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Risks Related to Our Business and Industry
−Removed: • our ability to increase our customers’ usage of our platform;
−Removed: • our ability to attract new customers effectively and in a cost-efficient manner;
−Removed: • our ability to increase adoption of our products by new customers, including enterprises;
−Removed: • our ability to develop new products and enhancements that achieve market acceptance and adapt to changing technology, regulations, and industry standards;
−Removed: • our ability to integrate our products with third-party products and ensure they operate effectively;
• the impact of global economic and political conditions, including macroeconomic and political uncertainties;
• fluctuations in our quarterly results and our ability to meet securities analysts’ and investors’ expectations;
+Added: • fluctuations in the levels of our customers’ usage of our platform;
+Added: • our ability to attract new customers and increase usage of our products by existing customers effectively and in a cost-efficient manner;
+Added: • our ability to develop new products and enhancements that achieve market acceptance and adapt to changing technology, regulations, and industry standards;
+Added: • our ability to integrate our products with third-party products and ensure they operate effectively;
• our ability to effectively manage our growth and strategic changes to our business;
−Removed: • our ability to compete effectively in intensely competitive markets;
−Removed: • the evolution of the markets for our products;
+Added: • our ability to compete effectively in intensely competitive and rapidly evolving markets;
• our history of losses and uncertainty about our future profitability;
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• our ability to maintain and enhance our brand and increase market awareness of our company and products;
−Removed: • disruptions or deterioration in quality of service and connectivity by third-party service providers;
+Added: • our reliance on network service providers and internet service providers for network service and connectivity;
• failure to set optimal prices for our products;
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• our ability to comply with telecommunications-related regulations, and the impact of future legislative or regulatory actions;
−Removed: • our ability to obtain or retain geographical, mobile, regional, local or toll-free numbers and to effectively process requests to port such numbers in a timely manner due to industry regulations;
+Added: • our ability to obtain, assign or retain geographical, mobile, regional, local or toll-free numbers and to effectively process requests to port such numbers in a timely manner due to industry regulations;
• federal and state legislation and international laws imposing obligations on the senders of commercial emails;
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• potential decline in the market price of our common stock due to substantial future sales of shares;
−Removed: • the possibility that we may not realize the anticipated long-term stockholder value of our share repurchase programs;
+Added: • the possibility that we may not realize the anticipated long-term stockholder value of our share repurchase program;
• securities or industry analysts changing their recommendations regarding our common stock;
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Risks Related to Our Business and Our Industry
+Added: Global economic and political conditions, including macroeconomic and political uncertainties, have had, and may continue to have, an adverse impact on our business, results of operations and financial condition.
+Added: Global economic and business activities continue to face widespread macroeconomic uncertainties, including market volatility, changes in international economic and trade relations, supply chain disruptions, changes in the labor market, elevated interest rates and potential increases in inflation, foreign currency exchange rate fluctuations and recession risks, which may continue for an extended period.
+Added: Additionally, the instability in the political environment in many parts of the world, including in the United States, and changes and uncertainty with respect to trade policies, actual or threatened tariffs, treaties, government regulations, executive orders, directives and enforcement priorities, as well as any ongoing or potential U.S.
+Added: federal government shutdown, may adversely affect the global economy and/or our business.
+Added: Given that a majority of our revenue is usage-based and therefore 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 subscription revenue.
+Added: Additionally, increased prices resulting from the effects of tariffs and inflation could increase our operating expenses.
+Added: Adverse macroeconomic conditions have in the past resulted in, and may in the future result in, decreased or delayed business spending by our current and prospective customers and business partners, reduced demand for or usage of 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 negatively affect revenue and revenue growth.
+Added: Additionally, our customers may be affected by changes and uncertainty in the global political environment with respect to trade and other policies.
+Added: For example, uncertainty regarding the impact of tariffs on certain countries by the U.S.
+Added: administration, as well as potential or actual retaliatory measures taken by trade partners, have adversely affected trade relations, put increased pressure on supply chains, and led to increased market volatility, and such effects may continue.
+Added: Any resulting harm to our customers’ businesses could depress their usage levels and/or purchasing power and lead them to reduce their spending with us.
+Added: Macroeconomic and political conditions and uncertainties have in the past adversely affected, and may in the future adversely affect, our business, results of operations and financial condition, and could exacerbate many of the other risks described in this “Risk Factors” section.
+Added: Our quarterly and annual results of operations have fluctuated in the past and may continue to do so in the future.
+Added: As a result, we may fail to meet securities analysts’ and investors’ expectations, which could cause the price of our common stock to decline.
+Added: Our quarterly and annual results of operations have fluctuated in the past and may continue to do so in the future due to a variety of factors, many of which are outside of our control.
+Added: These fluctuations and the related impacts to any earnings guidance we may issue from time to time could cause the price of our common stock to change significantly or decline.
+Added: In addition to the
+Added: other risks described in this “Risk Factors” section, some of the factors that may result in fluctuations to our results of operations include:
+Added: • fluctuations in demand for, pricing of, or usage of, our products;
+Added: • our ability to introduce new products, features and enhancements;
+Added: • our ability to expand our customer base and the markets that our products address, attract and retain new customers, obtain renewals from existing customers and cross-sell or otherwise increase revenue from existing customers;
+Added: • our ability to improve, automate, and leverage more of our self-service capabilities for customers;
+Added: • our ability to maintain and expand relationships with resellers, distributors, and strategic partners, including ISVs, technology partners, and systems integrators;
+Added: • our ability to combine our communications products with contextual data and AI and introduce compelling new products and enhancements that address the changing nature of our markets and customer needs and preferences;
+Added: • competition and the actions of our competitors, including pricing changes and the introduction of new technologies, products, services and geographies;
+Added: • significant security breaches or incidents impacting our platform, or interruptions to the delivery and use of our products;
+Added: • changes in cloud infrastructure, network services and other third-party technology, including the fees charged by their providers;
+Added: • the effectiveness of our sales and marketing efforts, the productivity of our sales force, and the length and complexity of the sales cycle for certain of our products or customers;
+Added: • changes in the mix or amount of products that our customers use, and that are sold in the United States versus internationally, during a particular period;
+Added: • seasonal trends, including due to increased consumer activity in the fourth quarter;
+Added: • the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business;
+Added: • our ability to control costs, including our operating expenses;
+Added: • the timing of customer payments and our ability to collect accounts receivable from customers;
+Added: • the amount and timing of costs associated with recruiting, training and integrating new employees, and retaining existing employees;
+Added: • expenses in connection with mergers, acquisitions, dispositions, or other strategic transactions;
+Added: • changes in foreign currency exchange rates and our ability to effectively hedge our foreign currency exposure;
+Added: • extraordinary expenses such as litigation or other dispute-related settlement payments;
+Added: • changes in laws, industry standards and regulations that affect our business;
+Added: • sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business;
+Added: • the impact of new accounting pronouncements;
+Added: • fluctuations in stock-based compensation expenses;
+Added: • general economic conditions, including heightened inflation or interest rates, and geopolitical uncertainty or instability.
+Added: The occurrence of one or more of the foregoing and other factors may cause our results of operations to vary significantly.
+Added: As such, comparing our operating results on a period-to-period basis may not be meaningful and should not be relied upon as an indication of future performance.
+Added: In addition, a significant percentage of our operating expenses is fixed in nature and is based on forecasted revenue trends.
+Added: Accordingly, in the event of a revenue shortfall, we may not be able to mitigate the negative impact on our net income (loss) and margins in the short term.
+Added: If we fail to meet or exceed the expectations of investors or securities analysts, then the trading price of our common stock could fall substantially, and we could face costly lawsuits, including securities class action suits, which, in turn, could harm our business, results of operations and financial condition.
If our customers terminate or reduce their usage of our products, our business, results of operations and financial condition would be adversely affected.
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Customers may terminate or reduce their use of our products, or we may fail to attract new customers, for any number of reasons, including dissatisfaction with our products or with the value proposition of our products, our inability to meet their needs and expectations, our failure to maintain performance, reliability, security, integrity or availability of our products and infrastructure to the satisfaction of our customers, or customers’ use of competitors’ products.
−Removed: For example, prior instances of disruptions in our cloud communications platform have impacted our customers’ ability to use products on our platform for up to several hours at a time.
−Removed: Issues with our products have had, and in the future may have, an adverse impact on customer satisfaction and our ability to retain or attract customers and have caused, and may in the future cause, us to incur certain costs associated with offering credits to our affected customers.
+Added: For example, prior instances of disruptions in our networks or systems, or those of our third-party service providers, have impacted our customers’ ability to use products on our platform for up to several hours at a time.
+Added: Such issues have had, and in the future may have, an adverse impact on customer satisfaction and our ability to retain or attract customers and have caused, and may in the future cause, us to incur certain costs associated with offering credits to our affected customers.
Additionally, we believe our ability to provide customers with high-quality, effective customer support services is a crucial component of maintaining customer satisfaction, generating increased customer usage of our products and ultimately retaining customers.
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If we lose customers, or if our customers reduce their usage levels of our products, our business, results of operations and financial condition could be adversely affected.
−Removed: If our sales and marketing efforts do not attract new customers or we are unable to sell additional products to our existing customers effectively and in a cost-efficient manner, our business, results of operations and financial condition would be adversely affected.
−Removed: To grow our business, we must continue to attract new customers, increase usage of our existing products and new product adoption by existing customers, and successfully market new products, including products with higher gross margins, in a cost-effective manner.
+Added: If we are unable to attract new customers or increase usage of our products by existing customers effectively and in a cost-efficient manner, our business, results of operations and financial condition would be adversely affected.
+Added: To grow our business, we must continue to attract new customers, increase usage of our existing products and new product adoption by existing customers, and successfully market new products, including products with higher gross margins, and do so in a cost-effective manner.
Our sales and marketing teams work closely together to drive awareness and adoption of our platform.
−Removed: We leverage our brand, marketing programs, developer network and conferences, such as SIGNAL, to expand our go-
−Removed: to-market motions.
+Added: We leverage our brand, marketing programs and conferences, such as SIGNAL, to expand our go-to-market
Our go-to-market model has three motions:
−Removed: our self-service platform, primarily aimed at developers, marketers, and other technical users;
−Removed: our direct sales motion, primarily aimed at enterprise and commercial customers;
−Removed: and our partner-led motion, including resellers, distributors, and strategic partners, such as independent software vendors, technology partners and systems integrators, which is primarily aimed at customers who do not have the available developer resources to build their own applications.
−Removed: If the costs of the marketing channels we use increase, then we may choose to use alternative or 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 of time and resources in new marketing campaigns and sales motions, and changes to the organization of our sales force, and we cannot guarantee that any such investments or changes will lead to wider adoption of our products or to the cost-effective acquisition of additional customers or increased revenue from existing customers as quickly or to the extent that we expect, or at all.
−Removed: In addition, new products that we develop or markets that we pursue may require increasingly sophisticated and more costly sales efforts and result in a longer sales cycle.
−Removed: If we are unable to maintain effective sales and marketing programs, our ability to efficiently attract new customers and increase revenue from existing customers could be adversely affected.
−Removed: In addition, in recent years, we have reduced the size of our sales force to drive further efficiencies in our sales operations.
−Removed: With a more streamlined workforce, we are continuing to improve and rely more heavily on our use of self-service capabilities to drive sales of our products to customers that do not require direct account coverage.
−Removed: Additionally, we are introducing AI and automation in our self-service platform aimed at improving sales and customer support.
−Removed: Our self-service capabilities may not be as effective as we anticipate in driving adoption or increased usage of our products, or may take longer than we expect to drive growth.
−Removed: If our efforts to increase the adoption and usage of our products or sell additional products to existing customers are more expensive or time-consuming than we expect or otherwise ineffective, then our business, results of operations and financial condition would be adversely affected.
−Removed: If we are unable to increase adoption of our products by new customers, including enterprises, our business, results of operations and financial condition may be adversely affected.
−Removed: Historically, a majority of our Active Customer Accounts have been acquired through the adoption of our Communications API products by software developers using our self-service model.
−Removed: As our platform and market evolves and we seek to increase our customer base and achieve broader market acceptance of our products, we must effectively adapt our sales motions and navigate challenges presented by these customers and markets.
−Removed: In addition to continuing to improve our self-service platform aimed at developers, marketers, and other technical users, we are also focusing increasingly on sales to enterprises, such as through our Segment product, which is primarily aimed at complex customer data platform implementations at larger companies, and additional product innovations combining our communications products with contextual data and AI.
−Removed: As we seek to increase the adoption of our products by enterprises, we expect to encounter higher costs and more complex sales efforts for these customers.
−Removed: Our ability to expand our customer base, including among enterprises, and to succeed in evolving markets will also depend, in part, on our ability to effectively attract and retain sales employees with relevant experience and organize, focus and train our sales, marketing and other employees.
+Added: our self-service platform, primarily aimed at developers and other technical customers;
+Added: our direct sales motion, primarily aimed at enterprises and other organizations with complex, high-scale business needs;
+Added: and our partner-led motion, including resellers, distributors, and strategic partners, such as ISVs, technology partners and systems integrators, which is primarily aimed at customers who do not have the available developer resources or expertise to build our products into their own applications.
+Added: Our sales and marketing strategies, and their effectiveness, are influenced by numerous factors.
We have made, and may in the future make, changes to the organization of our sales force and sales motions in response to changes in company strategy, new market opportunities, new products or features, sales performance or effectiveness, changes in sales headcount, changes to the compensation structure of our sales organization, or other factors.
−Removed: Such changes have resulted, and may in the future result, in a reduction of productivity, which could negatively impact our growth rate and results of operations.
−Removed: For enterprises, the decision to adopt our products may require the approval of multiple technical and business decision makers, including legal, security, compliance, procurement, operations and information technology (“IT”).
−Removed: 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 result in higher costs and longer sales cycles.
−Removed: In addition, some enterprise customers may not use our products enough for us to generate revenue that justifies our cost to obtain such customers.
−Removed: These complex and resource-intensive sales efforts could place additional strain on our product and engineering resources.
−Removed: Further, enterprises, including some of our existing customers or partners, may choose to develop their own solutions that do not include our products.
+Added: Such changes may not lead to wider adoption of our products or to the cost-effective acquisition of additional customers or increased revenue from existing customers as quickly or to the extent we expect, or at all, and have resulted, and may in the future result, in a reduction of productivity, which could negatively impact our growth rate and results of operations.
+Added: For example, in recent years, we have reduced the size of our sales force to drive further efficiencies in our sales operations and are continuing to improve and rely more heavily on our use of self-service capabilities to drive sales of our products to customers that do not require direct account coverage.
+Added: We are also introducing AI and automation in our self-service platform aimed at improving sales and customer support.
+Added: These efforts may not continue to be as effective as we anticipate in driving adoption or increased usage of our products, or may take longer than we expect to drive growth or increase efficiency.
+Added: In addition, if the costs of the marketing channels we use increase, then we may choose to use alternative or less expensive channels, which may not be as effective as the channels we currently use.
