What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-02-10 compared with 2021-02-11 · 93 added, 89 removed, 662 unchanged (22% of the section changed)

6 unchanged sentences

Risks Related to the Coronavirus (COVID-19) Pandemic

• The effect of the COVID-19 pandemic on our operations, and the operations of our customers, partners and suppliers, could have a material adverse effect on our business, financial condition, cash flows and results of operations.

• The effect of the COVID-19 pandemic on our operations, and the operations of our customers, partners and suppliers, has had and could have a material adverse effect on our business, financial condition, cash flows and results of operations, and the extent to which the pandemic will have a continued impact remains uncertain.

Risks Related to Industry Dynamics and Competition

37 unchanged sentences

• Action by governments to restrict access to, or operation of, our services or the content we distribute in their countries could substantially harm our reputation, business and financial results.

• Our operations may expose us to greater than anticipated income, non-income and transactional tax liabilities, which could harm our financial condition and results of operations.

• Income tax laws or regulations could be enacted or changed and existing income tax laws or regulations could be applied to us in a manner that could increase the costs of our products and services, which could harm our financial condition and results of operations.

• Our operations may expose us to greater than anticipated withholding, sales and transaction tax liabilities, including VAT, which could harm our financial condition and results of operations.

Risks Related to Ownership of Our Common Stock

10 unchanged sentences

• If we fail to maintain an effective system of internal control over financial reporting, we may not be able to report our financial results accurately or in a timely fashion, and we may not be able to prevent fraud;

in such case, our stockholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our stock.

in such case, our stockholders

could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our stock.

Risks Related to the Coronavirus (COVID-19) Pandemic

The effect of the COVID-19 pandemic on our operations, and the operations of our customers, partners and suppliers, could have a material adverse effect on our business, financial condition, cash flows and results of operations.

The effect of the COVID-19 pandemic on our operations, and the operations of our customers, partners and suppliers, has had and could have a material adverse effect on our business, financial condition, cash flows and results of operations, and the extent to which the pandemic will have a continued impact remains uncertain.

In December 2019, a novel coronavirus disease (“COVID-19”) was initially reported and on March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.

COVID-19 has had a widespread and detrimental effect on the global economy as a result of the continued increase in the number of cases and affected countries and actions by public health and governmental authorities, businesses, other organizations and individuals to address the outbreak, including travel bans and restrictions, quarantines, shelter in place, stay at home or total lock-down orders and business limitations and shutdowns.

COVID-19 has had a widespread and detrimental effect on the global economy as a result of the continued fluctuation in the number of cases and affected countries and actions by public health and governmental authorities, businesses, other organizations and individuals to address the outbreak, including travel bans and restrictions, quarantines, shelter in place, stay at home or total lock-down orders and business limitations and shutdowns.

Despite recent developments of vaccines, the duration and severity of COVID-19 and possible mutations and the degree of its impact on our business is uncertain and difficult to predict.

26 unchanged sentences

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

Material changes to our cash flows, liquidity and the volatility of the stock market and our stock price could impact our capital allocation strategy, including our recently introduced quarterly dividend program and our outstanding authorization under our stock repurchase program.

Material changes to our cash flows, liquidity and the volatility of the stock market and our stock price could impact our capital allocation strategy, including our quarterly dividend program and our outstanding authorization under our stock repurchase program.

Risks Related to Industry Dynamics and Competition

48 unchanged sentences

While we believe that there are obstacles to creating a meaningful network effect between customers and contributors, the barriers to creating a platform that allows for the licensing of content or provides workflow tools are low.

If competitors offer higher royalties or more favorable royalty earning potential, easier submission workflows, or less rigorous vetting processes or incentivize contributors to distribute their content on an exclusive basis, contributors may choose to stop distributing new content with us or remove their existing content from our collection.

If competitors offer higher royalties or more favorable royalty earning potential, easier submission workflows, or less rigorous vetting processes or

incentivize contributors to distribute their content on an exclusive basis, contributors may choose to stop distributing new content with us or remove their existing content from our collection.

Further, as technology advances or other market dynamics make creating, sourcing, archiving, indexing, reviewing, searching or delivering content easier or more affordable, our existing and potential competitors may also seek to develop new products, technologies or capabilities that could render many of the products, services and content types that we offer obsolete or less competitive.

52 unchanged sentences

Historically, our operations have been focused on our marketplace for content.

Further expansion of our operations and our marketplace into additional content categories, such as Shutterstock Editorial, or into new products and services, such as Shutterstock Custom, a provider of custom visual content we acquired in July 2017, or our workflow tools, such as Shutterstock Editor and Shutterstock Editor Pro, involves numerous risks and challenges, including increased capital requirements, increased marketing spend to gain brand awareness of these new operations, potential new competitors, and the need to develop new contributor and strategic relationships.

