Our operations and financial results are subject to various risks and uncertainties, including those described below.
−Removed: You should consider and read carefully all of the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before making an investment decision.
+Added: You should consider and read carefully all of the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including the sections titled “Special Note about Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before making an investment decision.
The risks described below are not the only ones we face.
−Removed: The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition, or results of operations.
+Added: The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition, results of operations, or growth prospects.
In such case, the trading price of our common stock could decline.
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Risks Related to Our Business and Operations
−Removed: We have experienced rapid revenue growth, which may not be indicative of our future performance, and we have a limited operating history, both of which make it difficult to forecast our future results of operations.
−Removed: Our revenue was $2.1 billion, $1.2 billion, and $592.0 million for the fiscal years ended January 31, 2023, 2022, and 2021, respectively.
+Added: We have experienced rapid revenue growth and have a limited operating history, both of which make it difficult to forecast our future results of operations.
+Added: Our revenue was $2.8 billion, $2.1 billion and $1.2 billion for the fiscal years ended January 31, 2024, 2023 and 2022, respectively.
As a result of our historical rapid growth, limited operating history, and unstable macroeconomic conditions, our ability to accurately forecast our future results of operations, including revenue, remaining performance obligations (RPO), and the percentage of RPO we expect to recognize as revenue in future periods, is limited and subject to a number of uncertainties, including our ability to plan for and model future growth and platform consumption.
Our historical revenue growth should not be considered indicative of our future performance.
−Removed: Further, in future periods, our revenue growth could slow or our revenue could decline for a number of reasons, including increased competition, changes to technology (including changes in software or underlying cloud infrastructure), and reduced demand for our platform as customers seek to optimize consumption, rationalize budgets, and prioritize cash flow management (including through shortened contract duration) in response to adverse economic conditions.
−Removed: In addition, we have recently seen, and may continue to see, our newer customers increase their consumption of our platform at a slower pace than our more tenured customers.
−Removed: As a result of the foregoing and our rapid revenue growth in prior periods, we expect our revenue growth rate to decline in future periods, and a decline in our revenue growth rate could adversely affect investors’ perceptions of our business, and negatively impact the trading price of our common stock.
+Added: Further, our revenue growth could slow or our revenue could decline for a number of reasons, including increased competition, changes to technology, such as changes in software or underlying cloud infrastructure or the increasing prominence of new technology like artificial intelligence, and reduced demand for our platform.
+Added: For example, customers may continue to optimize consumption, rationalize budgets, and prioritize cash flow management, including by reducing storage through shorter data retention policies and shortening committed contract durations.
+Added: As a result of the foregoing and our rapid revenue growth in prior periods, our revenue growth rate has slowed in recent periods.
+Added: Any further declines in our revenue growth rate could adversely affect investors’ perceptions of our business, and negatively impact the trading price of our common stock.
We have also encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as the risks and uncertainties described below.
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Because our customers have flexibility in the timing of their consumption, we do not have the visibility into the timing of revenue recognition that a typical subscription-based software company has.
−Removed: There is a risk that customers will consume our platform more slowly than we expect, including in response to adverse macroeconomic conditions, and we have recently seen, and may continue to see, our newer customers increase their consumption of our platform at a slower pace than our more tenured customers.
−Removed: As a result, actual results may differ from our forecasts, and our results of operations in a given period should not be relied upon as indicative of future performance.
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+Added: There is a risk that customers will consume our platform at lower levels than we expect, including in response to adverse macroeconomic conditions or holidays.
+Added: For example, during April 2023 and part of May 2023, consumption of our platform increased at a slower pace than expected.
+Added: Unexpected fluctuations in customer consumption may cause actual results to differ from our forecasts.
+Added: As a result, our results of operations in a given period should not be relied upon as indicative of future performance.
We have a history of operating losses and may not achieve or sustain profitability in the future.
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We expect our costs and expenses to increase in future periods.
−Removed: In particular, we intend to continue to invest significant resources to further develop our platform, expand our sales, marketing, and professional services teams, and retain our employees.
+Added: In particular, we intend to continue to invest significant resources to further develop our platform, expand our research and development teams, retain our employees, and acquire other businesses, including in the areas of data science, artificial intelligence, and machine learning.
In addition, our platform currently operates on public cloud infrastructure provided by Amazon Web Services (AWS), Microsoft Azure (Azure), and Google Cloud Platform (GCP), and our costs and gross margins are significantly influenced by the prices we are able to negotiate with these public cloud providers, which in certain cases are also our competitors.
If we fail to meet any minimum commitments under these third-party cloud infrastructure agreements, we may be required to pay the difference, and our results of operations could be negatively impacted.
−Removed: We will also incur increased general and administrative expenses associated with our growth, including costs related to internal systems and operating as a public company.
+Added: We will also incur increased general and administrative expenses associated with our growth, including costs related to internal systems, operating as a public company, and targeting regulated industries or markets.
Our efforts to grow our business may be costlier than we expect, or our revenue growth rate may be slower than we expect, and we may not be able to increase our revenue enough to offset the increase in operating expenses resulting from these investments.
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The markets in which we operate are highly competitive, and if we do not compete effectively, our business, financial condition, and results of operations could be harmed.
+Added: Our go-to-market strategy is focused on acquiring new customers and driving increased use of our platform by existing customers.
The markets in which we operate are rapidly evolving and highly competitive.
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Many of our competitors have substantially greater brand recognition, customer relationships, and financial, technical, and other resources than we do, and may be able to respond more effectively than us to new or changing opportunities, technologies, standards, customer requirements, and buying practices.
+Added: In addition, we may not be able to respond to market opportunities as quickly as smaller companies.
We currently only offer our platform on the public clouds provided by AWS, Azure, and GCP, which are also some of our primary competitors.
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All of the foregoing could make it difficult or impossible for us to provide products and services that compete favorably with those of the public cloud providers.
−Removed: For all of these reasons, competition may negatively impact our ability to maintain and grow consumption of our platform or put downward pressure on our prices and gross margins, any of which could materially harm our reputation, business, results of operations, and financial condition.
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+Added: For all of these reasons, competition may negatively impact our ability to acquire new customers and maintain and grow use of our platform, or it may put downward pressure on our prices and gross margins, any of which could materially harm our reputation, business, results of operations, and financial condition.
If we fail to innovate in response to changing customer needs, new technologies, or other market requirements, our business, financial condition, and results of operations could be harmed.
We compete in markets that evolve rapidly.
−Removed: We believe that the pace of innovation will continue to accelerate as customers increasingly base their purchases of cloud data platforms on a broad range of factors, including performance and scale, markets addressed, types of data processed, ease of data ingestion, user experience and programming languages, use of artificial intelligence, and data governance and regulatory compliance.
−Removed: We introduced data warehousing on our platform in 2014 as our core use case, and our customers subsequently began using our platform for additional workloads, including data lake, data engineering, data science and machine learning, application development, cybersecurity, Unistore, and collaboration.