+Added: New products that we develop or markets that we pursue may require increasingly sophisticated and more costly sales efforts and result in longer sales cycles.
+Added: For example, we are focusing increasingly on sales to enterprises, such as through our Segment product, which is primarily aimed at complex customer data platform implementations at larger companies, and additional product innovations combining our communications products with contextual data and AI.
+Added: As we seek to increase the adoption of our products by enterprises, we expect to encounter higher costs and more complex sales efforts for these customers.
+Added: For enterprises, the decision to adopt our products may require the approval of multiple technical and business decision makers, and enterprise customers may require extensive education about our products and significant customer support before they will commit to deploying our products at scale, which may place additional strain on our product and engineering resources.
+Added: Enterprises may also engage in protracted pricing and contract negotiations, leading to higher costs and longer sales cycles.
+Added: Enterprise customers may not use our products enough for us to generate revenue that justifies our cost to obtain such customers, or 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: If we are unable to successfully navigate the challenges posed by enterprise customers, our ability to acquire or benefit from enterprise customer relationships may be undermined and our business, results of operations and financial condition may be adversely affected.
−Removed: Our future success depends, in part, on our ability to develop new products and product enhancements that achieve market acceptance, as well as adapt and respond effectively to rapidly changing technology, regulations, and industry standards.
+Added: If our efforts to increase the adoption and usage of our products or sell additional products to existing customers are more expensive or time-consuming than we expect or are otherwise ineffective, then our business, results of operations and financial condition would be adversely affected.
+Added: We may not be able to develop new products or product enhancements that achieve market acceptance, or adapt and respond effectively to rapidly changing technology, regulations, industry standards, or customer needs and preferences.
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 and enhancements that reflect the changing nature of our markets, technology, industry standards, and customer needs and preferences.
−Removed: For example, we are focused on continued product innovations to combine our communications products with contextual data and AI in order to address evolving customer needs and expectations.
−Removed: The success of any enhancements or new products we introduce depends on several factors, including timely completion, adequate quality testing, actual performance quality, market-accepted pricing levels, the ability to provide rapid time-to-value for our customers, and overall market acceptance.
+Added: Anticipating these factors requires that we allocate significant resources without any guarantee that our investments of these resources will result in increased adoption of our products by current and prospective customers.
+Added: For example, we have committed, and expect to continue to commit, significant resources towards developing new products and enhancements by combining our communications products with contextual data and AI.
+Added: 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, customer value and the ability to provide rapid time-to-value for our customers, and the emergence of competing products and services that may be delivered at lower prices, more efficiently, conveniently or securely, or render our products obsolete.
+Added: For example, if user authentication practices evolve to reduce or eliminate the use of one-time passwords, our revenue could be adversely affected.
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 at times driven by our developer community and may be outside of our control.
−Removed: The current and prospective markets for our products are subject to rapid technological change, evolving industry standards, and changing regulations, as well as changing customer needs, requirements and preferences.
−Removed: These are all uncertain and we cannot predict the consequences, effects, or introduction of new, disruptive, emerging technologies or the manner and pace at which our markets develop over time, and our ability to compete in these markets depends on predicting and adapting to these changing circumstances to meet current and prospective customer needs.
−Removed: The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis, and anticipating these factors requires that we allocate significant resources without any guarantee that any such investments and efforts will result in increased adoption of our products in the marketplace.
−Removed: For example, with the development of next-generation solutions that utilize new and advanced features, including AI and ML, we have committed, and expect to continue to commit, significant resources to developing new products and enhancements and there is no guarantee that our investments and efforts will result in wider adoption of our products in the marketplace.
−Removed: If new technologies emerge that are able to deliver competitive products and services at lower prices, or more efficiently, quickly, conveniently or securely, or if new products are introduced into the market that could render our existing products obsolete, such technologies and products could adversely impact our ability to compete effectively and may lead to customers reducing or terminating their usage of our products.
−Removed: For example, if user authentication practices evolve to reduce or eliminate the use of one-time passwords, our revenue could be adversely affected.
−Removed: If we are unable to successfully and cost-effectively increase adoption and usage of our existing products, develop and drive adoption of new products, anticipate and keep pace with changes in technology, customers’ needs and expectations, and industry standards, or provide rapid time-to-value to our current and prospective customers, our business, results of operations and financial condition would be adversely affected.
+Added: If we are unable to successfully and cost-effectively develop and drive adoption of new products, anticipate and keep pace with changes in technology, customers’ needs and expectations, and industry standards, or provide rapid time-to-value to our current and prospective customers, our business, results of operations and financial condition would be adversely affected.
The success of our products depends, in part, on our ability to integrate them with third-party products used by us or our customers and to ensure that they operate effectively with evolving platforms and technologies.
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If we are unable to maintain the integrations between our products and such third-party products, our ability to meet the needs and expectations of our customers could be adversely affected, which could adversely affect our business.
−Removed: Our platform must integrate with and leverage a variety of infrastructure, network, hardware, mobile and software platforms and technologies, and we need to continuously modify and enhance our products and platform to adapt to changes and innovation in these technologies.
−Removed: For example, last year we launched a new channel using Rich Communication Services (“RCS”) and we are working on a channel for Apple Messages for Business.
−Removed: We are also focused on Segment’s interoperability across the data ecosystem.
+Added: Our platform must integrate with and leverage a variety of infrastructure, network, hardware, mobile and software platforms and technologies, and we need to continuously modify and enhance our products and platform to adapt to new integrations and changes and innovation in integrated technologies which may present significant complexity, obstacles or other adverse impacts on our products or our business.
+Added: For example, we recently launched a new channel using Rich Communication Services (“RCS”) and we are working on a channel for Apple Messages for Business.
+Added: We are also focused on the interoperability of our products across the data ecosystem.
Third-party platforms may also implement changes to their policies or practices regarding privacy or other matters that may adversely impact us or our customers.
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This development effort may require significant resources, which would adversely affect our business, results of operations and financial condition.
−Removed: Any failure of our products and platform to operate effectively with
−Removed: evolving or new platforms and technologies could reduce the demand for our products.
+Added: Any failure of our products and platform to operate effectively with evolving or new platforms and technologies could reduce the demand for our products.
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: Global economic and political conditions, including macroeconomic and political uncertainties, have had, and may continue to have, an adverse impact on our business, results of operations and financial condition.
−Removed: Global economic and business activities continue to face widespread macroeconomic uncertainties, including changes in the labor market and supply chain disruptions, inflation and monetary supply shifts, volatility in the banking and financial services sectors, and recession risks, which may continue for an extended period.
−Removed: Additionally, the instability in the geopolitical environment in many parts of the world, changes in public policy, international trade relations, actual or potential tariffs, and other disruptions to global and regional economies and markets may continue to cause or exacerbate uncertain economic conditions.
−Removed: 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 subscription revenue.
−Removed: Adverse macroeconomic conditions have resulted in, and may continue to result in, decreased or delayed business spending by our current and prospective customers and business partners, reduced demand for or usage of 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 negatively affect revenue and revenue growth.
−Removed: Additionally, changes in the U.S.
−Removed: political environment could lead to changes in macroeconomic conditions and to the legal and regulatory environment in the United States and globally, including changes to international trade relations, economic and monetary policies or other legislation, regulations, executive orders, directives or enforcement priorities, any of which could have an adverse impact on the global economy and/or our business.
−Removed: If customers fail to pay us or reduce their spending with us as a result of adverse macroeconomic or geopolitical conditions or otherwise, we may be required to take steps to enforce the terms of our contracts and collect amounts due, including through litigation, which could increase our operating expenses.
−Removed: For example, in February 2023, one of our customers, Oi SA, a Brazilian telecom company, initiated reorganization proceedings in a Brazilian bankruptcy court as well as a secondary proceeding under Chapter 15 in the United States and exposed us to risks on collections of pre-petition receivables and ongoing revenue, as detailed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Results of Operations.” If macroeconomic and geopolitical conditions and uncertainties adversely affect our business and the businesses of our current and prospective customers, our results of operations and financial condition may continue to be harmed, and many of the other risks described in this “Risk Factors” section will be exacerbated.
−Removed: Our quarterly and annual results of operations have fluctuated in the past and may continue to do so in the future.
−Removed: As a result, we may fail to meet securities analysts’ and investors’ expectations, which could cause the price of our common stock to decline.
−Removed: Our quarterly and annual results of operations have fluctuated in the past and may continue to do so in the future due to a variety of factors, many of which are outside of our control.
−Removed: These fluctuations and the related impacts to any earnings guidance we may issue from time to time could cause the price of our common stock to change significantly or experience declines.
−Removed: In addition to the other risks described in this “Risk Factors” section, some of the factors that may result in fluctuations to our results of operations include:
−Removed: • fluctuations in demand for, pricing of, or usage of, our products;
−Removed: • our ability to introduce new products, features and enhancements;
−Removed: • our ability to attract and retain new customers, obtain renewals from existing customers and cross-sell or otherwise increase revenue from existing customers;
−Removed: • our ability to improve, automate, and leverage more of our self-service capabilities for customers;
−Removed: • our ability to maintain and expand relationships with resellers, distributors, and strategic partners, including independent software vendors, technology partners, and systems integrators;
−Removed: • our ability to expand our customer base and the markets that our products address;
−Removed: • our ability to combine our communications products with contextual data and AI and introduce compelling new products and enhancements that address the changing nature of our markets and customer needs and preferences;
−Removed: • competition and the actions of our competitors, including pricing changes and the introduction of new technologies, products, services and geographies;
−Removed: • significant security breaches or incidents impacting our platform, or interruptions to the delivery and use of our products;
−Removed: • changes in cloud infrastructure, network services and other third-party technology, including the fees charged by their providers;
−Removed: • the effectiveness of our sales and marketing efforts and the productivity of our sales force;
−Removed: • the length and complexity of the sales cycle for certain of our products or customers;
−Removed: • changes in the mix of products that our customers use during a particular period;
−Removed: • seasonal trends in consumer activity;
−Removed: • changes in the mix or amount of products sold in the United States versus internationally;
−Removed: • the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business;
−Removed: • our ability to control costs, including our operating expenses;
−Removed: • the timing of customer payments and our ability to collect accounts receivable from customers;
−Removed: • the amount and timing of costs associated with recruiting, training and integrating new employees, and retaining existing employees;
−Removed: • expenses in connection with mergers, acquisitions, dispositions, or other strategic transactions;
−Removed: • changes in foreign currency exchange rates and our ability to effectively hedge our foreign currency exposure;
−Removed: • extraordinary expenses such as litigation or other dispute-related settlement payments;
−Removed: • changes in laws, industry standards and regulations that affect our business;
−Removed: • sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business;
−Removed: • the impact of new accounting pronouncements;
−Removed: • fluctuations in stock-based compensation expenses;
−Removed: • general economic conditions, including heightened inflation or interest rates, and geopolitical uncertainty or instability.
−Removed: The occurrence of one or more of the foregoing and other factors may cause our results of operations to vary significantly.
−Removed: As such, comparing our operating results on a period-to-period basis may not be meaningful and should not be relied upon as an indication of future performance.
−Removed: In addition, a significant percentage of our operating expenses is fixed in nature and is based on forecasted revenue trends.
−Removed: Accordingly, in the event of a revenue shortfall, we may not be able to mitigate the negative impact on our net income (loss) and margins in the short term.
−Removed: If we fail to meet or exceed the expectations of investors or securities analysts, then the trading price of our common stock could fall substantially, and we could face costly lawsuits, including securities class action suits, which, in turn, could harm our business, results of operations and financial condition.
If we fail to effectively manage our growth and strategic changes to our business, then our business, results of operations and financial condition could be adversely affected.
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To manage our current and anticipated future growth effectively, we must continue to improve our operational, financial and management controls as well as our reporting systems and procedures, which has required, and will continue to require, us to commit substantial financial, operational, and technical resources.
−Removed: As part of our growth strategy, we have in the past reorganized, and may in the future reorganize, our business or change our reporting structure, which requires significant expenditures, allocation of valuable management resources and significant demands on our operational and financial infrastructure.
−Removed: Any anticipated benefits from any restructuring initiatives we may take may be realized later than expected or not at all, and the ongoing costs of implementing these measures may be greater than anticipated.
−Removed: Additionally, 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 business and operating model, then our business, results of operations and financial condition could also be adversely affected.
We continue to scale the capacity of, and enhance the capability and reliability of, our technical infrastructure to support increased activity on our platform.
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If we fail to efficiently scale and manage our infrastructure, or if our customers experience service disruptions or outages, our business, financial condition and operating results may be adversely impacted.
−Removed: The markets in which we participate are intensely competitive, and if we do not compete effectively, our business, results of operations and financial condition could be harmed.
−Removed: The current and prospective markets for our products are rapidly evolving, significantly fragmented and highly competitive, with relatively low barriers to entry in some segments.
−Removed: The principal competitive factors these markets include completeness of offering, credibility with customers, ability to differentiate our products against competing offerings, global reach, ease of integration and programmability, product features, platform scalability, reliability, deliverability, security and performance, brand awareness and reputation, the strength of sales and marketing efforts, customer support, and the cost of deploying and using products.
−Removed: Our competitors are primarily (i) CPaaS companies that offer communications products and applications, (ii) other software companies that compete with portions of our communications product line, (iii) regional network service providers that offer limited developer functionality on top of their own physical infrastructure, (iv) customer relationship management and customer experience vendors and (v) standalone customer data platform vendors.
+Added: The current and prospective markets for our products are intensely competitive and rapidly evolving, and if we do not compete effectively or if these markets fail to grow as expected, our business, results of operations and financial condition could be harmed.
+Added: The current and prospective markets for our products are rapidly evolving, significantly fragmented and highly competitive, in some cases with relatively low barriers to entry, and may fail to grow as expected or decline over time.
+Added: The principal competitive factors of these markets include completeness of offering, credibility with customers, ability to differentiate our products against competing offerings, global reach, ease of integration and programmability, product features, platform scalability, reliability, deliverability, security and performance, brand awareness and reputation, the strength of sales and marketing efforts, customer support, and the cost of deploying and using products, as well as our customers’ perception of the value and necessity of our products and platform.
+Added: Our competitors are primarily (i) CPaaS companies that offer communications products and applications, (ii) regional network service providers that offer limited developer functionality on top of their own physical infrastructure, (iii) customer relationship management and customer experience vendors, (iv) standalone customer data platform vendors and (v) other software companies that compete with portions of our product line.
Some of our competitors and potential competitors are larger and have greater name recognition, longer operating histories, more established customer relationships, larger budgets, lower operating costs, and significantly greater resources than we do.
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Our current and potential competitors have in the past and may in the future develop and market products and services with comparable functionality to our products, and this could lead us to decrease prices in order to remain competitive.
+Added: In addition, customers may reduce or delay spending on our products or substitute alternative solutions in response to pricing pressures, budget constraints or changing business priorities.
