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• our ability to integrate and achieve the expected benefits of acquisitions, partnerships and investments;
+Added: • our use of AI technologies in our platform and business;
Risks Related to Cyber Security, Data Privacy and Intellectual Property
36 unchanged sentences
These macroeconomic conditions have resulted in, and may continue to result in, decreased business spending by our current and prospective customers and business partners, reduced demand for our products, lower renewal rates by our customers, longer or delayed sales cycles, including current and prospective customers delaying contract signing or contract renewals, reduced budgets or minimum commitments related to the products that we offer, or delays in customer payments or our ability to collect accounts receivable, all of which could have an adverse impact on our business, results of operations and financial condition.
−Removed: The current macroeconomic environment has constrained the budgets and financial resources of some of our current and prospective customers, which has caused the impacted current and prospective customers to become more budget-conscious, to delay and/or reduce spending.
−Removed: Given that a majority of our revenue is usage-based and impacted by general consumer sentiment
−Removed: and activity, our business may be more immediately and severely impacted by adverse macroeconomic conditions than those that rely primarily on software-as-a-service (“SaaS”) subscription revenue.
−Removed: The current macroeconomic environment has caused certain customers without long-term contracts with us to reduce or terminate their usage of our products without notice or termination changes, which has negatively impacted, and may in the future negatively impact, Communications revenue.
−Removed: Similarly, the current macroeconomic environment has caused certain customers to renegotiate existing contracts on less advantageous terms to us than those currently in place, default on payments due on existing contracts, or fail to renew at the end of their current contract term, which has had, and may continue to have, a negative impact on our Data & Applications revenue.
+Added: The current macroeconomic environment has constrained the budgets and financial resources of some of our current and prospective customers, which has caused the impacted current and prospective customers to become more budget-conscious and to delay and/or reduce spending.
+Added: Given that a majority of our revenue is usage-based and impacted by general consumer sentiment and activity, our business may be more immediately and severely impacted by adverse macroeconomic conditions than those that rely primarily on software-as-a-service (“SaaS”) subscription revenue.
+Added: The current macroeconomic environment has caused certain of our Communications customers to reduce or terminate their usage of our products without notice or termination charges, which has negatively impacted, and may in the future negatively impact, Communications revenue.
+Added: Similarly, the current macroeconomic environment has caused certain of our Data & Applications customers to renegotiate existing contracts on less advantageous terms to us than those currently in place, reduce or limit their contract value, default on payments due on existing contracts, or fail to renew at the end of their current contract term, which has had, and may continue to have, a negative impact on our Data & Applications revenue.
A prolonged economic slowdown could exacerbate these negative effects on revenue and revenue growth in both our Communications and Data & Applications business units.
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• fluctuations in demand for, pricing of, or usage of, our products, including due to the effects of global macroeconomic conditions, competition, and differing levels of demand for our products based on changing customer priorities, resources, financial conditions and economic outlook;
−Removed: • general economic conditions, including a downturn or recession, rising inflation and rising interest rates, geopolitical uncertainty and instability;
+Added: • general economic conditions, including a downturn or recession, rising inflation and interest rates, and geopolitical uncertainty and instability;
• the expected costs and benefits of our business unit reorganization and changes to our leadership structure;
3 unchanged sentences
• our ability to leverage more of our self-service capabilities for customers;
−Removed: • competition and the actions of our competitors, including pricing changes and the introduction of new products, services and geographies;
+Added: • competition and the actions of our competitors, including pricing changes and the introduction of new technologies, products, services and geographies;
• significant security breaches or incidents impacting our platform, or interruptions to the delivery and use of our products;
• changes in cloud infrastructure, network services and other third-party technology, including the fees charged by their providers;
−Removed: • the rate productivity of our salesforce, including our enterprise salesforce;
+Added: • the productivity of our salesforce, including our enterprise salesforce;
• the length and complexity of the sales cycle for our products, especially for sales to larger enterprises, government and regulated organizations;
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As a result of the reductions in force, we have incurred, and may continue to incur additional costs in the short-term, including cash expenditures for employee transitions, notice period and severance payments, employee benefits and related facilitation costs, as well as non-cash expenditures related to vesting of share-based awards.
−Removed: These additional cash and non-cash
−Removed: expenditures could have the effect of reducing our operating margins.
+Added: These additional cash and non-cash expenditures could have the effect of reducing our operating margins.
Our reductions in force may result in other unintended consequences, including employee attrition beyond our intended reduction in force, which may also be further exacerbated by the actual or perceived declining value of our equity awards;
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and the failure to maintain our corporate culture, employee morale and productivity, and to retain highly skilled employees due to reductions in our workforce and changes in leadership structure.
−Removed: Because of these and other factors, we cannot predict whether we will realize the purpose and anticipated benefits of Reorganization and segment reporting changes, and if we do not, our business, results of operations and financial condition could be adversely affected.
+Added: Because of these and other factors, we cannot predict whether we will realize the purpose and anticipated benefits of the Reorganization and segment reporting changes, and if we do not, our business, results of operations and financial condition could be adversely affected.
There is no guarantee that investors, analysts or the market will understand or favorably view the changes we make to our financial reporting in connection with the shift from one to two segments or that any such changes will have the desired effect.
Failure of investors or analysts to understand our revised segment reporting structure may negatively affect their ability to understand our business and operating results, which could adversely affect our stock price.
−Removed: In addition, we test for goodwill impairment at the reporting unit level and consider the difference between the fair value of a reporting unit and its carrying
−Removed: value when determining whether any impairment exists.
−Removed: There can be no assurance that the change to our segment reporting structure will not result in impairment charges in future periods, which could harm our operating results.
Our business depends on customers increasing their use of our products, and a loss of customers or decline in their use of our products could adversely affect our business, results of operations and financial condition.
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The majority of our customers are charged based on their usage of our products.
−Removed: Most customers do not have long-term contractual financial commitments to us and, therefore, most of our customers may reduce or cease their use of our products at any time without penalty or termination charges.
−Removed: Customers may terminate or reduce their use of our products for any number of reasons, including if they are not satisfied with our products, the value proposition of our products or our ability to meet their needs and expectations, or due to their use of competitors’ products.
−Removed: For example, prior instances of disruptions in our cloud communications platform impacted our customers’ ability to use products on our platform for up to several hours at a time.
+Added: Most of our customers do not have long-term contractual financial commitments to us and, therefore, may reduce or cease their use of our products at any time without penalty or termination charges.
+Added: Customers may terminate or reduce their use of our products for any number of reasons, including dissatisfaction with our products or the value proposition of our products, our inability to meet their needs and expectations, their use of competitors’ products, macroeconomic conditions, or reductions in their budgets.
+Added: Additionally, prior instances of disruptions in our cloud communications platform impacted our customers’ ability to use products on our platform for up to several hours at a time.
Issues with our products have caused, and may in the future cause, us to incur certain costs associated with offering credits to our affected customers, which have had, and in the future may have, an adverse impact on customer satisfaction and our ability to retain or attract customers.
Additionally, we believe our ability to provide customers with high-quality, effective customer support services at all stages of the process is a crucial component of maintaining customer satisfaction, generating increased customer usage of our products and ultimately retaining customers.
−Removed: Our inability to devote sufficient resources to effectively assist our customers could adversely affect our ability to retain existing customers and could disincentivize prospective customers from adopting our products.