−Removed: Our future success depends on our ability to continue to innovate and increase customer adoption of our platform and the Data Cloud, including Snowflake Marketplace.
+Added: We believe that the pace of innovation will continue to accelerate as customers increasingly base their purchases of cloud data platforms on a broad range of factors, including performance and scale, markets addressed, types of data processed, ease of data ingress and egress, user experience and programming languages, use of artificial intelligence, and data governance and regulatory compliance.
+Added: We introduced data warehousing on our platform in 2014 as our core use case, and our customers subsequently began using our platform for additional workloads, including data lake, data engineering, AI/ML, applications, collaboration, cybersecurity, and Unistore.
+Added: Our future success depends on our ability to continue to innovate rapidly and effectively and increase customer adoption of our platform and the Data Cloud, including the Snowflake Marketplace and Snowpark.
Further, the value of our platform to customers is increased to the extent they are able to use it to process and access all types of data.
We need to continue to invest in technologies, services, and partnerships that increase the types of data available and processed on our platform and the ease with which customers can ingest data into our platform.
−Removed: We must also continue to enhance our data sharing and marketplace capabilities so customers can share their data with internal business units, customers, and other third parties, acquire additional third-party data to combine with their own data in order to gain additional business insights, and develop and monetize applications on our platform.
+Added: We must also continue to enhance our data sharing and marketplace capabilities so customers can share their data with internal business units, customers, and other third parties, acquire additional third-party data and data products to combine with their own data in order to gain additional business insights, and develop and monetize applications on our platform.
As we develop, acquire, and introduce new services and technologies, including those that may incorporate artificial intelligence and machine learning, we may be subject to new or heightened legal, ethical, and other challenges.
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If we are unable to enhance our platform or operations to keep pace with these rapidly evolving customer requirements, or if new technologies emerge that are able to deliver competitive products at lower prices, more efficiently, more conveniently, or more securely than our platform, our business, financial condition, and results of operations could be adversely affected.
+Added: If we are not successful in executing our investments in artificial intelligence and machine learning technology, including generative AI Technology, our business, financial condition, and results of operations could be harmed.
+Added: We are investing significantly in artificial intelligence and machine learning technology, or AI Technology.
+Added: Our investments include internally developing AI Technology, acquiring companies with complementary AI Technology, and partnering with companies to bring AI Technology to our platform.
+Added: Our competitors are pursuing similar opportunities.
+Added: These competitors may, as a result of greater resources, branding, or otherwise, develop, adopt and implement AI Technology faster or more successfully than we do, which could impair our ability to compete effectively and adversely affect our business, financial condition and results of operations.
+Added: In addition, our successful development of AI Technology depends on our access to GPUs, which are currently in high demand.
+Added: It is also possible that our investments in AI Technology do not result in the benefits we anticipate, or enable us to maintain our competitive advantage, which may adversely affect our business, financial condition, and results of operations.
+Added: For example, we may not accurately anticipate market demand or offer AI Technology that amplifies our core data platform.
If we or our third-party service providers experience an actual or perceived security breach or unauthorized parties otherwise obtain access to our customers’ data, our data, or our platform, our platform may be perceived as not being secure, our reputation may be harmed, demand for our platform may be reduced, and we may incur significant liabilities.
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Our platform is built on the infrastructure of third-party public cloud providers, such as AWS, Azure, and GCP.
−Removed: We also use third-party service providers and sub-processors to help us deliver services to our customers and their end-users, as well as for our internal business operations.
−Removed: These vendors may process, store, or transmit data of our employees, partners, customers, and customers’ end-users.
+Added: We also use third-party service providers, sub-processors, and technology to help us deliver services to our customers and their end-users, as well as for our internal business operations.
+Added: These third-party providers may process, store, or transmit data of our employees, partners, customers, and customers’ end-users or may otherwise be used to help operate our technology.
+Added: Some of this third-party technology, including open-source software, could be used as an attack vector.
Even though we may not control the security measures of these vendors, we may be responsible for any breach of such measures.
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Threats to information systems and data come from a variety of sources, including traditional computer “hackers,” internal and external personnel (such as through theft or misuse), sophisticated nation-states, and nation-state-supported actors.
−Removed: We and the third parties on which we rely are subject to a variety of evolving cyber threats, including unauthorized intrusions, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, social engineering attacks (including phishing), internal and external personnel misconduct or error, supply-chain attacks, software vulnerabilities, and software or hardware disruptions or failures, all of which are prevalent in our industry and our customers’ and partners’ industries.
−Removed: Furthermore, future business expansions or acquisitions could expose us to additional cybersecurity risks and vulnerabilities.
−Removed: The techniques used to sabotage or to obtain unauthorized access to our and our third-party providers’ platforms, systems, networks, or physical facilities in which data is stored or processed, or through which data is transmitted change frequently, and are becoming increasingly difficult to detect.
−Removed: In addition, ransomware attacks are becoming increasingly frequent and severe, and we may be unwilling or unable to make ransom payments due to, for example, applicable laws or regulations prohibiting such payments.
−Removed: In general, cybersecurity breaches or efforts to mitigate security vulnerabilities could lead to significant interruptions in our operations, loss of data and income, reputational harm, diversion of funds, unexpected service interruptions, increased insurance costs, and other harm to our business, reputation, and competitive position.
+Added: We and the third parties on which we rely are subject to a variety of evolving cyber threats, including unauthorized intrusions, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, social engineering attacks (including through deep fakes and phishing), internal and external personnel misconduct or error, supply-chain attacks, software vulnerabilities, software or hardware disruptions or failures, and attacks enhanced or facilitated by AI Technology, all of which are prevalent in our industry and our customers’ and partners’ industries.
+Added: Furthermore, future business expansions, acquisitions or partnerships could expose us to additional cybersecurity risks and vulnerabilities.
+Added: The techniques used to sabotage or obtain unauthorized access to our and our third-party providers’ platforms, systems, networks, or physical facilities in which data is stored or processed, or through which data is transmitted change frequently, and are becoming increasingly difficult to detect.
+Added: In addition, ransomware attacks are becoming more frequent and severe, and we may be unwilling or unable to make ransom payments due to, for example, applicable laws or regulations prohibiting such payments.
+Added: In general, cybersecurity breaches or security vulnerabilities could lead to significant interruptions in our operations, loss of data and income, reputational harm, diversion of funds, unexpected service interruptions, increased insurance costs, and other harm to our business, reputation, and competitive position.
+Added: While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
We are a target of threat actors seeking unauthorized access to our or our customers’ or partners’ systems or data or to disrupt our operations or ability to provide our services.
Threat actors may also exploit vulnerabilities in, or obtain unauthorized access to, platforms, systems, networks, or physical facilities utilized by our third-party service providers.
+Added: While we take steps designed to detect, mitigate, and remediate vulnerabilities in our information security systems (such as our hardware and software, including that of third parties upon which we rely), we may be unable in the future to detect and remediate all such vulnerabilities on a timely basis.
