DOMO, INC.
For the period ended Jul 31, 2026. Filed Sep 3, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2026 · Filed Sep 3, 2026
HUCK$2.75-4.2%Stored close · as of Nov 6, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-Q
Period ended 2026-04-30; filed 2026-06-15.
0001628280-26-043173
Item 1A. Risk FactorsCurrent report: 10-Q
Period ended 2026-07-31; filed 2026-09-03.
0001628280-26-060537
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 335 previous paragraphs and 345 current paragraphs.
317 unchanged; 15 reworded; 12 added; 2 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Risks Related to the Proposed Transaction with Progress
Current report
We have entered into a definitive Asset Purchase Agreement to sell substantially all of our assets, and the failure to complete this transaction, or delays in closing this transaction, could have an adverse effect on our business, results of operations and financial condition.
Current report
In February 2026, we announced that our board of directors initiated a formal process to explore strategic alternatives to maximize shareholder value. On July 22, 2026, we entered into an Asset Purchase Agreement (Purchase Agreement) with Progress Software Corporation (Progress), pursuant to which Progress agreed to acquire substantially all of our assets and assume certain liabilities for $400 million in cash (Asset Sale). We cannot provide assurance that the Asset Sale will be completed on the timeline currently anticipated or at all. Concurrently with the execution and delivery of the Purchase Agreement, Progress entered into a Voting and Support Agreement (Support Agreement) with stockholders of the Company holding sufficient voting power to approve the transaction under applicable law and the Company’s organizational documents (Majority Stockholders), pursuant to which the Majority Stockholders agreed, among other things, to execute and deliver a written consent approving and adopting the Purchase Agreement and the transactions thereunder and to comply with certain transfer and other restrictions with respect to their shares of our common stock, in each case subject to the terms and conditions of the Support Agreement. The closing of the Asset Sale is also subject to satisfaction or waiver of certain customary conditions.
Current report
The Purchase Agreement includes customary “no-shop” restrictions, subject to an exception permitting our board of directors to consider unsolicited competing proposals, which means the Asset Sale could still be superseded, delayed, or disrupted by a competing bid. The Purchase Agreement also provides for a downward adjustment to the $400 million purchase price if the cash acquired by Progress at closing is below a specified $25.0 million threshold, and requires us to pay Progress a termination fee of $13.5 million if the Purchase Agreement is terminated under specified circumstances, including our termination following an uncured breach that prevents closing by November 30, 2026, or in connection with a competing proposal. The pursuit of the Asset Sale or any other such strategic transactions could involve risks to our operations and financial results, whether or not such transaction is ultimately consummated. Such risks could include:
Current report
Following the closing of the Asset Sale, we will no longer have an operating business, and our future success will depend on our ability to identify a use of the proceeds from the Asset Sale.
Current report
If we complete the Asset Sale, we will sell substantially all of our operating assets and will retain, among other things, cash proceeds from the Asset Sale and our net operating loss carryforwards (NOLs) and certain other tax attributes. We do not intend to liquidate following the closing, and our board of directors will evaluate alternatives for the use of the cash proceeds from the Asset Sale. Those alternatives are currently expected to include using such cash proceeds to fund, at least in part, the acquisition of assets that will allow us to potentially derive a benefit from our NOLs and certain other tax attributes. There is no assurance that our board of directors will be able to identify, negotiate and complete any such transaction, or that any such transaction, if completed, will be successful. We may also incur substantial costs in connection with our efforts to identify and evaluate potential transactions, whether or not any such transaction is completed.
Current report
Our credit facility remains subject to a covenant breach and forbearance agreement, and if the Asset Sale is not completed or we fail to maintain compliance with the forbearance agreement, our lenders could accelerate our indebtedness.