+Added: If we are unable to devote sufficient resources to effectively assist our customers, it could adversely affect our ability to retain existing customers and could disincentivize prospective customers from adopting our products.
We may be unable to respond quickly enough to accommodate short-term increases in demand for customer support.
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Our sales are highly dependent on our business reputation and on positive recommendations from our customers.
−Removed: Our inability to provide high-quality customer support, or a market perception that we do not maintain high-quality customer support, could erode the trust of current and potential customers and adversely affect our reputation.
−Removed: Customer usage of our products is generally outside of our control and therefore it is difficult to accurately predict customers’ usage levels.
+Added: If we are unable to provide high-quality customer support, or if there is a market perception that we do not maintain high-quality customer support, it could erode the trust of current and potential customers and adversely affect our reputation.
+Added: Customer usage of our products depends on factors generally outside of our control, so it is difficult to accurately predict customers’ usage levels.
The loss of customers or reductions in their usage levels of our products may each have a negative impact on our business, results of operations and financial condition.
−Removed: Our Dollar-Based Net Expansion Rate may decline in the future if customers are not satisfied with our products and related customer service experience, the value proposition of our products or our ability to meet their needs and expectations.
+Added: Our Dollar-Based Net Expansion Rate has recently declined as compared to prior periods, and it may continue to decline in the future if customers are not satisfied with our products and related customer service experience, the value proposition of our products or our ability to meet their needs and expectations, or due to macroeconomic conditions or reductions in customers’ budgets.
If a significant number of customers cease using, or reduce their usage of our products, including due to cost-saving measures in the face of macroeconomic uncertainty or changes in the competitive landscape, then we may be required to spend significantly more on sales and marketing than we currently expect in order to maintain or increase revenue from customers.
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If we are unable to attract new customers in a cost-effective manner, sell additional products to our existing customers or develop new products and enhancements to our products that achieve market acceptance then our business, results of operations and financial condition would be adversely affected.
−Removed: To grow our business, we must continue to attract new customers in a cost-effective manner, increase revenue from existing customers, and increase gross margins, each of which depends in part on our ability to enhance and improve our existing products, increase adoption and usage of our products, and introduce new products, particularly products with higher gross margins.
+Added: To grow our business, we must continue to attract new customers in a cost-effective manner, increase revenue from existing customers, and increase gross profits, each of which depends in part on our ability to enhance and improve our existing products, increase adoption and usage of our products, and introduce new products, including products with higher gross margins.
We use a variety of marketing channels to promote our products and platform, such as developer events and developer evangelism, search engine marketing and optimization, regional customer events, email campaigns, billboard advertising and public relations initiatives.
If the costs of the marketing channels we use increase, then we may choose to use alternative and less expensive channels, which may not be as effective as the channels we currently use.
−Removed: We have made in the past, and may make in the future, significant expenditures and investments in new marketing campaigns, and we cannot guarantee that any such investments will lead wider adoption of our products or to the cost-effective acquisition of additional customers.
−Removed: If we are unable to maintain effective marketing programs, then our ability to efficiently attract new customers could be adversely affected and we may not be able to attract the number and types of new customers we are seeking.
+Added: We have made in the past, and may make in the future, significant expenditures and investments in new marketing campaigns, and we cannot guarantee that any such investments will lead to wider adoption of our products or to the cost-effective acquisition of additional customers.
+Added: If we are unable to maintain effective marketing programs, our ability to efficiently attract new customers could be adversely affected, and we may not be able to attract the number and types of new customers we are seeking.
In addition, our ability to attract new customers and increase revenue from existing customers depends in large part on our ability to enhance and improve our existing products and to introduce compelling new products that reflect the changing nature of our markets, technological advances and industry standards.
The success of any enhancements or new products depends on several factors, including timely completion, adequate quality testing, actual performance quality, market-accepted pricing levels and overall market acceptance.
−Removed: Enhancements and new products that we develop may not be introduced in a timely or cost-effective manner, may contain errors or defects, may require reworking features and capabilities, may have interoperability difficulties with our platform or other products or may not achieve the broad market acceptance necessary to generate significant revenue or increase our gross margins.
+Added: Enhancements and new products that we develop may not be introduced in a timely or cost-effective manner, may contain errors or defects, may require reworking features and capabilities, may have interoperability difficulties with our platform or other products or may not achieve the broad market acceptance necessary to generate significant revenue or increase our gross profits.
Furthermore, our ability to increase the usage of our products depends, in part, on the development of new use cases for our products, which is typically driven by our developer community and may be outside of our control.
Our ability to generate usage of additional products by our customers may also require increasingly sophisticated and more costly sales efforts and result in a longer sales cycle.
−Removed: If we are unable to successfully enhance our existing products to meet evolving customer requirements, increase adoption and usage of our products, develop and drive adoption of new products, and increase our gross margins, or if our efforts to increase the usage of our products are more expensive than we expect, then our business, results of operations and financial condition would be adversely affected.
+Added: If we are unable to successfully enhance our existing products to meet evolving customer requirements, increase adoption and usage of our products, develop and drive adoption of new products, and increase our gross profits, or if our efforts to increase the usage of our products are more expensive than we expect, then our business, results of operations and financial condition would be adversely affected.
The adoption of our products, and the development of enhancements and new products, also depends, in part, on our ability to anticipate complex and uncertain emerging technologies, changes to customers’ needs and expectations, and shifts in industry standard practices.
Anticipating these factors requires that we allocate significant resources without any guarantee that any such investments and efforts will result in wider adoption of our products in the marketplace.
−Removed: If we are unable to adequately anticipate these changes, then our business and financial condition could be adversely affected.
+Added: If we are unable to adequately anticipate these changes, our business and financial condition could be adversely affected.
Additionally, the success of our existing products and any new products we introduce depends, in part, on our ability to integrate them with third-party products used by us or our customers.
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If we are unable to maintain the integrations between our products with such third-party products, our ability to meet the needs and expectations of our current and prospective customers could be adversely affected and adversely affect our business.
−Removed: If we are unable to successfully enhance our existing products to meet evolving customer requirements, increase adoption and usage of our products, develop and drive adoption of new products, maintain integrations with third-party products, anticipate changes in technology, customers’ needs and expectations, or industry standards, and increase our gross margins, or if our efforts to increase the usage of our products are more expensive than we expect, then our business, results of operations and financial condition would be adversely affected.
+Added: If we are unable to successfully enhance our existing products to meet evolving customer requirements, increase adoption and usage of our products, develop and drive adoption of new products, maintain integrations with third-party products, anticipate changes in technology, customers’ needs and expectations, or industry standards, and increase our gross profits, or if our efforts to increase the usage of our products are more expensive than we expect, then our business, results of operations and financial condition would be adversely affected.
If we are unable to increase adoption of our products by enterprises, our business, results of operations and financial condition may be adversely affected.
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We believe that there is significant competition for experienced sales professionals with the skills and technical knowledge that we require.
−Removed: Even if we are successful in hiring qualified sales employees, new hires require significant training and experience before they achieve full productivity, particularly for sales efforts targeted at enterprises and new territories.
+Added: Even if we are successful in hiring qualified sales employees, new hires require significant training and experience before they achieve full productivity,
+Added: particularly for sales efforts targeted at enterprises and new territories.