Any security breach of our platform, our operational systems, our software (including open-source software), our physical facilities, or the systems of our third-party service providers or sub-processors, or the perception that one has occurred, could result in litigation, indemnity obligations, regulatory enforcement actions, investigations, fines, penalties, mitigation and remediation costs, disputes, reputational harm, diversion of management’s attention, and other liabilities and damage to our business.
+Added: Security breaches and consequences from breaches, including negative publicity, may also prevent or cause customers to stop using our products, deter new customers from using our products, and negatively impact our ability to grow and operate our business.
We have contractual and other legal obligations to notify relevant stakeholders of security breaches.
−Removed: Such mandatory disclosures are costly and could lead to negative publicity, loss of customer or partner confidence in the effectiveness of our security measures, diversion of management’s attention, governmental investigations, and the expenditure of significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach.
−Removed: A security incident may also cause us to breach, or lead to claims that we have breached, customer contracts or legal obligations.
+Added: For example, SEC rules require disclosure on Form 8-K of the nature, scope and timing of any material cybersecurity incident and the reasonably likely impact of such incident.
+Added: Determining whether a cybersecurity incident is notifiable or reportable may not be straightforward and any such mandatory disclosures are costly and could lead to negative publicity, loss of customer or partner confidence in the effectiveness of our security measures, diversion of management’s attention, governmental investigations, and the expenditure of significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach.
+Added: A security incident may also cause us to breach, or lead to claims that we have breached, customer contracts or other legal obligations.
As a result, we could be subject to legal action (including the imposition of fines or penalties) and our customers could end their relationships with us.
Furthermore, there can be no assurance that any limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities, damages, or claims related to our data privacy and security obligations.
−Removed: Litigation resulting from security breaches may adversely affect our business.
−Removed: Unauthorized access to our platform, systems, networks, or physical facilities could result in litigation with our customers, our customers’ end-users, or other relevant stakeholders.
+Added: Litigation and regulatory actions resulting from security breaches or related to our information security practices may adversely affect our business.
+Added: Unauthorized access to our platform, systems, networks, or physical facilities could result in litigation with our customers, our customers’ end-users, or other relevant stakeholders, or investigations, inquiries, or actions by regulators.
+Added: We may be subject to, and have received in the past, requests by regulators for information about our security practices, experiences, and issues.
+Added: Alleged failures, problems, or issues related to our information security, including following such information requests, could result in formal investigations or actions from a variety of regulators, including state attorneys general, the Federal Trade Commission (FTC), the SEC, and others.
These proceedings could force us to spend money in defense or settlement, divert management’s time and attention, increase our costs of doing business, or adversely affect our reputation.
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Risks related to our systems and security breaches are likely to increase as we continue to expand our platform and geographic footprint, grow our customer and partner base, and process, store, and transmit increasingly large amounts of data.
−Removed: In addition, some of our employees work remotely, including while traveling for business, which increases our cyber security risk, creates data accessibility concerns, and makes us more susceptible to security breaches or business disruptions.
+Added: In addition, some of our employees work remotely, including while traveling for business, which increases our cybersecurity risk, creates data accessibility concerns, and makes us more susceptible to security breaches or business disruptions.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, or prospects.
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We could suffer disruptions, outages, defects, and other performance and quality problems with our platform or with the public cloud and internet infrastructure on which it relies.
−Removed: Our business depends on our platform to be available without disruption.
+Added: Our business depends on our platform being available without disruption.
We have experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality problems with our platform and with the public cloud and internet infrastructure on which our platform relies.
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• our ability to retain existing customers and drive their increased consumption of our platform;
−Removed: • customer expansion rates, particularly for newer customers who we have recently seen, and may continue to see, increase their consumption of our platform at a slower pace than our more tenured customers;
+Added: • customer expansion rates;
• timing, amount, and cost of our investments to expand the capacity of our public cloud providers;
−Removed: • seasonality;
−Removed: • investments in new features, functionality, and programming languages, including investments in making our platform available to store and process highly regulated data or comply with new or existing data sovereignty requirements;
−Removed: • fluctuations in consumption resulting from the introduction of new features, technologies, or capabilities to our software, systems, or to underlying cloud infrastructure, including features or capabilities that may increase or decrease the consumption required to execute existing or future workloads, like better storage compression and cloud infrastructure processor improvements;
+Added: • seasonality, including the impact of holidays;
+Added: • investments in new features, functionality, and programming languages, including investments in AI Technology and in making our platform available to store and process highly regulated data or comply with new or existing data sovereignty requirements;
+Added: • fluctuations in consumption resulting from the introduction of new features, technologies, or capabilities to our software, systems, or to underlying cloud infrastructure, including features or capabilities that may increase or decrease the consumption required to execute existing or future workloads, like better storage compression and cloud infrastructure processor improvements, or that allow customers to use our platform to provide compute services without requiring them to store data;
+Added: • our ability to execute on our business strategy, including our strategies related to the Data Cloud, such as Snowpark and the Snowflake Marketplace;
• the timing and frequency of purchases;
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• fluctuations or delays in purchasing decisions in anticipation of new products or enhancements by us or our competitors;
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−Removed: • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions;
+Added: • changes in customers’ budgets and cash flow management strategies and in the timing of their budget cycles and purchasing decisions;
• our ability to control costs, including our operating expenses;
−Removed: • the amount and timing of operating expenses, particularly research and development and sales and marketing expenses, including commissions;
+Added: • the amount and timing of operating expenses, particularly research and development expenses, including with respect to GPUs to develop AI Technology, and sales and marketing expenses, including commissions;
• the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges;
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If our results of operations fall below the expectations of investors and securities analysts who follow our stock, the price of our common stock could decline substantially, and we could face costly lawsuits, including securities class actions.
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Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products and platform.
−Removed: We must expand our sales and marketing organization to increase our sales to new and existing customers.
−Removed: We plan to continue expanding our direct sales force, both domestically and internationally, particularly our direct enterprise sales organization focused on sales to the world’s largest organizations.
−Removed: We believe there is significant competition for experienced sales professionals with the necessary skills and technical knowledge, particularly as we target larger enterprise customers.
−Removed: It requires significant time and resources to effectively onboard new sales and marketing personnel.
+Added: We must increase the productivity of our sales and marketing organization to increase our sales to new and existing customers.
+Added: It requires significant time and resources to effectively onboard new sales and marketing personnel and to train new and existing personnel so they are able to successfully sell our product.
We also plan to continue to dedicate significant resources to sales and marketing programs that are industry-specific and focused on large organizations.
−Removed: Once a new customer begins using our platform, our sales team will need to continue to focus on expanding consumption with that customer.
+Added: Once a new customer begins using our platform, our sales team needs to focus on expanding consumption with that customer.
All of these efforts will require us to invest significant financial and other resources, including in industries and sales channels in which we have limited experience to date.