Further expansion of our operations and our marketplace into additional content categories, such as Shutterstock Editorial, or into new products and services, such as Shutterstock Studios, an end-to-end custom creative shop, our creative flow applications, such as Catalog and Plan, creative editing software and our predictive performance functionality, involves numerous risks and challenges, including increased capital requirements, increased marketing spend to gain brand awareness of these new operations, potential new competitors,

and the need to develop new contributor and strategic relationships.

Growth into additional content, product and service areas may require changes to our existing business model and cost structure and modifications to our infrastructure and may expose us to new regulatory and legal risks, any of which may require expertise in which we have little or no experience.

13 unchanged sentences

Our future profitability will depend in part on our continued ability to grow our revenues.

however, we have seen a deceleration in our growth rate, which may continue, and we may not even be able to grow at all.

In future periods, our revenue could grow more slowly than in recent periods or further decline for many reasons, including any increase in competition, reduction in demand for our products, inability to introduce new products or enhance our existing product offerings, pricing pressures, contraction of our overall market or our failure to capitalize on growth opportunities.

12 unchanged sentences

Our growth creates additional challenges and risks with respect to attracting, integrating and retaining qualified employees, particularly enterprise sales leadership and sales personnel.

In addition, we expect that, if we continue to grow, a large percentage of our sales force at any time will be new to the company and our offerings.

In addition, we expect that, if we continue to grow, a large percentage of our

sales force at any time will be new to the company and our offerings.

New hires require significant training and may take a significant amount of time before they achieve full productivity.

27 unchanged sentences

Future acquisitions or investments could also result in potential dilutive issuances of equity securities, use of significant cash balances or the incurrence of debt, any of which could adversely affect our stock price, financial condition and results of operations.

Further, our acquisitions or investments could result in significant impairments related to goodwill and amortization

expenses related to other intangible assets and exposure to undisclosed or potential liabilities of the acquired companies.

Further, our acquisitions or investments could result in significant impairments related to goodwill and amortization expenses related to other intangible assets and exposure to undisclosed or potential liabilities of the acquired companies.

To the extent that the goodwill arising from the acquisitions carried on the financial statements does not pass a goodwill impairment test, excess goodwill will be impaired and will reduce future earnings.

72 unchanged sentences

Failure to invest in and adapt to technological developments and industry trends may have a material adverse effect on our business, results of operations, financial condition and prospects.

We rely upon third-party service providers, such as co-location and cloud service providers, for our data centers and application hosting, and we are dependent on these third parties to provide continuous power, cooling, internet connectivity and physical security for our servers, and our reliance on these third-parties can be expected to increase as we expand our infrastructure in the future.

We rely upon third-party service providers, such as cloud service providers, for our application hosting, and we are dependent on these third parties to provide continuous power, cooling, internet connectivity and physical security for computing storage resources, and our reliance on these third-parties can be expected to increase as we expand our infrastructure in the future.

In the event that these third-party providers experience any interruption in operations or cease business for any reason, or if we are unable to agree on satisfactory terms for continued hosting relationships, our business could be harmed and we could be forced to enter into a relationship with other service providers or assume hosting responsibilities ourselves.

Although our use of multiple production data centers enables us to provide rapid content delivery to our customers and is intended to mitigate the risks associated with supporting business continuity in the event of an emergency, a system disruption at an active data center or third-party hosting service provider could result in a noticeable disruption and performance degradation to our websites.

Further, our technology infrastructure may be vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, computer intrusions, vulnerabilities and viruses, software errors, computer denial-of-service attacks and other events.

A significant number of the systems making up this infrastructure are not redundant, and our disaster recovery planning may not be sufficient for every eventuality.

Although our use of distributed systems enables us to provide rapid content delivery to our customers and is intended to mitigate the risks associated with supporting business continuity in the event of an emergency, a system disruption at a third-party hosting service provider could result in a noticeable disruption and performance degradation to our websites.

Further, our technology infrastructure may be vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, computer intrusions, vulnerabilities and malware (including viruses and malicious software), software errors, computer denial-of-service attacks and other events.

A number of the systems making up this infrastructure are not redundant, and our disaster recovery planning may not be sufficient for every eventuality.

Our technology infrastructure may fail or be vulnerable to damage or interruption because of actions by third parties or employee error or malfeasance.

4 unchanged sentences

The satisfactory performance, reliability and availability of our web properties and our network infrastructure are critical to our reputation, our ability to attract and retain customers and contributors to our platform and our ability to maintain adequate customer service levels.