Our recent hires and planned hires may not become as productive as quickly as we expect, and we may encounter difficulties or be unable to hire or retain sufficient numbers of qualified individuals in the future in the markets where we do business.
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In addition, while enterprise customers may quickly deploy our products on a limited basis, before they will commit to deploying our products at scale, they often require extensive education about our products and significant customer support time and also engage in protracted pricing and contract negotiations, which may be exacerbated by changing inflationary pressure and reduced IT budgets and may result in higher costs and longer sales cycles.
−Removed: In addition, sales cycles for enterprises are inherently more complex and less predictable than the sales through our self-service model, and some enterprise customers may not use
−Removed: our products enough to generate revenue that justifies the cost to obtain such customers.
+Added: In addition, sales cycles for enterprises are inherently more complex and less predictable than the sales through our self-service model, and some enterprise customers may not use our products enough to generate revenue that justifies the cost to obtain such customers.
These complex and resource-intensive sales efforts could place additional strain on our product and engineering resources.
−Removed: Further, enterprises, including some of our customers, may choose to develop their own solutions that do not include our products.
+Added: Further, enterprises, including some of our existing customers, may choose to develop their own solutions that do not include our products.
They may also demand reductions in pricing as their usage of our products increases, notwithstanding increased costs incurred by us to provide such products, which could have an adverse impact on our gross margin.
−Removed: Additionally, economic recessions or slowdowns can result in our enterprise customers terminating their arrangements with us, longer sales cycles, and reduced or limited contract values as enterprise organizations focus on general cost reductions in the face of macroeconomic uncertainty.
+Added: Additionally, we have experienced, and may continue to experience, certain of our Data & Applications customers failing to renew their contracts with us, reducing or limiting their contract values, and engaging in longer sales cycles as these customers focus on general cost reductions in the face of macroeconomic uncertainty.
As a result of our limited experience selling and marketing to enterprises, our efforts to sell to these potential customers may not be successful.
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The market for our products and platform continues to evolve, which makes our business and future prospects difficult to evaluate.
−Removed: We believe that our revenue currently constitutes a significant portion of the total revenue in the market, and therefore, we believe that our future success will depend in large part on the growth, if any, and evolution of this market.
If developers and organizations do not recognize the need for and benefits of our products and platform, they may decide to adopt alternative products and services to satisfy some portion of their business needs.
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Our growth will depend, in part, on our ability to leverage more of our self-service capability for developers that do not need direct account coverage.
−Removed: We will also continue to prioritize accelerating sales of our Twilio Data & Applications products, which could have an impact on our results of operations.
+Added: We will also continue to prioritize accelerating sales of our Data & Applications products, which could have an impact on our results of operations.
Our ability to expand the market that our products and platform address depends upon a number of factors, including the cost, performance and perceived value associated with such products and platform.
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As a result of this growth, our organizational structure is becoming more complex as we improve our operational, financial and management controls as well as our reporting systems and procedures.
−Removed: The expansion of our systems and infrastructure, as well as the changes arising from the Reorganization, will require us to commit substantial financial, operational, and technical resources.
−Removed: Our revenue may not increase as a result of our investments in these areas and, if revenue does increase, it may not increase enough to offset these investments, or it may take several periods before we begin to see the benefits of these investments.
−Removed: If we are unable to adequately manage our growth and other business changes in a manner that preserves the key aspects of our corporate culture, including as a result of our recent reductions in force and the Reorganization, the quality and performance of our products may suffer, which could negatively affect our brand, reputation and ability to retain and attract customers and employees.
+Added: The expansion of our systems and infrastructure, as well as the changes arising from the Reorganization, has required, and will continue to require, us to commit substantial financial, operational, and technical resources.
+Added: Our revenue may not increase as a result of our
+Added: investments in these areas and, if revenue does increase, it may not increase enough to offset these investments, or it may take several periods before we begin to see the benefits of these investments.
+Added: If we are unable to adequately manage our growth and other business changes in a manner that preserves the key aspects of our corporate culture, including as a result of our past reductions in force and the Reorganization, the quality and performance of our products may suffer, which could negatively affect our brand, reputation and ability to retain and attract customers and employees.
Finally, if we are unable to maintain reliable service levels for our customers or if the level of efficiency in our organization suffers as we grow and transform our operating model, then our business, results of operations and financial condition could be adversely affected.
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We have a history of losses and may not achieve or sustain profitability in the future.
−Removed: We have incurred net losses in each year since our inception, including net losses of $508.3 million, $1.3 billion and $949.9 million in the six months ended June 30, 2023 and the years ended December 31, 2022 and 2021, respectively.
−Removed: We had an accumulated deficit of $4.4 billion as of June 30, 2023.
+Added: We have incurred net losses in each year since our inception, including net losses of $650.0 million, $1.3 billion and $949.9 million in the nine months ended September 30, 2023 and the years ended December 31, 2022 and 2021, respectively.
+Added: We had an accumulated deficit of $4.6 billion as of September 30, 2023.
We will need to generate and sustain increased revenue levels, and manage our operating expenses, in future periods to become profitable and, even if we do, we may not be able to maintain or increase our level of profitability.
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If we are unable to achieve and sustain profitability, or if we incur significant losses, the value of our business and Class A common stock may significantly decrease.
−Removed: We depend largely on the continued services of highly skilled personnel, including our senior management and other key employees, and failing to attract, integrate or retain such employees could adversely affect our business, results of operations and financial condition.
+Added: We depend largely on the continued services of highly skilled personnel, including our senior management and other key employees, and the inability to attract, integrate or retain such employees could adversely affect our business, results of operations and financial condition.
Our future performance depends on the continued services and contributions of highly skilled personnel, including our senior management and other key employees, to execute on our business plan, to develop our products and platform, to deliver our products to customers, to attract and retain customers and to identify and pursue opportunities to expand our business.
We believe that there is, and will continue to be, intense competition for highly skilled management, technical, sales and other employees with experience in our industry.
−Removed: In addition, we have experienced and may continue to experience high levels of employee attrition, which could significantly delay or prevent the achievement of our business objectives, and any resulting influx of new employees may require us to expend time, attention and resources to recruit and retain employees, restructure parts of our organization and train and integrate new personnel.
−Removed: We have focused our hiring efforts on areas such as Segment, Engage and Flex, and we have frozen the vast majority of new hires and backfills outside of these core areas.
+Added: In addition, we have experienced and may continue to experience employee attrition, which could significantly delay or prevent the achievement of our business objectives, and any resulting influx of new employees may require us to expend time, attention and resources to recruit and retain employees, restructure parts of our organization and train and integrate new personnel.
If we fail to effectively manage attrition, and to hire, integrate and adequately incentivize our personnel, our efficiency and ability to meet our operational and growth targets, as well as our corporate culture, employee morale, productivity and retention, could suffer, and our business and operating results would be adversely impacted.
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The replacement of any of our senior management or other key employees will involve significant time and costs, and any loss of services of any such key employee for any reason could significantly delay or prevent the achievement of our business objectives and could adversely affect our business, results of operations and financial condition.
−Removed: The labor market for our business is subject to external factors that are beyond our control, including our industry’s highly competitive market for skilled workers and leaders, inflation, effects that the COVID-19 pandemic has had on the labor market, and workforce participation rates.