Our business and results of operations will be harmed if our sales and marketing efforts generate increases in revenue that are smaller than anticipated.
−Removed: We may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop, integrate, and retain talented and effective sales personnel, if our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are not effective.
+Added: We may not achieve anticipated revenue growth from our sales force if we are unable to hire, develop, integrate, and retain talented and effective sales personnel, if our sales personnel are unable to achieve desired productivity levels, or if our sales and marketing programs are not effective.
Sales efforts to large customers involve risks that may not be present or that are present to a lesser extent with respect to sales to smaller organizations.
−Removed: Sales to large customers involve risks that may not be present or that are present to a lesser extent with sales to smaller organizations, such as longer sales cycles, more complex customer requirements, including our ability to partner with third parties that advise such customers or help them integrate their IT solutions, substantial upfront sales costs, and less predictability in completing some of our sales.
+Added: Sales to large customers involve risks that may not be present or that are present to a lesser extent with sales to smaller organizations, such as longer sales cycles, stronger customer leverage in negotiating pricing and other terms, more complex customer requirements, including our ability to partner with third parties that advise such customers or help them integrate their IT solutions, substantial upfront sales costs, less predictability in completing some of our sales, and higher customer support expectations.
For example, large customers may require considerable time to evaluate and test our platform or new features prior to making a purchase decision.
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Negative conditions or volatility in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, bank failures, international trade relations, inflation, and interest rate fluctuations, or the existence of pandemics (such as the COVID-19 pandemic), political turmoil, natural catastrophes, warfare, or terrorist attacks on the United States, Europe, the Asia-Pacific region, Japan, or elsewhere, could cause a decrease in business investments, including spending on cloud technologies, and negatively affect the growth of our business.
−Removed: For example, the ongoing military conflict between Russia and Ukraine has created volatility in the global capital markets and could have further global economic consequences, including disruptions of the global supply chain.
+Added: For example, the ongoing Hamas-Israel and the Russia-Ukraine conflicts have created volatility in the global capital markets and could have further global economic consequences, including disruptions of the global supply chain.
In addition, unfavorable conditions in the general economy may negatively impact our customers’ budgets or cash flow, which could impact the contract terms, including payment terms, our customers demand from us.
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We cannot predict the timing, strength, or duration of any economic slowdown, instability, or recovery, generally or within any particular industry.
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Our growth depends on the development, expansion, and success of our partner relationships.
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The relationships we have with these partners, and that our partners have with our customers, provide our customers with enhanced value from our platform and the Data Cloud, including the Snowflake Marketplace.
−Removed: Our future growth will be increasingly dependent on the success of these relationships, and if we are unsuccessful in growing and maintaining these relationships or the types and quality of data supported by or available for consumption on our platform, our business, financial condition, and results of operations could be adversely affected.
+Added: Our future growth will be increasingly dependent on the success of these relationships, and if we are unsuccessful in growing and maintaining these relationships or the types and quality of data and data applications supported by or available for consumption on our platform, our business, financial condition, and results of operations could be adversely affected.
Additionally, a small but increasing portion of our revenue is generated as a result of our relationships with global system integrators, managed service providers, and resellers.
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If we lose key members of our management team or are unable to attract and retain the executives and employees we need to support our operations and growth, our business and future growth prospects may be harmed.
−Removed: Our success depends in part on the continued services of Frank Slootman, our Chairman and Chief Executive Officer, Michael P.
−Removed: Scarpelli, our Chief Financial Officer, and our other executive officers, as well as our other key employees in the areas of research and development and sales and marketing.
+Added: Our success depends in part on the continued services of our executive officers, as well as our other key employees in the areas of research and development and sales and marketing.
From time to time, there may be changes in our executive management team or other key employees resulting from the hiring or departure of these personnel.
Our executive officers and other key employees are employed on an at-will basis, which means that these personnel could terminate their employment with us at any time.
−Removed: The loss of one or more of our executive officers, or the failure by our executive team to effectively work with our employees and lead our company could harm our business.
+Added: For example, in February 2024, Frank Slootman retired as Chief Executive Officer and we appointed Sridhar Ramaswamy to replace him.
+Added: The loss of one or more of our executive officers could harm morale, cause additional personnel to depart, or introduce operational delays or risks as successor executives learn our business, each of which could harm our operating results.
In addition, to execute our growth plan, we must attract and retain highly qualified personnel.
−Removed: Competition for these personnel is intense, especially for engineers experienced in designing and developing cloud-based data platform products, experienced sales professionals, and expert customer support personnel.
+Added: Competition for these personnel is intense, especially for engineers experienced in designing and developing cloud-based data platform products, including products with artificial intelligence capabilities and experienced sales, customer support, and professional services personnel.
We also are dependent on the continued service of our existing software engineers because of the sophistication of our platform.
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In order to continue to hire and retain highly qualified personnel, we will need to continue to hire in new locations around the world and manage return to work and remote working policies, which may add to the complexity and costs of our business operations.
From time to time, we have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications.
−Removed: Many of the companies with which we compete for experienced personnel have greater resources than we have, and the acceptance by these companies of remote or hybrid work environments may increase the competition for talent.
+Added: Many of the companies with which we compete for experienced personnel have greater resources than we have and can provide higher compensation and benefits.
+Added: In addition, we require the majority of our employees to work from a physical office, while certain of our competitors allow remote work environments.
In addition, prospective and existing employees often consider the value of the equity awards they receive in connection with their employment.
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Furthermore, current and prospective employees may believe that their equity award offers have limited upside, and our competitors may be able to offer more appealing compensation packages.
−Removed: In order to retain our existing employees and manage potential attrition, including as a result of recent stock price decreases and continued market volatility that impact the actual or perceived value of our equity awards, we may issue additional equity awards or provide our employees with increased cash compensation, which could negatively impact our results of operations and be dilutive to stockholders.
+Added: In order to retain our existing employees and manage potential attrition, including as a result of any stock price decreases and market volatility that impact the actual or perceived value of our equity awards, we may issue additional equity awards or provide our employees with increased cash compensation, which could negatively impact our results of operations and be dilutive to stockholders.
Finally, if we hire employees from competitors or other companies, their former employers may attempt to assert that we or these employees have breached our or their legal obligations, resulting in a diversion of our time and resources.
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We typically commit to our customers that our platform will maintain a minimum service-level of availability.
−Removed: If we are unable to meet these commitments, we may be obligated to provide customers with additional capacity, which could significantly affect our revenue.
+Added: If we are unable to meet these commitments, we may be obligated to provide customers with additional capacity at no cost, which could significantly affect our revenue.
We rely on public cloud providers, such as AWS, Azure, and GCP, and any availability interruption in the public cloud could result in us not meeting our service-level commitments to our customers.
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We may be liable for up to the full amount of the contractual claims, which could result in substantial liability or material disruption to our business or could negatively impact our relationships with customers or other third parties, reduce demand for our platform, and adversely affect our business, financial condition, and results of operations.
