomware, hacking or similar breaches from nation-state and affiliated actors, including attacks that could materially disrupt our systems and operations, supply chain, and ability to
+Added: produce, sell and distribute our products and services as well as retaliatory cybersecurity attacks from Russian and Russian-affiliated actors against companies with a U.S.
+Added: In addition, laws, regulations, government guidance, and industry standards and practices in the United States and elsewhere are rapidly evolving to combat these threats.
+Added: We may face increased compliance burdens regarding such requirements with regulators and customers regarding our products and services and also incur additional costs for oversight and monitoring of our own supply chain.
+Added: We and our customers may also experience increased costs associated with security measures and increased risk of suffering cyberattacks, including ransomware attacks.
+Added: Should we or the third-party vendors and service providers upon which we rely experience such attacks, including from ransomware or other security breaches or incidents, our operations may also be hindered or interrupted due to system disruptions or otherwise, with foreseeable secondary contractual, regulatory, financial and reputational harms that may arise from such an incident.
+Added: Further, we cannot assure that any limitations of liability provisions in our customer agreements, contracts with third-party vendors and service providers or other contracts would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim relating to a security breach or other security incident.
+Added: We also cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or will be available in sufficient amounts to cover claims related to a security incident or breach, or that the insurer will not deny coverage as to any future claim.
+Added: The successful assertion of 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 coinsurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.
We may become involved in litigation that may adversely affect us.
From time to time, we have been subject to claims, suits and other proceedings.
−Removed: For example, we are currently the subject of litigation with Cylance, Inc.
+Added: For example, we are currently the subject of litigation with BlackBerry Corp.
For additional information regarding this litigation, see the section titled “Part I—Legal Proceedings.” Regardless of the outcome, legal proceedings can have an adverse impact on us because of legal costs and diversion of management attention and resources, and could cause us to incur significant expenses or liability, adversely affect our brand recognition or require us to change our business practices.
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Risks Related to Financial and Accounting Matters
−Removed: The requirements of being a public company, including maintaining adequate internal control over our financial and management systems, may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members.
+Added: The requirements of being a public company, including maintaining adequate internal control over our financial and management systems, result in significant costs and may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members.
As a public company we incur significant legal, accounting, and other expenses.
−Removed: We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of the applicable listing standards of the New York Stock Exchange (NYSE).
+Added: We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations of the applicable listing standards of the New York Stock Exchange (NYSE).
We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly, and place significant strain on our personnel, systems, and resources.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
−Removed: We are continuing to develop and refine our disclosure controls, internal control over financial reporting and other procedures that are designed to ensure information required to be disclosed by us in our financial statements and in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
+Added: We are continuing to develop and refine our disclosure
+Added: controls, internal control over financial reporting and other procedures that are designed to ensure information required to be disclosed by us in our financial statements and in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
Our current controls and any new controls we develop may become inadequate because of changes in conditions in our business.
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Further, weaknesses in our internal controls may be discovered in the future.
−Removed: Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results, may result in a restatement of our financial statements for prior periods, cause us to fail to meet our reporting obligations, and could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in the periodic reports we will file with the SEC.
+Added: Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results, may result in a restatement of our financial statements for prior periods, cause us to fail to meet our reporting obligations, and could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our annual reports on Form 10-K filed with the SEC beginning in fiscal year 2023.
Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our Class A common stock.
−Removed: As a result of becoming a public company, our management is required, pursuant to Section 404 of the Sarbanes-Oxley Act, to certify financial and other information in our quarterly and annual reports and
−Removed: provide an annual report on the effectiveness of our internal control over financial reporting commencing with our second Annual Report on Form 10-K.
−Removed: Being a public company, and particularly after we are no longer an “emerging growth company,” requires significant resources and management oversight.
−Removed: As a result, management’s attention may be diverted from other business concerns, which could harm our business, operating results, and financial condition.
−Removed: We incur significant costs and management resources as a result of operating as a public company.
−Removed: As a public company, we incur significant legal, accounting, compliance and other expenses that we did not incur as a private company and these expenses will increase even more after we are no longer an “emerging growth company.” Our management and other personnel devote a substantial amount of time and incur significant expense in connection with compliance initiatives.
−Removed: As a public company, we bear all of the internal and external costs of preparing and distributing periodic public reports in compliance with our obligations under the securities laws.
−Removed: In addition, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act, and the related rules and regulations implemented by the SEC and the NYSE have increased legal and financial compliance costs and will make some compliance activities more time-consuming.