+Added: The labor market for our business is subject to external factors that are beyond our control, including our industry’s highly competitive market for skilled workers and leaders, inflation and workforce participation rates.
We must provide competitive compensation packages and a high-quality work environment to hire, retain and motivate employees.
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The promotion of our brand also requires us to make substantial expenditures, and we anticipate that these expenditures will increase as our market becomes more competitive and as we expand into new markets.
−Removed: To the extent that these activities
−Removed: increase revenue, this revenue still may not be enough to offset the increased expenses we incur, including, but not limited to, as a result of recent inflationary pressures.
+Added: To the extent that these activities increase revenue, this revenue still may not be enough to offset the increased expenses we incur, including, but not limited to, as a result of recent inflationary pressures.
If we are unable to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, evolving interoperability requirements, and changing customer needs, requirements or preferences, our products may become less competitive.
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If we are unable to develop new products that satisfy our customers and provide enhancements and new features for our existing products that keep pace with rapid technological and industry change, our business, results of operations and financial condition could be adversely affected.
−Removed: For example, with the development of next-generation solutions that utilize new and advanced features, including artificial intelligence (“AI”) and machine learning (“ML”), we expect to commit significant resources to developing new products and enhancements incorporating AI and ML, and there is no guarantee that our investments and efforts will result in wider adoption of our products in the marketplace.
+Added: For example, with the development of next-generation solutions that utilize new and advanced features, including AI and ML, we expect to commit significant resources to developing new products and enhancements incorporating AI and ML, and there is no guarantee that our investments and efforts will result in wider adoption of our products in the marketplace.
If new technologies emerge that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently or more securely or new products are introduced into the market that could render our products obsolete, such technologies and products could adversely impact our ability to compete effectively and may lead to customers reduce or terminate their usage of our products.
8 unchanged sentences
If we are unable to respond to these changes in a cost-effective manner, our products may become less marketable and less competitive or obsolete, and our business, results of operations and financial condition could be adversely affected.
−Removed: In the second quarter of 2023 we notified customers that we will begin gradually blocking U.S.-bound Application-to-Person (“A2P”) SMS and MMS messages from unregistered 10-digit long code (“10DLC”) phone numbers on July 5, 2023 and will completely block any remaining unregistered A2P 10DLC message traffic after August 31, 2023.
+Added: In the second quarter of 2023 we began gradually blocking U.S.-bound Application-to-Person (“A2P”) SMS and MMS messages from unregistered 10-digit long code (“10DLC”) phone numbers and effective August 31, 2023 we completely blocked any remaining unregistered A2P 10DLC message traffic.
These changes could result in reduced volume and revenue in our messaging products, which could adversely affect our results of operations.
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If a significant portion of these intermediaries stop providing services or stop providing services on a cost-effective basis, our business could be adversely affected.
−Removed: We also interconnect with internet service providers around the world to enable the use of our email products by our customers, and we expect that we will continue to rely on internet service providers for network connectivity going forward.
+Added: We also interconnect with internet service providers around the world to enable the use of our email products by our customers, and we expect to continue to rely on internet service providers for network connectivity going forward.
Our reliance on internet service providers reduces our control over quality of service and exposes us to potential service outages and rate fluctuations.
12 unchanged sentences
Moreover, enterprises may demand substantial price concessions.
−Removed: In addition, if the mix of products sold changes, including for a shift to IP-based products, then we may need to, or
−Removed: choose to, revise our pricing.
+Added: In addition, if the mix of products sold changes, including for a shift to IP-based products, then we may need to, or choose to, revise our pricing.
As a result, in the future we may be required or choose to reduce our prices or change our pricing models, which could adversely affect our business, results of operations and financial condition.
1 unchanged sentence
We are continuing to expand our international operations to increase our revenue from customers outside of the United States as part of our growth strategy.
−Removed: In the six months ended June 30, 2023 and the years ended December 31, 2022 and December 31, 2021, we derived 34%, 34% and 32% of our revenue from customer accounts located outside the United States, respectively.
+Added: In the nine months ended September 30, 2023 and the years ended December 31, 2022 and December 31, 2021, we derived 34%, 34% and 32% of our revenue from customer accounts located outside the United States, respectively.
The future success of our business will depend, in part, on our ability to expand our customer base worldwide.
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• understanding, reconciling, and implementing technical controls to address, different technical standards, data privacy and telecommunications regulations, and registration and certification requirements outside the United States, which could prevent customers from deploying our products or limit their usage;
−Removed: • our ability to comply with laws, regulations and industry standards relating to data privacy, data protection, data localization and data security enacted in countries and other regions in which we operate or do business, including the GDPR and Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais) (Law No.
−Removed: 13,709/2018);
+Added: • our ability to comply with laws, regulations and industry standards relating to data privacy, data protection, data localization and data security, as well as sustainability and other ESG matters, enacted in countries and other regions in which we operate or do business, and the associated costs and management attention required to support such compliance;
• difficulties in understanding and complying with local laws, regulations and customs in non-U.S.
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We currently generate significant revenue from our largest customers, and the loss or decline in revenue from any of these customers could harm our business, results of operations and financial condition.
−Removed: In the six months ended June 30, 2023 and the years ended December 31, 2022 and 2021, our 10 largest Active Customer Accounts generated an aggregate of 11%, 12% and 11% of our revenue, respectively.
+Added: In the nine months ended September 30, 2023 and the years ended December 31, 2022 and 2021, our 10 largest Active Customer Accounts generated an aggregate of 10%, 12% and 11% of our revenue, respectively.
If any of these customers, or other large customers do not continue to use our products, use fewer of our products, or use our products in a more limited capacity, or not at all, our business, results of operations and financial condition could be adversely affected.
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If we are not able to successfully integrate these acquired businesses with ours or pursue our customer and product strategy successfully, the anticipated benefits of such acquisitions may not be realized fully or may take longer than expected to be realized.
−Removed: Further, it is possible that there could be a loss of our key employees and customers, disruption of ongoing businesses or unexpected issues, higher than expected costs and an overall post-completion process that takes longer than originally anticipated.
+Added: Further, it is possible that there could be a loss of our key employees and customers, disruption of
+Added: ongoing businesses or unexpected issues, higher than expected costs and an overall post-completion process that takes longer than originally anticipated.
In addition, the following issues, among others, must be addressed in order to realize the anticipated benefits of our acquisitions, partnerships or investments:
• combining the acquired businesses’ corporate functions with our corporate functions;
−Removed: • combining acquired businesses with our business in a manner that permits us to achieve the synergies anticipated to result from such acquisitions, the failure of which would result in the anticipated benefits of our acquisitions not being realized in the time frame currently anticipated or at all;
+Added: • combining acquired businesses with our existing business in a manner that permits us to achieve the synergies anticipated to result from such acquisitions, the failure of which would result in the anticipated benefits of our acquisitions not being realized in the time frame currently anticipated or at all;
• maintaining existing agreements with customers, distributors, providers, talent and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers, talent and vendors;
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From time to time we may also divest or stop investing in certain businesses or products.
−Removed: For example, in the second quarter of 2023, we sold our Internet of Things assets and liabilities to a third party and in the third quarter of 2023, we sold our ValueFirst business to a third party.
+Added: For example, in the second quarter of 2023, we sold our Internet of Things assets and liabilities, and in the third quarter of 2023, we sold our ValueFirst business.