Any system interruptions that result in the unavailability of our websites could result in negative publicity, damage our reputation and brand or adversely affect our results of operations.

We have in the past experienced, and may in the future experience temporary system interruptions for a variety of reasons, including security breaches and other security incidents, viruses, telecommunication and other network failures, power failures, programming errors, undetected bugs, design faults, data corruption, denial-of-service attacks, poor scalability or network overload from an overwhelming number of visitors trying to reach our websites at the same time.

Any system interruptions that result in the unavailability of our websites could result in

negative publicity, damage our reputation and brand or adversely affect our results of operations.

We have in the past experienced, and may in the future experience temporary system interruptions for a variety of reasons, including security breaches and other security incidents, malware (including viruses and malicious software), telecommunication and other network failures, power failures, programming errors, undetected bugs, design faults, data corruption, denial-of-service attacks, poor scalability or network overload from an overwhelming number of visitors trying to reach our websites at the same time.

Even a disruption as brief as a few minutes could have a negative impact on our marketplace activities and could result in a loss of revenue.

3 unchanged sentences

We face risks resulting from the content in our collection such as unforeseen costs related to infringement claims, potential liability arising from indemnification claims, changes to intellectual property content regulations and laws and the inability to prevent or monitor misuse.

Our content is licensed from copyright owners such as photographers, illustrators, videographers and composers who contribute content to our collection and, subject to our licenses with our contributors, we typically offer customers a perpetual,

royalty-free license to use the content for their editorial or commercial needs.

Although we have implemented measures to review the content that we accept into our collection, we cannot guarantee that each contributor holds the rights or releases he or she claims or that such rights and releases are adequate, which in turn affects the licenses granted to our customer.

43 unchanged sentences

We also collect, store, process, transmit and use our employees’ personally identifiable information and other data in connection with their employment.

While we take measures intended to protect the security, integrity and confidentiality of the personal information and other sensitive information we collect, store or transmit, we cannot guarantee that inadvertent or unauthorized use or disclosure will not occur, or that third parties will not gain unauthorized access to this information.

There have been a number of reported incidents where third-party service providers or partners have used software to access the personal data of their customers’ or partners’ customers for marketing and other purposes.

While our privacy policies prohibit such activities, our third-party service providers or partners may engage in such activity without our knowledge or consent.

Our privacy policies and practices prohibit such activities, but our third-party service providers or partners may nevertheless engage in such activity without our knowledge or consent.

If we or our third-party service providers or partners were to experience a cybersecurity incident, data breach or disruption, unauthorized access or failure of systems compromising our customers’, contributors’ or employees’ data, or if one of our third-party service providers or partners were to access our customers’ personal data without authorization, our brand and reputation could be adversely affected, use of our products could decrease, we could experience business interruption and we could be exposed to a risk of loss, litigation and regulatory proceedings.

3 unchanged sentences

Regulatory scrutiny of privacy, data collection, use of data and data protection continues to intensify both within the United States and globally.

The personal information and other data we collect, store, process and use is increasingly subject to

legislation and regulations in numerous jurisdictions around the world, especially in Europe.

The personal information and other data we collect, store, process and use is increasingly subject to legislation and regulations in numerous jurisdictions around the world, especially in Europe.

These laws often develop in ways we cannot predict and some laws may be in conflict with one another.

21 unchanged sentences

As supervisory authorities issue further guidance on personal information export mechanisms, including circumstances where the standard contractual clauses cannot be used and/or start taking enforcement action, we could suffer additional costs, complaints, and/or regulatory investigations or fines.

Moreover, if we are otherwise unable to transfer personal information between and among countries and regions in which we operate, it could affect the manner in which we provide our services and could adversely affect our financial results.

Moreover, if we are otherwise unable to transfer personal information between and among countries and

regions in which we operate, it could affect the manner in which we provide our services and could adversely affect our financial results.

Several other foreign jurisdictions, such as Brazil, where a General Data Privacy Law that imposes detailed rules for the collection, use, processing and storage of personal data in Brazil was signed into law in August 2018 and took effect in 2020, with enforcement beginning in August 2021;

1 unchanged sentence

Similarly, data privacy laws have been enacted in a number of jurisdictions, including, but not limited to, the European Union, Illinois and California, which regulate the collection of certain biometric data regarding individuals, including their facial images, and the use of such data, including in facial recognition systems.

Private and class plaintiffs have successfully asserted claims in settled litigation relating to the processing and storage of photographs under biometric privacy laws.

Similar laws have also been introduced in several additional states.