−Removed: We have invested and intend to continue to invest resources to comply with evolving laws, regulations and standards, and this investment has resulted in and will continue to result in increased general and administrative expenses and may divert management’s time and attention from our other business activities.
−Removed: If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us, and our business may be harmed.
+Added: Our management is also required, pursuant to Section 404 of the Sarbanes-Oxley Act, to certify financial and other information in our quarterly and annual reports and provide an annual report on the effectiveness of our internal control over financial reporting.
+Added: In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure, including those related to climate change and other ESG-focused disclosures, are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming.
+Added: These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.
+Added: This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
+Added: We intend to continue to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.
+Added: If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business may be adversely affected.
We have incurred significant costs with respect to our directors’ and officers’ insurance coverage.
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These factors would also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
−Removed: We could be subject to additional tax liabilities and United States federal income tax reform could adversely affect us.
+Added: Being a public company requires significant resources and management oversight.
+Added: As a result, management’s attention may be diverted from other business concerns, which could harm our business, operating results, and financial condition.
+Added: We could be subject to additional tax liabilities and United States federal and global income tax reform could adversely affect us.
We are subject to U.S.
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federal tax rates, making sweeping changes to rules governing international business operations, and imposing significant additional limitations on tax benefits, including the deductibility of interest and the use of net operating loss carryforwards.
−Removed: Further changes to U.S.
−Removed: tax laws, including limitations on the ability of taxpayers to claim and utilize foreign tax credits, as well as changes to U.S.
−Removed: tax laws that may be enacted in the future, could impact the tax treatment of our foreign earnings and adversely affect our operating results and financial condition.
+Added: On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA) into law.
+Added: The IRA contains certain tax measures, including a corporate alternative minimum tax of 15% on some large corporations and an excise tax of 1% on certain corporate stock buy-backs taking place after December 31, 2022.
+Added: We are currently evaluating the various provisions of the IRA and currently anticipate that its impact, if any, will not be material to our operating results or cash flows.
+Added: In the United States, Congress and the Biden administration continue to consider other proposed legislation to make various tax law changes.
+Added: These proposals, could include changes to the existing framework in respect of income taxes, limitations on the ability of taxpayers to claim and utilize foreign tax credits, as well as add new types of non-income taxes (such as taxes based on a percentage of revenue or taxes applicable to digital services).
+Added: In addition, the Organization for Economic Cooperation and Development (OECD) Inclusive Framework of 137 jurisdictions have joined a two-pillar plan to reform international taxation rules.
+Added: The first pillar is focused on the allocation of taxing rights between countries for in-scope multinational enterprises that sell goods and services into countries with little or no local physical presence and is intended to apply to multinational enterprises with global turnover above 20 billion euros.
+Added: The second pillar is focused on developing a global minimum tax rate of at least 15 percent applicable to in-scope multinational enterprises and is intended to apply to multinational enterprises with annual consolidated group revenue in excess of 750 million euro.
+Added: While substantial work remains to be completed by the OECD and national governments on the implementation of these proposals, future tax reform resulting from these developments may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or result in higher cash tax liabilities.
+Added: Due to the large and expanding scale of our international business activities, these types of changes to the taxation of our activities could impact the tax treatment of our foreign earnings, increase our worldwide effective tax rate, increase the amount of taxes imposed on our business, and harm our financial position.
+Added: Such changes may also apply retroactively to our historical operations and result in taxes greater than the amounts estimated and recorded in our financial statements.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
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If not utilized, the federal net operating loss carryforwards will begin to expire in 2031, and the state net operating loss carryforwards will begin to expire in 2024.
−Removed: In addition, we had federal research and development credit carryforwards of $1.1 million, which will begin to expire in 2037, and state research and development credit carryforwards of $1.1 million, which do not expire.
−Removed: We also had foreign net operating loss carryforwards of $281.9 million, which do not expire.
+Added: In addition, as of January 31, 2023, we had federal research and development credit carryforwards of $2.0 million, which will begin to expire in 2037, and state research and development credit carryforwards of $2.0 million, which do not expire.
+Added: We also had foreign net operating loss carryforwards of $289.8 million, as of January 31, 2023, which do not expire.
Realization of these net operating loss and research and development credit carryforwards depends on future income, and there is a risk that certain of our existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our operating results and financial condition.
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federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.
−Removed: We could be required to collect additional sales, use, value added, digital services, or other similar taxes or be subject to other liabilities that may increase the costs our customers would have to pay for our solutions and adversely affect our business, operating results, and financial condition.