The sale of a business or product may require us to restructure operations and/or terminate employees, and could expose us to unanticipated ongoing obligations and liabilities, including as a result of our indemnification obligations.
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Additionally, we may experience harm to our financial results, including loss of revenue, and we may not realize the expected benefits and cost savings of these actions and our operating results may be adversely impacted.
+Added: The use of AI technologies in our platform and our business may not produce the desired benefits, and may result in increased liability, reputational harm, or other adverse consequences.
+Added: We continue to incorporate additional AI solutions and features into our platform and our business, and these solutions and features may become more important to our operations or to our future growth over time.
+Added: We expect to rely on AI solutions and features to help drive future growth in our business, but there can be no assurance that we will realize the desired or anticipated benefits from AI.
+Added: Our investments in AI solutions and features have and may continue to negatively impact our Data & Applications cost of revenue and gross margins until we are able to increase revenue enough to offset these investments.
+Added: We may also fail to properly implement or market our AI solutions and features.
+Added: Our competitors or other third parties may incorporate AI into their products, offerings, and solutions more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
+Added: Our ability to effectively implement and market our AI solutions and features will depend, in part, on our ability to attract and retain employees with AI expertise, and we expect significant competition for professionals with the skills and technical knowledge that we will require.
+Added: Additionally, our offerings based on AI may expose us to additional claims, demands and proceedings by private parties and regulatory authorities and subject us to legal liability as well as brand and reputational harm.
+Added: For example, our business, financial condition and results of operations may be adversely affected if content or recommendations that AI solutions or features assist in producing are or are alleged to be deficient, inaccurate, or biased, or if such content, recommendations, solutions or features
+Added: or their development or deployment (including the collection, use, or other processing of data used to train or create such AI solutions or features) are found to have or alleged to have infringed upon or misappropriated third-party intellectual property rights or violate applicable laws, regulations, or other actual or asserted legal obligations to which we are or may become subject.
+Added: The legal, regulatory, and policy environments around AI are evolving rapidly, and we may become subject to new and evolving legal and other obligations.
+Added: These and other developments may require us to make significant changes to our use of AI, including by limiting or restricting our use of AI, and which may require us to make significant changes to our policies and practices, which may necessitate expenditure of significant time, expense, and other resources.
+Added: AI also presents emerging ethical issues, and if our use of AI becomes controversial, we may experience brand or reputational harm.
Risks Related to Cyber Security, Data Privacy and Intellectual Property
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Because the techniques used to access, disrupt or sabotage devices, systems and networks change frequently and may not be recognized until launched against a target, we may be required to make further investments over time to protect data and infrastructure as cybersecurity threats develop, evolve and grow more complex over time.
−Removed: We may also be unable to anticipate these techniques,
−Removed: and we may not become aware in a timely manner of any security breach or incident, which could exacerbate any damage we experience.
+Added: We may also be unable to anticipate these techniques, and we may not become aware in a timely manner of any security breach or incident, which could exacerbate any damage we experience.
Additionally, we depend upon our employees and contractors to appropriately handle confidential and sensitive data, including customer data, and to deploy our IT resources in a safe and secure manner that does not expose our network systems to security breaches or incidents or the loss, alteration, unavailability, or other unauthorized processing of data.
We have been and expect to be subject to cybersecurity threats and incidents, including denial-of-service attacks, employee errors or individual attempts to gain unauthorized access to information systems.
+Added: We also continue to incorporate AI solutions and features into our platform, which may result in security incidents or otherwise increase cybersecurity risks.
+Added: Further, AI technologies may be used in connection with certain cybersecurity attacks, resulting in heightened risks of security breaches and incidents.
Any data security incidents, including internal malfeasance or inadvertent disclosures by our employees or a third party’s fraudulent inducement of our employees to disclose information, unauthorized access or usage, virus or similar breach or incident or disruption of our platform, systems, or networks or those of our service providers, such as AWS, could result in loss, unavailability, or other unauthorized processing of confidential information, and any such event, or the perception that it has occurred, may result in damage to our reputation, erosion of customer trust, loss of customers, litigation, regulatory investigations, fines, penalties and other liabilities.
−Removed: For example, in June and August 2022, we became aware that threat actors had conducted sophisticated social engineering campaigns against some of our employees after having obtained employee names and cell phone numbers from unknown sources.
+Added: For example, in June and August 2022, we became aware that threat actors
+Added: had conducted sophisticated social engineering campaigns against some of our employees after having obtained employee names and cell phone numbers from unknown sources.
The attack identified in August, which involved smishing text messages that purported to be from our IT department, resulted in the threat actor obtaining some of our employees’ credentials and access to certain data of approximately 209 customers out of our total customer base of approximately 270,000 at that time.
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Industry reports indicate that the threat actors also attacked other technology, telecommunication and cryptocurrency companies.
−Removed: Furthermore, we are required to comply with laws and regulations that require us to maintain the security of personal information and we may have contractual and other legal obligations to notify customers, regulators, impacted individuals or other relevant stakeholders of security breaches.
+Added: Furthermore, we are required to comply with laws and regulations that require us to maintain the security of personal information and we may have contractual and other legal obligations to notify customers, regulators, government agencies, impacted individuals or other relevant stakeholders of security breaches.
Such disclosures are costly, and the disclosures or the failure to comply with such requirements could lead to adverse consequences.
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We have experienced, and expect that we may experience interruptions, delays and outages in service and availability in the future due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints.
−Removed: Capacity constraints could be caused by a number of potential causes, including technical failures, natural disasters, public health epidemics or pandemics (such as COVID-19), fraud or security attacks.
+Added: Capacity constraints could be caused by a number of potential causes, including technical failures, natural disasters, public health epidemics or pandemics, fraud or security attacks.
In addition, if our security, or that of AWS, is compromised, our products or platform are unavailable, or if our users are unable to use our products within a reasonable amount of time or at all, any one of which may be due to circumstances beyond our control, then our business, results of operations and financial condition could be adversely affected.
−Removed: In some instances, we may encounter difficulties or otherwise
−Removed: not be able to identify the cause or causes of these performance problems within a period of time acceptable to our customers.
+Added: In some instances, we may encounter difficulties or otherwise not be able to identify the cause or causes of these performance problems within a period of time acceptable to our customers.
It may become increasingly difficult to maintain and improve our platform performance and to troubleshoot performance issues, especially during peak usage times, as our products become more complex and the usage of our products increases.
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AWS provides us with computing and storage capacity pursuant to an agreement that continues until terminated by either party.
−Removed: AWS may terminate the agreement if we fail to cure a breach of the agreement within 30 days of our being notified of the breach and, in some cases, AWS may suspend the agreement immediately for cause upon notice.
+Added: terminate the agreement if we fail to cure a breach of the agreement within 30 days of our being notified of the breach and, in some cases, AWS may suspend the agreement immediately for cause upon notice.
Although we expect that we could procure similar services from other third parties, if any of our arrangements with AWS are terminated, we could experience interruptions to our platform and encounter difficulties in our ability to make our products reliably accessible by customers, as well as delays and additional expenses in procuring, implementing, and transitioning to alternative cloud infrastructure services.
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These laws and regulations are expanding globally, evolving, are being tested in courts, may result in increasing regulatory and public scrutiny of our practices relating to personal information and may increase our exposure to regulatory enforcement action, sanctions and litigation.