With the introduction of new products and services and new market entrants, we expect competition to intensify in the future.
+Added: Industry developments and evolving technology, such as AI, may also impact our competitive landscape and the factors required to compete effectively in current or prospective markets.
+Added: Our ability to grow will depend in part on our success in expanding the scope of our products and entering new markets, and there can be no assurance that the markets will grow or that our products will achieve meaningful adoption within them.
As we expand the scope of our products, we may face additional competition and, in some cases, may find our products in competition with those of our customers, which could cause them to replace our products with competitive offerings.
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Pricing pressures and increased competition generally could result in reduced revenue, reduced margins, increased losses or the failure of our products to achieve or maintain widespread market acceptance, any of which could harm our business, results of operations and financial condition.
−Removed: Our business, results of operations and financial condition also depends, in part, on our ability to establish, maintain and expand relationships through resellers, distributors, and strategic partners, including independent software vendors, technology partners and systems integrators.
+Added: Our business, results of operations and financial condition also depends, in part, on our ability to establish, maintain and expand relationships through resellers, distributors, and strategic partners, including ISVs, technology partners and systems integrators.
A portion of our revenue is derived from sales made by these partners and any one of them may later decide to sell their own products or those of third parties that may be competitive with our products.
A loss or reduction in sales of our products through these third parties could adversely affect our revenue and other results of operations.
−Removed: The markets for our products continue to evolve and may decline or experience limited growth.
−Removed: The markets for our products continue to evolve, which makes our business and future prospects difficult to evaluate.
−Removed: If current and prospective customers 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.
−Removed: In order to grow our business and extend our market position, we intend to focus on educating customers about the benefits of our products and platform, expanding and improving the functionality of our products and bringing new technologies to market to increase market acceptance and use of our platform.
−Removed: Our growth will depend, in part, on our ability to expand the markets that our products address and to enter into new markets.
−Removed: Our ability to do so depends upon a number of factors, including the cost, performance and perceived value associated with our products and platform.
−Removed: The markets for our products and platform could fail to grow significantly, or at all, or there could be a reduction in demand for our products as a result of any number of factors, including a lack of customer acceptance, technological challenges, competing products and services, decreases in spending by current and prospective customers, weakening macroeconomic conditions, and other causes.
−Removed: If these markets do not grow or demand for our products decreases, then our business, results of operations and financial condition could be adversely affected.
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 $109.4 million, $1.0 billion and $1.3 billion in the years ended December 31, 2024, 2023 and 2022, respectively.
−Removed: We had an accumulated deficit of $7.5 billion as of December 31, 2024.
+Added: While we achieved net income of $33.8 million in the year ended December 31, 2025, we have incurred net losses in each preceding year since our inception, including net losses of $109.4 million and $1.0 billion in the years ended December 31, 2024 and 2023, respectively.
In addition, while we have experienced revenue growth in prior periods, it is not indicative of future revenue growth, and our revenue and revenue growth for any quarterly or annual period should not be relied upon as an indication of our future revenue or revenue growth for any future period.
−Removed: If we are unable to generate and sustain increased revenue levels and manage our operating expenses, we may not become profitable and achieve our stated profitability goals and, even if we do, we may not be able to maintain or increase our level of profitability.
+Added: If we are unable to generate and sustain increased revenue levels and manage our operating expenses, we may not achieve and sustain profitability and, even if we do, we may not be able to increase our level of profitability or achieve our stated profitability goals.
As we implement additional initiatives to increase revenue, our operating expenses may continue to rise over the long term, potentially including, among other things:
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We have experienced, and may continue to experience, high attrition among our senior management team and key employees.
−Removed: 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 our financial and operational targets, and could adversely affect our business, results of operations and financial condition.
+Added: 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 our financial and operational targets, and could adversely affect our business, results of operations and financial condition.
Additionally, we have implemented several reductions in workforce and efforts to restructure our business in the past and may in the future implement other reductions in force.
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To deliver our products, we rely on network service providers and internet service providers for our network service and connectivity, and disruption or deterioration in the quality of these services or changes in provider fees that we pay in connection with the delivery of communications on our platform could adversely affect our business, results of operations and financial condition.
−Removed: We currently interconnect with fixed and mobile network service providers around the world to enable our customers to use our products over their networks.
−Removed: Although we are in the process of acquiring authorization in many countries for direct access to phone numbers and for the provision of voice and messaging services on the networks of fixed and mobile network service providers, we expect that we will continue to rely on network service providers for these services.
−Removed: Where we do not have direct access to phone numbers, our reliance on network service providers has reduced our operating flexibility, ability to make timely service changes and control quality of service.
−Removed: In addition, the fees that we are charged by network service providers may change daily or weekly and we can be subject to the imposition of additional fees, penalties, or other administrative or technical requirements, and even service interruption, due to regulatory, competitive, or other industry related changes over which we have little to no control.
−Removed: For example, in recent years, multiple major U.S.
−Removed: mobile carriers have introduced A2P SMS service offerings that added a new fee for A2P SMS messages delivered to their respective subscribers, and, from time to time, other U.S.
−Removed: mobile carriers have added similar fees.
−Removed: While we have historically responded to these types of fee increases through a combination of further negotiating efforts with our network service providers, absorbing the increased costs or passing the fees through to customers, there is no guarantee that we will continue to be able to respond in these ways in the future without a material negative impact to our business.
−Removed: We typically do not change our customers’ pricing as rapidly and, as a result, such fee increases could adversely affect our business and results of operations.
−Removed: In addition, passing these fees through to our customers typically has the
−Removed: effect of increasing our revenue and cost of revenue, but typically does not impact the gross profit dollars received for sending these messages and, as a result, has a negative impact on our gross margins.
−Removed: Additionally, our ability to respond to any new fees may be constrained if all network service providers in a particular market impose equivalent fee structures, if the magnitude of the fees is disproportionately large when compared to the underlying prices paid by our customers, or if the market conditions limit our ability to increase the prices we charge our customers.
−Removed: Furthermore, many of these network service providers do not have long-term committed contracts with us and may interrupt services or terminate their agreements with us without notice.
−Removed: If a significant portion of our network service providers stop providing us with access to their infrastructure, fail to provide these services to us on a cost-effective basis, cease operations, or otherwise terminate these services, the delay caused by qualifying and switching to other network service providers could be time consuming and costly and could adversely affect our business, results of operations and financial condition.
−Removed: Further, if problems occur with our network service providers, such problems have in the past caused, and may in the future cause, errors, service outages, security incidents, or poor-quality communications on our products, and we could encounter difficulty identifying the source of the problem.
−Removed: The occurrence of errors, service outages, security incidents, or poor-quality communications on our products, whether caused by our platform or a network service provider, may result in the loss of our existing customers or the delay of adoption of our products by potential customers and may adversely affect our business, results of operations and financial condition.
−Removed: Further, we sometimes access network services through intermediaries who have direct access to network service providers.
−Removed: Although we are in the process of securing direct connections with network service providers in many countries, we expect that we will continue to rely on intermediaries for these services for some period of time.
−Removed: These intermediaries sometimes have offerings that directly compete with our products and may stop providing services to us on a cost-effective basis.
−Removed: 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 to continue to rely on internet service providers for network connectivity going forward.
−Removed: Our reliance on internet service providers reduces our control over quality of service and exposes us to potential service outages and rate fluctuations.
−Removed: The occurrence of poor-quality of service or service outages on our products may result in the loss of our existing customers or the delay of adoption of our products by potential customers and may adversely affect our business, results of operations and financial condition.
−Removed: Similarly, if a significant portion of our internet service providers stop providing us with access to their network infrastructure, fail to provide access on a cost-effective basis, cease operations, or otherwise terminate access, the delay caused by qualifying and switching to other internet service providers could be time consuming and costly and could adversely affect our business, results of operations, and financial condition.
+Added: We interconnect with fixed and mobile network service providers around the world to deliver our products.
+Added: Although we have, or are in the process of acquiring, authorization to provide voice and messaging services and for direct access to phone numbers in many countries, we expect to continue to rely to some extent on network service providers for these services.
+Added: Reliance on network service providers subjects us to regulatory, competitive and other industry related changes over which we have little or no control.
+Added: In addition, our reliance on network service providers subjects us to fees, penalties, administrative and technical requirements, each of which are subject to change.
+Added: Similarly, in some cases, we utilize intermediaries for direct access to networks.
+Added: Although we have, or are in the process of securing, direct connections with network service providers in many countries, we expect to continue to rely on intermediaries for these services to some extent.
+Added: These intermediaries also charge us changing fees and at times have offerings that compete directly with our products.
+Added: We also interconnect with internet service providers around the world to deliver our email products, and expect to continue to rely on such providers.
+Added: Reliance on these providers poses risks to the quality of our services, primarily by limiting our control, operating flexibility, and ability to timely identify and respond to necessary service changes, and by subjecting us to service interruptions or outages.
+Added: Reliance on such providers in the past has caused, and may in the future cause, errors, service outages, security incidents, or poor-quality communications on our products, and we could encounter difficulty identifying the source of the problem.
+Added: This has in the past, and may in the future, cause harm to our brand, result in lost revenue, and cause us to lose existing and prospective customers.
+Added: The fees we pay to these providers also subject us to risks.
+Added: We are exposed to significant fluctuations in applicable fees paid to network service providers, intermediaries, and internet service providers.
+Added: These fees are outside of our control and we are not able to predict the magnitude or timing of changes to such fees.
+Added: Additional or increased fees charged by such providers have resulted, and could in the future result, in increases to our costs and other impacts on our financial results.
+Added: For example, recent increases to A2P messaging fees charged by major U.S.
+Added: mobile carriers are expected to create a modest headwind on our margins going forward, and such fees may increase further over time.
+Added: In some markets, fees charged by our network service providers change daily or weekly.
+Added: We may not be able to change our customer pricing as rapidly, and absorbing these costs could adversely affect our business and results of operations.
+Added: Further, even when we do pass fee increases through to customers, it typically increases revenue and cost of revenue such that while gross profit dollars are not impacted, it has a negative impact on gross margins.
+Added: While historically we have responded to many fee increases through negotiating efforts, absorbing increased costs or passing fees through to customers, we may be unable to respond in these ways in the future without a material negative impact to our business.
+Added: Our ability to respond to fee increases may also be constrained by equivalent increases by other providers in a particular market, fees that are disproportionately large compared to underlying prices paid by our customers, or market or other conditions limiting our ability to increase the prices we charge for our products.
+Added: We also face risks related to losing access to these services.
+Added: Many of these providers do not have long-term committed contracts with us and may interrupt services or terminate their agreements with us without notice.
+Added: We may not be able to replace these services on a cost-effective basis, or at all, and even if we can, replacing providers may be time-consuming, costly and result in delays.
+Added: Any of the foregoing consequences of our reliance on network service providers, intermediaries and internet service providers to deliver our products could adversely impact our business, results of operations and financial condition.
Failure to set optimal prices for our products could adversely impact our business, results of operations and financial condition.
−Removed: For certain of our products, we primarily charge our customers based on their usage of such products.
−Removed: One of the challenges of this usage-based pricing model is the variability of the fees that we pay to network service providers over whose networks we transmit communications.
−Removed: Such network fees can vary daily or weekly, differ across countries, and are affected by volume and other factors that may be outside of our control and which are difficult to predict.
−Removed: This can result in us incurring increased costs that we may be unable or unwilling to pass through to our customers, which could adversely impact our business, results of operations and financial condition.
−Removed: If we elect to pass through increased fees to our customers, it could adversely affect our relationship with our customers and our customers may look for lower cost alternatives.
−Removed: We adjust the pricing models for our products from time to time and expect that we will continue to do so.
−Removed: Many of our usage-based customers enter into contracts with negotiated pricing, and our subscription customers are also subject to negotiated pricing.
−Removed: As competitors introduce new products or services that compete with ours or reduce their prices, we may be unable to attract new customers or retain existing customers based on our historical pricing.
−Removed: If we are required or choose to reduce our prices, it could adversely affect our business, results of operations and financial condition.
+Added: We face risks associated with optimally pricing our products, particularly given the dynamic nature of our usage-based pricing.
+Added: The fees that we pay to network service providers can vary, in some markets daily or weekly, differ across countries, and are affected by volume and other factors that may be outside of our control and which are difficult to predict.
+Added: As a result, we may incur increased costs that we may be unable or unwilling to pass through to our customers.
+Added: If we do pass increased fees through to our customers, it could adversely affect customer relationships or cause customers to seek lower-cost alternatives.
+Added: We periodically adjust the pricing for our products and expect to continue to.
+Added: Many of our usage-based customers have contracts with negotiated pricing, and our subscription contracts also have negotiated pricing.
+Added: New products or price reductions by competitors may prevent us from retaining or attracting customers based on our historical pricing, and we may otherwise be required or choose to reduce our pricing.
+Added: Any such price reductions, lost customers, or other failure to optimize our pricing could adversely impact our business, results of operations and financial condition.
Our international operations expose us to risks inherent in global operations.
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• restrictions on the transfer of funds;
−Removed: • political or social unrest, economic instability, conflict or war in a specific country or region in which we, our customers, partners or service providers operate, which could have an adverse impact on our operations in the region or otherwise have a material impact on regional or global economies, any or all of which could adversely affect our business.
+Added: • political or social unrest, economic instability, conflict or war in a specific country or region in which we, our customers, partners or service providers operate, which could have an adverse impact on our operations in the
+Added: region or otherwise have a material impact on regional or global economies, any or all of which could adversely affect our business.
Also, due to costs from our international operations and network service provider fees outside of the United States, which generally are higher than domestic rates, our gross margin for messages terminating internationally is typically lower than our gross margin for messages terminating domestically.
As a result, our gross margin has been, and may continue to be, adversely impacted by our international operations.
−Removed: Our failure to manage any of these risks successfully could harm our international operations, and adversely affect our business, results of operations and financial condition.
+Added: If we, or our international business partners, fail to manage any of these risks successfully, it could harm our international operations and adversely affect our business, results of operations and financial condition.
We may not realize potential benefits from our acquisitions, partnerships and investments because of difficulties related to integration, the achievement of synergies, and other challenges.
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In some circumstances, we may determine to do so through acquisitions, partnerships or investments in businesses and technologies that are complementary to our business.
−Removed: There can be no assurances that such acquisitions will result in the anticipated benefits and 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, the diversion of management attention and resources from day-to-day business operations and an overall post-completion process that takes longer than originally anticipated.
+Added: There can be no assurances that such transactions will result in the anticipated benefits, and 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, the diversion of management attention and resources from day-to-day business operations and an overall post-completion process that takes longer than originally anticipated.
In addition, the following issues, among others, may need to be addressed in order to realize the anticipated benefits of any acquisitions, partnerships or investments:
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From time to time, we may also divest or stop investing in certain businesses or products.
−Removed: For example, in 2023 we divested our Internet of Things and ValueFirst businesses, and in 2024 we wound down the software component of our Zipwhip business.