−Removed: We collect sales, use, value added, digital services, and other similar taxes in a number of jurisdictions.
−Removed: One or more U.S.
−Removed: states or countries may seek to impose incremental or new sales, use, value added, digital services, or other tax collection obligations on us.
+Added: We could be required to collect additional sales, use, value added, digital services, or other similar taxes or be subject to other liabilities with respect to past or future sales, that may increase the costs our customers would have to pay for our solutions and adversely affect our business, operating results, and financial condition.
+Added: We do not collect sales and use, value added, or similar taxes in all jurisdictions in which we have sales because we have been advised that such taxes are not applicable to our services in certain jurisdictions.
+Added: Sales and use, value added, and similar tax laws and rates vary greatly by jurisdiction.
+Added: Certain jurisdictions in which we do not collect such taxes may seek to impose incremental or new sales, use, value added, digital services, or assert other tax collection obligations on us that such taxes are applicable, which could result in tax assessments, penalties and interest, to us or our customers for the past amounts, and we may be required to collect such taxes in the future.
+Added: If we are unsuccessful in collecting such taxes from our customers, we could be held liable for such costs, which may adversely affect our results of operations.
Further, an increasing number of U.S.
states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies.
−Removed: Additionally, the Supreme Court of the United States ruled in South Dakota v.
−Removed: Wayfair, Inc.
−Removed: et al, or Wayfair, that online sellers can be required to collect sales and use tax despite not having a physical presence in the state of the customer.
−Removed: In response to Wayfair, or otherwise, U.S.
−Removed: states or local governments may adopt, or begin to enforce, laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions.
A successful assertion by one or more U.S.
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Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our operating results and financial condition.
−Removed: We are expanding our international operations and staff to support our business in international markets.
+Added: We are expanding our international operations and staff to support our business and growth in international markets.
We generally conduct our international operations through wholly-owned subsidiaries and are or may be required to report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions.
−Removed: Our intercompany relationships and intercompany transactions are subject
−Removed: to complex transfer pricing rules administered by taxing authorities in various jurisdictions in which we operate with potentially divergent tax laws.
+Added: Our corporate structure and associated transfer pricing policies contemplate future growth in international markets, and consider the functions, risks, and assets of the various entities involved in intercompany transactions.
+Added: The amount of taxes we pay in different jurisdictions will depend on the application of the tax laws of the various jurisdictions, including the United States, to our intercompany transactions, international business activities, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
+Added: Furthermore, increases in tax rates, new or revised tax laws, and new interpretations of existing tax laws and policies by taxing authorities and courts in various jurisdictions, could result in an increase in our overall tax obligations which could adversely affect our business.
+Added: Our intercompany relationships and intercompany transactions are subject to complex transfer pricing rules administered by taxing authorities in various jurisdictions in which we operate with potentially divergent tax laws.
The amount of taxes we pay in different jurisdictions will depend on the application of the tax laws of the various jurisdictions, including the United States, to our intercompany transactions, international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies by taxing authorities and courts in various jurisdictions, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
It is not uncommon for tax authorities in different countries to have conflicting views, for instance, with respect to, among other things, the manner in which the arm’s length standard is applied for transfer pricing purposes, the transfer pricing and charges for intercompany services and other intercompany transactions, or with respect to the valuation of our intellectual property and the manner in which our intellectual property is utilized within our group.
−Removed: If taxing authorities in any of the jurisdictions in which we conduct our international operations were to successfully challenge our transfer pricing, we could be required to reallocate part or all of our income to reflect transfer pricing adjustments, which could result in an increased tax liability to us.
+Added: In 2022, we began negotiating a bilateral Advance Pricing Agreement (APA) with the United States and the Israeli governments, covering various transfer pricing matters for intercompany transactions relating to the intergroup utilization of our intellectual property among our group enterprises.
+Added: An APA, if obtained, will provide us with a more predictable future business operating model, and preclude the relevant tax authorities from making certain transfer pricing adjustments within the scope of these agreements.
+Added: These transfer pricing matters may be significant to our consolidated financial statements.
+Added: If taxing authorities in any of the jurisdictions in which we conduct our
+Added: international operations were to successfully challenge our transfer pricing, we could be required to reallocate part or all of our income to reflect transfer pricing adjustments, which could result in an increased tax liability to us.
In such circumstances, if the country from where the income was reallocated did not agree to the reallocation, we could become subject to tax on the same income in both countries, resulting in double taxation.