−Removed: The CCPA imposes obligations on businesses to which it applies.
−Removed: These obligations include, but are not limited to, providing specific disclosures in privacy notices and affording California residents certain rights related to their personal information.
+Added: The CCPA (as amended by the California Privacy Rights Act of 2020) imposes obligations on businesses to which it applies.
+Added: These obligations include, but are not limited to, providing specific disclosures in privacy notices and affording California residents (both consumers and employees) certain rights related to their personal information.
The CCPA allows for statutory fines for noncompliance.
−Removed: In addition, the California Privacy Rights Act of 2020 (“CPRA”), which became enforceable as of January 1, 2023, expanded the CCPA protections for consumers and employees.
Similar laws have been enacted or been proposed at the state and federal levels.
−Removed: For example, Connecticut, Utah, Virginia and Colorado have each passed laws similar to but different from the CCPA and CPRA that have taken or will take effect in 2023;
−Removed: Florida, Montana, and Texas have enacted similar legislation that becomes effective in 2024;
−Removed: Tennessee and Iowa have passed such a law that will take effect in 2025;
+Added: For example, Connecticut, Utah, Virginia and Colorado have each passed laws similar to but different from the CCPA that have taken or will take effect in 2023;
+Added: Florida, Montana, Oregon and Texas have enacted similar legislation that becomes effective in 2024;
+Added: Tennessee, Delaware and Iowa have passed such a law that will take effect in 2025;
and Indiana has enacted similar legislation that will become effective in 2026.
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Outside the United States, an increasing number of laws, regulations, and industry standards apply to privacy, data protection and data security.
−Removed: For example, the GDPR, the United Kingdom’s Data Protection Act 2018 (“UK GDPR”) and the Swiss Federal Act on Data Protection impose strict requirements for processing the personal information of individuals protected by the legislation, whether their data is processed within or outside the European Economic Area (“EEA”), the United Kingdom (“UK”) and Switzerland, respectively (such jurisdictions, collectively, “Europe”).
+Added: For example, the GDPR, the United Kingdom’s Data Protection Act 2018 (“UK GDPR”) and the new Swiss Federal Act on Data Protection, which became effective in September 2023, impose strict requirements for processing the personal information of individuals protected by the legislation, whether their data is processed within or outside the European Economic Area (“EEA”), the United Kingdom (“UK”) and Switzerland, respectively (such jurisdictions, collectively, “Europe”).
For example, the GDPR imposes significant requirements regarding the processing of individuals’ personal information, including in relation to transparency, lawfulness of processing, individuals’ privacy rights, compliant contracting, data minimization, data breach notification, data re-usage, data retention, security of processing and international data transfers.
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Further, individuals may initiate compensation claims or litigation related to our processing of their personal information.
−Removed: Other privacy laws in Europe impose strict requirements
−Removed: around marketing communications and the deployment of cookies on users’ devices.
+Added: Other privacy laws in Europe impose strict requirements around marketing communications and the deployment of cookies on users’ devices.
As another example, Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No.
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Additionally, we expect an increase in the regulation of the use of AI and ML in products and services.
−Removed: For example, in Europe, the proposed AI Act, if adopted, could impose onerous obligations related to the development, placing on the market and use of AI-related systems.
+Added: For example, in Europe, the proposed Artificial Intelligence Act (“AI Act”), if adopted, could impose onerous obligations related to the development, placing on the market and use of AI-related systems.
We may have to change our business practices to comply with such obligations.
Further, the interpretation and application of new domestic and foreign laws and regulations in many cases is uncertain, and our legal and regulatory obligations in such jurisdictions are subject to frequent and unexpected changes, including the potential for various regulatory or other governmental bodies to enact new or additional laws or regulations, to issue rulings that invalidate prior laws or regulations, or to increase penalties significantly.
−Removed: For example, the EU’s Digital Services Act and Digital Markets Act recently entered into force, whereas proposed laws in Europe include the Artificial Intelligence Act and the Data Act.
−Removed: Also, the UK Parliament is currently debating the Data Protection and Digital Information (No.
+Added: For example, the EU’s Digital Services Act and Digital Markets Act recently entered into force, whereas proposed laws in Europe include the AI Act and the Data Act.
+Added: the UK Parliament is currently debating the Data Protection and Digital Information (No.
2) Bill which, if enacted, will introduce certain changes to the UK’s data protection laws.
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As a cumulative example of these risks, because our primary data processing facilities are in the United States, we have experienced hesitancy, reluctance, or refusal by European or multinational customers to continue to use our services due to the potential risks posed as a result of the Court of Justice’s July 2020 ruling in the “Schrems II” case, as well as related guidance from regulators and the recent enforcement action against Meta by the Irish Data Protection Commission.
−Removed: For example, absent appropriate safeguards or other circumstances, the GDPR and laws in Switzerland and the UK generally restrict the transfer of personal information to countries outside of the EEA, Switzerland and the UK such as the United States, that the European Commission does not consider as providing an adequate level of privacy, data protection and data security.
−Removed: On March 25, 2022, the United States and EU announced an “agreement in principle” to replace the EU-U.S.
−Removed: Privacy Shield transfer framework with the Trans-Atlantic Data Privacy Framework.
−Removed: Progress has since been made towards the establishment of this as a valid transfer mechanism with President Biden’s issuance of the Executive Order Enhancing Safeguards for United States Signals Intelligence Activity in October 2022.
−Removed: Additionally, on December 13, 2022, the European Commission published a draft adequacy decision on the level of protection of personal data under the EU-U.S.
−Removed: Data Privacy Framework and on February 28, 2023, the European Data Protection Board adopted its opinion on the draft adequacy decision on the level of protection of personal data under the EU-U.S.
−Removed: Data Privacy Framework, but this framework has not yet been established.
−Removed: If we cannot implement and maintain a valid mechanism for cross-border data transfers, we and our customers may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal information from Europe or elsewhere.
+Added: For example, absent appropriate safeguards or other circumstances, the GDPR and laws in Switzerland and the UK generally restrict the transfer of personal information to countries outside of the EEA, Switzerland and the UK such as the United States.
+Added: On July 10, 2023, the European Commission adopted its adequacy decision for the EU-U.S.
+Added: Data Privacy Framework.
+Added: Based on this new adequacy decision, personal information can flow from the EU to U.S.
+Added: companies participating in the EU-U.S.
+Added: Data Privacy Framework without having to put in place additional data protection safeguards.
+Added: We are certified under the EU-U.S.
+Added: Data Privacy Framework, the UK Extension to the EU-U.S.
+Added: Data Privacy Framework, and the Swiss-U.S.
+Added: Data Privacy Framework.
+Added: If we cannot maintain a valid mechanism for cross-border data transfers, we and our customers may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal information from Europe or elsewhere.
The inability to import personal information to the United States could significantly and negatively impact our business operations;
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In addition, outside of Europe, other jurisdictions have proposed and enacted laws relating to cross-border data transfer or requiring personal information, or certain subcategories of personal information, to be stored in the jurisdiction of origin.