The sale of a business or product has in the past and may in the future 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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Risks Related to Cybersecurity, Data Privacy and Intellectual Property
−Removed: Breaches of or incidents impacting our networks or systems, or those of our third-party service providers, could degrade our ability to conduct our business, compromise the integrity of our products, platform and data, result in significant loss or unavailability of data and the theft of our intellectual property, damage our reputation, expose us to liability to third parties and require us to incur significant additional costs to maintain the security of our networks and data.
−Removed: We depend upon our IT systems to conduct virtually all of our business operations, ranging from our internal operations and research and development activities to our marketing and sales efforts and communications with our customers and business partners.
−Removed: We have in the past and will in the future be subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), personnel or service provider misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss or unavailability of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, natural disasters, and other similar threats.
−Removed: Individuals or entities have in the past attempted and will in the future attempt to penetrate the security of our platform, or of our network or systems, and to cause harm to our business operations, including by misappropriating our proprietary information or that of our customers, employees and business partners or to cause interruptions of our products and platform.
−Removed: In particular, cyberattacks and other malicious internet-based activity continue to increase in frequency and in magnitude generally, and cloud-based companies have been targeted in the past.
−Removed: In addition to threats from traditional computer hackers, malicious code, software vulnerabilities, supply chain attacks and vulnerabilities through our third-party partners, employee theft or misuse, password spraying, phishing, smishing, vishing, credential stuffing and denial-of-service attacks, we also face threats from sophisticated organized crime, nation-state, and nation-state supported actors who engage in attacks (including advanced persistent threat intrusions) that add to the risk to our systems (including those hosted on cloud services), internal networks, our customers’ systems, our service providers’ networks, and the information that they store and process.
−Removed: Ransomware and cyber extortion attacks, including those perpetrated by organized criminal threat actors, nation-states, and nation-state-supported actors, are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds.
−Removed: Extortion payments may alleviate or reduce the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
−Removed: Geopolitical tensions and events may further heighten risks we and
−Removed: our service providers face from these and other types of attacks.
−Removed: 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 expect to 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, and we may not become aware in a timely manner of any security breach or incident, which could exacerbate any damage we experience.
−Removed: 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.
−Removed: 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.
−Removed: We also continue to incorporate AI solutions and features into our platform, which may result in security incidents or otherwise increase cybersecurity risks.
−Removed: Further, AI technologies may be used in connection with certain cybersecurity attacks, resulting in heightened risks of security breaches and incidents.
−Removed: Any 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, the introduction of viruses or other malicious code or any other breach or incident or disruption of our platform, systems, or networks or those of our service providers, could result in loss, corruption, 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 mobile phone numbers from unknown sources.
−Removed: The attack identified in August 2022, 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.
−Removed: We notified and worked with our affected customers.
−Removed: We also notified appropriate regulators and addressed their questions about the incident.
−Removed: We also took steps to remediate the incident, including enhancing our security training, improving our two factor authentication requirements, implementing additional layers of control within our VPN, reducing access to certain internal applications and tools, running simulated phishing attempts to increase employee security awareness, and increasing the refresh frequency for access to certain internal applications.
−Removed: Industry reports indicate that the threat actors also attacked other technology, telecommunication and cryptocurrency companies.
−Removed: We also rely on various third-party service providers to operate our platform and deliver our products, including network service providers, internet service providers, telecommunications carriers, providers of cloud infrastructure and cloud communications, and third-party technology and intellectual property.
−Removed: Our service providers (or their sub-service providers) have in the past experienced, and may in the future experience, security breaches and incidents, including unauthorized access or inadvertent disclosures, that have exposed and may expose or make available to threat actors our data or that of our customers.
−Removed: Even when our systems are not compromised, if our service providers experience breaches or incidents that impact our data or our customers’ data, then our reputation, customer trust, business, results of operations and financial condition could be adversely affected.
−Removed: Furthermore, we are required to comply with laws and regulations that require us to maintain security measures designed to protect 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.
−Removed: Such disclosures are costly, and the disclosures or the failure to comply with such requirements could lead to adverse consequences.
−Removed: If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences.
−Removed: Consequences associated with such security incidents may include:
−Removed: government enforcement actions and other actions or proceedings (for example, investigations, audits, and inspections), and related fines, penalties, required remedial actions, or other obligations and liabilities;
−Removed: additional reporting requirements and/or oversight;
−Removed: restrictions on processing or transferring data (including personal data);
−Removed: claims, demands, and litigation (including class claims);
−Removed: indemnification obligations;
−Removed: monetary fund diversions;
−Removed: interruptions in our operations (including availability of data);
−Removed: financial loss and other similar harms.
−Removed: Actual and perceived security incidents and attendant consequences could also lead to negative publicity and reputational harm, may cause our customers to lose confidence in the effectiveness of our security measures and require us to expend significant capital and other resources to respond to and/or mitigate the security incident.
−Removed: Accordingly, if our cybersecurity measures or those of our third-party service providers fail to protect against unauthorized access, attacks (which may include sophisticated cyberattacks), or if our employees or contractors compromise or mishandle data, then our reputation, customer trust, business, results of operations and financial condition could be adversely affected.
−Removed: While we maintain errors, omissions and cyber liability insurance policies covering certain security and privacy damages, we cannot be certain that our existing insurance coverage will continue to be available on acceptable terms or will be
−Removed: available, and in sufficient amounts, to cover the potentially significant losses that may result from a security incident or breach or that the insurer will not deny coverage as to any future claim.
+Added: Breaches of or other incidents impacting our networks or systems, or those of our third-party service providers, could degrade our ability to conduct our business, compromise the integrity of our products, platform and data, result in significant loss or unavailability of data and the theft of our intellectual property, damage our reputation, expose us to liability to third parties and require us to incur significant additional costs to maintain the security of our networks and data.
+Added: We depend upon our IT systems to conduct virtually all of our business operations, ranging from our internal operations and research and development activities to our marketing and sales efforts and communications with our customers, vendors and other business partners.
+Added: Moreover, our platform stores, transmits, and otherwise processes our, our customers’ and our partners’ proprietary, confidential, and sensitive data.
+Added: We also rely on various third-party service providers – including network service providers, internet service providers, telecommunications carriers, and providers of cloud infrastructure and cloud communications – for business operations, to operate our platform and to deliver our products, as well as third-party technology and intellectual property.
+Added: We have been targeted by threat actors seeking unauthorized access to our systems or data, or that of our customers or third-party service providers, or to disrupt our operations or ability to provide our services.
+Added: Our third-party service providers have also been targeted.
+Added: Our platform and our underlying infrastructure, the information we store and process, and those of our third-party service providers, are subject to evolving threats and have in the past and may in the future be subject to breaches, compromises, disruptions, or other incidents, including as a result of the following:
+Added: • fraud, social-engineering attacks (such as phishing) and other third-party attempts to induce our employees, customers or partners to disclose sensitive information to gain access to our customers’ data or systems, or our data or our systems;
+Added: • efforts by hackers or sophisticated groups, such as criminal organizations, state-sponsored organizations or nation-states, to launch coordinated cyberattacks on internally built infrastructure or on third-party cloud-computing platform providers, including malicious code, ransomware, destructive malware, supply chain attacks and distributed denial-of-service attacks;
+Added: • third-party attempts to abuse our marketing, advertising, messaging or products and functionalities to impersonate persons or organizations and disseminate information that is false, misleading or malicious;
+Added: • attacks on, malfunctions or unavailability of, or other vulnerabilities in, the underlying networks and services that power the internet or that our products otherwise depend on, many of which are not under our control or the control of our customers or partners;
+Added: • attacks facilitated or enhanced by AI, including deep fakes;
+Added: • employee fraud, misconduct or error, including resulting from efforts to bribe, extort, infiltrate or otherwise compromise our or our service providers’ workforce.
+Added: Cyberattacks and other malicious activity continue to become more sophisticated, targeted and inexpensive to conduct, and to increase in frequency and magnitude.
+Added: These include ransomware and cyber extortion attacks, which can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds.
+Added: Extortion payments may reduce the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments, such as due to applicable laws or regulations prohibiting such payments.
+Added: Geopolitical tensions and events may further heighten risks we and our service providers face from breaches and other incidents.
+Added: We make, and expect to continue to make, significant investments in processes and controls designed to mitigate risks associated with breaches and other incidents, including to evaluate and respond to known and potential risks.
+Added: These investments are, and could increasingly be, costly, and may not be effective or prevent a material incident.
+Added: Our ability to effectively mitigate these risks may be impacted by, among other factors:
+Added: • the rapidly evolving nature of techniques to breach, compromise, or disrupt IT systems and infrastructure, including increasing use of AI technologies, such that we may not be able to recognize such techniques until launched against a target, or anticipate, prevent, or timely respond to them, increasing the likelihood and magnitude of damage of a breach or other incident;
+Added: • the increasing complexity of our internal IT systems, including as we adopt new technologies, including AI solutions, and incorporate and secure IT environments from acquired companies;
+Added: • our reliance on third-party technology and service providers;
+Added: • our limited control over customers and third-party providers (including those authorized by customers to access their data) and the processing of data by third-party providers, which may prevent us from maintaining the integrity or security of such data.
+Added: In the normal course of business, we experience, and have experienced, cyberattacks and other security incidents, which have in the past and may in the future cause harm to our business.
+Added: For example, in 2022, one such incident resulted in threat actors obtaining employee credentials and accessing customer data, and required us to notify affected customers and regulators and take steps to remediate the incident.
+Added: While to date the security events we have experienced have not had a material financial impact, we may experience significant and material future incidents.
+Added: Any security incident can result in loss, corruption, unavailability, or other unauthorized processing of confidential information or sensitive personal information.
+Added: Any such event, or the perception that it has occurred, may also result in damage to our reputation, erosion of customer trust, loss of customers, litigation, regulatory investigation, fines, penalties, and other consequences and liabilities that could adversely affect our business, results of operation and financial condition.
+Added: Laws and regulations require us to maintain security measures, and we may have contractual or other legal obligations to notify customers, government agencies, impacted individuals or other relevant stakeholders of security breaches or other incidents, which disclosures are costly and may cause widespread negative publicity and resulting harm, among other adverse consequences.
+Added: Further, the detection, prevention, and remediation of known and potential security incidents, including determining whether an incident is notifiable or reportable, may not be straightforward and result in additional direct or indirect costs to respond or alleviate the consequences of the actual or perceived incident, such as additional infrastructure capacity spending to mitigate system degradation or reallocation of resources from development activities.
+Added: We maintain errors, omissions and cyber liability insurance policies covering certain security and privacy damages, but such insurance may not be sufficient to cover the potentially significant losses resulting from a security breach or other incident, may be denied with respect to a particular claim, or may not remain available in the future on acceptable terms or at all.
Our actual or perceived failure to comply with increasingly stringent laws, regulations and contractual obligations relating to privacy, data protection and cybersecurity could harm our reputation and subject us to significant fines and liability or loss of business.
−Removed: We and our customers are subject to numerous domestic (for example, the California Consumer Privacy Act (“CCPA”)) and foreign (for example, the General Data Protection Regulation (“GDPR”) in the European Union (“EU”)) privacy, data protection and cybersecurity laws and regulations that restrict the collection, use, disclosure and processing of personal information, including financial and health data.
−Removed: These laws and regulations are expanding globally, evolving, and 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 breadth and depth of changes in data protection obligations has required significant time and resources, including a review of our technology and systems against the requirements of the GDPR.
−Removed: The CCPA (as amended by the California Privacy Rights Act of 2020) 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 (both consumers and employees) certain rights related to their personal information.
−Removed: The CCPA allows for statutory fines for noncompliance.
−Removed: Similar laws have been enacted in 18 other states with 13 laws currently in effect and the remainder becoming effective later in 2025 and 2026.
−Removed: Numerous other states, and the U.S.
−Removed: federal government, also have proposed general privacy legislation recently.
−Removed: Additionally, other states have proposed, and in certain cases enacted, other laws and regulations addressing privacy and cybersecurity, such as Washington’s My Health, My Data Act, which includes a private right of action.
−Removed: If we become subject to new privacy, data protection or cybersecurity laws, the risk of enforcement action against us could increase because we may become subject to additional obligations, and the number of individuals or entities that can initiate actions against us may increase, including individuals, via a private right of action, and state actors.
−Removed: Outside the United States, an increasing number of laws, regulations, and industry standards apply to privacy, data protection and cybersecurity.
−Removed: For example, the GDPR, the United Kingdom’s General Data Protection Regulation and 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”).
−Removed: 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.
−Removed: Under the GDPR and UK GDPR, government regulators may impose temporary or definitive bans on data processing or data transfers, require a company to delete data, as well as impose significant fines, potentially ranging up to 20 million Euros under the GDPR, 17.5 million GBP under the UK GDPR, or 4% of a company’s worldwide revenue, whichever is higher.
−Removed: Further, individuals may initiate compensation claims or litigation related to our processing of their personal information.
−Removed: Other privacy and data protection laws in Europe impose strict requirements around marketing communications and the deployment of cookies on users’ devices.
−Removed: As another example, Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No.
−Removed: 13,709/2018) may apply to our operations.
−Removed: The LGPD broadly regulates processing of personal information of individuals in Brazil and imposes compliance obligations and penalties comparable to those of the GDPR.
−Removed: 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 Artificial Intelligence Act (“AI Act”), once effective, will impose onerous obligations related to the development, placing on the market and use of AI-related systems.
−Removed: In the United States, numerous states have established study commissions that could lead to regulation of AI, and certain states have enacted legislation regulating aspects of AI.
−Removed: Other countries also are contemplating laws regulating AI and ML.
−Removed: We may have to change our business practices to comply with obligations under these or other new and evolving regimes.
−Removed: 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, Digital Markets Act and Data Act entered into force in 2024, and the EU’s Network and Information Security Directive II, adopted in 2023, provides for EU member states to have issued implementing legislation by October 2024.
−Removed: Additionally, the EU’s Digital Operational Resiliency Act entered into force on January 17, 2025.
−Removed: Similarly, with our registration as an interconnected VoIP provider for certain products with the Federal Communications Commission (“FCC”), we also must comply with privacy laws associated with customer proprietary network information rules in the United States.
−Removed: In addition, states such as California have increasingly adopted or proposed, or may propose, regulations that may classify our services in such a manner as to subject us to additional privacy-related compliance obligations under state law.
−Removed: If we fail or are perceived to have failed to maintain compliance with these requirements, we could be subject to regulatory audits or inquiries, civil and criminal penalties, fines and breach of contract claims, as well as reputational damage, which could impact the willingness of customers to do business with us.
−Removed: In addition to our legal obligations, our contractual obligations relating to privacy, data protection and cybersecurity have become increasingly stringent due to changes in laws and regulations and the expansion of our offerings.
−Removed: Certain privacy, data protection and cybersecurity laws, such as the GDPR and the CCPA, require our customers to impose specific contractual restrictions on their service providers.
