Risk Factors Update Summary

• Addition of contractual requirements, other obligations, and consumer protection laws, including the California Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA), with potential fines of up to $7,500 per violation and statutory damages for data breaches.
• Increased climate change risks globally, including California headquarters facing more severe events like wildfires and India office experiencing cyclones and flooding.
• Revenue growth rate may continue to decline due to various factors, including rising interest rates. This decline is evident as revenue increased from $232.1 million in 2022 to $137.4 million in 2023.
• Increased operating expenses from $635.6 million in 2022 to $663.2 million in 2023 while still operating at a loss.
• Inclusion of new privacy laws in India, such as the Digital Personal Data Protection Act (DPDP), with strict requirements for processing personal data and fines of up to €20 million or 4% of global turnover.
• Climate-related events may disrupt operations, increase attrition, and lead to higher costs to maintain business.
• Regulatory developments and stakeholder expectations on climate change could impact financial condition and operations.
• Disclosure of risks related to generative AI technologies, potential intellectual property challenges, and limitations on copyright and patent protection for works created by AI tools.
• Significant growth in large customers, with sales efforts to large customers involving risks. Larger customers are becoming a bigger part of the business.
• Expansion of risks related to international operations, including foreign currency exchange rate fluctuations and challenges in complying with export control laws.
• Increased focus on generative artificial intelligence (AI) and machine learning features in products, which may require additional investment and increase the cost profile.
• Introduction of risks related to tax matters, such as the expiration of net operating loss carryforwards and foreign tax credits, potentially leading to increased state taxes.
• Potential risks associated with the use of generative AI, including legal liability, reputational harm, and cybersecurity risks.
• Mention of risks associated with the dual-class structure of common stock, potential dilution from stock issuances, and challenges in transferring personal data across jurisdictions.
• Increased competition in the market for customer service, IT service management, and CRM products, leading to challenges in maintaining market share and profitability.
• Addition of ESG risks, highlighting the importance of meeting evolving stakeholder expectations, potential reputational damage, and increased compliance costs.
• Risks related to cybersecurity threats, including system slowdowns, interruptions, and breaches, which could result in adverse consequences and reputational harm.