Current report
We were not in compliance with the minimum annualized recurring revenue covenant under our secured credit facility as of April 30, 2026, which gives our lenders the right to accelerate approximately $137.2 million of outstanding principal and fees. Our lenders have not waived this default but have agreed to a forbearance, pursuant to which they have agreed to refrain from exercising remedies, subject to our satisfaction of certain conditions, including entry into a definitive agreement with respect to a strategic transaction and completion of that transaction within specified timeframes. If the Asset Sale is not completed on the anticipated timeline, if the forbearance agreement terminates or expires without replacement or extension, or if we otherwise fail to satisfy the conditions of the forbearance agreement, our lenders could declare all outstanding obligations under the credit facility immediately due and payable, which would have a material adverse effect on our liquidity and financial condition, and there is substantial doubt about our ability to continue as a going concern.
Current report
Our recently adopted Tax Benefits Preservation Plan is intended to protect our NOLs but may not prevent an ownership change, and it has anti-takeover effects that could adversely affect holders of our common stock.
Current report
On July 22, 2026, in light of the significance of our NOLs and other tax attributes following the Asset Sale, our board of directors adopted a Tax Benefits Preservation Plan (Preservation Plan) with Equiniti Trust Company, LLC, as rights agent, and declared a dividend of one preferred stock purchase right for each outstanding share of our Class A common stock and Class B common stock held of record as of the close of business on August 4, 2026. This protects against a possible limitation on the Company’s ability to use its NOLs and certain other tax attributes to reduce potential future U.S. federal income tax obligations. The NOLs and certain other tax attributes are valuable assets to us, which may inure to the benefit of us and our stockholders. However, if we experience an “ownership change,” as defined in Section 382 of the Code, our ability to fully utilize the NOLs and certain other tax attributes will be substantially limited and the timing of the usage of the NOLs and other tax attributes could be substantially delayed, which could significantly impair the value of those assets. Generally, an “ownership change” occurs if the percentage of our stock owned by one or more of our “5-percent shareholders” (as such term is defined in Section 382 of the Code) increases by more than 50 percentage points over the lowest percentage of stock owned by such stockholder or stockholders at any time over a three-year period. The Preservation Plan is intended to prevent such an “ownership change” by deterring any person or group, together with its affiliates and associates, from acquiring beneficial ownership of 4.9% (Specified Percentage) or more of our securities. The Preservation Plan is not expected to interfere with the Asset Sale or any other merger or business combination approved by our board of directors. There can be no assurance that the Tax Benefits Preservation Plan will prevent an “ownership change” within the meaning of Sections 382 and 383 of the Code, in which case we may lose all or most of the anticipated tax benefits associated with our prior losses.
Current report
•the pendency, terms or anticipated timing of the closing of the Asset Sale, including any failure to complete or delay in completing the Asset Sale;
Current report
•market perception of our prospects after the completion of the Asset Sale;
Removed paragraphs (2)
Previous report
A strategic transaction, whether or not consummated, could have an adverse effect on our business, results of operations and financial condition.
Previous report
In February 2026, we announced that our board of directors initiated a formal process to explore strategic alternatives to maximize shareholder value. The Company is in advanced negotiations regarding a potential transaction. While substantial progress has been made, no definitive agreement has been executed and there can be no assurance that any transaction will result from these discussions. If negotiations continue to progress successfully, the Company anticipates that a potential transaction could be announced in the near term. The pursuit of such strategic transactions could involve risks to our operations and financial results, whether or not such transaction is ultimately consummated. Such risks could include:
Reworded paragraphs (15)
Previous wording
•Significant transaction costs, which may or may not be recovered in the future and which may be incurred even if such strategic transaction fails to close or is otherwise unsuccessful;
Current wording
•Significant transaction costs (potentially including any termination fees), which may or may not be recovered in the future and which may be incurred even if such strategic transaction fails to close or is otherwise unsuccessful;
Previous wording
We incurred net losses of $18.1 million and $14.2 million for the three months ended April 30, 2025 and 2026, respectively, and had an accumulated deficit of $1,561.1 million at April 30, 2026. We may not be able to generate sufficient revenue to achieve or sustain profitability. We expect to continue to incur losses for the foreseeable future and we expect costs to increase in future periods as we expend substantial financial and other resources on, among other things:
Current wording
We incurred net losses of $41.0 million and $23.8 million for the six months ended July 31, 2025 and 2026, respectively, and had an accumulated deficit of $1,570.7 million at July 31, 2026. We may not be able to generate sufficient revenue to achieve or sustain profitability. We expect to continue to incur losses for the foreseeable future and we expect costs to increase in future periods as we expend substantial financial and other resources on, among other things:
Previous wording
We have been growing and expect to continue to invest in our growth for the foreseeable future. If we fail to manage this growth effectively, our business and operating results will be adversely affected.