−Removed: In addition, we support customer workloads that involve the processing of protected health information and are required to sign business associate agreements with customers that subject us to requirements under the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, as well as state laws that govern health information.
−Removed: Our actual or perceived failure to comply with laws, regulations, contractual commitments, or other actual or asserted obligations, including certain industry standards, regarding privacy, data protection and cybersecurity could lead to costly legal action, adverse publicity, significant liability, inability to process data, and decreased demand for our services, which could adversely affect our business, results of operations and financial condition.
−Removed: 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 potential risks arising from the Court of Justice’s July 2020 ruling in the “Schrems II” case, as well as related guidance from regulators and 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 many countries outside of such jurisdictions, such as the United States.
−Removed: On July 10, 2023, the European Commission adopted its adequacy decision for the EU-U.S.
−Removed: Data Privacy Framework.
−Removed: Based on this decision, personal information can flow from the EU to U.S.
−Removed: companies participating in the EU-U.S.
−Removed: Data Privacy Framework without having to put in place additional data protection safeguards.
−Removed: We are certified under the EU-U.S.
−Removed: Data Privacy Framework, the UK Extension to the EU-U.S.
−Removed: Data Privacy Framework, and the Swiss-U.S.
−Removed: Data Privacy Framework.
−Removed: 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.
−Removed: The inability to transfer personal information to the United States could significantly and negatively impact our business operations;
−Removed: limit our ability to collaborate with parties that are subject to data privacy and security laws;
−Removed: or require us to increase our personal information processing capabilities in Europe and/or elsewhere at significant expense.
−Removed: 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 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.
−Removed: Evolving laws, regulations, and other actual and asserted obligations relating to privacy, data protection, and cybersecurity, 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.
−Removed: Further, in view of new or modified federal, state or foreign laws and regulations, industry standards, contractual obligations and other actual and asserted obligations, or any changes in their interpretation, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to modify our practices and platform and otherwise adapt to these changes.
−Removed: We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new products and features could be limited.
+Added: We are subject to increasing legal, regulatory, and contractual obligations relating to privacy, data protection and cybersecurity that affect how we process personal data in the jurisdictions where we and our customers operate.
+Added: Our obligations change frequently due to new or modified laws and regulations, as well as court rulings interpreting or invalidating them.
+Added: These evolving obligations involve significant compliance costs and operational challenges, and increasingly expose us to enforcement actions and other proceedings or actions, sanctions, and litigation, as well as regulatory and public scrutiny of our practices relating to personal information.
+Added: We expect the increasing breadth and depth, and changing nature of, these obligations to continue to require significant resources, including to review our technology, systems and processes against changing requirements.
+Added: They may also limit our ability to use personal data for new products, including those relying on AI-related technologies.
+Added: In the United States, for example, the California Consumer Privacy Act (as amended by the California Privacy Rights Act of 2020, the “CCPA”) provides our customers, employees, and other individuals certain rights related to their personal information.
+Added: The federal government has also proposed, and numerous other states are considering or have proposed and/or enacted, laws and regulations addressing privacy and cybersecurity.
+Added: Internationally, the regulatory landscape is increasingly complex and fragmented and compliance increasingly financially burdensome.
+Added: For example, in the European Union (“EU”), the General Data Protection Regulation (“GDPR”) imposes significant requirements regarding the processing of personal information, including related to transparency, individuals’ privacy rights, compliance contracting, data minimization, data breach notification, data retention, security, and international data transfers.
+Added: Other international privacy and data protection laws also impose strict requirements, such as related to marketing communications and deployment of cookies.
+Added: Together, this patchwork of global requirements presents significant compliance challenges, and subjects us to possible fines, sanctions, litigation, and other adverse consequences.
+Added: For example, under the GDPR, regulators may impose temporary or definitive bans on data transfers or other processing, require deletion, and impose significant fines, potentially ranging up to 4% of our worldwide revenue.
+Added: We must also comply with increasing laws and regulations relating to data residency, data localization, and the transfer of data across territorial boundaries, arising from the fact that our primary data processing facilities are in the United States.
+Added: example, the GDPR restricts the transfer of personal data from the EU to the United States and other countries that are not deemed to have implemented adequate data protection measures, and other jurisdictions have proposed and enacted laws relating to cross-border data transfer or requiring personal information to be stored in the jurisdiction of origin.
+Added: We use a variety of legal transfer mechanisms to transfer personal data across borders, including standard contractual clauses and the E.U.-U.S.
+Added: Data Privacy Framework, whose use is subject to ongoing review and litigation, and we may not be able to continue to rely on these or other transfer mechanisms.
+Added: As a result of this uncertainty, we have encountered hesitancy, reluctance or refusal by European and multinational customers to use our services.
+Added: If we are unable to maintain valid mechanisms for cross-border data transfer, we and our customers may face increased exposure to regulatory actions, significant fines, or injunctions against processing or transferring personal information from Europe or elsewhere.
+Added: Any inability to transfer personal information to the United States or other jurisdictions, or costly restrictions on such transfer, may also limit our ability to collaborate with partners and customers, require us to increase our data processing capabilities in Europe and/or other jurisdictions at significant expense, and/or otherwise negatively impact our business.
+Added: Additionally, as a provider of interconnected VoIP service, we must also comply with certain U.S.
+Added: federal privacy laws and regulations, including Section 222 of the Communications Act of 1934, as amended, and the FCC’s customer proprietary network information rules.
+Added: We are also subject to state rules and obligations that have been proposed or adopted, or may be in the future.
+Added: We are also subject to other rapidly changing technology- and industry-specific laws, regulations and obligations.
+Added: For example, we expect increased global regulation in the use of AI and ML such as the recent AI Act in Europe, which imposes onerous obligations related to the development, placement on the market and use of AI systems.
+Added: Various countries and a growing number of U.S.
+Added: states are also enacting legislation regulating aspects of AI or AI generally.
+Added: We may need to change our business practices to comply with obligations under these or other new and evolving regimes, and face significant compliance challenges, liability, or other risks.
+Added: We also have contractual obligations relating to privacy, data protection and cybersecurity that are increasingly stringent due to related legal and regulatory changes and the expansion of our offerings.
+Added: For example, certain laws and regulations, such as the GDPR and CCPA, require our customers to impose contractual restrictions on their service providers.
+Added: In addition, we support customer workloads involving the processing of protected health information and are required to sign business associate agreements with customers that subject us to certain requirements under federal and state laws governing health information, such as the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009.
+Added: Taken together, evolving legal, regulatory and contractual obligations pertaining to privacy, data protection, cybersecurity and AI may require us to expend resources to modify our practices and products, reduce demand for our platform, increase our costs, restrict our ability to store and process data, inhibit product functionality or the development of new products and features, or impact our ability to operate in certain locations, any of which could impair growth or otherwise harm our business.
+Added: Further, any actual or perceived non-compliance with these laws, regulations, contractual commitments, or other actual or asserted obligations, including industry standards, pertaining to privacy, data protection , cybersecurity or AI could subject us to regulatory audits or inquiries, civil and criminal penalties, or significant fines, or lead to costly legal action, breach of contract claims, adverse publicity, significant liability, inability to process data, and decreased demand for our services, any of which could adversely affect our business, results of operations, and financial condition.
We could incur substantial costs in protecting or defending our intellectual property rights, and any failure to protect our intellectual property could adversely affect our business, results of operations and financial condition.
Our success depends, in part, on our ability to protect our brand and the proprietary methods and technologies that we develop under patent and other intellectual property laws.
−Removed: We rely on a combination of patents, copyrights, trademarks, service
−Removed: marks, trade secret laws and other intellectual property laws, contractual provisions, and internal processes, procedures, and controls in an effort to establish, maintain, enforce, and protect our intellectual property and proprietary rights.
+Added: We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws and other intellectual property laws, contractual provisions, and internal processes, procedures, and controls in an effort to establish, maintain, enforce, and protect our intellectual property and proprietary rights.
However, the steps we take to protect our intellectual property may be inadequate.
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We also rely, in part, on contractual confidentiality obligations we impose on our business partners, employees, consultants, advisors, customers and others in our efforts to protect our proprietary technology, processes and methods.
−Removed: These obligations may not effectively prevent unauthorized disclosure or use of our confidential information, and it may be possible for unauthorized parties to copy or access our software or other proprietary technology or information, or to develop similar products independently without us having an adequate remedy for unauthorized use or disclosure of our confidential information.
+Added: obligations may not effectively prevent unauthorized disclosure or use of our confidential information, and it may be possible for unauthorized parties to copy or access our software or other proprietary technology or information, or to develop similar products independently without us having an adequate remedy for unauthorized use or disclosure of our confidential information.
In addition, others may independently discover our trade secrets and proprietary information, and in these cases, we may not be able to assert any trade secret rights against those parties.
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Litigation is inherently unpredictable and we cannot predict the timing, nature, controversy or outcome of disputes brought against us or assure you that the results of any of these actions will not have an adverse effect on our business, results of operations or financial condition.
−Removed: Our use of open source software could negatively affect our ability to sell our products and subject us to possible litigation.
−Removed: Our products and platform incorporate open source software, and we expect to continue to incorporate open source software in our products and platform in the future.
−Removed: Few of the licenses applicable to open source software have been interpreted by courts, and there is a risk that these licenses could be construed in a manner that could impose unanticipated
−Removed: conditions or restrictions on our ability to commercialize our products and platform.
−Removed: Although we have implemented policies to regulate the use and incorporation of open source software into our products and platform, we cannot be certain that we have not incorporated open source software in our products or platform in a manner that is inconsistent with such policies.
−Removed: If we fail to comply with open source licenses, we may be subject to certain requirements, including requirements that we offer our products that incorporate the open source software for no cost, that we make available the source code for any modifications or derivative works we create based upon, incorporating or using the open source software and that we license such modifications or derivative works under the terms of applicable open source licenses.
−Removed: If an author or other third-party that distributes such open source software were to allege that we had not, or have not, complied with the terms and conditions of the license for such open source software, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from generating revenue from customers using products that contained the open source software and required to comply with onerous conditions or restrictions on these products.
−Removed: In any of these events, we and our customers could be required to seek licenses from third parties in order to continue offering our products and platform and to re-engineer our products or platform or discontinue offering our products to customers in the event re-engineering cannot be accomplished on a timely basis.
−Removed: Any of the foregoing could require us to devote additional research and development resources to re-engineer our products or platform, damage our reputation, give rise to increased scrutiny regarding our use of open source software, result in customer dissatisfaction and may adversely affect our business, results of operations and financial condition.
We rely on technology and intellectual property of third parties, the loss of which could limit the functionality of our products and disrupt our business.
−Removed: We use technology and intellectual property licensed from third parties in certain of our products and our platform, and we expect to license additional third-party technology and intellectual property in the future.
+Added: We use technology and intellectual property licensed from third parties in certain of our products and our platform, and for business operations, and we expect to license additional third-party technology and intellectual property in the future.
Licensed technology and intellectual property may not continue to be available on commercially reasonable terms, or at all.
The loss of the right to license and distribute third-party technology could limit the functionality of our products or platform and could require us to redesign our products or platform.
−Removed: In addition, if the third-party technology and intellectual property we use has errors, service outages, security vulnerabilities, or otherwise malfunctions, the functionality of our products and platform may be negatively impacted, our customers may experience outages or reduced service levels, and our business may be adversely affected.
+Added: In addition, if the third-party technology and intellectual property we use has errors, service outages, security vulnerabilities, or otherwise malfunctions, our business operations or the functionality of our products and platform may be negatively impacted, our customers may experience outages or reduced service levels, and our business may be adversely affected.
For example, we outsource a substantial majority of our cloud infrastructure to Amazon Web Services (“AWS”), which hosts our products and platform.
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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.
−Removed: In addition, if our security, or that of AWS, is compromised, if our products, platform or customer data become 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.
+Added: In addition, if our security,
+Added: or that of AWS, is compromised, if our products, platform or customer data become 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.
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.
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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.
−Removed: Any of the above circumstances or events may harm our reputation, erode customer trust, cause customers to stop using or
−Removed: reduce their usage of our products, discourage customers from renewing their contracts, impair our ability to increase revenue from existing customers, impair our ability to grow our customer base, subject us to financial penalties and liabilities under our service level agreements and otherwise harm our business, results of operations and financial condition.
+Added: Any of the above circumstances or events may harm our reputation, erode customer trust, cause customers to stop using or reduce their usage of our products, discourage customers from renewing their contracts, impair our ability to increase revenue from existing customers, impair our ability to grow our customer base, subject us to financial penalties and liabilities under our service level agreements and otherwise harm our business, results of operations and financial condition.
+Added: Our use of open source software could negatively affect our ability to sell our products and subject us to possible litigation.
+Added: Our products and platform incorporate open source software, and we expect to continue to incorporate open source software in our products and platform in the future.
+Added: Open source software presents certain risks in addition to those of third-party technology and intellectual property generally.
+Added: Few of the licenses applicable to open source software have been interpreted by courts, and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products and platform.
+Added: Although we have implemented policies to regulate the use and incorporation of open source software into our products and platform, we cannot be certain that we have not incorporated open source software in our products or platform in a manner that is inconsistent with such policies.
+Added: If we fail to comply with open source licenses, we may be subject to certain requirements, including requirements that we offer our products that incorporate the open source software for no cost, that we make available the source code for any modifications or derivative works we create based upon, incorporating or using the open source software and that we license such modifications or derivative works under the terms of applicable open source licenses.
+Added: If an author or other third-party that distributes such open source software were to allege that we had not, or have not, complied with the terms and conditions of the license for such open source software, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from generating revenue from customers using products that contained the open source software and required to comply with onerous conditions or restrictions on these products.
+Added: In any of these events, we and our customers could be required to seek licenses from third parties in order to continue offering our products and platform and to re-engineer our products or platform or discontinue offering our products to customers in the event re-engineering cannot be accomplished on a timely basis.
+Added: Any of the foregoing could require us to devote additional research and development resources to re-engineer our products or platform, damage our reputation, give rise to increased scrutiny regarding our use of open source software, result in customer dissatisfaction and may adversely affect our business, results of operations and financial condition.
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.
−Removed: We have deployed, and continue to develop and incorporate, 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.
−Removed: 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.
−Removed: For example, we are focused on continued product innovations to combine our communications products with contextual data and AI to address evolving customer needs and expectations.
+Added: We have deployed, and continue to develop and incorporate, AI solutions and features in our platform and our business, and these solutions and features may become more important to our operations, future growth or competitiveness over time.
+Added: We expect to rely on AI solutions and features to help drive future growth and efficiency in our business, but there can be no assurance that we will realize the desired or anticipated benefits from AI in a timely or cost-effective manner.
+Added: For example, we
+Added: are focused on continued product innovations to combine our communications products with contextual data and AI.
We are also building out new AI capabilities internally, including AI automation and agents in our self-service platform and in our internal operations.