−Removed: If we are unable to increase our data processing capabilities and storage in Europe and other countries to limit or eliminate the need for data transfers out of Europe and other applicable countries quickly enough, and other valid solutions for personal information transfers to the United States or other countries are not available or are difficult to implement in the interim, we will likely face
−Removed: continuing reluctance from European and multinational customers to use our services and increased exposure to regulatory actions, substantial fines and injunctions against processing or transferring personal information across borders.
+Added: If we are unable to increase our data processing capabilities and storage in Europe and other countries to limit or eliminate the need for data transfers out of Europe and other applicable countries quickly enough, and valid solutions for personal information transfers to the United States or other countries are not available or are difficult to implement in the interim, we will likely face continuing reluctance from European and multinational customers to use our services and increased exposure to regulatory actions, substantial fines and injunctions against processing or transferring personal information across borders.
Evolving laws, regulations, and other actual and asserted obligations relating to privacy, data protection, and data security, as well as any new or evolving obligations relating to the use of AI and ML technologies, could reduce demand for our platform, increase our costs, impair our ability to grow our business, or restrict our ability to store and process data or, in some cases, impact our ability to offer our service in some locations and may subject us to liability.
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We subsequently removed the identified traffic.
−Removed: In response to written questions from the FCC, we provided to the agency a follow-up letter on February 10, 2023 detailing our fraud mitigation practices and various improvements being carried out to reduce future risks.
+Added: In response to written questions from the FCC, we sent a follow-up letter to the agency on February 10, 2023 detailing our fraud mitigation practices and various planned improvements to reduce future risks.
There has been no further communication from the agency on this matter.
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For example, in some countries, some or all of the services we offer are not considered regulated telecommunications services, while in other countries they are subject to telecommunications regulations, including but not limited to payment into universal service funds, licensing fees, provision of emergency services, provision of information to support emergency services and number portability.
−Removed: Failure to comply with these regulations could result in our Company being issued remedial directions to undertake independent audits and implement effective systems, processes and
−Removed: practices to ensure compliance, significant fines or being prohibited from providing telecommunications services in a jurisdiction.
+Added: Failure to comply with these regulations could result in our Company being issued remedial directions to undertake independent audits and implement effective systems, processes and practices to ensure compliance, significant fines or being prohibited from providing telecommunications services in a jurisdiction.
Moreover, certain of our products may be used by customers located in countries where voice and other forms of Internet Protocol (“IP”) communications may be illegal or require special licensing or in countries on a U.S.
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Any such penalties or governmental action may be costly and may harm our business and damage our brand and reputation.
−Removed: We may be required to incur additional expenses to meet applicable international regulatory requirements or be required to raise the prices of services, or restructure or discontinue those services if required by law or if we cannot or will not meet those requirements.
+Added: We may be required to incur additional expenses to meet applicable international regulatory requirements or be
+Added: required to raise the prices of services, or restructure or discontinue those services if required by law or if we cannot or will not meet those requirements.
Any of the foregoing could adversely affect our business, results of operations and financial condition.
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Transferring existing numbers is a manual process that can take up to 15 business days or longer to complete.
−Removed: Any delay that we experience in transferring these numbers typically results from the fact that we depend on network service providers to transfer these numbers, a process that we do not control, and these network service providers may refuse or substantially delay
−Removed: the transfer of these numbers to us.
+Added: Any delay that we experience in transferring these numbers typically results from the fact that we depend on network service providers to transfer these numbers, a process that we do not control, and these network service providers may refuse or substantially delay the transfer of these numbers to us.
Number portability is considered an important feature by many potential customers, and if we fail to reduce any related delays, then we may experience increased difficulty in acquiring new customers.
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Among other things, the CAN-SPAM Act, obligates the sender of commercial emails to provide recipients with the ability to “opt-out” of receiving future commercial emails from the sender.
−Removed: In addition, some states have passed laws regulating commercial email practices that are significantly more restrictive and difficult to comply with than the CAN-SPAM Act.
+Added: In addition, some states have passed laws regulating commercial email practices that are
+Added: significantly more restrictive and difficult to comply with than the CAN-SPAM Act.
For example, Utah and Michigan prohibit the sending of email messages that advertise products or services that minors are prohibited by law from purchasing or that contain content harmful to minors to email addresses listed on specified child protection registries.
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For example, on January 25, 2023, we received a cease-and-desist letter from the FCC alleging that we were transmitting illegal robocall traffic that originated from an independent software vendor customer and their end user customer.
−Removed: In response, we have suspended the customers’ accounts and we provided to the FCC a follow-up letter on February 10, 2023 detailing our fraud mitigation practices and various improvements being carried out to reduce future risks.
+Added: In response, we suspended the customers’ accounts and sent the FCC a follow-up letter on February 10, 2023 detailing our fraud mitigation practices and various planned improvements to reduce future risks.
There has been no further communication from the agency on this matter.
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We cannot predict whether our role in facilitating our customers’ or other users’ activities will result in violations of carrier policies which could result in fines, administrative delays, or service interruptions.
−Removed: We also cannot predict whether our role in facilitating our customers’ or other users’ activities would expose us to liability under applicable state or federal law, or whether that possibility could become more likely if changes to current laws regulating content moderation, such as Section 230 of the Communications Decency Act, are enacted.
+Added: We also cannot predict whether our role in facilitating our customers’ or other users’ activities would expose us to liability under applicable state or federal law, or whether that possibility could become more likely if changes to current laws regulating content moderation, such as Section 230 of the Communications Decency Act,
If we are found liable for our customers’ or other users’ activities, we could be required to pay fines or penalties, redesign business methods or otherwise expend resources to remedy any damages caused by such actions and to avoid future liability.
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These laws or charges could limit the growth of Internet-related commerce or communications generally or result in reductions in the demand for Internet-based products and services such as our products and platform.
−Removed: In particular, a re-adoption of “network neutrality” rules in the United States, which President Biden supported during his campaign, could affect the services used by us and our customers.
+Added: In particular, in October 2023 the FCC moved to advance a proposal that would restore “network neutrality” rules in the United States, which could affect the services used by us and our customers.
+Added: If limits are imposed on the types of traffic that U.S.
+Added: domestic carriers can carry over their broadband networks, it could adversely affect the amount of carrier-originated traffic that we carry.
California’s state network neutrality law went into effect on March 10, 2021.
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If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including:
−Removed: possible loss of export privileges;
+Added: the possible loss of export privileges;
fines, which may be imposed on us and responsible employees or managers;
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Further, we incorporate encryption technology into certain of our products.
−Removed: Various countries regulate the import of certain encryption technology, including through import permitting and licensing requirements, and have enacted laws that could limit our customers’ ability to import our products into those countries.
+Added: Various countries regulate the import of certain encryption technology, including through import permitting and licensing requirements, and have enacted laws that
+Added: could limit our customers’ ability to import our products into those countries.
Encryption products and the underlying technology may also be subject to export control restrictions.
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and foreign anti-corruption and anti-bribery laws, including the FCPA, the UK Bribery Act 2010, and other anti-corruption laws and regulations in the countries in which we conduct activities.
−Removed: Anti-corruption laws are interpreted broadly and generally prohibit companies, their employees, agents, representatives, business partners, and third parties intermediaries from directly or indirectly authorizing, offering, or providing, improper payments or things of value to recipients in the public or private sector, and also require that we maintain accurate books and records and adequate internal controls and compliance procedures designed to prevent violations.