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Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition, and results of operations.
We have in the past and may in the future seek to acquire or invest in businesses, joint ventures, and platform technologies that we believe could complement or expand our platform, enhance our technology, or otherwise offer growth opportunities.
−Removed: Further, the proceeds we received from our initial public offering (IPO) in September 2020 increased the likelihood that we will devote resources to exploring larger and more complex acquisitions and investments than we have previously attempted.
−Removed: For example, in March 2022 we acquired Streamlit, Inc., a privately-held company which provides an open-source framework built to simplify and accelerate the creation of data applications, representing a larger and more complex acquisition than our prior endeavors.
+Added: For example, during the fiscal year ended January 31, 2024, we acquired several companies, including Samooha, Inc., a privately-held company which developed data clean room technology;
+Added: Neeva Inc., a privately-held internet search company which leveraged generative artificial intelligence;
+Added: Mountain US Corporation (f/k/a Mobilize.net Corporation), a privately-held company which provided a suite of tools for efficiently migrating databases to the Data Cloud;
+Added: and LeapYear Technologies, Inc., a privately-held company which provided a differential privacy platform.
Any such acquisitions or investments may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable opportunities, whether or not the transactions are completed, and may result in unforeseen operating difficulties and expenditures.
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These transactions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our results of operations.
+Added: In addition, we may inherit commitments, risks, and liabilities of companies that we acquire that we are unable to successfully mitigate and that may be amplified by our existing business.
+Added: Finally, our acquisitions or investments may result in disputes or litigation, including in connection with the achievement of earnouts.
As part of our corporate development program, we invest in companies to support our key business initiatives.
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If one or more of such investees fails to timely provide us with information necessary for the preparation of our consolidated financial statements and disclosures, we may be unable to report our financial results in a timely manner, which would negatively affect our business and the price of our common stock.
−Removed: Seasonality may cause fluctuations in our remaining performance obligations.
+Added: Seasonality may cause fluctuations in our remaining performance obligations or in customer consumption.
Historically, we have received a higher volume of orders from new and existing customers in the fourth fiscal quarter of each year.
As a result, we have historically seen higher non-GAAP free cash flow in the first and fourth fiscal quarters of each year, and our sequential growth in remaining performance obligations has historically been highest in the fourth fiscal quarter of each year.
−Removed: We expect this seasonality to become more pronounced as we continue to target large enterprise customers based on their procurement, budgeting, and deployment cycles.
−Removed: For more information, including a definition of non-GAAP free cash flow and a reconciliation of free cash flow to the most directly comparable financial measure calculated in accordance with GAAP, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
+Added: Although we seek to moderate our cash outflows with our cash receipts, we may not be successful in doing so, particularly since we expect this seasonality to become more pronounced as we continue to target large enterprise customers based on their procurement, budgeting, and deployment cycles.
+Added: In addition, while consumption is typically lower during holidays, the magnitude of any decrease is difficult to predict and that may result in inaccurate financial guidance.
+Added: For more information about non-GAAP free cash flow, including a definition of non-GAAP free cash flow and a reconciliation of free cash flow to the most directly comparable financial measure calculated in accordance with U.S.
+Added: generally accepted accounting principles (GAAP), see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
We do business with federal, state, local, and foreign governments and agencies, and heavily regulated organizations;
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We have made, and may continue to make, significant investments to support future sales opportunities in the government sector, including obtaining government certifications.
−Removed: However, government certification requirements may change, we may be unable to achieve or sustain one or more required government certifications, or we may be required to make unexpected changes to our business or products in order to obtain or sustain such certifications.
+Added: However, government certification requirements may change, we may be unable to achieve or sustain one or more required government certifications, or we may be required to make unexpected changes to our business or products to obtain or sustain such certifications.
As a result, our ability to sell into the government sector could be restricted until we satisfy the requirements of such certifications.
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−Removed: A substantial majority of our sales to date to government entities have been made indirectly through our distribution and reseller partners.
+Added: A substantial majority of our sales to government entities have been made indirectly through our distribution and reseller partners.
Doing business with government entities, whether directly or indirectly, presents a variety of risks.
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Such laws, regulations, and contractual provisions impose compliance obligations that are more burdensome than those typically encountered in commercial contracts, and they often give customers in the government market substantial rights and remedies, many of which are not typically found in commercial contracts.
−Removed: These rights and remedies may relate to intellectual property, price protection, the accuracy of information provided to the government, and termination rights.
+Added: These rights and remedies may relate to intellectual property, price protection, the accuracy of information provided to the government, incident notification, and termination rights.
In addition, governments may use procurement requirements as an alternative to lawmaking, and impose stricter requirements than would apply to the commercial sector in areas that are not directly related to the purchase.
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Existing and prospective customers, such as those in these industries, may be required to comply with more stringent regulations in connection with using and implementing our services or particular regulations regarding third-party vendors that may be interpreted differently by different customers.
−Removed: In addition, regulatory agencies may impose requirements toward third-party vendors generally, or our company in particular, that we may not be able to, or may not choose to, meet.
+Added: In addition, regulatory agencies may impose requirements toward third-party vendors generally, or our company in particular, that we may not be able to, or may choose not to, meet.
+Added: We may make special compliance commitments that are more expensive to satisfy than we anticipate, or that we are unable to satisfy.
In addition, customers in these heavily regulated areas and their regulators often have a right to conduct audits of our systems, products, and practices.
In the event that one or more customers or their regulators determine that some aspect of our business does not meet regulatory requirements, we may be limited in our ability to continue or expand our business.
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Our customers also include a number of non-U.S.
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From time to time, we may become subject to legal proceedings and claims, such as claims brought by our customers in connection with commercial disputes, employment claims, including claims related to the loss of employee equity grants upon termination, intellectual property claims, or securities class actions or other claims related to volatility in the trading price of our common stock.
+Added: For example, we are currently subject to a securities class action lawsuit in federal court alleging federal securities law violations in connection with our initial public offering (IPO).
+Added: See the section titled “Legal Proceedings” for more information.
Litigation might result in substantial costs and may divert management’s attention and resources, which might seriously harm our business, financial condition, and results of operations.
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Natural disasters, pandemics, and other catastrophic events could have an adverse impact on our business, operations, and the markets and communities in which we, our partners, and our customers operate.
−Removed: Our platform and the public cloud infrastructure on which our platform relies are vulnerable to damage or interruption from catastrophic events, such as earthquakes, floods, fires, power loss, telecommunication failures, military conflict or war, terrorist attacks, criminal acts, sabotage, other intentional acts of vandalism and misconduct, geopolitical events, and disease.
−Removed: Some of our United States corporate offices in which we operate and certain of the public cloud data centers on which our platform runs are located in the San Francisco Bay Area and Pacific Northwest, regions known for seismic activity.