−Removed: Our investments in AI solutions and features have and may continue to negatively impact our cost of revenue and gross margins until we are able to increase revenue enough to offset these investments.
We may also fail to properly implement or market our AI solutions and features.
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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.
−Removed: 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 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 violated applicable laws, regulations, or other actual or asserted legal or contractual obligations to which we are or may become subject.
+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, harmful, or biased, or if such content, recommendations, solutions, or features 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 violated applicable laws, regulations, or other actual or asserted legal or contractual obligations to which we are or may become subject.
+Added: If we fail to obtain any required permissions to collect, use, or otherwise process data, including personal information, in relation to AI solutions or features, or if we jeopardize the privacy or security of such information, it could adversely affect our business, results of operations and financial condition.
The legal, regulatory, and policy environments around AI are evolving rapidly, and we may become subject to new and evolving legal and other obligations.
−Removed: More recently, the FCC applied restrictions in the Telephone Consumer Protection Act of 1991 (“TCPA”) on AI-generated voices.
−Removed: 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: 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, require us to make significant changes to our policies and practices, and necessitate expenditure of significant time, expense, and other resources.
AI also presents emerging ethical issues, and if our use of AI becomes controversial, we may experience brand or reputational harm.
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Certain of our products are subject to telecommunications-related regulations, and future legislative or regulatory actions could adversely affect our business, results of operations and financial condition.
−Removed: As a provider of communications products, we are subject to existing or potential FCC and state regulations relating to privacy, telecommunications, consumer protection and other requirements.
−Removed: In addition, the extension of telecommunications regulations to our non-interconnected VoIP services could result in additional federal and state regulatory obligations and taxes.
−Removed: We are also in discussions with certain jurisdictions regarding potential sales and other taxes for prior periods that we may owe.
−Removed: In the event any of these jurisdictions disagree with management’s assumptions and analysis, the assessment of our tax exposure could differ materially from management's current estimates, which may increase our costs of doing business and negatively affect the prices our customers pay for our services.
−Removed: If we do not comply with FCC rules and regulations, we could be subject to FCC enforcement actions, fines, loss of licenses and possibly restrictions on our ability to operate or offer certain of our products.
−Removed: For example, in 2023, we received a “cease-and-desist” letter from the FCC related to reported fraudulent traffic on our messaging platform.
−Removed: We subsequently removed the identified traffic and sent a follow-up letter to the agency detailing our fraud mitigation practices and various planned improvements to reduce future risks.
−Removed: Any enforcement action by the FCC, which may be a public process, would hurt our reputation in the industry, could erode customer trust, possibly impair our ability to sell our VoIP, other telecommunications products and/or other services to customers and could adversely affect our business, results of operations and financial condition.
−Removed: In addition, states such as California have increasingly adopted or proposed, or may propose, regulations that may subject us to additional registration, reporting, resiliency and/or compliance obligations.
−Removed: If we become subject to several new and/or different interconnected and/or non-interconnected VoIP regulations at the state level, it may increase our compliance costs and the risk of enforcement action against us, which in turn could adversely affect our business, results of operations and financial condition.
−Removed: Certain of our products are subject to a number of FCC regulations and laws that are administered by the FCC.
−Removed: Among others, we must comply (in whole or in part) with:
−Removed: • the Communications Act of 1934, as amended, which regulates communications services and the provision of such services;
−Removed: • the Telephone Consumer Protection Act, which limits the use of automatic dialing systems for calls and texts, artificial or prerecorded voice messages and fax machines;
−Removed: • the Communications Assistance for Law Enforcement Act, which requires covered entities to assist law enforcement in undertaking electronic surveillance;
−Removed: • the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (“TRACED”);
−Removed: • requirements to safeguard the privacy of certain customer information;
−Removed: • payment of annual FCC regulatory fees and contributions to FCC-administered funds based on our interstate and international revenues;
−Removed: • rules pertaining to access to our services by people with disabilities and contributions to the Telecommunications Relay Services fund.
−Removed: In addition, Congress and the FCC are attempting to mitigate the prevalence of robocalls by requiring participation in a technical standard called Signature-based Handling of Asserted Information Using toKENs (“SHAKEN”) and Secure Telephone Identity Revisited (“STIR”) (together, “SHAKEN/STIR”), which allows voice carriers to authenticate caller ID, prohibiting malicious spoofing.
−Removed: The FCC continues to increase its focus on robocall mitigation, including by implementing orders and holding open proceedings related to robocalls and robotexts.
−Removed: We cannot predict whether the FCC will require more than the robocall and robotexting measures that we have started to implement.
−Removed: If the FCC were to implement new regulations or requirements that limited the types of customers allowed to use our platform or overly burdensome requirements for our customers, those actions could limit the customers that we are able to serve.
−Removed: Similarly, in May 2021, the Biden administration issued an Executive Order requiring federal agencies to implement additional information technology security measures, including, among other things, requiring agencies to adopt multifactor authentication and encryption for data at rest and in transit to the maximum extent consistent with federal records laws and other applicable laws.
−Removed: Due to this Executive Order, federal agencies may require us to modify our cybersecurity practices and policies, thereby increasing our compliance costs.
−Removed: If we are unable to meet the requirements of the Executive Order, our ability to work with the U.S.
−Removed: government, whether directly or indirectly, may be impaired and may result in a loss of revenue.
−Removed: If we do not comply with any current or future rules or regulations that apply to our business, we could be subject to substantial fines and penalties, and we may have to restructure our offerings, exit certain markets or raise the price of our products.
−Removed: In addition, any uncertainty regarding whether particular regulations apply to our business, and how they apply, could increase our costs or limit our ability to grow.
−Removed: As we continue to expand internationally, we have become subject to telecommunications laws and regulations in the foreign countries where we offer our products.
−Removed: Internationally, we currently offer our products in more than 180 countries and territories.
−Removed: Our international regulatory and business obligations, and the related challenges and resources involved, increase when we enter new countries and as our presence and market share in such countries grow.
−Removed: Our international operations are subject to country-specific governmental regulation and related actions that have increased and will continue to increase our compliance costs or impact our products and platform or prevent us from offering or providing our products in certain countries.
−Removed: Moreover, the regulation of CPaaS companies like us is continuing to evolve internationally and many existing regulations may not fully contemplate the CPaaS business model or how they fit into the communications regulatory framework.
−Removed: As a result, interpretation and enforcement of regulations often involve significant uncertainties.
−Removed: In many countries, including those in the European Union, a number of our products or services are subject to licensing and communications regulatory requirements which increases the level of scrutiny and enforcement by regulators.
−Removed: Future legislative, regulatory or judicial actions impacting CPaaS services could also increase the cost and complexity of compliance and expose us to liability.
−Removed: 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
−Removed: information to support emergency services and number portability as well as requirements to combat scams and fraud.
−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 practices to ensure compliance, significant fines or being prohibited from providing telecommunications services in a jurisdiction.
−Removed: In addition, from time to time we implement Know-Your-Customer and/or Know-Your-Traffic related processes in the jurisdictions in which we operate, which may create friction for our customers, require management attention, and increase our compliance costs.
−Removed: 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.
−Removed: embargo list.
−Removed: Even where our products are reportedly illegal or become illegal or where users are located in an embargoed country, users in those countries may be able to continue to use our products in those countries notwithstanding the illegality or embargo.
−Removed: We may be subject to penalties or governmental action if consumers continue to use our products in countries where it is illegal to do so or if we use a local partner to provide services in a country and the local partner does not comply with applicable governmental regulations.
−Removed: 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: As a provider of communications products and a licensed telecommunications provider, we are required to comply with many changing federal, state and international regulations, including relating to privacy, security, telecommunications, consumer protection, fraud and scam prevention, Know Your Customer and Know Your Traffic and other requirements and obligations, which often vary across the numerous jurisdictions in which we operate.
+Added: Compliance with these requirements involves significant management attention and compliance costs, and can present operational challenges, onboarding delays and friction for our customers, require us to raise prices, restructure or discontinue our products, or limit our ability to expand into certain jurisdictions.
+Added: If we do not comply with such requirements, we could face enforcement actions, significant fines, remedial directions to implement audits or new processes, loss of licenses, restrictions or prohibitions on our ability to operate or offer certain of our products, eroded customer trust, and damage to our brand and reputation, and other consequences.
Any of the foregoing could adversely affect our business, results of operations and financial condition.
−Removed: If we are unable to obtain or retain geographical, mobile, regional, local or toll-free numbers, or to effectively process requests to port such numbers in a timely manner due to industry regulations, our business and results of operations may be adversely affected.
+Added: In the United States, at the federal level, we and/or our customers are required to comply with laws and regulations limiting telemarketing and certain technologies that enable automatic calling and/or messaging and establishing quiet hours for solicitations, such as the Telephone Consumer Protection Act of 1991 (“TCPA”), laws requiring assistance to law enforcement in electronic surveillance, requirements to pay regulatory fees and contributions to various federally administered funds, requirements to safeguard the privacy of certain customer information, and requirements aimed at mitigating illegal robocalls and robotexts, such as the implementation of call authentication technologies, and other compliance requirements.
+Added: At the state level, some states have adopted, proposed or may propose, regulations that may subject us to additional registration, reporting, resiliency and/or compliance obligations, including laws similar to the TCPA.
+Added: We are also subject to varying international licensing obligations and communications regulations, including related to reporting requirements, provision of emergency services and of information to support emergency services, number portability, combatting scam and fraud, payment into universal service funds, and licensing fees, among others.
+Added: As we expand into new countries, our potential regulatory and licensing obligations, and related scrutiny, increase.
+Added: The international landscape continues to evolve, and in many cases involves significant uncertainties related to how the CPaaS business model fits into the communications regulatory framework.
+Added: There is significant variation in requirements across international jurisdictions, including as to whether some or all of the services we offer are considered regulated telecommunications services.
+Added: In addition, 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.
+Added: embargo list, and users in such countries may continue to use our products in those countries notwithstanding the illegality or embargo, or a local partner that we use to
+Added: provide services may not comply with applicable governmental regulations, subjecting us to potential penalties or governmental actions that may be costly, harm our business and damage our brand and reputation.
+Added: Both in the United States and internationally, these requirements continue to change.
+Added: For example, new federal, state, or international requirements could impose more or different robocall or robotext mitigation measures, limit the customers we are able to serve, extend telecommunications regulations to our non-interconnected VoIP services or messaging products, subject us to additional registration, reporting or resiliency compliance obligations, or subject us to other fees, taxes or obligations.
+Added: The changing nature of these requirements increases the associated compliance costs, operational challenges, possibility of enforcement actions and other associated risks, and new or changed requirements, or interpretations or judicial actions related to them, may also adversely affect our business, results of operations and financial condition.
+Added: If we are unable to obtain, assign or retain geographical, mobile, regional, local or toll-free numbers, or to effectively process requests to port such numbers in a timely manner due to industry regulations, our business and results of operations may be adversely affected.
Our future success depends in part on our ability to obtain allocations of geographical, mobile, regional, local and toll-free direct inward dialing numbers or phone numbers as well as short codes and alphanumeric sender IDs (collectively, “Numbering Resources”) in the United States and foreign countries at a reasonable cost and without overly burdensome restrictions.
−Removed: Our ability to obtain allocations of, assign and retain Numbering Resources depends on factors outside of our control, such as applicable regulations, the practices of authorities that administer national numbering plans or of network service providers from whom we can provision Numbering Resources, such as offering these Numbering Resources with conditional minimum volume call level requirements, the cost of these Numbering Resources and the level of overall competitive demand for new Numbering Resources.
−Removed: In addition, in order to obtain allocations of, assign and retain Numbering Resources in the EU or certain other regions, we are often required to be licensed by local telecommunications regulatory authorities, some of which have been increasingly monitoring and regulating the categories of Numbering Resources that are eligible for provisioning to us or our customers, including restricting the use of types of numbers for particular use cases.
−Removed: For example, France has prohibited the use of mobile numbers for certain use cases, and Spain is considering similar rules.
+Added: Our ability to obtain allocations of, assign and retain Numbering Resources depends on factors outside of our control, such as applicable regulations, the practices of authorities that administer national numbering plans and the requirements of network service providers from whom we can provision Numbering Resources, such as conditional minimum volume call level requirements, as well as related costs and competitive demand.
+Added: In addition, in order to obtain allocations of, assign and retain Numbering Resources in many international jurisdictions, we are often required to be licensed by local telecommunications regulatory authorities.
We have obtained licenses and are in the process of obtaining licenses in various countries in which we do business, but in some countries, the regulatory regime around provisioning of Numbering Resources is unclear, subject to change over time, and sometimes may conflict from jurisdiction to jurisdiction.
−Removed: Furthermore, these regulations and governments’ approach to their enforcement, as well as our products and services, are still evolving and we may be unable to maintain compliance with applicable regulations, or enforce compliance by our customers, on a timely basis or without significant cost.
−Removed: Also, compliance with these types of regulation may require changes in products or business practices that result in reduced revenue.
−Removed: Due to our or our customers’ assignment and/or use of Numbering Resources in certain countries in a manner that may violate applicable rules and regulations, we have been subjected to government inquiries and audits, and may in the future be subject to significant penalties or further governmental action, and in extreme cases, may be precluded from doing business in that particular country.
−Removed: We have also been forced to reclaim Numbering Resources from our customers as a result of certain events of non-compliance.
+Added: These regulations and governments’ approach to their enforcement, as well as our products and services, are evolving and we may be unable to maintain compliance with applicable regulations, or enforce compliance by our customers, on a timely basis or without significant cost or changes in products or business practices that result in reduced revenue.
+Added: In some countries where our or our customers’ assignment and/or use of Numbering Resources in certain ways may violate applicable rules and regulations, we have been subjected to government inquiries and audits, and may in the future be subject to significant penalties or further governmental action, and in extreme cases, may be precluded from doing business in that particular country.
+Added: We have also been required to reclaim Numbering Resources from our customers as a result of certain events of non-compliance.
These reclamations result in loss of customers, loss of revenue, reputational harm, erosion of customer trust, and may also result in breach of contract claims, all of which could have an adverse effect on our business, results of operations and financial condition.
−Removed: Due to their limited availability, there are certain popular area code prefixes that we generally cannot obtain.
−Removed: Our inability to acquire or retain Numbering Resources for our operations may make our voice and messaging products less attractive to potential customers in the affected local geographic areas.
−Removed: In addition, future growth in our customer base, together with growth in the customer bases of other providers of cloud communications, has increased, which increases our dependence on needing sufficiently large quantities of Numbering Resources.
−Removed: It may become increasingly difficult to source larger quantities of Numbering Resources as we scale and we may need to pay higher costs for Numbering Resources, and Numbering Resources may become subject to more stringent regulation or conditions of usage such as the registration and ongoing compliance requirements discussed above.
+Added: If we are unable to acquire or retain Numbering Resources, our voice and messaging products may be less attractive to potential customers.
+Added: Certain popular area code prefixes have limited availability, and restrictive rules generally prevent us from obtaining or assigning certain number types.