7 unchanged sentences

The CPRA, which will come into effect on January 1, 2023 (with a look back to January 2022), amends and expands the CCPA to add additional disclosure obligations (including an obligation to disclose retention periods or criteria for categories of personal information), grant consumers additional rights (including rights to correct their data, limit the use and disclosure of sensitive personal information, and opt out of the sharing of personal information for certain targeted behavioral advertising purposes), and establishes a privacy enforcement agency known as the California Privacy Protection Agency (“CPPA”).

The CPPA will serve as California’s chief privacy regulator, which will likely result in greater regulatory activity

and enforcement in the privacy area.

The CPPA will serve as California’s chief privacy regulator, which will likely result in greater regulatory activity and enforcement in the privacy area.

Other states have also considered or are considering privacy laws similar to the CCPA.

11 unchanged sentences

We also rely heavily on our networks, and on the networks of third-party service providers for the secure storage, processing and transmission of confidential and other information and generally to conduct our business.

Although we maintain security features on our websites and utilize encryption and authentication technology, our cybersecurity measures may not detect or prevent all attempts, whether intentional or unintentional, to hack our systems, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, ransomware, other social engineering attacks, cybersecurity breaches or other attacks and disruptions that may jeopardize our networks and the security of information stored in and transmitted by our networks and websites.

Although we maintain security features on our websites and utilize encryption and authentication technology, our cybersecurity measures may not detect or prevent all attempts, whether intentional or unintentional, to hack our systems, denial-of-service attacks, malware (including viruses and malicious software), break-ins, phishing attacks, ransomware, other social engineering attacks, cybersecurity breaches or other attacks and disruptions that may jeopardize our networks and the security of information stored in and transmitted by our networks and websites.

We use third-party service providers, including payment processors and co-location and cloud service vendors for our data centers and application hosting, to operate our business, and their security measures may not prevent cybersecurity incidents and other disruptions that may jeopardize their networks and the security of information stored in and transmitted by their networks.

3 unchanged sentences

In addition, a significant cybersecurity breach or cyber-attack could result in payment networks prohibiting us from processing transactions on their networks.

Although cybersecurity and the continued development and enhancement of the processes, practices and controls that are designed to protect our systems, computers, software, data and networks from attack, damage, disruption or unauthorized access are a high priority for us, because the techniques used to attack, damage, disrupt or obtain unauthorized access are constantly evolving in sophisticated ways to avoid detection and often are not recognized until launched against a target, our efforts may not be enough to anticipate or prevent a party from circumventing our security measures, or the security measures of our third-party service providers, and accessing and misusing the confidential or personal information of our employees, customers and contributors.

If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose users and customers.

1 unchanged sentence

While we continually work to safeguard our internal network systems and validate the security of our third-party providers, to mitigate these potential risks, including through information security policies and employee awareness and training, there is no assurance that such actions will be sufficient to prevent cyber-attacks or cybersecurity breaches.

Any actual or perceived breach or the perceived threat of an attack or breach, could cause our customers, contributors and other third parties to cease doing business with us, or subject us to lawsuits, regulatory fines, criminal penalties, statutory damages, and other costs, including for provision of breach notices and credit monitoring to our customers, and other action or liability, and could lead to business interruption, any of which could harm our reputation, business, financial condition and results of operations.

Failure to protect our intellectual property could substantially harm our business and operating results.

1 unchanged sentence

We rely on trademark, copyright and patent law, trade secret protection, and non-disclosure agreements and other contractual restrictions to protect our proprietary rights.

We have registered “Shutterstock”, “Offset”, “Bigstock”, “PremiumBeat,” “Rex Features” and “Shutterstock Editor” and associated logos and other marks as trademarks in the United States and other jurisdictions and we are the registered owner of the shutterstock.com, bigstock.com, offset.com, premiumbeat.com and rexfeatures.com internet domain names and various other related domain names.

We have registered “Shutterstock,” “Shutterstock Editorial,” “Asset Assurance,” “Offset,” “Bigstock,” “Rex Features,” “PremiumBeat,” “TurboSquid,” “PicMonkey,” “Pattern89,” “Shotzr,” “Shutterstock Studios” and “Shutterstock Editor” and associated logos and other marks as trademarks in the United States and other jurisdictions and we are the registered owner of the shutterstock.com, bigstock.com, offset.com, premiumbeat.com rexfeatures.com, turbosquid.com and picmonkey.com internet domain names and various other related domain names.

Effective intellectual property protection for our trademarks and domain names may not be available or practical in every country in which we operate or intend to operate.

14 unchanged sentences

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

The use of open source software can also carry security risks arising from unknown vulnerabilities that can be exploited by malware in unanticipated ways, which can lead to disruption and / or harm to operations and protected data.