+Added: Our platform and the public cloud infrastructure on which our platform relies are vulnerable to damage or interruption from catastrophic events, such as earthquakes, floods, fires, power loss, telecommunication failures, cyber attacks, military conflict or war, terrorist attacks, criminal acts, sabotage, other intentional acts of vandalism and misconduct, geopolitical events, and epidemics or pandemics, such as the COVID-19 pandemic.
+Added: Some of our U.S.
+Added: corporate offices in which we operate and certain of the public cloud data centers on which our platform runs are located in the San Francisco Bay Area and Pacific Northwest, regions known for seismic activity.
Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems at our facilities or the facilities of our public cloud providers could result in disruptions, outages, and other performance and quality problems.
−Removed: Similarly, the potential long-term impact of the COVID-19 pandemic, its resurgence, or a new pandemic on the global economy and our business continue to be difficult to assess or predict.
−Removed: While many states and countries have reopened, the status of the global recovery remains uncertain and unpredictable.
+Added: Our customers are also subject to the risk of catastrophic events.
+Added: If those events occur, demand for our platform may decrease.
If we are unable to develop and maintain adequate plans to ensure that our business functions continue to operate during and after a catastrophic event and to execute successfully on those plans if such an event occurs, our business could be seriously harmed.
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• slower than anticipated public cloud adoption by international businesses;
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−Removed: • changes in a specific country’s or region’s political, economic, or legal and regulatory environment, including the effects of Brexit, pandemics, tariffs, trade wars, sanctions, or long-term environmental risks;
+Added: • changes in a specific country’s or region’s political, economic, or legal and regulatory environment, including the effects of pandemics, tariffs, trade wars, sanctions, or long-term environmental risks;
• the need to adapt and localize our platform for China and other countries, including as a result of data sovereignty requirements, and the engineering and related costs that we may incur when making those changes;
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• unexpected changes in, or the selective application of, trade relations, regulations, or laws;
−Removed: • new, evolving, and more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information;
+Added: • new, evolving, and more stringent regulations relating to privacy and data security, data localization, and the unauthorized use of, or access to, commercial and personal information;
+Added: • new, evolving, and potentially more stringent regulations relating to AI Technology;
• differing and potentially more onerous labor regulations where labor laws are generally more advantageous to employees as compared to the United States, including regulations governing terminations in locations that do not permit at-will employment and deemed hourly wage and overtime regulations;
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• political instability, military conflict or war, or terrorist activities;
−Removed: • COVID-19 or any other pandemics or epidemics that could result in decreased economic activity in certain markets;
−Removed: additional costs associated with travel, return to work, or other restrictions that are specific to certain markets;
−Removed: decreased use of our products and services;
−Removed: or decreased ability to import, export, or sell our products and services to existing or new customers in international markets;
• exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
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We expect to invest substantial time and resources to further expand our international operations, and, if we are unable to do so successfully and in a timely manner, our business and results of operations will suffer.
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+Added: As we prepare to offer our platform to Chinese affiliates of certain multi-national customers, risks associated with economic, political, and social events in China could negatively affect our business, financial condition, results of operations and growth prospects.
+Added: We are currently preparing to offer our platform to Chinese affiliates of certain multi-national customers.
+Added: Under Chinese law, we must offer our platform through a Chinese-owned operating partner, which must assume control and management of certain aspects of our platform and serve as the seller of record.
+Added: This requires a new operating and go-to-market model, and there is a risk that functionality or customer experience may suffer and that we may incur liability or brand impairment arising from the operating partner’s actions or inactions.
+Added: In addition, developing and operationalizing this new model is a significant investment and may not generate expected returns.
+Added: We may also encounter the following risks:
+Added: • uncertainty regarding the validity, enforceability, and scope of protection for intellectual property rights in China and the practical difficulties of enforcing such rights;
+Added: • inability to secure our intellectual property and other proprietary information located in China from unauthorized access or theft;
+Added: • heightened risks of cyber incidents, which could lead to the unauthorized access to or exposure of customer data;
+Added: • inability to comply with extensive and evolving Chinese laws that are often ambiguous or inconsistently enforced;
+Added: • changes in tax regulations that may impact the economics of our China operating model;
+Added: • economic or political instability;
+Added: • a slowdown in China’s economy;
+Added: • a government-controlled foreign exchange rate and limitations on the convertibility of the Chinese yuan to other currencies.
+Added: Further, geopolitical and national security tensions between China and the United States or other countries could lead to further restrictions on our ability to operate in China, increased scrutiny of our business operations in China, or unwillingness of certain customers to do business with us, including the U.S.
+Added: federal government.
+Added: Due to these and other risks, our operations in China may be more expensive or difficult than anticipated or they may fail, which could have an adverse effect on our business, financial condition, results of operations, and growth prospects.
We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.
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• the failure by us to obtain patents and other intellectual property rights for important innovations or maintain appropriate confidentiality and other protective measures to establish and maintain our trade secrets;
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• to the extent a customer or partner owns any intellectual property created through a professional services engagement, our inability to use or monetize that intellectual property as part of our business;
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• our inability to detect infringement or other misappropriation of our intellectual property rights by third parties;
+Added: • uncertainty regarding the applicability of intellectual property protections to AI Technology (including outputs generated from AI Technology);
• other practical, resource, or business limitations on our ability to enforce our rights.
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Any intellectual property litigation to which we become a party may require us to do one or more of the following:
−Removed: • cease selling, licensing, or using products or features that incorporate the intellectual property rights that we allegedly infringe, misappropriate, or violate;
+Added: • cease selling, licensing, or using products, features, or data sets that incorporate the intellectual property rights that we allegedly infringe, misappropriate, or violate;
• require us to change the name of our products or services;
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• redesign the allegedly infringing products to avoid infringement, misappropriation, or violation, which could be costly, time-consuming, or impossible.
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Intellectual property litigation is typically complex, time consuming, and expensive to resolve and would divert the time and attention of our management and technical personnel.
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Risks Related to Our Tax, Legal, and Regulatory Environment
−Removed: We are subject to stringent and changing obligations related to data privacy and security, and the failure or perceived failure to comply with these obligations could result in significant fines and liability or otherwise result in substantial harm to our business and prospects.
+Added: We are subject to stringent and changing obligations related to data, including data privacy and security, and the failure or perceived failure to comply with these obligations could result in significant fines and liability or otherwise result in substantial harm to our business and prospects.
We are subject to data privacy and protection laws, regulations, guidance, external and internal policies and other documentation, industry standards, certifications, and contractual and other obligations that apply to the collection, transmission, storage, use, and other processing of personal information.
These obligations are rapidly evolving, extensive, complex, and include inconsistencies and uncertainties.
−Removed: Examples of recent and anticipated developments that have or could impact our business include the following:
+Added: Examples of recent and anticipated developments that have impacted or could impact our business include the following:
• The European Union’s (EU) General Data Protection Regulation (GDPR) and the United Kingdom’s General Data Protection Regulation established strict requirements applicable to the handling of personal information.