Furthermore, the relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
−Removed: If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
−Removed: We are subject to federal, state and local income, sales and other taxes in the United States and income, withholding, transaction and other taxes in numerous foreign jurisdictions.
−Removed: Significant judgment is required in evaluating our tax positions and our worldwide provision for income taxes.
−Removed: During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination is uncertain.
−Removed: In addition, our tax obligations and effective tax rates could be adversely affected by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations, including those relating to income tax nexus, by recognizing tax losses or lower than anticipated earnings in jurisdictions where we have lower statutory rates and higher than anticipated earnings in jurisdictions where we have higher statutory rates, by changes in foreign currency exchange rates, or by changes in the valuation of our deferred tax assets and liabilities.
−Removed: We may be audited in various jurisdictions, and such jurisdictions including in jurisdictions in which we are not currently filing, may assess new or additional taxes, sales taxes and value added taxes against us.
+Added: We believe that our tax and financial accounting positions are reasonable and our tax reserves are adequate to cover any potential liability.
+Added: We also believe that our assumptions, judgements, and estimates are reasonable and that our transfer pricing for these intercompany transactions are on arm’s-length terms.
+Added: However, the relevant tax authorities may disagree with our tax positions, including any assumptions, judgements or estimates used for these transfer pricing matters and intercompany transactions.
+Added: If any of these tax authorities determine that our transfer pricing for these intercompany transactions do not meet arm’s-length criteria, and were successful in challenging our positions, we could be required to pay additional taxes, interest and penalties related thereto, which could be in excess of any reserves established therefor, and which could result in higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
+Added: Our financial statements could fail to reflect adequate reserves to cover such a contingency.
+Added: We may be audited in various jurisdictions, including in jurisdictions in which we are not currently filing, and such jurisdictions may assess new or additional taxes, sales taxes and value added taxes against us.
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 an adverse effect on our operating results or cash flows in the period or periods for which a determination is made.
−Removed: In addition, the OECD has published proposals covering a number of issues, including country-by-country reporting, permanent establishment rules, transfer pricing rules, tax treaties and taxation of the digital economy.
−Removed: A significant majority of countries in the OECD’s Inclusive Framework have agreed in principle to a proposed solution to address the tax challenges arising from the digitalization of the economy.
−Removed: Future tax reform resulting from these developments may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or result in higher cash tax liabilities.
−Removed: The OECD’s proposed solution envisages new international tax rules and the removal of all Digital Services Taxes (DST).
−Removed: Notwithstanding this, some countries, in the E.U.
−Removed: and beyond, continue to operate a DST regime to capture tax revenue on digital services more immediately.
−Removed: Such laws may increase our tax obligations in those countries or change the manner in which we operate our business.
−Removed: We are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.
−Removed: We are an “emerging growth company” as defined in the JOBS Act.
−Removed: We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which we have total gross revenue
−Removed: of $1.07 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the date of the completion of our IPO, (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years, and (vi) the date on which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act.
−Removed: We could be deemed a large accelerated filer as earlier as January 31, 2023.
−Removed: For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (iii) exemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not approved previously.
−Removed: We currently intend to take advantage of the available exemptions described above.
−Removed: Furthermore, under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until such time as those standards become applicable to private companies.
−Removed: To date, we have not elected to take advantage of the benefits of this extended transition period for accounting standards.
−Removed: If we elect to delay adopting new or revised accounting standards, while we are still an “emerging growth company,” we will have to disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.
−Removed: We cannot predict if investors will find our Class A common stock less attractive because we may rely on certain exemptions available to emerging growth companies.
−Removed: If some investors find our Class A common stock less attractive as a result, our stock price may be more volatile.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, our operating results could be adversely affected.
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We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as discussed in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
−Removed: Significant assumptions and estimates used in preparing our consolidated financial statements include but are not limited to those related to the valuation of our common stock prior to our IPO in June 2021, stock-based compensation, the period of benefit for deferred contract acquisition costs, standalone selling prices for each performance obligation, useful lives of long-lived assets, the incremental borrowing rate used for operating lease liabilities, and accounting for income taxes.
−Removed: Additionally, as a result of the continuing COVID-19 pandemic, many of management’s estimates and assumptions require increased judgment and carry a higher degree of variability and volatility.
+Added: Significant assumptions and estimates used in preparing our consolidated financial statements include but are not limited to those related to stock-based compensation, the period of benefit for deferred contract acquisition costs, standalone selling prices for each performance obligation, useful lives of long-lived assets, the incremental borrowing rate used for operating lease liabilities, and accounting for income taxes.