Catastrophic events or other interruptions or failures of our information technology systems could hurt our ability to effectively provide our products and services, which could harm our reputation and brand and adversely affect our business and operating results.

Our computers and other technological systems, as well as our data centers and the computers, systems and data centers of our third-party service providers, could be damaged or interrupted by fire, flood, power loss, telecommunications failure, earthquakes, acts of war or terrorism, acts of God, computer viruses, physical or electronic break-ins and other similar events or disruptions.

Our third-party service providers, including cloud service providers could be disrupted by fire, flood, power loss, telecommunications failure, earthquakes, acts of war or terrorism, acts of God, malware (including viruses and malicious software), physical or electronic break-ins and other similar events or disruptions.

Our principal executive offices are located in New York City, a region that has experienced acts of terrorism in the past.

8 unchanged sentences

For each of the years ended December 31, 2021, 2020 and 2019, approximately two-thirds of our revenue, respectively, was derived from customers located outside of the United States.

While a significant portion of our customers reside outside of the United States, we have limited experience operating as a company outside the United States.

We expect to continue to devote significant resources to international expansion through, for example, the possibility of establishing additional offices, hiring additional overseas personnel, entering into strategic arrangements with local partners, and exploring acquisition opportunities.

In addition, we expect to increase marketing for our foreign language offerings and to further localize our collection and user experience for foreign markets.

Our ability to expand our business and attract talented employees, as well as customers and contributors, in an increasing number of international markets requires considerable management attention and resources and is subject to the challenges of supporting a growing business in an environment of multiple languages, cultures, customs, legal systems, alternative dispute systems, regulatory systems and commercial infrastructures.

If we fail to deploy, manage or oversee our international operations successfully, our business may suffer.

Additionally, expanding our international focus may subject us to risks that we have not faced before or increase risks that we currently face, including risks associated with:

Our international presence exposes us to additional risks, including risks associated with:

• modifying our technology and marketing and localizing our offerings for customers’ and contributors’ preferences, customs and language;

20 unchanged sentences

• higher costs associated with doing business internationally.

These risks may make it impossible or prohibitively expensive to expand to new international markets, delay entry into such markets, or require us to enter into commercial arrangements with local partners, all of which may affect our ability to grow our business.

grow our business.

As international e-commerce and other online and web services grow, competition is expected to intensify and local companies may have a substantial competitive advantage because of their greater understanding of, and focus on, the local customer.

33 unchanged sentences

Such laws and regulations may cover a vast array of activities.

For example, automatic contract or subscription renewal, credit card fraud and processing, sales, advertising, taxation, tariffs, data privacy, management and storage, cybersecurity, pricing, content, copyrights, distribution, electronic contracts, consumer protection, outsourcing, broadband residential internet access, internet neutrality and the characteristics and quality of products or services, and intellectual property ownership and infringement are

all subject to jurisdictional laws and regulations.

In certain countries, including European jurisdictions in particular, certain of these laws may be more restrictive than in the United States.

13 unchanged sentences

If access to our services is restricted, in whole or in part, in one or more countries or our competitors can successfully penetrate geographic markets that we cannot access, our reputation among our customers, contributors and employees may be negatively impacted, our ability to retain or increase our contributor and customer base may be adversely affected, we may not be able to maintain or grow our revenue as anticipated, and our financial results could be adversely affected.

Our operations may expose us to greater than anticipated income, non-income and transactional tax liabilities, which could harm our financial condition and results of operations.

We have operations in various taxing jurisdictions in the United States and foreign countries, and there is a risk that the fiscal authorities in one or more jurisdictions may contend that our tax liabilities and/or obligation to remit transactional taxes could be greater relative to prior taxable periods and more than anticipated relative to future taxable periods.

We believe our worldwide provision for taxes is reasonable, but our ultimate tax liability may differ from the amounts recorded in our financial statements and may materially adversely affect our financial results in the period or periods for which such determination is made.

We have created reserves with respect to such tax liabilities where we believe it to be appropriate.

However, there can be no assurance that our ultimate tax liability will not exceed the reserves that we have created.

In addition, tax law and regulatory changes in the U.S., E.U.

and other jurisdictions, including tax law and regulatory changes that may be enacted by U.S.

President Biden’s administration or otherwise enacted as a result of tax policy recommendations from organizations such as the Organization for Economic Co-operation and Development (the “OECD”) have and may continue to have an impact on our financial condition and results of operations.

Specifically, the enactment of the TCJA has had a significant impact on our financial statements and we believe may potentially have a significant ongoing impact on our financial condition and results of operations in future years.