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An inability or material limitation on our ability to transfer personal data to the United States or other countries could materially impact our business operations and revenue.
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• In the United States, federal, state, and local governments have enacted or proposed data privacy and security laws, including data breach notification laws, personal data privacy laws, and consumer protection laws.
−Removed: For example, the California Consumer Privacy Act (CCPA) provides increased privacy rights and protections, including the ability of individuals to opt out of specific disclosures of their personal information.
−Removed: Further, as of January 1, 2023, the California Privacy Rights Act of 2020 (CPRA) has expanded the CCPA and established the California Privacy Protection Agency for purposes of implementing and enforcing the CPRA, which could increase the risk of an enforcement action.
+Added: Additionally, in the past few years, numerous U.S.
+Added: states—including California, Virginia, Colorado, Connecticut, and Utah—have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.
+Added: Such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making and, if exercised, may adversely impact our business and ability to provide our products and services.
+Added: Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments.
+Added: These state laws allow for statutory fines for noncompliance.
+Added: For example, the California Consumer Privacy Act (CCPA), as amended by the California Privacy Rights Act of 2020 (CPRA), provides increased privacy rights and protections, including the ability of individuals to opt out of specific disclosures of their personal information, and provides for fines of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
states have adopted, or are considering adopting, similar laws.
−Removed: • Other government bodies have implemented laws and are considering further regulating artificial intelligence and machine learning, which could negatively impact our ability to use these technologies.
−Removed: Further, there is a proposed regulation in Europe related to artificial intelligence that, if adopted, could impose onerous obligations related to the use of AI-related systems.
−Removed: We may have to change our business practices to comply with such obligations, which may be difficult, onerous, and costly.
• The certifications we may maintain and the standards that may apply to our business, such as the U.S.
−Removed: Federal Risk and Authorization Management Program, PCI-DSS, ISO/IEC 27001, HI-TRUST CSF, StateRAMP, among others, are becoming more stringent.
−Removed: These and other similar legal and regulatory developments could contribute to legal and economic uncertainty, increase our exposure to liability, affect how we design, market, and sell our platform, and how we operate our business, how our customers and partners process and share data, how we process and use data, and how we transfer personal data from one jurisdiction to another, any of which could require us to take on more onerous obligations in our contracts, impact our ability to operate in certain jurisdictions, and/or negatively impact the types of data available on or the demand for our platform.
+Added: Federal Risk and Authorization Management Program (FedRAMP), U.S.
+Added: Department of Defense Impact Level 4 (IL4), Payment Card Industry Data Security Standards (PCI-DSS), International Organization for Standardization (ISO)/International Electrotechnical Commission (IEC) 27001, Health Information Trust Alliance Common Security Framework (HI-TRUST CSF), StateRAMP, among others, are becoming more stringent.
+Added: • We may also become subject to new laws that specifically regulate non-personal data.
+Added: For example, we may become subject to certain parts of the European Union’s Data Act, which imposes certain data and cloud service interoperability and switching obligations to enable users to switch between cloud service providers without undue delay or cost, as well as certain requirements concerning cross-border international transfers of, and governmental access to, non-personal data outside the European Economic Area.
+Added: These and other similar legal and regulatory developments could contribute to legal and economic uncertainty, increase our exposure to liability, affect how we design, market, and sell our platform, and how we operate our business, how our customers and partners process and share data, how we process and use data, and how we transfer personal data from one jurisdiction to another, any of which could increase our costs, require us to take on more onerous obligations in our contracts, impact our ability to operate in certain jurisdictions, and/or negatively impact the types of data available on or the demand for our platform.
It is possible that new laws may be adopted or existing laws may be interpreted and applied in a manner that is inconsistent with our practices and our efforts to comply with the evolving data protection rules may be unsuccessful.
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Although we endeavor to comply with applicable data privacy and security obligations, any actual or perceived non-compliance with such obligations by us or our third-party service providers and sub-processors could result in proceedings, investigations, or claims against us by regulatory authorities, customers, or others, leading to reputational harm, higher liability and indemnity obligations, significant fines, litigation costs, additional reporting requirements or oversight, bans on processing personal information, orders to destroy or not use personal information, limitations in our ability to develop or commercialize our platform, inability to process personal information or operate in certain jurisdictions, and other damages.
−Removed: For example, if regulators assert that we have failed to comply with the GDPR, we may be subject to fines of up to EUR 20.0 million or 4% of our worldwide annual revenue, whichever is greater, as well as potential data processing restrictions and penalties.
+Added: For example, if regulators assert that we have failed to comply with the GDPR or U.K.
+Added: GDPR, we may be subject to fines of up to (i) 20.0 million Euros or 17.5 million British pounds, as applicable, or (ii) 4% of our worldwide annual revenue, whichever is greater, as well as potential data processing restrictions and penalties.
+Added: In addition, private plaintiffs have become increasingly active in bringing privacy- and information security-related claims against companies, including class action claims.
+Added: Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for significant statutory damages, depending on the volume of data and the number of violations.
Even if we are not determined to have violated these laws and other obligations, investigations into these issues typically require the expenditure of significant resources and generate negative publicity.
−Removed: In addition, any failure by us or our third-party service providers to comply with applicable obligations could result in proceedings against us.
+Added: In addition, any failure by us or our third-party service providers and sub-processors to comply with applicable obligations could result in proceedings against us.
+Added: Certain regulators, such as the FTC, may prohibit our use of certain personal information as a result of such proceedings.
Any of these events could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: We may publish privacy policies and other documentation regarding our collection, processing, use, and disclosure of personal information, or other confidential information.
+Added: We publish privacy policies and other documentation regarding our security program and our collection, processing, use, and disclosure of personal information or other confidential information.
Although we endeavor to comply with our published policies, certifications, and documentation, we or our vendors may at times fail to do so or may be perceived to have failed to do so.
−Removed: Claims that we have violated individuals’ privacy rights or failed to comply with data protection laws or applicable privacy notices even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.
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+Added: Claims by regulators or private parties that we have not followed our published documentation or otherwise violated individuals’ privacy rights or failed to comply with data protection laws, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.
+Added: Issues in the development and use of AI Technology, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations.
+Added: The legal and regulatory landscape applicable to AI Technology is uncertain and is evolving rapidly, which may result in new and enhanced governmental or regulatory scrutiny, litigation, confidentiality, privacy or security risks, ethical concerns, legal liability, or other complications that could adversely affect our business, reputation or financial results.
+Added: For example, states, regions, and supranational bodies, including the European Union and the United States, have passed or proposed new rules and regulations related to the use or sale of AI Technology.
+Added: These regulations may impose onerous obligations related to our development, offering, and use of AI Technology and expose us to an increased risk of regulatory enforcement and litigation.
+Added: If we cannot use AI Technology or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.
+Added: In particular, there is significant uncertainty surrounding the applications of intellectual property and privacy laws to AI Technology.