Current wording
We expect to continue to invest in our growth for the foreseeable future. If we fail to manage this growth effectively, our business and operating results will be adversely affected.
Previous wording
We intend to continue to grow our business. If we cannot adequately train new employees, including our direct sales force, or if new employees are not as productive as quickly as we would like, sales may decrease or customers may lose confidence in the knowledge and capability of our employees. In addition, we may make direct investments in our international business, and increase the number of employees outside the United States. We must successfully manage growth to achieve our objectives. Although our business has experienced significant growth in the past, we cannot provide any assurance that our business will continue to grow at any particular rate, or at all.
Current wording
We intend to grow our business. If we cannot adequately train new employees, including our direct sales force, or if new employees are not as productive as quickly as we would like, sales may decrease or customers may lose confidence in the knowledge and capability of our employees. In addition, we may make direct investments in our international business, and increase the number of employees outside the United States. We must successfully manage growth to achieve our objectives. Although our business has experienced significant growth in the past, we cannot provide any assurance that our business will continue to grow at any particular rate, or at all.
Previous wording
Our business and operations may consume resources faster than we anticipate. We have incurred cumulative and recurring losses from operations since inception and had an accumulated deficit of $1,561.1 million as of April 30, 2026. We have also experienced negative or close to breakeven cash flows from operating activities, including cash provided by operating activities of $4.0 million and $5.2 million for the three months ended April 30, 2025 and 2026, respectively. As of April 30, 2026, we had $39.1 million of cash and cash equivalents, which were held for working capital purposes. Additionally, no amounts were available to draw under our credit facility. Our need to raise additional capital or complete a potential transaction is heightened by our noncompliance with a financial covenant under our credit facility as of April 30, 2026 and the resulting substantial doubt about our ability to continue as a going concern, as described above.
Current wording
Our business and operations may consume resources faster than we anticipate. We have incurred cumulative and recurring losses from operations since inception and had an accumulated deficit of $1,570.7 million as of July 31, 2026. We have also experienced negative or close to breakeven cash flows from operating activities, including cash provided by operating activities of $7.3 million and cash used in operating activities of $1.2 million for the six months ended July 31, 2025 and 2026, respectively. As of July 31, 2026, we had $25.1 million of cash and cash equivalents, which were held for working capital purposes. Additionally, no amounts were available to draw under our credit facility. Our need to raise additional capital or complete a potential transaction is heightened by our noncompliance with a financial covenant under our credit facility as of July 31, 2026 and the resulting substantial doubt about our ability to continue as a going concern, as described above.
Previous wording
We were not in compliance with a financial covenant under our secured credit facility as of April 30, 2026, which gives our lenders the right to accelerate our indebtedness, and there is substantial doubt about our ability to continue as a going concern; although our lenders have not waived the underlying default, they have agreed to a forbearance subject to certain contingencies.
Current wording
We were not in compliance with a financial covenant under our secured credit facility as of April 30, 2026 and July 31, 2026, which gives our lenders the right to accelerate our indebtedness, and there is substantial doubt about our ability to continue as a going concern; although our lenders have not waived the underlying default, they have agreed to a forbearance subject to certain contingencies.
Previous wording
As of April 30, 2026, we were not in compliance with the minimum annualized recurring revenue covenant under our credit facility, which is secured by substantially all of our assets. This noncompliance gives our lenders the right to accelerate repayment of the $136.6 million of principal and related fees, and we have classified the related term loan and fees as current liabilities as of April 30, 2026. Our cash and cash equivalents of $39.1 million as of April 30, 2026 would not be sufficient to repay the term loan upon any such acceleration. As a result, substantial doubt exists about our ability to continue as a going concern, and our plans to address these conditions do not alleviate that doubt.