+Added: In addition, future growth in our customer base and those of other CPaaS providers may make it increasingly difficult to source larger quantities of Numbering Resources, and Numbering Resources may become more expensive or subject to more stringent regulation or conditions of usage.
Additionally, in some geographies, we support number portability, which allows our customers to transfer their existing phone numbers to us and thereby retain their existing phone numbers when subscribing to our voice and messaging products.
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 the transfer of these numbers to us.
−Removed: 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.
−Removed: We may also be required to compensate customers for certain failures in the porting process.
+Added: Any delay that we experience in transferring these numbers typically results from our dependency on network service providers to transfer these numbers, and these network service providers may refuse or substantially delay the transfer of these numbers to us.
+Added: Number portability is an important feature to many potential customers, and failure to reduce delays may result in adverse regulatory enforcement, increased difficulty in acquiring new customers, or costs to compensate customers for certain failures in the porting process.
United States federal and state legislation and international laws impose certain obligations on the senders of commercial emails, which could minimize the effectiveness of our platform, and establish financial penalties for non-compliance, which could increase the costs of our business.
−Removed: The Federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the “CAN-SPAM Act”) establishes certain requirements for commercial email messages and transactional email messages and specifies penalties for the transmission of email messages that are intended to deceive the recipient as to source or content.
+Added: The Federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the “CAN-SPAM Act”) establishes certain requirements for commercial email messages and transactional email messages and specifies penalties for the
+Added: transmission of email messages that are intended to deceive the recipient as to source or content.
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.
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.
−Removed: For example, certain states 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.
+Added: For example, certain states 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 registries.
Some portions of these state laws may not be preempted by the CAN-SPAM Act.
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The terms of any injunctions, judgments, consent decrees or settlement agreements entered into in connection with enforcement actions or investigations against our company in connection with any of the foregoing laws may also require us to change one or more aspects of the way we operate our business, which could impair our ability to attract and retain customers or could increase our operating costs.
−Removed: Our customers’ and other users’ violation of our policies or other misuse of our platform to transmit unwanted, offensive or illegal messages, spam, phishing scams, links to harmful applications or for other fraudulent or illegal activity could damage our reputation, and we may face a risk of regulatory penalties, litigation and liability for illegal activities on our platform and unauthorized, inaccurate, or fraudulent information distributed via our platform.
−Removed: The actual or perceived improper sending of text messages or voice calls may subject us to potential risks, including liabilities or claims relating to consumer protection laws and regulatory enforcement, including fines.
−Removed: For example, the TCPA restricts telemarketing and the use of automatic SMS text messages without prior express consent.
−Removed: TCPA violations can result in significant financial penalties, as businesses can incur penalties or criminal fines imposed by the FCC or be fined up to $1,500 per violation through private litigation or state attorneys general or other state actor enforcement.
+Added: Our customers’ and others’ violation of our policies or other misuse of our platform to transmit unwanted, offensive or illegal communications, spam, social engineering scams, links to harmful applications or for other fraudulent or illegal activity could damage our reputation, and we may face a risk of regulatory penalties, litigation and liability for illegal activities on our platform and unauthorized, inaccurate, or fraudulent information distributed via our platform.
+Added: The actual or perceived improper sending of text messages, voice calls, or e-mail may subject us to potential risks, including liabilities or claims relating to consumer protection laws and regulatory enforcement, including fines.
+Added: For example, the TCPA restricts telemarketing and the use of text messages without prior express consent.
+Added: TCPA violations can result in significant financial penalties, as businesses can incur civil or criminal penalties imposed by the FCC, FTC, state attorneys general or other state actors or through private litigation.
+Added: Regulatory enforcement is often public, which would result in reputational harm.
Class action suits are the most common method for private enforcement.
This has resulted in civil claims against our company and requests for information through third-party subpoenas.
−Removed: The scope and interpretation of the laws that are or may be applicable to the delivery of text messages or voice calls are continuously evolving and developing.
+Added: The scope and interpretation of the laws that are or may be applicable to the delivery of text messages, voice calls, or e-mail are continuously evolving and developing.
If we do not comply with these laws or regulations or if we become liable under these laws or regulations due to the failure of our customers to comply with these laws, we could face direct liability.
−Removed: Moreover, certain customers may use our platform to transmit unwanted, offensive or illegal messages, calls, spam, phishing scams, and website links to harmful applications, reproduce and distribute copyrighted material or the trademarks of others without permission, and report inaccurate or fraudulent data or information.
−Removed: These issues also arise with respect to a portion of those users who use our platform on a free trial basis or upon initial use.
−Removed: These actions are in violation of our policies and in particular, our Acceptable Use Policy.
−Removed: For example, in 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 suspended the customers’ accounts and sent the FCC a follow-up letter detailing our fraud mitigation practices and various planned improvements to reduce future risks.
−Removed: However, our efforts to defeat spamming attacks, illegal robocalls and other fraudulent activity will not prevent all such attacks and activity.
−Removed: Such use of our platform could damage our reputation and we could face claims for damages, regulatory enforcement, copyright or trademark infringement, defamation, negligence, or fraud.
−Removed: Furthermore, enacting more stringent controls on our customers’ use of our platform to
−Removed: combat such violations of our Acceptable Use Policy could increase friction for our legitimate customers and decrease their use of our platform.
−Removed: Our customers’ and other users’ promotion of their products and services through our platform might not comply with federal, state, and foreign laws or of contractual requirements imposed by carriers, such as the CTIA Shortcode Agreement, The Campaign Registry, and similar policies.
−Removed: We rely on contractual representations made to us by our customers that their use of our platform will comply with our policies and applicable law, including, without limitation, our email and messaging policies.
+Added: Moreover, certain customers and others have in the past, and despite our prevention efforts, may in the future, use our platform to transmit unwanted, offensive or illegal communications, spam, social engineering scams, and website links to harmful applications, reproduce and distribute copyrighted material or the trademarks of others without permission, and report inaccurate or fraudulent data or information.
+Added: These actions violate our policies.
+Added: Our efforts to defeat spamming attacks, illegal robocalls and other fraudulent activity will not prevent all such activity, particularly as it is facilitated or enhanced by evolving technologies, including AI.
+Added: Such activity could damage our reputation and the effectiveness of our platform, and we could face claims for damages, regulatory enforcement, copyright or trademark infringement, defamation, negligence, or fraud.
+Added: Furthermore, enacting more stringent controls on use of our platform to combat such activity could increase friction for our legitimate customers and decrease their use of our platform.
+Added: Similarly, our products may be subject to fraudulent usage, including but not limited to revenue share fraud, domestic traffic pumping, subscription fraud, premium text message scams and other fraudulent schemes, such as phishing.
+Added: Although our customers are required to set passwords or personal identification numbers to protect their accounts, third parties have in the past been, and may in the future be, able to access customers’ accounts through fraudulent means and use the accounts for fraudulent activity.
+Added: Furthermore, spammers attempt to use our products to send targeted and untargeted spam communications.
+Added: We cannot be certain that our efforts to defeat spamming attacks will be successful in eliminating all spam communications from being sent using our platform.
+Added: In addition, a security breach of, or security incident impacting, our customers’ systems could result in exposure of their authentication credentials, unauthorized access to their accounts or fraudulent calls on their accounts, any of which could adversely affect our business, results of operations and financial condition.
+Added: Our customers’ and other users’ promotion of their products and services through our platform might not comply with federal, state, and foreign laws or of contractual requirements imposed by carriers, such as the CTIA Shortcode Agreement, The Campaign Registry, carrier codes of conduct and similar policies.
+Added: We rely on contractual representations made to us by our customers that their use of our platform will comply with our policies and applicable law, including, without limitation, our
+Added: email and messaging policies.
Although we retain the right to verify that customers and other users are abiding by certain contractual terms, our Acceptable Use Policy and our email and messaging policies and, in certain circumstances, to review their email, messages and distribution lists, our customers and other users are ultimately responsible for compliance with our policies, and we do not systematically audit our customers or other users to confirm compliance with our policies.
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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.
−Removed: Additionally, our products may be subject to fraudulent usage, including but not limited to revenue share fraud, domestic traffic pumping, subscription fraud, premium text message scams and other fraudulent schemes, such as phishing.
−Removed: Although our customers are required to set passwords or personal identification numbers to protect their accounts, third parties have in the past been, and may in the future be, able to access and use their accounts through fraudulent means.
−Removed: Furthermore, spammers attempt to use our products to send targeted and untargeted spam messages.
−Removed: We cannot be certain that our efforts to defeat spamming attacks will be successful in eliminating all spam messages from being sent using our platform.
−Removed: In addition, a security breach of, or security incident impacting, our customers’ systems could result in exposure of their authentication credentials, unauthorized access to their accounts or fraudulent calls on their accounts, any of which could adversely affect our business, results of operations and financial condition.
Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our products, and could adversely affect our business, results of operations and financial condition.
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For example, in January 2025, the U.S.
−Removed: Court of Appeals for the Sixth Circuit struck down the FCC’s net neutrality rules, and it is unlikely that similar federal rules will be adopted beyond those intended to preempt state regulation.
+Added: Court of Appeals for the Sixth Circuit struck down the FCC’s net neutrality rules, and it is unlikely that similar federal rules will be adopted.
Without federal net neutrality rules, we cannot predict whether internet access service providers may be able to limit our users’ ability to access our platform or make our platform a less attractive alternative to our competitors’ applications.
−Removed: Moreover, several states such as California have enacted or are considering state-level legislation or executive action that would implement certain net neutrality protections.
−Removed: State broadband regulations have been upheld by courts in certain jurisdictions, creating the potential for a patchwork of disparate regulatory regimes.
+Added: Moreover, several states have enacted or are considering state-level legislation or executive action that would implement certain net neutrality protections.
+Added: State broadband regulations have been upheld by courts in certain jurisdictions, creating the potential for a patchwork of disparate regulatory regimes and operational challenges.
In a related regulatory context, while the EU requires equal access to internet content, under its Digital Single Market initiative the EU may impose additional requirements that could increase our costs.
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The performance of the internet and its acceptance as a business tool has been adversely affected by “viruses,” “worms,” and similar malicious programs.
−Removed: If the use of the internet is reduced as a result of these or other
−Removed: issues, then demand for our products could decline, which could adversely affect our business, results of operations and financial condition.
+Added: If the use of the internet is reduced as a result of these or other issues, then demand for our products could decline, which could adversely affect our business, results of operations and financial condition.
Our global operations subject us to potential liability under export controls, economic sanctions, customs, anti-corruption, and other laws and regulations, and violating these laws could subject us to liability and impair our ability to compete in international markets.
−Removed: Certain of our products and services may be subject to international trade laws, including the U.S.
−Removed: Export Administration Regulations, U.S.
−Removed: customs laws, and U.S.
−Removed: economic and trade sanctions as well as similar laws and regulations in other countries in which we do business.
−Removed: Exports and imports of our products and the provision of our services must be made in compliance with these laws.
+Added: Certain aspects of our business are subject to international trade laws, including U.S.
+Added: export control laws and regulations, U.S.
+Added: customs laws and regulations, and U.S.
+Added: economic sanctions laws and regulations, as well as other similar laws and regulations in other countries in which we do business.
+Added: Exports and imports of our products and the provision of our services must be made in compliance with these laws, which include varying prohibitions on the sale, export, or supply of our products and services to certain sanctioned countries, regions, governments, entities, or individuals.
We take precautions to prevent our products from being imported or exported and our services from being provided in violation of these laws;
−Removed: however, we are aware of certain of our products and services being provided to a small number of individuals and entities that are the subject of, or are located in countries or regions subject to, sanctions regulations administered by U.S.
+Added: however, we are aware of certain of our products and services being provided to, procured from, or that involve dealings with, a small number of individuals and entities that are the subject of, or are located in countries or regions subject to, sanctions regulations administered by U.S.
and foreign governmental authorities.
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the possible loss of export privileges;
−Removed: fines, which may be imposed on us and responsible employees or managers;
+Added: which may be imposed on us and responsible employees or managers;
criminal liability, which may be imposed on us and responsible employees or managers;
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Because we fulfill email delivery on behalf of our customers, denylisting of this type could undermine the effectiveness of our customers’ transactional email, email marketing programs and other email communications, all of which could have a material negative impact on our business, financial condition and results of operations.
−Removed: In the first quarter of 2024, Google and Yahoo began enforcing new email sender requirements aimed at sender authentication, including Domain-based Message Authentication, Reporting and Conformance (“DMARC”) record requirements.
−Removed: These requirements have required us to devote time and resources toward compliance efforts, and these or similar authentication requirements imposed in the future could result in reduced volumes for our email products and could adversely affect our business, financial condition and results of operations.
+Added: For example, in 2024 and 2025, Google, Yahoo and Microsoft began enforcing new email sender requirements aimed at sender authentication, including Domain-based Message Authentication, Reporting and Conformance (“DMARC”) record requirements, requiring us to devote time and resources toward compliance efforts.
+Added: These or similar authentication requirements imposed in the future could result in reduced volumes for our email products and could adversely affect our business, financial condition and results of operations.
Additionally, inbox service providers can block emails from reaching their users or categorize certain emails as “promotional” emails and, as a result, direct them to an alternate or “tabbed” section of the recipient’s inbox.
−Removed: The implementation of new or more restrictive policies by inbox service providers may make it more difficult to deliver our customers’ emails, particularly if we are not given adequate notice of a change in policy or struggle to update our platform or services to comply with the changed policy in a reasonable amount of time.
+Added: implementation of new or more restrictive policies by inbox service providers may make it more difficult to deliver our customers’ emails, particularly if we are not given adequate notice of a change in policy or struggle to update our platform or services to comply with the changed policy in a reasonable amount of time.
If the open rates of our customers’ emails are negatively impacted by the actions of inbox service providers to block or categorize emails then customers may question the effectiveness of our platform and cancel their accounts.
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dollar can affect our results of operations due to transactional and translational remeasurements.
−Removed: As a result of such foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and results of
+Added: As a result of such foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and results of operations.
In addition, to the extent that fluctuations in currency exchange rates cause our results of operations to differ from our expectations or the expectations of our investors and securities analysts who follow our stock, the trading price of our common stock could be adversely affected.
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Accordingly, we may need to engage in equity or debt financings to secure additional funds.
−Removed: If we raise additional funds through future issuances of
−Removed: equity or convertible debt securities, our stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
+Added: If we raise additional funds through future issuances of equity or convertible debt securities, our stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities, our ability to repurchase stock, and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.
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Similarly, our metrics may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology.
−Removed: The numbers that we use to calculate our metrics are based on internal data and may be compiled from multiple systems, including systems that are organically developed or acquired through business combinations.
+Added: The numbers that we use to
+Added: calculate our metrics are based on internal data and may be compiled from multiple systems, including systems that are organically developed or acquired through business combinations.
While these numbers are based on what we believe to be reasonable judgments and estimates for the applicable period of measurement, there are inherent challenges in measuring our business or components of our business.