+Added: Intellectual property ownership and license rights, including copyright, surrounding AI Technology have not been fully addressed by courts or other federal or state laws or regulations, and our use of AI Technology or adoption of AI Technology into our products and services may result in disputes with respect to ownership or intellectual property, or exposure to claims of copyright or other intellectual property misappropriation.
+Added: In addition, our AI Technology may involve the processing of personal and other sensitive data and may be subject to laws, policies, legal obligations, and contractual requirements related to privacy, data protection, and information security.
+Added: Certain privacy laws extend rights to consumers (such as the right to obtain consent or delete certain personal data) and regulate automated decision making.
+Added: An alleged or actual failure to meet these obligations may lead to regulatory investigations and fines or penalties;
+Added: may require us to change our business practices or retrain our algorithms;
+Added: or may prevent or limit our use of AI Technology.
+Added: For example, the FTC has required other companies to turn over or disgorge valuable insights or trainings generated through the use of AI Technology where they allege the company has violated privacy and consumer protection laws, meaning that we would be unable to use that data in our AI Technology.
+Added: It is also possible that we are held liable for intellectual property, privacy, or other legal violations of third-party AI Technology that we use, and that we may not have full recourse for any damages that we suffer (for example, our use of third-party AI Technology may be subject to limitations of liability or provide no liability coverage (e.g., free or open-source technology)).
+Added: The algorithms or training methodologies used in the AI Technology we use or offer may be flawed.
+Added: Datasets may be overly broad, insufficient, or contain inappropriately biased information.
+Added: Our generative AI Technology may also generate outputs that are inaccurate, misleading, harmful, or otherwise flawed.
+Added: This may happen if the inputs that the model relied on were inaccurate, incomplete, or flawed (including if a bad actor “poisons” the model with bad inputs or logic), or if the logic of the algorithm is flawed (a so-called “hallucination”).
+Added: Our customers or others may rely on or use such outputs to their detriment, or it may lead to adverse outcomes, which may expose us to brand or reputational harm, competitive harm, and/or legal liability.
+Added: Finally, if we enable or offer services or technologies that draw scrutiny or controversy, we may experience brand or reputational harm, competitive harm, and/or legal liability.
We are subject to anti-corruption, anti-bribery, anti-money laundering, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition, and results of operations.
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If our channel partners fail to obtain appropriate import, export, or re-export licenses or permits, we may also be adversely affected through reputational harm, as well as other negative consequences, including government investigations and penalties.
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Also, various countries, in addition to the United States, regulate the import and export of certain encryption and other technology, including import and export licensing requirements, and have enacted laws that could limit our ability to distribute our platform in those countries.
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For example, 2017 legislation informally titled the Tax Act significantly reformed the Internal Revenue Code of 1986, as amended (the Code).
−Removed: Recently, the United States passed the Inflation Reduction Act, which provides for a minimum tax equal to 15% of the adjusted financial statement income of certain large corporations, as well as a 1% excise tax on share repurchases.
+Added: In August 2022, the United States passed the Inflation Reduction Act, which provides for a minimum tax equal to 15% of the adjusted financial statement income of certain large corporations, as well as a 1% excise tax on stock repurchases.
In February 2023, our board of directors authorized the repurchase of up to $2.0 billion of our common stock through a stock repurchase program.
−Removed: We do not expect the excise tax on share repurchase programs to have a material impact on our aggregate tax liability.
−Removed: Many countries in Europe, as well as a number of other countries and organizations, including the Organization for Economic Cooperation and Development and the European Commission, have recently proposed, recommended, or (in the case of countries) enacted or otherwise become subject to changes to existing tax laws or new tax laws that could significantly increase our tax obligations in the countries where we do business or require us to change the manner in which we operate our business.
−Removed: These proposals, recommendations and enactments include changes to the existing framework in respect of income taxes, as well as new types of non-income taxes (such as taxes based on a percentage of revenue or taxes applicable to digital services), which could apply to our business.
+Added: We do not expect the excise tax on repurchases under our stock repurchase program to have a material impact on our aggregate tax liability.
+Added: In addition, many countries have recently proposed, recommended, or enacted changes to existing tax laws or new tax laws that could significantly increase our tax obligations in the countries where we do business or require us to change the manner in which we operate our business.
+Added: Over the last several years, the Organization for Economic Cooperation and Development has been working on a Base Erosion and Profit Shifting Project that, if implemented, would change various aspects of the existing framework under which our tax obligations are determined in many of the countries in which we do business.
+Added: As of July 2023, nearly 140 countries have approved a framework that imposes a minimum tax rate of 15%, among other provisions.
+Added: As this framework is subject to further negotiation and implementation by each member country, the timing and ultimate impact of any such changes on our tax obligations are uncertain.
+Added: Similarly, the European Commission and several countries have issued proposals that would apply to various aspects of the current tax framework under which we are taxed.
+Added: These proposals include changes to the existing framework to calculate income tax, as well as proposals to change or impose new types of non-income taxes (such as taxes based on a percentage of revenue or taxes applicable to digital services), which could apply to our business.
Due to the large and expanding scale of our international business activities, these types of changes to the taxation of our activities could increase our worldwide effective tax rate, increase the amount of taxes imposed on our business, and harm our financial position.
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legislation on our effective tax rate.
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Our ability to use our net operating loss carryforwards may be limited.
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• actual or anticipated fluctuations in our financial condition or results of operations;
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• variance in our actual or projected financial performance from expectations of securities analysts;
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• announcements by us or our competitors of significant business developments, acquisitions, investments, or new offerings;
+Added: • rumors and market speculation involving us or other companies in our industry;
• significant data breaches, disruptions to, or other incidents involving our platform;
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In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation.
−Removed: We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.
+Added: We have been, and may be in the future, the target of this type of litigation, which could result in substantial expenses and divert our management’s attention.
+Added: We are currently subject to a securities class action lawsuit in federal court alleging federal securities law violations in connection with our IPO.
+Added: See the section titled “Legal Proceedings” for more information.
Future sales of our common stock in the public market could cause the market price of our common stock to decline.
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We are unable to predict the timing of or the effect that such sales may have on the prevailing market price of our common stock.
−Removed: The shares of common stock subject to outstanding options and restricted stock unit awards (RSUs) under our equity incentive plans, and the shares reserved for future issuance under our equity incentive plans, will become eligible for sale in the public market upon issuance, subject to compliance with applicable securities laws.
+Added: The shares of common stock subject to outstanding options and restricted stock unit awards under our equity incentive plans, and the shares reserved for future issuance under our equity incentive plans, will become eligible for sale in the public market upon issuance, subject to compliance with applicable securities laws.
Further, certain holders of our common stock have rights, subject to some conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.
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Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute all other stockholders.
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Accordingly, holders of our common stock may need to rely on sales of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
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We incur significant costs operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
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Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
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Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock.
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This choice of forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
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Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.
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If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business.
−Removed: 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.