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 industry or financial analysts and investors, resulting in a potential decline in the market price of our Class A common stock.
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As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies, alter our operational policies and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or we may be required to restate our published financial statements.
−Removed: Such changes to existing standards or changes in their interpretation may have an adverse effect
−Removed: on our reputation, business, financial condition and profit, or cause an adverse deviation from our revenue and operating profit target, which may adversely affect our financial results.
+Added: For example, SEC proposals on climate-related disclosures may require us to update our accounting or operational policies, processes, or systems to reflect new or amended financial reporting standards.
+Added: Such changes to existing standards or changes in their interpretation may have an adverse effect on our reputation, business, financial condition and profit, or cause an adverse deviation from our revenue and operating profit target, which may adversely affect our financial results.
We are exposed to fluctuations in currency exchange rates, which could negatively affect our business, operating results, and financial condition.
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dollar continues to strengthen, this could adversely affect our operating results and financial condition.
−Removed: In addition, increased international sales in the future, including through continued international expansion, our channel partners and other partnerships, could result in foreign currency denominated sales, which would increase our foreign currency risk.
+Added: addition, increased international sales in the future, including through continued international expansion, our channel partners and other partnerships, could result in foreign currency denominated sales, which would increase our foreign currency risk.
Our operating expenses incurred outside the U.S.
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Such terms may involve restrictive covenants making it difficult to engage in capital raising activities and pursue business opportunities, including potential acquisitions.
−Removed: The trading prices of technology companies have been highly volatile as a result of the continuing COVID-19 pandemic, the conflict in Ukraine, and market downturn, which may reduce our ability to access capital on favorable terms or at all.
+Added: The trading prices of technology companies have been highly volatile as a result of the continuing effects of the COVID-19 pandemic, the conflict in Ukraine, inflation, rising interest rates, instability in the banking system, and market downturns, which may reduce our ability to access capital on favorable terms or at all.
In addition, a recession, depression, or other sustained adverse market event could adversely affect our business and the value of our Class A common stock.
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• failure of industry or financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
−Removed: • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
+Added: • litigation or other proceedings involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
• developments or disputes concerning our intellectual property rights or our solutions, or third-party proprietary rights;
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• other events or factors, including those resulting from the COVID-19 pandemic, war, such as Russia’s invasion of Ukraine, armed conflict, incidents of terrorism or responses to these events.
−Removed: In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.
−Removed: Broad market and industry factors may seriously affect the market price of our Class A common stock, regardless of our actual operating performance.
+Added: In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies, particularly during the current period of macroeconomic uncertainty, including rising inflation, increasing interest rates, labor shortages and fluctuations in international currency rates, as well as the impacts of the current conflict in Ukraine and the COVID-19 pandemic.
+Added: These economic, political, regulatory and market conditions have and may continue to negatively impact the market price of our Class A common stock, regardless of our actual operating performance.
In addition, in the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action litigation has often been instituted against that company.
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Any such issuance could result in substantial dilution to our existing stockholders and cause the market price of our Class A common stock to decline.
−Removed: The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of our IPO, including our directors, executive officers, and beneficial owners of 5% or greater of our outstanding capital stock who hold in the aggregate approximately 89% of the voting power of our capital stock as of January 31, 2022, which will limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.
+Added: The dual class structure of our common stock has the effect of concentrating voting control with the holders of our Class B common stock who held, in the aggregate, approximately 85% of the voting power of our capital stock as of January 31, 2023, which will limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.
Our Class B common stock has 20 votes per share, and our Class A common stock has one vote per share.
−Removed: As of January 31, 2022, the holders of our outstanding Class B common stock hold approximately 93% of the voting power of our outstanding capital stock, with our directors, executive officers, and pre-IPO holders of more than 5% of our common stock, and their respective affiliates, holding in the aggregate approximately 89% of the voting power of our capital stock as of January 31, 2022.
−Removed: Because of the twenty-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively are expected to continue to control a majority of the combined voting power of our common stock and therefore will be able to control all matters submitted to our stockholders for approval until the earlier of (i) the date specified by a vote of the holders of 66 2/3% of the then outstanding shares of Class B common stock, (ii) seven years from the date of our Final Prospectus, or June 29, 2028, (iii) the first date following the completion of our IPO on which the number of shares of outstanding Class B common stock (including shares of Class B common stock subject to outstanding stock options) held by Tomer Weingarten, including certain permitted entities that Mr.