Current wording
As of July 31, 2026, we were not in compliance with the minimum annualized recurring revenue covenant under our credit facility, which is secured by substantially all of our assets. This noncompliance gives our lenders the right to accelerate repayment of the $138.3 million of principal and related fees, and we have classified the related term loan and fees as current liabilities as of July 31, 2026. Our cash and cash equivalents of $25.1 million as of July 31, 2026 would not be sufficient to repay the term loan upon any such acceleration. As a result, substantial doubt exists about our ability to continue as a going concern, and our plans to address these conditions do not alleviate that doubt.
Previous wording
Our lenders have not waived the noncompliance, but have entered into a forbearance agreement with us under which they agreed to forbear from exercising their rights and remedies with respect to the noncompliance and certain other specified and anticipated defaults for a limited period that is subject to certain conditions, including our entry into a definitive purchase agreement by July 31, 2026 and the completion of a potential transaction no later than November 30, 2026. The forbearance does not waive the underlying default and does not change the classification of the term loan, which remains a current liability, and upon its expiration the lenders may exercise their rights and remedies, including acceleration. See Note 11, "Debt" to our condensed consolidated financial statements, for further details.
Current wording
Our lenders have not waived the noncompliance, but have entered into a forbearance agreement with us under which they agreed to forbear from exercising their rights and remedies with respect to the noncompliance and certain other specified and anticipated defaults for a limited period that is subject to certain conditions, including our entry into a definitive purchase agreement by July 31, 2026 and the completion of a potential transaction no later than November 30, 2026. We satisfied the July 31, 2026 milestone by entering into the Purchase Agreement with Progress on July 22, 2026, as described above under “—We have entered into a definitive Asset Purchase Agreement to sell substantially all of our assets, and the failure to complete this transaction, or delays in its completion, could have an adverse effect on our business, results of operations and financial condition”; however, the forbearance remains conditioned on our completing the Asset Sale by November 30, 2026, and there can be no assurance that we will do so. The forbearance does not waive the underlying default and does not change the classification of the term loan, which remains a current liability, and upon its expiration the lenders may exercise their rights and remedies, including acceleration. See Note 12, "Debt" to our condensed consolidated financial statements, for further details.
Previous wording
In addition, taxation of cloud-based software is constantly evolving as many state and local jurisdictions consider the taxability of software services provided remotely. These events could require us or our customers to pay additional tax amounts on a prospective or retroactive basis, as well as require us or our customers to pay fines or penalties and interest for past amounts deemed to be due. If we raise our prices to offset the costs of these changes, existing and potential future customers may elect not to continue to use or purchase subscriptions to our platform in the future. Additionally, new, 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 platform. Any or all of these events could harm our business and operating results.
Current wording
In addition, taxation of cloud-based software is constantly evolving as many state and local jurisdictions consider the taxability of software services provided remotely. For example, California has recently amended its tax laws to subject certain retail sales of digital prewritten software, cloud-based applications, and software services to sales tax in California, effective January 1, 2027. These events could require us or our customers to pay additional tax amounts on a prospective or retroactive basis, as well as require us or our customers to pay fines or penalties and interest for past amounts deemed to be due. If we raise our prices to offset the costs of these changes, existing and potential future customers may elect not to continue to use or purchase subscriptions to our platform in the future. Additionally, new, 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 platform. Any or all of these events could harm our business and operating results.