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generally accepted accounting principles (“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, as provided in “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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Adoption of these types of accounting standards and any difficulties in implementation of changes in accounting principles, including the ability to modify our accounting systems, could cause us to fail to meet our financial reporting obligations, which result in regulatory discipline and harm investors' confidence in us.
−Removed: If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.
−Removed: We review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
−Removed: Goodwill is required to be tested for impairment at least annually.
−Removed: As of December 31, 2024, we carried a net $5.5 billion of goodwill and intangible assets.
−Removed: 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.
−Removed: For example, during the year ended December 31, 2023, we recorded an impairment of intangible assets related to Segment totaling approximately $285.7 million, as described in additional detail in Note 6 to our consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on February 27, 2024.
−Removed: Any such charges may adversely affect our results of operations.
+Added: Events or changes in circumstances may require us to record impairment charges related to our intangible assets, goodwill or investments.
+Added: We review our intangible assets, goodwill and equity method investment for impairment in accordance with applicable accounting requirements.
+Added: As of December 31, 2025, we carried a net $5.4 billion of goodwill and intangible assets and $301.6 million related to our equity method investment.
+Added: 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, have in the past resulted, and could in the future result, in a change to the estimation of fair value resulting in an impairment charge to the underlying asset.
+Added: Our results of operations may be adversely affected as a result of any such charges.
+Added: For example, during the year ended December 31, 2025, we recorded an impairment of our equity method investment totaling approximately $80.6 million, as described in additional detail in Note 12 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
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Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires that we evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report on internal control over financial reporting.
−Removed: A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
+Added: A material weakness is a deficiency, or combination of deficiencies, in internal control
+Added: over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
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federal, state and foreign net operating loss carryforwards (“NOLs”), of $2.9 billion, $2.4 billion and $1.0 billion, respectively.
−Removed: Utilization of these NOL carryforwards depends on our future taxable income, and there is risk that a portion of our existing NOLs could expire unused, and that even if we achieve profitability, the use of our unexpired NOLs would be subject to limitations, which could materially and adversely affect our operating results.
−Removed: federal NOLs generated in taxable years beginning before January 1, 2018, may be carried forward only 20 years to offset future taxable income, if any.
−Removed: Under current law, U.S.
−Removed: federal NOLs generated in taxable years beginning after December 31, 2017 can be carried forward indefinitely, but the deductibility of such U.S.
−Removed: federal NOLs is generally limited to 80% of taxable income.
−Removed: Our state NOLs may also be subject to limitations, including periods during which the use of state NOL carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
−Removed: For example, California recently enacted legislation that limits the use of state NOLs for taxable years beginning on or after January 1, 2024 and before January 1, 2027.
+Added: Utilization of these NOLs depends on our future taxable income, and there is risk that a portion of our existing NOLs could expire unused and the use of our unexpired NOLs could be subject to limitations, which could materially and adversely affect our operating results.
+Added: Under current law, our U.S.
+Added: federal NOLs can generally be carried forward indefinitely, but the deductibility of such NOLs is generally limited to 80% of taxable income.
+Added: Our state NOLs may also be subject to limitations, including periods during which the use of state NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
+Added: For example, California legislation limits the use of state NOLs for taxable years beginning on or after January 1, 2024 and before January 1, 2027.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, a corporation that undergoes an “ownership change” (generally defined as a greater than 50-percentage-point cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period) is subject to limitations on its ability to utilize its pre-change NOLs and other pre-change tax attributes to offset post-change taxable income and taxes.
−Removed: Our existing NOLs and other tax attributes may be subject to limitations arising from previous ownership changes,
−Removed: and if we undergo an ownership change in the future, our ability to utilize NOLs could be further limited by Section 382 of the Code.
−Removed: Future changes in our stock ownership, some of which may be outside of our control, could result in an ownership change under Section 382 of the Code.
+Added: Our existing NOLs and other tax attributes may be subject to limitations arising from previous ownership changes, and if we undergo an ownership change in the future (which may be outside of our control), our ability to utilize NOLs and other tax attributes could be further limited.
We may have additional tax liabilities, which could harm our business, results of operations and financial condition.
−Removed: Significant judgments and estimates are required in determining our provision for income taxes and other tax liabilities.
−Removed: Our tax expense may be impacted, for example, if tax laws change or are clarified to our detriment or if tax authorities successfully challenge the tax positions that we take, such as, for example, positions relating to the arm’s-length pricing standards for our intercompany transactions and our indirect tax positions.
−Removed: In determining the adequacy of our provision for income taxes, we assess the likelihood of adverse outcomes that could result if our tax positions were challenged by the Internal Revenue Service (“IRS”), and other tax authorities.
−Removed: Should the IRS or other tax authorities assess additional taxes as a result of examinations, we may be required to record charges to operations that could adversely affect our results of operations and financial condition.
−Removed: We conduct operations in many tax jurisdictions throughout the United States and internationally.
−Removed: In many of these jurisdictions, non-income-based taxes, such as sales, value-added tax, goods and services tax, and telecommunications taxes, are assessed on our operations or our sales to customers.
−Removed: We are subject to indirect taxes, and may be subject to certain other taxes, in some of these jurisdictions.
−Removed: We collect certain telecommunications-based taxes from our customers in certain jurisdictions, and we expect to continue expanding the number of jurisdictions in which we will collect these taxes in the future.
−Removed: Many states are also pursuing legislative expansion of the scope of goods and services that are subject to sales and similar taxes as well as the circumstances in which a vendor of goods and services must collect such taxes.
−Removed: Following the United States Supreme Court decision in South Dakota v.
−Removed: Wayfair, Inc., states are now free to levy taxes on sales of goods and services based on an “economic nexus,” regardless of whether the seller has a physical presence in the state.
+Added: In many of the jurisdictions in which we operate, non-income-based taxes, such as sales tax, value-added tax, goods and services tax, and telecommunications taxes, are assessed on our operations or our sales to customers.
+Added: Such tax laws and rates vary by jurisdiction.
+Added: One or more states or countries may seek to impose incremental or new indirect tax collection obligations on us.
Any additional fees and taxes levied on our services by any state may adversely impact our results of operations.
−Removed: Historically, we have not billed or collected taxes in certain jurisdictions and, in accordance with 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.
+Added: Historically, we have not billed or collected indirect taxes in certain jurisdictions and, in accordance with 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.
We reserved $42.8 million on our December 31, 2025 balance sheet for these tax payments.
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We are in discussions with certain jurisdictions regarding potential sales and other indirect taxes for prior periods that we may owe.
−Removed: If any of these jurisdictions disagree with management’s assumptions and analysis, the assessment of our tax exposure could differ materially from management’s current estimates.
−Removed: For example, in 2020, San Francisco City and County assessed us for $38.8 million in taxes, including interest and penalties, which exceeded the $11.5 million we had accrued for that assessment.
−Removed: We paid the full amount under protest and filed a lawsuit on May 27, 2021 contesting the assessment.
−Removed: We entered into a settlement agreement in November 2023 pursuant to which San Francisco paid us $18.0 million in settlement of our claims.
+Added: If any of these jurisdictions disagree with management’s assumptions and analysis, the assessment of our tax exposure could differ materially from management’s current estimates, which may increase our costs of doing business and negatively affect the prices our customers pay for our products.
Our global operations and structure subject us to potentially adverse tax consequences.
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If such a disagreement were to occur, and our position were not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
−Removed: Changes in, or interpretations of, tax rules and regulations or our tax positions may materially and adversely affect our income taxes.
−Removed: We are subject to income taxes in both the United States and numerous international jurisdictions.
−Removed: Significant judgment is required in determining our worldwide provision for income taxes.
+Added: Changes in, or interpretations of, tax rules and regulations or our tax positions may materially and adversely affect our taxes.
+Added: We are subject to taxes in both the United States and numerous international jurisdictions.
+Added: Significant judgment is required in determining our worldwide provision for taxes.
In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain.
−Removed: Our effective tax rates may fluctuate significantly on a quarterly basis because of a variety of factors, including changes in the mix of earnings and losses in countries with differing statutory tax rates, changes in our business or structure, changes in tax laws that could adversely impact our income or non-income taxes or the expiration of or disputes about certain tax agreements in a particular country.
+Added: Our effective tax rates may fluctuate significantly on a quarterly basis because of a variety of factors, including changes in the mix of earnings and losses in countries with differing statutory tax rates, changes in our business or structure, or the expiration of or disputes about certain tax agreements in a particular country.
We are subject to audit by various tax authorities.
In accordance with GAAP, we recognize income tax benefits, net of required valuation allowances and accrual for uncertain tax positions.
−Removed: Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different than that which is reflected in historical income tax provisions and accruals.
+Added: Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different than that which is reflected in our historical income tax provisions and accruals.
Should additional taxes be assessed as a result of an audit or litigation, an adverse effect on our results of operations, financial condition and cash flows in the period or periods for which that determination is made could result.
−Removed: Changes in tax laws or tax rulings, or changes in interpretations of existing laws, could cause us to be subject to additional income-based taxes and non-income taxes (such as payroll, sales, use, value-added, digital tax, net worth, property, and goods and services taxes), which in turn could materially affect our financial position and results of operations.
+Added: Changes in tax laws, including recently enacted U.S.
+Added: federal tax legislation commonly referred to as the One Big Beautiful Bill Act (the “OBBB Act”), or tax rulings, or changes in interpretations of existing laws, could cause us to be subject to additional taxes, which in turn could materially affect our financial position and results of operations.
+Added: The OBBB Act could potentially increase our effective tax rate as we continue to expand our international operations in the coming years.
Additionally, new, changed, modified, or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and other costs, as well as the costs of our products.
−Removed: For example, on August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, with tax provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income of corporations with adjusted financial statement income exceeding $1.0 billion, effective for tax years beginning after December 31, 2022, and a 1% excise tax on share repurchases occurring after December 31, 2022, which resulted in an excise tax payable calculated on our 2023 and 2024 share repurchases.
−Removed: 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 2024.
−Removed: If the requirement to capitalize Section 174 expenditures is not modified by legislation, it will continue to impact our effective tax rate and our cash tax liability.
−Removed: 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.
−Removed: 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% for large multinational companies.
−Removed: On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive and various countries have enacted or are in the process of enacting legislation on these rules.
−Removed: These changes, when enacted by various countries in which we do business, may increase our taxes in these countries.
−Removed: Changes to these and other areas in relation to international tax reform, including future actions taken by foreign governments in response to the Tax Act, could increase uncertainty and may adversely affect our tax rate and cash flow in future years.
+Added: As another example, the Organization for Economic Co-operation and Development (the “OECD”) has proposed a global minimum tax (“Pillar Two”), contemplating a minimum tax rate of 15% for large multinational companies, and various countries have proposed or enacted implementing legislation.
+Added: Notwithstanding the OECD’s side-by-side elective safe harbor announced in January 2026 for U.S.
+Added: parented groups, we may still face increased tax rates, compliance complexity and tax provision volatility as a result of Pillar Two.
Risks Related to Ownership of Our Common Stock
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Additionally, the shares of common stock subject to outstanding options and restricted stock unit awards under our equity incentive plans and the shares reserved for future issuance under our equity incentive plans will become eligible for sale in the public market upon issuance, subject to applicable insider trading policies.
−Removed: We may not realize the anticipated long-term stockholder value of our share repurchase programs, and any failure to repurchase our common stock after we have announced our intention to do so may negatively impact our stock price.
+Added: We may not realize the anticipated long-term stockholder value of our share repurchase program, and any failure to repurchase our common stock after we have announced our intention to do so may negatively impact our stock price.
In January 2025, our board of directors authorized the repurchase of up to $2.0 billion of our common stock from time to time through a share repurchase program.
−Removed: As of December 31, 2024, we had repurchased $3.0 billion of outstanding shares of our common stock under prior authorizations that expired on December 31, 2024.
−Removed: Under our share repurchase program, we may make repurchases of stock through a variety of methods, including open share market purchases, privately negotiated purchases, entering into one or more confirmations or other contractual arrangements with a financial institution counterparty to
−Removed: effectuate one or more accelerated stock repurchase contracts, forward purchase contracts or similar derivative instruments, Dutch auction tender offers, or through a combination of any of the foregoing, in accordance with applicable federal securities laws.
+Added: As of December 31, 2025, we had repurchased $854.6 million of outstanding shares of our common stock under this program, such that approximately $1.1 billion remained available for purchase as of such date.
+Added: Under our share repurchase program, we may make repurchases of stock through a variety of methods, including open share market purchases, privately negotiated purchases, entering into one or more confirmations or other contractual arrangements
+Added: with a financial institution counterparty to effectuate one or more accelerated stock repurchase contracts, forward purchase contracts or similar derivative instruments, Dutch auction tender offers, or through a combination of any of the foregoing, in accordance with applicable federal securities laws.
Our share repurchase program terminates at 11:59 pm Pacific Time on December 31, 2027, does not obligate us to repurchase any specific number of shares, and may be suspended at any time at our discretion and without prior notice.
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• limiting the ability of our stockholders to call and bring business before special meetings;
−Removed: • providing that our board of directors is classified into three classes of directors with staggered three-year terms;
• prohibiting stockholder action by written consent, instead requiring all stockholder actions to be taken at a meeting of our stockholders;
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We also rely on our network and third-party infrastructure and enterprise applications and internal technology systems for our engineering, sales and marketing, and operations activities.
−Removed: Although we maintain incident management and disaster response plans, in the event of a major disruption caused by a natural disaster or man-made problem, we may be unable to continue our operations and may endure system interruptions and outages, reputational harm, delays in our development activities, lengthy interruptions in service, security breaches and incidents and loss or unavailability of critical data, any of which could adversely affect our business, results of operations and financial condition.
+Added: Although we maintain incident management and disaster response plans, in the event of a major disruption caused by a natural disaster or man-made problem, we may be unable to continue our operations and may endure system interruptions and outages, reputational harm, delays in our development
+Added: activities, lengthy interruptions in service, security breaches and incidents and loss or unavailability of critical data, any of which could adversely affect our business, results of operations and financial condition.
In addition, computer malware, viruses and computer hacking, fraudulent use attempts and phishing attacks have become more prevalent in our industry, have occurred on our platform in the past and may occur on our platform in the future.
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Our reputation and/or business could be negatively impacted by ESG matters and/or our reporting of such matters.
−Removed: There is an increasing focus on ESG matters from governmental authorities, investors, customers and other stakeholders, whose expectations are evolving and may be contradictory.
+Added: There has been a focus on ESG matters from governmental authorities, investors, customers and other stakeholders, whose expectations are evolving and may be contradictory.
Our decisions regarding ESG-related initiatives, goals, or commitments, including whether to pursue them, and/or the extent to which we achieve them, may be scrutinized and could negatively impact our reputation, result in reduced customer demand or certain investors not purchasing or holding our stock, harm our ability to attract and retain qualified employees, or otherwise materially harm our business.
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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.