+Added: As of January 31, 2023, the holders of our outstanding Class B common stock held approximately 85% of the voting power of our outstanding capital stock.
+Added: Because of the twenty-to-one voting ratio between our Class B and Class A
+Added: common stock, the holders of our Class B common stock collectively are expected to continue to control a majority of the combined voting power of our common stock and therefore will be able to control all matters submitted to our stockholders for approval until the earlier of (i) the date specified by a vote of the holders of 66 2/3% of the then outstanding shares of Class B common stock, (ii) seven years from the date of our Final Prospectus, or June 29, 2028, (iii) the first date following the completion of our IPO on which the number of shares of outstanding Class B common stock (including shares of Class B common stock subject to outstanding stock options) held by Tomer Weingarten, including certain permitted entities that Mr.
Weingarten controls, is less than 25% of the number of shares of outstanding Class B common stock (including shares of Class B common stock subject to outstanding stock options) that Mr.
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In addition, several stockholder advisory firms and large institutional investors oppose the use of multiple class structures.
−Removed: As a result, the dual class structure of our common stock may make us ineligible for inclusion in certain indices and may discourage such indices from selecting us for inclusion, notwithstanding our automatic termination provision, may cause
−Removed: stockholder advisory firms to public negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure, and may result in large institutional investors not purchasing shares of our Class A common stock.
+Added: As a result, the dual class structure of our common stock may make us ineligible for inclusion in certain indices and may discourage such indices from selecting us for inclusion, notwithstanding our automatic termination provision, may cause stockholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure, and may result in large institutional investors not purchasing shares of our Class A common stock.
Any exclusion from certain stock indices could result in less demand for our Class A common stock.
Any actions or publications by stockholder advisory firms or institutional investors critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A common stock.
−Removed: We could be subject to securities class action litigation.
−Removed: In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities.
−Removed: This risk is especially relevant for us, because technology companies have experienced significant stock price volatility in recent years.
−Removed: This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which could adversely affect our business, operating results, and financial condition.
−Removed: Additionally, the dramatic increase in the cost of directors’ and officers’ liability insurance may make it more expensive for us to obtain directors’ and officers’ liability insurance in the future and may require us to opt for lower overall policy limits and coverage or to forgo insurance that we may otherwise rely on to cover significant defense costs, settlements, and damages awarded to plaintiffs, or incur substantially higher costs to maintain the same or similar coverage.
−Removed: These factors could make it more difficult for us to attract and retain qualified executive officers and members of our board of directors.
General Risk Factors
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In addition, the purchase of our platform is often discretionary and may involve a significant commitment of capital and other resources.
−Removed: Weak global and regional economic conditions and spending environments, geopolitical instability and uncertainty, weak economic conditions in certain regions or a reduction in information technology spending regardless of macro-economic conditions, including the effects of the continuing COVID-19 pandemic and the recent conflict in Ukraine, on the foregoing issues, could adversely affect our business, operating results, and financial condition, including longer sales cycles, lower prices for our platform, higher default rates among our channel partners, reduced sales and slower or declining growth.
−Removed: We may be adversely affected by natural disasters, pandemics and other catastrophic events, and by man-made problems such as war, armed conflict, terrorism, that could disrupt our business operations, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
+Added: Weak global and regional economic conditions, including U.S.
+Added: and global macro-economic issues, including global banking and finance related issues, labor shortages, supply chain disruptions, rising interest rates and inflation, spending environments, geopolitical instability, warfare and uncertainty, weak economic conditions in certain regions or a reduction in information technology spending regardless of macro-economic conditions, including the effects of the COVID-19 pandemic and the war in Ukraine, and proposed judicial reform in Israel, could adversely affect our business, operating results, and financial condition, including resulting in longer sales cycles, a negative impact on our ability to attract and retain new customers or
+Added: expand our platform or sell additional products and services to our existing customers, lower prices for our platform, higher default rates among our channel partners, reduced sales to new or existing customers and slower or declining growth.
+Added: For example, as a result of current uncertainty in macroeconomic conditions, we have recently observed a lengthening of the sales cycle for some prospective customers that we attribute to higher cost-consciousness around IT budgets.
+Added: We expect the macroeconomic conditions impacting demand to persist in the near-term.
+Added: Deterioration in economic conditions in any of the countries in which we do business could also cause slower or impaired collections on accounts receivable, which may adversely impact our liquidity and financial condition.
+Added: Moreover, the U.S.
+Added: capital markets have experienced and continue to experience extreme volatility and disruption.
+Added: Inflation rates in the U.S.