+Added: Anti-corruption laws are interpreted broadly and generally prohibit companies, their employees, agents, representatives, business partners, and third-party intermediaries from directly or indirectly authorizing, offering, or providing, improper payments or things of value to recipients in the public or private sector, and also require that we maintain accurate books and records and adequate internal controls and compliance procedures designed to prevent violations.
We sometimes leverage third parties to sell our products and conduct our business abroad.
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A claim brought against us that is uninsured or underinsured could result in unanticipated costs and could seriously harm our business.
−Removed: If we are required to make substantial payments or implement significant changes to our operations as a result of legal proceedings or claims, our business, results of operations and financial condition could be adversely affected.
+Added: If we are required to make substantial payments or implement significant changes to our
+Added: operations as a result of legal proceedings or claims, our business, results of operations and financial condition could be adversely affected.
Risks Related to Financial and Accounting Matters
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dollars, we have also conducted business in currencies other than the U.S.
−Removed: We expect to significantly expand the number of transactions with customers that are denominated in foreign currencies in the future as we continue to expand our business internationally.
+Added: We expect to expand the number of transactions with customers that are denominated in foreign currencies in the future as we continue to expand our business internationally.
We also incur expenses for some of our network service provider costs outside of the United States in local currencies and for employee compensation and other operating expenses at our non-U.S.
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We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results.
−Removed: As of June 30, 2023, we had $1.0 billion of indebtedness outstanding (excluding intercompany indebtedness).
+Added: As of September 30, 2023, we had $1.0 billion of indebtedness outstanding (excluding intercompany indebtedness).
Our indebtedness may:
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We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy.
−Removed: If investors or analysts do not perceive our
−Removed: metrics to be accurate representations of our business, or if we discover material inaccuracies in our metrics, our reputation, business, results of operations, and financial condition would be harmed.
+Added: If investors or analysts do not perceive our metrics to be accurate representations of our business, or if we discover material inaccuracies in our metrics, our reputation, business, results of operations, and financial condition would be harmed.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
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GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
−Removed: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
+Added: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances,
+Added: as provided in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
Assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition and business combinations.
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Goodwill is required to be tested for impairment at least annually.
−Removed: As of June 30, 2023, we carried a net $6.0 billion of goodwill and intangible assets.
+Added: As of September 30, 2023, we carried a net $5.9 billion of goodwill and intangible assets.
An adverse change in market conditions or significant changes in accounting conclusions, particularly if such changes have the effect of changing one of our critical assumptions or estimates, could result in a change to the estimation of fair value that could result in an impairment charge to our goodwill or intangible assets.
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Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.
−Removed: Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over
−Removed: financial reporting that we are required to include in our periodic reports that will be filed with the SEC.
+Added: Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports that will be filed with the SEC.
Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, and could have a material and adverse effect on our business, results of operations and financial condition and could cause a decline in the trading price of our Class A common stock.
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GAAP”), we have recorded a provision for our tax exposure in these jurisdictions when it is both probable that a liability has been incurred and the amount of the exposure can be reasonably estimated.
−Removed: We reserved $31.8 million and $20.5 million for domestic jurisdictions and jurisdictions outside of the United States, respectively, on our June 30, 2023 balance sheet for these tax payments.
−Removed: These estimates include several key assumptions,
−Removed: including, but not limited to, the taxability of our products, the jurisdictions in which we believe we have nexus or a permanent establishment, and the sourcing of revenues to those jurisdictions.
+Added: We reserved $32.2 million and $19.2 million for domestic jurisdictions and jurisdictions outside of the United States, respectively, on our September 30, 2023 balance sheet for these tax payments.
+Added: These estimates include several key assumptions, including, but not limited to, the taxability of our products, the jurisdictions in which we believe we have nexus or a permanent establishment, and the sourcing of revenues to those jurisdictions.
In the event these jurisdictions challenge our assumptions and analysis, our actual exposure could differ materially from our current estimates and reserves.
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We believe, however, that this assessment is incorrect and, after failing to reach a settlement, filed a lawsuit on May 27, 2021 contesting the assessment.
−Removed: The previously set trial date remains vacated, and the parties expect to file an update with the Court on the status of the case in October 2023.
−Removed: However, litigation is uncertain and a ruling against us may adversely affect our financial position and results of operations.
+Added: The previously set trial date remains vacated, and the parties have finalized a settlement agreement that was approved by San Francisco’s Board of Supervisors on November 7, 2023 and is currently before the Mayor for approval.
+Added: However, litigation is uncertain, and if the settlement is not formally approved and further litigation is necessary, a ruling against us may adversely affect our financial position and results of operations.
Our global operations and structure subject us to potentially adverse tax consequences.
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As another example, beginning in 2022, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) eliminates the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to Section 174 of the Code, which impacts our effective tax rate and our cash tax liability in 2023.
−Removed: requirement to capitalize Section 174 expenditures is not modified by legislation, it may also impact our effective tax rate and our cash tax liability in the future.
+Added: If the requirement to capitalize Section 174 expenditures is not modified by legislation, it may also impact our effective tax rate and our cash tax liability in the future.
On October 8, 2021, the Organization for Economic Co-operation and Development (the “OECD”) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (the “Framework”) which agreed to a two-pillar solution to address tax challenges arising from digitalization of the economy.
On December 20, 2021, the OECD released Pillar Two Model Rules defining the global minimum tax rules, which contemplate a minimum tax rate of 15%.
−Removed: The OECD continues to release additional guidance on these rules and the Framework calls for law enactment by OECD and G20 members to take effect after 2023.
+Added: The OECD continues to
+Added: release additional guidance on these rules and the Framework calls for law enactment by OECD and G20 members to take effect after 2023.
These changes, when enacted by various countries in which we do business, may increase our taxes in these countries.
22 unchanged sentences
• any significant change in our management, including changes in the pace of hiring;
−Removed: • general political, social, economic and market conditions, in both domestic and foreign markets, including the effects of the COVID-19 pandemic and the war in Ukraine on the global economy, changes in the labor market, supply chain disruptions, inflation, increased interest rates, instability and volatility in the banking and financial services sector, and slow or negative growth of our markets.
+Added: • general political, social, economic and market conditions, in both domestic and foreign markets, including the effects of the COVID-19 pandemic and the war in Ukraine on the global economy, changes in the labor market,
+Added: supply chain disruptions, inflation, increased interest rates, instability and volatility in the banking and financial services sector, and slow or negative growth of our markets.
In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies.
61 unchanged sentences
There is an increasing focus from regulators, certain investors, and other stakeholders concerning ESG matters, both in the United States and internationally.
−Removed: We communicate certain ESG-related initiatives, goals, and/or commitments regarding environmental matters, diversity, responsible sourcing and social investments, and other matters in our annual ESG Report, on our website, in our filings with the SEC, and elsewhere.
−Removed: These initiatives, goals, or commitments could be difficult to achieve
−Removed: and costly to implement.
+Added: We communicate certain ESG-related initiatives, goals, and/or commitments regarding environmental matters, diversity, responsible sourcing and social investments, and other matters in our annual Impact and DEI Report, on our website, in our filings with the SEC, and elsewhere.
+Added: These initiatives, goals, or commitments could be difficult to achieve and costly to implement.
We could fail to achieve, or be perceived to fail to achieve, our ESG-related initiatives, goals, or commitments.
3 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.