Previous wording
Our pricing and subscription models have evolved over time and will continue to evolve in the future. While 89% of our annual recurring revenue is now utilizing the platform as a consumption-based service, it is relatively new to our business and therefore contains inherent risks. Revenue recognized for certain customers may be negatively impacted due to our consumption-based pricing model. For example, certain customers may end up using less data than originally contemplated in their initial consumption-based contract resulting in lower net retention in future years. Additionally, as we implement artificial intelligence tools on our platform, we may not be able to accurately predict customer demand of these tools, and if certain customers use these tools more than we anticipate, we may incur increased operational costs that may not be recovered in an appropriate timeframe. We believe our partner ecosystem will become increasingly important to our business as we continue its expansion. If our partners decide to internally adopt tools that we provide or find other ways that will reduce their need for our platform, such as by adopting artificial intelligence tools offered by our competitors in lieu of purchasing our services, that could result in lower volume of usage, which could adversely impact our financial performance. The success of our pricing model transition is subject to numerous variables, including, but not limited to, customer demand, renewal and expansion rates, our ability to capture upside from over-usage of volume in future contracts, our ability to further develop and scale infrastructure, the ability of our sales force to successfully execute new sales strategies and drive adoption of our platform, tax and accounting implications, pricing, and our costs. Moreover, changes in our pricing and subscription models subject us to a number of uncertainties, including our ability to plan for and model future growth and make accurate projections regarding our future performance. Changes to our pricing and subscription models may also expose us to unexpected or unintended effects, including increased user dissatisfaction, reputational harm and difficulty obtaining or retaining customers. Further, large customers, which are the focus of our direct sales efforts, may demand greater price discounts. In an inflationary environment, our costs may increase and we may not be able to adjust our pricing models accordingly, which could adversely impact our financial performance.
Current wording
Our pricing and subscription models have evolved over time and will continue to evolve in the future. While 91% of our annual recurring revenue is now utilizing the platform as a consumption-based service, it is relatively new to our business and therefore contains inherent risks. Revenue recognized for certain customers may be negatively impacted due to our consumption-based pricing model. For example, certain customers may end up using less data than originally contemplated in their initial consumption-based contract resulting in lower net retention in future years. Additionally, as we implement artificial intelligence tools on our platform, we may not be able to accurately predict customer demand of these tools, and if certain customers use these tools more than we anticipate, we may incur increased operational costs that may not be recovered in an appropriate timeframe. We believe our partner ecosystem will become increasingly important to our business as we continue its expansion. If our partners decide to internally adopt tools that we provide or find other ways that will reduce their need for our platform, such as by adopting artificial intelligence tools offered by our competitors in lieu of purchasing our services, that could result in lower volume of usage, which could adversely impact our financial performance. The success of our pricing model transition is subject to numerous variables, including, but not limited to, customer demand, renewal and expansion rates, our ability to capture upside from over-usage of volume in future contracts, our ability to further develop and scale infrastructure, the ability of our sales force to successfully execute new sales strategies and drive adoption of our platform, tax and accounting implications, pricing, and our costs. Moreover, changes in our pricing and subscription models subject us to a number of uncertainties, including our ability to plan for and model future growth and make accurate projections regarding our future performance. Changes to our pricing and subscription models may also expose us to unexpected or unintended effects, including increased user dissatisfaction, reputational harm and difficulty obtaining or retaining customers. Further, large customers, which are the focus of our direct sales efforts, may demand greater price discounts. In an inflationary environment, our costs may increase and we may not be able to adjust our pricing models accordingly, which could adversely impact our financial performance.
Previous wording
Further, we may make changes to our platform that customers do not find useful. We may also discontinue certain features, begin to charge for certain features that are currently free or increase fees for any features or usage of our platform. We may also face unexpected problems or challenges in connection with new applications or feature introductions. Enhancements and changes to our platform could fail to attain sufficient market acceptance for many reasons, including:
Current wording
Further, we may make changes to our platform that customers do not find useful. We may also discontinue certain features, begin to charge for certain features that are currently free or increase fees for any features or usage of our platform.