+Added: significantly increased in 2022 resulting in federal action to increase interest rates, adversely affecting capital markets activity.
+Added: Further deterioration of the macroeconomic environment and regulatory action may adversely affect our business, operating results, and financial condition.
+Added: Moreover, there has been recent turmoil in the global banking system.
+Added: For example, on March 10, 2023, Silicon Valley Bank (SVB), one of our banking partners, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC), as receiver.
+Added: While we only had a minimal amount of our cash directly at SVB and, since that date, the FDIC has stated that all depositors of SVB will be made whole, there is no guarantee that the federal government would guarantee all depositors as they did with SVB depositors in the event of further bank closures and continued instability in the global banking system may negatively impact us or our customers, including our customers’ ability to pay for our platform, and adversely impact our business and financial condition.
+Added: Moreover, events such as the closure of SVB, in addition to global macroeconomic conditions discussed above, may cause further turbulence and uncertainty in the capital markets.
+Added: We may be adversely affected by natural disasters, pandemics and other catastrophic events, and by man-made problems such as war, that could disrupt our business operations, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce, and the global economy, and thus could have an adverse effect on us.
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In addition, our global operations expose us to risks associated with public health crises, such as pandemics and epidemics, which could harm our business and cause our operating results to suffer.
−Removed: For example, the ongoing effects of the COVID-19 pandemic and the measures that we, our customers and governmental authorities have adopted, as described in detail elsewhere in these risk factors.
−Removed: In addition, our growth rate may actually slow or decline once the impact of the COVID-19 pandemic tapers as people begin to return to offices and other workplaces.
+Added: For example, the ongoing effects of the COVID-19 pandemic and the measures that we, our customers and governmental authorities have adopted, as described in detail elsewhere in these risk factors, have and could continue to have an adverse effect on our business and operating results.
+Added: In addition, our growth rate may actually slow or decline as the impact of the COVID-19 pandemic tapers as people continue to return to offices and other workplaces.
Further, acts of war, armed conflict, terrorism and other geopolitical unrest, such as Russia’s invasion of Ukraine, could cause disruptions in our business or the businesses of our partners or the economy as a whole.
−Removed: In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, cyberattack, or telecommunications failure, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in development of our platform, lengthy interruptions in service,
−Removed: breaches of data security, and loss of critical data, all of which could have an adverse effect on our future operating results.
+Added: In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, cyberattack, or telecommunications failure, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in development of our platform, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on our future operating results.
Climate change could result in an increase in the frequency or severity of such natural disasters.
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Additionally, all the aforementioned risks will be further increased if we do not implement an effective disaster recovery plan or our partners’ disaster recovery plans prove to be inadequate.
−Removed: The continuing COVID-19 pandemic could adversely affect our business, operating results, and financial condition.
−Removed: The COVID-19 pandemic has had and continues to cause general business disruption worldwide.
−Removed: The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, operating results, cash flows, and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted.
−Removed: We have experienced, and may continue to experience, negative impacts on certain parts of our business following the implementation of shelter-in-place orders and work-from-home requirements, to mitigate the outbreak of the COVID-19 pandemic, including a lengthening of the sales cycle for some prospective customers and delays in the delivery of professional services and trainings to our customers.
−Removed: It is possible that additional, more protective vaccine mandates may be announced by state or local jurisdictions that could impact our workforce and operations.
−Removed: Although we cannot predict with certainty the impact any mandates will have on our workforce and operations, these requirements and any future requirements may result in attrition and impede our ability to recruit and retain our workforce.
−Removed: These measures also may further disrupt the national supply chain, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
−Removed: We do not yet know the full extent of potential impacts on our business, operations or on the global economy as a whole, particularly if the COVID-19 pandemic continues and persists for an extended period of time.
−Removed: Potential impacts include:
+Added: The COVID-19 pandemic could adversely affect our business, operating results, and financial condition.
+Added: The COVID-19 pandemic continues to impact worldwide economic activity and financial markets.
+Added: We have experienced, and may continue to experience negative impacts on certain parts of our business.
+Added: The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, operating results, cash flows, and financial condition will depend on future developments that are uncertain and cannot be accurately predicted.
+Added: Measures we have taken to mitigate the spread of the virus could negatively affect our customer success efforts, delay and lengthen our sales cycle for some prospective customers and delay the delivery of professional services and trainings to our customers, impact our marketing, sales and support efforts, reduce employee efficiency and
+Added: productivity, increase employee attrition, and create operational or other challenges, any of which could harm our business and results of operations.