Certain provisions of the TCJA are likely to undergo revisions (in some cases, certain changes are already specifically enumerated in

the statute) or by their terms are set to expire on certain specified future dates, unless such provisions are further modified by subsequent legislation.

There continue to be unresolved questions regarding how certain provisions of the TCJA are to be interpreted and implemented.

Potential regulatory and/or legislative action to address questions that have arisen or may arise because of the TCJA as well as any potential changes in accounting standards for income taxes or related interpretations in response to the TCJA could cause uncertainty with respect to the ultimate impact of the TCJA on our tax provisions.

In response to the TCJA, several sovereign foreign jurisdictions, as well as administrative bodies such as the E.U.

and the OECD, have expressed reservations and raised concerns about certain provisions, and it is possible that formal challenges or reactionary regulatory legislation may be instituted by one or more of such foreign authorities that could ultimately adversely affect us and/or negate or minimize some or all of the favorable impacts that we have or may derive from the TCJA.

There is also heightened scrutiny by fiscal authorities in virtually every sovereign foreign jurisdiction on the potential taxation of e-commerce businesses.

The OECD has issued guidelines, referred to as the Base Erosion and Profit Shifting project, or BEPS, to its member-nations aimed at encouraging broad-based legislative initiatives intended to prevent perceived base erosion transactions and income shifting in a tax-advantaged manner.

Further, for the past several years, the OECD has had a specific focus on the taxation implications of e-commerce business, generally referred by the OECD as the “digital economy.” In the fourth quarter of 2019, the OECD released details on its proposed approach which would, among other changes, create a new right to tax certain “digital economy” income not necessarily based on traditional nexus concepts nor on the “arm’s length principle.” Further, in the fall of 2020, the OECD released details on their BEPS Pillars I & II proposals for comment with implementation delayed until mid-year 2021 at the earliest.

At this point, there is a lack of consensus agreement among the key members, specifically by the U.S., with the latest OECD proposal.

has expressed that it would generally support a solution along the lines proposed by the OECD only if the solution was in the form of a “safe-harbor” rather than a mandatory requirement.

A failure to reach full consensus on an executable plan within the tight timeframe under which the OECD is operating could result in individual jurisdictions legislating digital tax provisions in an uncoordinated and unilateral manner, and further result in greater or even double taxation that companies may not have sufficient means to remedy.

For example, a number of jurisdictions, including the UK, France and Italy, have already adopted or have formally proposed legislation to effect the taxation of certain e-commerce business based on differing criteria and metrics.

Efforts to alleviate this increased tax burden will increase the cost of structuring and compliance as well as the cost of doing business internationally.

Any changes to the taxation of our international activities may increase our worldwide effective tax rate and adversely impact our financial position and results of operations.

Further, the prospective taxation by multiple jurisdictions of e-commerce businesses could subject us to exposure to withholding, sales, VAT and/or other transaction taxes on our past and future transactions in such jurisdictions where we currently or in the future may be required to report taxable transactions.

A successful assertion by any jurisdiction that we failed to pay such withholding, sales, VAT or other transaction taxes, or the imposition of new laws requiring the registration for, collection of, and payment of such taxes, could result in substantial tax liabilities related to past, current and future sales, create increased administrative burdens and costs, discourage customers from purchasing content from us, or otherwise substantially harm our business and results of operations.

We are currently subject to and in the future may become subject to additional compliance requirements for certain of these taxes.

Where appropriate, we have made accruals for these taxes, which are reflected in our consolidated financial statements.

Changes in the estimates or assumptions underlying these accruals could have an adverse impact on our financial condition in the future.

Lastly, in June 2018, the Supreme Court of the United States (the “Supreme Court”) issued its decision in the matter of South Dakota v.

Wayfair, Inc .

This decision effectively reversed the 25-year-old “physical presence doctrine” previously established by the Supreme Court in Quill Corp.

North Dakota , which required a minimum level of physical presence within a state before the state could impose an obligation to register and remit sales tax on revenue derived within that state.

Since the decision, a number of states have enacted sales tax enabling legislation which has had the effect of significantly expanding the liability of e-commerce companies to register, collect and remit state sales taxes from customers.

We are in the process of registering for, and collecting sales tax in a number of states.

We are in the process of determining how and when our collection practices will need to change in the relevant states and have already registered for and are collecting sales tax in several states.

We are also evaluating the impact, if any, of the imposition of sales tax on customer demand for our products, or our realized revenue.

However, this decision has, and will continue to, significantly increase the effort, resources and costs associated with the collection and compliance burden.

Income tax laws or regulations could be enacted or changed and existing income tax laws or regulations could be applied to us in a manner that could increase the costs of our products and services, which could harm our financial condition and results of operations.