Previous wording
Historically, we have generated a substantial majority of our revenue from customers inside the United States. For example, approximately 80%, and 79% of our total revenue for the three months ended April 30, 2025 and 2026, respectively, was derived from sales within the United States. We continue to expand internationally and plan to continue to expand our international operations as part of our growth strategy. Expanding our international operations will subject us to a variety of risks and challenges, including:
Current wording
Historically, we have generated a substantial majority of our revenue from customers inside the United States. For example, approximately 80% and 79% of our total revenue for the six months ended July 31, 2025 and 2026, respectively, was derived from sales within the United States. We continue to expand internationally and plan to continue to expand our international operations as part of our growth strategy. Expanding our international operations will subject us to a variety of risks and challenges, including:
Previous wording
In the United States, various laws and regulations apply to the collection, disclosure, and other processing of certain types of data, including with respect to security measures used to protect such data. Additionally, the FTC and many state attorneys general are interpreting federal and state consumer protection laws as imposing standards for the collection, use, dissemination, security, and other processing of data. The laws and regulations relating to privacy and cybersecurity are evolving, can be subject to significant change, and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. For example, California in 2018 enacted the California Consumer Privacy Act (CCPA), which went into effect on January 1, 2020. The CCPA requires covered companies to, among other things, provide disclosures to California consumers and afford such consumers new abilities to opt-out of certain sales of personal information. Additionally, the California Privacy Rights Act (CPRA) was approved by California voters in November 2020 and became effective January 1, 2023. The CPRA amended and expanded the CCPA in numerous respects, including by expanding the CCPA’s private right of action. Following enactment of the CCPA, many other states have adopted or considered privacy legislation, many of which are comprehensive laws similar to the CCPA and CPRA. For example, Virginia, Colorado, Utah, and Connecticut have adopted such legislation that became effective in 2023, Texas, Montana, Oregon, and Florida have adopted such legislation that became effective in 2024, Delaware, Iowa, Maryland, Minnesota, Nebraska, New Hampshire, New Jersey, and Tennessee have adopted such legislation that became effective in 2025, Indiana, Kentucky, and Rhode Island have adopted such legislation that has become effective in 2026, and Alabama and Oklahoma have adopted such legislation that becomes effective in 2027. Broad federal privacy legislation has also been proposed. In 2025, the U.S. Department of Justice issued a rule entitled the Preventing Access to U.S. Sensitive Personal Data and Government-Related Data by Countries of Concern or Covered Persons, which places restrictions on data transactions involving sensitive personal data and certain “Countries of Concern” and “Covered Persons” (i.e., individuals and entities located in or controlled by individuals or entities located in those jurisdictions). Additionally, states have adopted other laws and regulations relating to privacy and cybersecurity, such as Washington’s My Health, My Data Act, which includes a private right of action. These and other new and evolving laws and regulations relating to privacy in the U.S. could increase our potential liability and adversely affect our business. Aspects of these laws and regulations and their interpretation and enforcement remain uncertain. We cannot fully predict the impact of these or other new and evolving laws and regulations rela…
Excerpt shortened here; the source contains the full paragraph.
Current wording
In the United States, various laws and regulations apply to the collection, disclosure, and other processing of certain types of data, including with respect to security measures used to protect such data. Additionally, the FTC and many state attorneys general are interpreting federal and state consumer protection laws as imposing standards for the collection, use, dissemination, security, and other processing of data. The laws and regulations relating to privacy and cybersecurity are evolving, can be subject to significant change, and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. For example, California in 2018 enacted the California Consumer Privacy Act (CCPA), which went into effect on January 1, 2020. The CCPA requires covered companies to, among other things, provide disclosures to California consumers and afford such consumers new abilities to opt-out of certain sales of personal information. Additionally, the California Privacy Rights Act (CPRA) was approved by California voters in November 2020 and became effective January 1, 2023. The CPRA amended and expanded the CCPA in numerous respects, including by expanding the CCPA’s private right of action. Following enactment of the CCPA, many other states have adopted or considered privacy legislation, many of which are comprehensive laws similar to the CCPA and CPRA. For example, Virginia, Colorado, Utah, and Connecticut have adopted such legislation that became effective in 2023, Texas, Montana, Oregon, and Florida have adopted such legislation that became effective in 2024, Delaware, Iowa, Maryland, Minnesota, Nebraska, New Hampshire, New Jersey, and Tennessee have