+Added: We do not yet know the full extent of potential impacts on our business, operations or on the global economy as a whole, particularly if the COVID-19 pandemic persists for an extended period of time.
+Added: Potential impacts include but are not limited to:
• our customer prospects and our existing customers may experience slowdowns in their businesses, which in turn may result in reduced demand for our platform, lengthening of sales cycles, loss of customers, and difficulties in collections;
−Removed: • we have started to open select offices in accordance with local ordinances, however, most of our employees continue to work from home and a substantial number may continue to do so for the foreseeable future, which may result in decreased employee productivity and morale with increased unwanted employee attrition;
+Added: • we have opened our offices in accordance with local ordinances, however, most of our employees continue to work from home and a substantial number may continue to do so for the foreseeable future, which may present challenges to employee collaboration, productivity and retention;
• we continue to incur fixed costs, particularly for real estate, and are deriving reduced or no benefit from those costs;
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• our critical vendors could go out of business;
−Removed: • substantially all our in-person marketing events, including conferences, have been canceled and we are only recently returning to limited in-person events, and we may continue to experience prolonged delays in our ability to reschedule or conduct in-person events and other related activities;
−Removed: • our marketing, sales, and support organizations are accustomed to extensive face-to-face customer and partner interactions, and our ability to conduct business is largely unproven.
Any of the foregoing could adversely affect our business, financial condition, and operating results.
−Removed: Moreover, due to the increasingly distributed nature of many workplaces as a result of shelter-in-place mandates, the demand for cybersecurity solutions like ours has increased during the COVID-19 pandemic.
−Removed: As a result, our business has experienced, and may continue to experience, a positive impact as a result of the COVID-19 pandemic.
−Removed: Moreover, we have seen slower growth in certain operating expenses due to reduced business travel, and the virtualization or cancellation of customer and employee events.
−Removed: However, as a vaccine becomes widely available and people begin to return to offices and other workplaces, any positive impacts of the COVID-19 pandemic on our business may slow or decline once the impact of the pandemic tapers.
Investors’ expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks.
10 unchanged sentences
If our financial results fail to meet, or significantly exceed, our announced guidance or the expectations of analysts or public investors, analysts could downgrade our Class A common stock or publish unfavorable research about us.
−Removed: If one or more of these analysts cease coverage of our Class A common stock or fail to publish reports on us regularly, our visibility in the financial markets could decrease, which in turn could cause our stock price or trading volume to decline.
+Added: If one or more of these analysts cease coverage of our Class A common stock or fail to publish reports on us regularly, our
+Added: visibility in the financial markets could decrease, which in turn could cause our stock price or trading volume to decline.
We could be subject to securities class action litigation.
1 unchanged sentence
This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which could adversely affect our business, operating results, or financial condition.
−Removed: Additionally, the dramatic increase in the cost of directors’ and officers’ liability insurance may make it more expensive for us to obtain directors’ and officers’ liability insurance in the future and may require us to opt for lower overall policy limits and coverage or to forgo insurance that we may otherwise rely on to cover significant defense costs, settlements, and damages awarded to plaintiffs, or incur substantially higher costs to maintain the same or
−Removed: similar coverage.
+Added: Additionally, the dramatic increase in the cost of directors’ and officers’ liability insurance may make it more expensive for us to obtain directors’ and officers’ liability insurance in the future and may require us to opt for lower overall policy limits and coverage or to forgo insurance that we may otherwise rely on to cover significant defense costs, settlements, and damages awarded to plaintiffs, or incur substantially higher costs to maintain the same or similar coverage.
These factors could make it more difficult for us to attract and retain qualified executive officers and members of our board of directors.
11 unchanged sentences
• permit our board of directors to establish the number of directors and fill any vacancies and newly created directorships;
−Removed: • require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;
+Added: • require super-majority voting to amend some provisions in our restated certificate of incorporation and amended and restated bylaws;
• authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;
5 unchanged sentences
• prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
−Removed: • provide that our board of directors is expressly authorized to make, alter, or repeal our bylaws;
+Added: • provide that our board of directors is expressly authorized to make, alter, or repeal our amended and restated bylaws;
• establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
13 unchanged sentences
These provisions may limit a stockholders’ ability to bring a claim in a judicial forum of their choosing for disputes with us or our directors, officers, or employees, which may discourage lawsuits against us and our directors, officers, and employees.
−Removed: Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation or restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition, and operating results.
+Added: Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition, and operating results.
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.