We believe that our worldwide provision for income taxes is reasonable, but our ultimate tax liability may differ from the amounts recorded in our financial statements.

Any additional income tax liability may have a material adverse effect on our financial results in the period or periods for which such determination is made.

We have established reserves for such additional income tax liabilities as we believe are appropriate.

However, there can be no assurance that our ultimate income tax liability will not exceed those reserves.

Tax law and regulatory changes in the U.S., the E.U.

and other jurisdictions, including tax law and regulatory changes that may be enacted by the U.S.

federal and state governments or as a result of tax policy recommendations from organizations such as the Organization for Economic Co-operation and Development (the “OECD”), have and may continue to have an impact on our financial condition and results of operations.

Specifically, the enactment of the TCJA has had and may continue to have a significant effect on our financial statements.

Certain provisions of the TCJA are likely to be amended by future legislation or, by their terms, are scheduled to change or expire on specified dates.

In addition, questions remain regarding the interpretation and implementation of the TCJA.

Potential regulatory or legislative action to address questions under the TCJA and changes in accounting standards for income taxes or related interpretations in response to the TCJA could cause uncertainty regarding the effect of the TCJA on our provision for income taxes.

Moreover, foreign jurisdictions and administrative bodies that have raised concerns about certain provisions of the TCJA might formally challenge those provisions or adopt legislation contrary to those provisions.

Such a response could eliminate or reduce the benefits that we have derived or may derive from the TCJA.

Fiscal authorities in many foreign jurisdictions have increased their scrutiny of the potential taxation of e-commerce businesses.

On October 8, 2021, the OECD announced that over 130 countries had reached a two-pillar agreement to address tax challenges presented by the digitalization of the global economy.

Pillar One would require the largest and most profitable multinational enterprises to allocate a portion of their profits to markets where they derive revenue, regardless of whether they maintain a physical presence in those markets.

Initially, the profit allocation rule would apply only to multinational enterprises with more than €20 billion in global annual revenues and a profit margin above 10%.

The revenue threshold would be reduced to €10 billion beginning seven years after the effective date of Pillar One.

Pillar Two would subject multinational enterprises with annual revenue of more than €750 million to a global minimum tax at a rate of 15%.

Based on current US tax law, there exists disparity between the US minimum tax under GILTI and the proposed Pillar Two framework.

On December 20th the OECD published detailed model legislation for the Pillar Two project, to assist in the implementation of a landmark reform to the international tax system.

The participating countries are expected to implement the agreement by entering into a multilateral convention and enacting domestic legislation by 2023.

Such legislation could increase our global effective tax rate and have a material effect on our financial position and results of operations.

To prevent double taxation as a result of the profit allocation rule, the multilateral convention would require the removal of all existing digital services taxes and prohibit the introduction of new digital services taxes.

Until the convention is adopted, however, countries that had previously enacted a digital services tax, may continue to impose their tax.

The imposition of digital services taxes may have a material effect on our financial condition and results of operations.

Our operations may expose us to greater than anticipated withholding, sales and transaction tax liabilities, including VAT, which could harm our financial condition and results of operations.

We are subject to non-income taxes, including withholding, sales, use and value added taxes, in various jurisdictions in which we conduct business.

Fiscal authorities in one or more of those jurisdictions may contend that our tax liabilities or our obligations to remit transactional taxes are greater than in prior taxable periods and more than anticipated relative to future taxable periods.

Significant judgment is required in determining our exposure for non-income taxes.

These determinations are highly complex and require detailed analysis of the available information and applicable statutes and regulatory materials.

In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain.

Certain jurisdictions in which we do not collect withholding, sales, use, value added or other taxes on our sales or assess use tax on our purchases may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, and we may be required to collect or remit such taxes in the future.

We continue to evaluate the impact, if any, of the imposition of sales tax on customer demand for our products and results of operations.

Recent legislation, including the decision in the matter of South Dakota v.

Wayfair, Inc., has, and will continue to, significantly increase the effort, resources and costs associated with the collection and compliance burden for sales tax.

The prospective taxation by multiple jurisdictions of e-commerce businesses could also subject us to exposure to withholding tax, sales tax, VAT and other transaction taxes on our past and future transactions in jurisdictions in which we currently are, or in the future may be, required to report taxable transactions.

A successful assertion by a jurisdiction that we failed to pay such taxes, or the adoption of new laws requiring the registration for, collection of, and payment of such taxes, could result in substantial tax liabilities related to past, current and future sales, create increased administrative burdens and costs, discourage customers from purchasing content from us, or otherwise substantially harm our business and results of operations.