adopted such legislation that became effective in 2025, Indiana, Kentucky, and Rhode Island have adopted such legislation that has become effective in 2026, Alabama and Oklahoma have adopted such legislation that becomes effective in 2027; and Vermont has adopted such legislation that becomes effective in 2028. Broad federal privacy legislation has also been proposed. In 2025, the U.S. Department of Justice issued a rule entitled the Preventing Access to U.S. Sensitive Personal Data and Government-Related Data by Countries of Concern or Covered Persons, which places restrictions on data transactions involving sensitive personal data and certain “Countries of Concern” and “Covered Persons” (i.e., individuals and entities located in or controlled by individuals or entities located in those jurisdictions). Additionally, states have adopted other laws and regulations relating to privacy and cybersecurity, such as Washington’s My Health, My Data Act, which includes a private right of action. These and other new and evolving laws and regulations relating to privacy in the U.S. could increase our potential liability and adversely affect our business. Aspects of these laws and regulations and their interpretation and enforcement remain uncertain. We cannot fully predict th…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
European Commission and United States agreed in principle in March 2022 to a new EU-U.S. Data Privacy Framework (DPF), with respect to the European Commission adopted an adequacy decision in July 2023, allowing the DPF to be implemented and available for participating entities to use to legitimize transfers of personal data from the E.U. to the U.S. We have self-certified to the DPF, the Swiss-U.S. Data Privacy Framework, and the United Kingdom Extension to the DPF. The DPF has faced legal challenge, and each of these frameworks may be subject to legal challenge in the future. Additionally, the European Commission’s adequacy decision regarding the DPF provides that it will be subject to future reviews and may be subject to suspension, amendment, repeal, or limitations to its scope by the European Commission. Numerous laws and regulations in other jurisdictions also have been enacted or modified in manners imposing data transfer restrictions, and we and many other companies may need to implement different or additional measures to establish or maintain legitimate means for the transfer and receipt of personal data from the E.U., Switzerland, the United Kingdom, or other countries or regions to the U.S., and we may, in addition to other impacts, be required to engage in additional contractual negotiations and experience additional costs associated with increased compliance burdens, and we and our customers face the potential for regulators to apply different standards to the transfer of personal data from the E.U., Switzerland, the United Kingdom, or other regions to the U.S., and to block or require additional measures taken with respect to certain data flows from the E.U., Switzerland, the United Kingdom, or other regions to the U.S. We and our customers may face a risk of enforcement actions or other proceedings by regulatory authorities relating to personal data transfers. Any such proceedings could result in substantial costs and diversion of resources, distract management and technical personnel and negatively affect our business, operating results, and financial condition. We may be at risk of experiencing reluctance or refusal of European or multi-national customers to use our solutions and being subject to regulatory action or incurring penalties. Any of these developments may have an adverse effect on our business.
Current wording
We previously were certified under the E.U.-U.S. Privacy Shield and the Swiss-U.S. Privacy Shield with respect to our transfer of certain personal data from the E.U. and Switzerland to the United States. The E.U.-U.S. Privacy Shield framework and the use of E.U. Standard Contractual Clauses (the SCCs) to protect data exports between the E.U. and the U.S. have been subject to legal challenges in the E.U, and on July 16, 2020, the Court of Justice of the European Union (the CJEU), Europe’s highest court, held in the “Schrems II” case that the E.U.-U.S. Privacy Shield was invalid, and imposed additional obligations in connection with the use of the SCCs. The Swiss data protection and information commissioner subsequently concluded that the Swiss-U.S. Privacy Shield was invalid on similar grounds. The European Commission issued new SCCs on June 4, 2021, addressing aspects of the CJEU’s opinion in the Schrems II case, which were required to be implemented. The European Commission and United States agreed in principle in March 2022 to a new EU-U.S. Data Privacy Framework (DPF), with respect to the European Commission adopted an adequacy decision in July 2023, allowing the DPF to be implemented and available for participating entities to use to legitimize transfers of personal data from the E.U. to the U.S. We have self-certified to the DPF, the Swiss-U.S. Data Privacy Framework, and the United Kingdom Extension to the DPF. The DPF has faced legal challenge, and each of these frameworks may be subject to legal challenge in the future. Additionally, the European Commission’s adequacy decision regarding the DPF provides that it will be subject to future reviews and may be subject to suspension, amendment, repeal, or limitations to its scope by the European Commission. Numerous laws and regulations in other jurisdictions also have been enacted or modified in manners imposing data transfer restrictions, and we and many other companies may need to implement different or additional measures to establish or maintain legitimate means for the transfer and receipt of personal data from the E.U., Switzerland, the United Kingdom, or other countries or regions to the U.S., and we may, in addition to other impacts, be required to engage in additional contractual negotiations and experience additional costs associated with increased compliance burdens, and we and our customers face the potential for regulators to apply different standards to the transfer of personal data from the E.U., Switzerland, the United Kingdom, or other regions to the U.S., and to block or require additional measures taken with respect to certain data flows from the E.U., Switzerland, the United Kingdom, or other regions to the U.S. We and our customers may face a risk of enforcement actions or other proceedings by regulatory authorities relating to personal data transfers. Any such proceedings could result in substantial costs and diversion of resources, distract management and technical perso…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Further, we have been advised that Mr. James has pledged the shares of Class A common stock and Class B common stock beneficially owned by him to secure a loan with a financial institution, which loan has or will have various requirements to repay all or a portion of the loan upon the occurrence of various events, including when the price of the Class B common stock goes below certain specified levels. Mr. James has indicated that he intends to extend or refinance the loan before its June 27, 2026 maturity date. Although Mr. James has indicated his intention to sell other assets if necessary, shares of our common stock may need to be sold or otherwise transferred to meet these repayment requirements. Upon a default under such loan, the lenders could sell the pledged shares into the market. Sales or transfers of such shares to reduce the loan balance or by the lenders upon foreclosure are likely to adversely affect our stock price. Mr. James has also indicated to us that he may in the future from time to time refinance such indebtedness, enter into derivative transactions based on the value of our Class B common stock, dispose of shares of common stock, otherwise monetize shares of his common stock and/or engage in other transactions relating to shares of our common stock and/or other securities of the company. Any of these activities may adversely affect the price of our common stock. Mr. James has also indicated that he intends to (1) continue to beneficially own a majority of the Class A common stock that he currently beneficially owns and (2) continue to control at least a majority of the voting power of our company.
Current wording
Further, we have been advised that Mr. James has pledged the shares of Class A common stock and Class B common stock beneficially owned by him to secure a loan with a financial institution, which loan has or will have various requirements to repay all or a portion of the loan upon the occurrence of various events, including when the price of the Class B common stock goes below certain specified levels. Mr. James has informed the Company that he is negotiating an extension of the loan, including a partial pay down of the principal, with new lenders and that his existing lenders have extended the repayment deadline to allow for this refinancing. Although Mr. James has indicated his intention to sell other assets if necessary, shares of our common stock may need to be sold or otherwise transferred to meet these repayment requirements. Upon a default under such loan, the lenders could sell the pledged shares into the market. Sales or transfers of such shares to reduce the loan balance or by the lenders upon foreclosure are likely to adversely affect our stock price. Mr. James has also indicated to us that he may in the future from time to time refinance such indebtedness, enter into derivative transactions based on the value of our Class B common stock, dispose of shares of common stock, otherwise monetize shares of his common stock and/or engage in other transactions relating to shares of our common stock and/or other securities of the company. Any of these activities may adversely affect the price of our common stock. Mr. James has also indicated that he intends to (1) continue to beneficially own a majority of the Class A common stock that he currently beneficially owns and (2) continue to control at least a majority of the voting power of our company.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
We may also face unexpected problems or challenges in connection with new applications or feature introductions. Enhancements and changes to our platform could fail to attain sufficient market acceptance for many reasons, including:
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
We previously were certified under the E.U.-U.S. Privacy Shield and the Swiss-U.S. Privacy Shield with respect to our transfer of certain personal data from the E.U. and Switzerland to the United States. The E.U.-U.S. Privacy Shield framework and the use of E.U. Standard Contractual Clauses (the SCCs) to protect data exports between the E.U. and the U.S. have been subject to legal challenges in the E.U, and on July 16, 2020, the Court of Justice of the European Union (the CJEU), Europe’s highest court, held in the “Schrems II” case that the E.U.-U.S. Privacy Shield was invalid, and imposed additional obligations in connection with the use of the SCCs. The Swiss data protection and information commissioner subsequently concluded that the Swiss-U.S. Privacy Shield was invalid on similar grounds. The European Commission issued new SCCs on June 4, 2021, addressing aspects of the CJEU’s opinion in the Schrems II case, which were required to be implemented. The