We are currently subject to and in the future may become subject to additional compliance requirements for certain of those taxes.

Where appropriate, we have made accruals for those taxes, which are reflected in our consolidated financial statements.

Changes in the estimates or assumptions underlying those accruals could have an adverse effect on our financial condition.

Risks Related to Ownership of Our Common Stock

39 unchanged sentences

In the past, certain companies that have experienced volatility in the market price of their common stock have been subject to securities class action litigation.

We may be the target of this type of litigation in the future.

We may be the target

of this type of litigation in the future.

Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

13 unchanged sentences

In February 2017, our Board authorized us to repurchase up to an additional $100 million of our outstanding common stock.

We had approximately $100 million of remaining authorization for purchases under the share repurchase program as of December 31, 2020 and February 5, 2021.

We had approximately $73 million and $66 million of remaining authorization for purchases under the share repurchase program as of December 31, 2021 and February 4, 2022, respectively.

The timing and amount of any share repurchases will be determined based on market conditions, share price and other factors and we may not repurchase any shares under this authorization.

12 unchanged sentences

We filed a registration statement on Form S-8 under the Securities Act covering shares of common stock issuable pursuant to options and shares reserved for future issuance under our 2012 Omnibus Equity Incentive Plan and our Amended and Restated 2012 Employee Stock Purchase Plan.

Shares issued pursuant to such options and plans can be freely sold in the public market upon issuance and vesting, subject to the terms of the award agreements delivered under such plans, unless they are held by “affiliates,” as that term is defined in Rule 144 of the Securities Act.

Shares issued pursuant to such options and plans can be freely sold in the

public market upon issuance and vesting, subject to the terms of the award agreements delivered under such plans, unless they are held by “affiliates,” as that term is defined in Rule 144 of the Securities Act.

We may also issue our shares of common stock or securities convertible into our common stock from time to time in connection with a financing, acquisition, investment or otherwise.

13 unchanged sentences

Any provision of our amended and restated certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock.

Even in the absence of a takeover attempt, the

existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

There can be no assurance that we will declare dividends in the future.

On February 11, 2020, our Board of Directors approved the initiation of a quarterly dividend policy and declared the Company’s first quarterly cash dividend of $0.17 per share, which was paid in the first quarter of 2020.

On January 12, 2021, we announced that our Board of Directors approved an increase to the quarterly dividend to $0.21 per share, to be paid in the first quarter of 2021.

We currently expect to declare and pay cash dividends on a quarterly basis in the future.

Beginning in 2020, we have paid a quarterly dividend and currently expect to declare and pay cash dividends on a quarterly basis in the future.

Any future dividend payments, however, will be within the discretion of our Board of Directors and will depend on, among other things, our future financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, anticipated cash needs, business prospects, provisions of applicable law and other factors that our Board of Directors may deem relevant.

6 unchanged sentences

For example, we have continued to upgrade our financial and business processing applications to accommodate the increased volume of products and transactions resulting from our growth to date.

If we experience delays or difficulties in implementing these systems, or if we otherwise do not effectively manage our growth, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, or satisfy customer requirements, among other things.

If we experience delays or difficulties in implementing these systems, or if we otherwise do not effectively manage our growth,

we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, or satisfy customer requirements, among other things.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Act and related regulations implemented by the SEC and the stock exchanges are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming.

8 unchanged sentences

As amended, beginning in 2018, except for certain grandfathered arrangements in place prior to November 2, 2017 under the amendment’s transition rules, Section 162(m) no longer includes an exception to the limitations for “performance-based compensation” and expands the group of executive officers covered by the limitation.

Regulations were recently proposed to provide additional guidance regarding how the grandfathering rules are to be implemented.

There can be no assurance that the evolving interpretation of the grandfathering rules will not impact whether certain cash and equity-based compensation awards granted to our executive officers prior to November 2, 2017 are exempt from the Section 162(m) deduction limitations.

In addition, current and future compensation we provide to our executive officers that is not otherwise covered by the grandfathering rules, will be subject to the deduction limitation rules of Section 162(m) in 2018 and going forward and will result in an adverse income tax consequence to the Company.

Further, the American Rescue Plan Act was signed into law on March 11, 2021, and added a new subsection to Section 162(m) of the Internal Revenue Code to expand the application to an additional five most highly compensated individuals.

The expansion of Section 162(m) coverage is effective for tax years beginning after December 31, 2026.

These and other increased costs associated with operating as a public company may decrease our net income or increase our net loss and may cause us to reduce costs in other areas of our business or increase the prices of our products or services to offset the effect of such increased costs.

10 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors