1、HUBSPOT INCFORM 10-K(Annual Report)Filed 02/14/22 for the Period Ending 12/31/21 Address25 FIRST STREET2ND FLOORCAMBRIDGE,MA,02141Telephone(888)482-7768CIK0001404655SymbolHUBSSIC Code7372-Services-Prepackaged SoftwareIndustrySoftwareSectorTechnologyFiscal Year12/31http:/www.edgar- Copyright 2022,EDG
2、AR Online,a division of Donnelley Financial Solutions.All Rights Reserved.Distribution and use of this document restricted under EDGAR Online,a division of Donnelley Financial Solutions,Terms of Use.UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(MARK ONE)ANNUAL REPORT P
3、URSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED DECEMBER 31,2021 ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-36680HubSpot,Inc.(Exact name of registr
4、ant as specified in its charter)Delaware20-2632791(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)25 First StreetCambridge,Massachusetts,02141(Address of principal executive offices)(888)482-7768(Registrants telephone number,including area code)Securiti
5、es registered pursuant to Section 12(b)of the Act:Title of each classTrading symbol(s)Name of each exchange on which registeredCommon Stock,par value$0.001 per shareHUBSNew York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:None.Indicatebycheckmarkiftheregistrantisawell-kno
6、wnseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YESNOIndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YESNOIndicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringt
7、hepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YESNOIndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-T(23
8、2.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).YESNOIndicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethedefinitionsof“larg
9、eacceleratedfiler,”“acceleratedfiler,”“smallerreportingcompany,”and“emerginggrowthcompany”inRule12b-2oftheExchangeAct:Largeacceleratedfiler Acceleratedfiler Non-acceleratedfiler Smallerreportingcompany Emerginggrowthcompany Ifanemerginggrowthcompany,indicatebycheckmarkiftheRegistranthaselectednottou
10、setheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.IndicatebycheckmarkwhethertheregistranthasfiledareportonandattestationtoitsmanagementsassessmentoftheeffectivenessofitsinternalcontrolsoverfinancialreportingunderSec
11、tion404(b)oftheSarbanes-OxleyAct(15U.S.C7262(b)bytheregisteredpublicaccountingfirmthatpreparedorissueditsauditreportYESNOIndicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).YESNOTheaggregatemarketvalueofcommonstockheldbynon-affiliatesoftheregistrant,basedonth
12、eclosingpriceoftheregistrantscommonstockonJune30,2021,asreportedbytheNewYorkStockExchangeonsuchdatewasapproximately$25,969,281,583.Sharesoftheregistrantscommonstockheldbyeachexecutiveofficer,directorandholderof5%ormoreoftheoutstandingcommonstockhavebeenexcludedinthatsuchpersonsmaybedeemedtobeaffilia
13、tes.Thiscalculationdoesnotreflectadeterminationthatcertainpersonsareaffiliatesoftheregistrantforanyotherpurpose.OnFebruary11,2022,theregistranthad47,569,390sharesofcommonstockoutstanding.DOCUMENTS INCORPORATED BY REFERENCEPortionsoftheregistrantsdefinitiveProxyStatementforits2021AnnualMeetingofStock
14、holdersareincorporatedbyreferenceinPartIIIofthisAnnualReportonForm10-K.SuchProxyStatementwillbefiledwiththeU.S.SecuritiesandExchangeCommissionwithin120daysaftertheendofthefiscalyeartowhichthisreportrelates.ExceptwithrespecttoinformationspecificallyincorporatedbyreferenceinthisForm10-K,theProxyStatem
15、entisnotdeemedtobefiledaspartofthisForm10-K.1HUBSPOT,INC.TABLE OF CONTENTS Page No.PART I ITEM1.Business4ITEM1A.RiskFactors12ITEM1B.UnresolvedStaffComments37ITEM2.Properties37ITEM3.LegalProceedings37ITEM4.MineSafetyDisclosures37PART IIITEM5.MarketforRegistrantsCommonEquity,RelatedStockholderMattersa
16、ndIssuerPurchasesofEquitySecurities38ITEM6.SelectedFinancialData40ITEM7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations41ITEM7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk57ITEM8.FinancialStatementsandSupplementaryData59ITEM9.ChangesinandDisagreementswithAccountan
17、tsonAccountingandFinancialDisclosures94ITEM9A.ControlsandProcedures94ITEM9B.OtherInformation95ITEM9C.DisclosureRegardingForeignJurisdictionsthatPreventInspections95PART IIIITEM10.Directors,ExecutiveOfficersandCorporateGovernance96ITEM11.ExecutiveCompensation96ITEM12.SecurityOwnershipofCertainBenefic
18、ialOwnersandManagementandRelatedStockholderMatters96ITEM13.CertainRelationshipsandRelatedTransactions,andDirectorIndependence96ITEM14.PrincipalAccountingFeesandServices96PART IVITEM15.Exhibits,FinancialStatementSchedules97ITEM16.10-KSummary97SIGNATURES1012SPECIAL NOTE REGARDING FORWARD-LOOKING STATE
19、MENTSThisAnnualReportonForm10-Kcontainsforward-lookingstatementswithinthemeaningofSection27AoftheSecuritiesActof1933,asamended,andSection21EoftheSecuritiesExchangeActof1934,asamended,andthesestatementsinvolvesubstantialrisksanduncertainties.Allstatementsotherthanstatementsofhistoricalfactcontainedin
20、thisAnnualReportonForm10-Kareforward-lookingstatements.Forward-lookingstatementsgenerallyrelatetofutureeventsorourfuturefinancialoroperatingperformance.Insomecases,youcanidentifyforward-lookingstatementsbecausetheycontainwordssuchas“may,”“should,”“expects,”“plans,”“anticipates,”“could,”“intends,”“ta
21、rget,”“projects,”“contemplates,”“believes,”“estimates,”“predicts,”“potential”or“continue”orthenegativeofthesewordsorothersimilartermsorexpressionsthatconcernourexpectations,strategy,plansorintentions.Forward-lookingstatementscontainedinthisAnnualReportonForm10-Kinclude,butarenotlimitedto,statementsa
22、bout:ourfuturefinancialperformance,includingourexpectationsregardingourrevenue,costofrevenue,grossmarginandoperatingexpenses;maintainingandexpandingourcustomerbaseandincreasingouraveragesubscriptionrevenuepercustomer;theimpactofcompetitioninourindustryandinnovationbyourcompetitors;ouranticipatedgrow
23、thandexpectationsregardingourabilitytomanageourfuturegrowth;ourexpectationsregardingthepotentialimpactoftheCOVID-19pandemiconourbusiness,operations,andthemarketsinwhichweandourpartnersandcustomersoperate;ouranticipatedareasofinvestments,includingsalesandmarketing,researchanddevelopment,customerservi
24、ceandsupport,datacenterinfrastructureandservicecapabilities,andexpectationsrelatingtosuchinvestments;ourpredictionsaboutindustryandmarkettrends;ourabilitytoanticipateandaddresstheevolutionoftechnologyandthetechnologicalneedsofourcustomers,toroll-outupgradestoourexistingsoftwareplatformandtodevelopne
25、wandenhancedapplicationstomeettheneedsofourcustomers;ourabilitytomaintainourbrandandinboundmarketing,sellingandservicingthoughtleadershipposition;theimpactofourcorporatecultureandourabilitytoattract,hireandretainnecessaryqualifiedemployeestoexpandouroperations;theanticipatedeffectonourbusinessofliti
26、gationtowhichweareormaybecomeaparty;ourabilitytosuccessfullyacquireandintegratecompaniesandassets;ourplansregardingdeclaringorpayingcashdividendsintheforeseeablefuture;andourabilitytostayabreastofnewormodifiedlawsandregulationsthatcurrentlyapplyorbecomeapplicabletoourbusinessbothintheUnitedStatesand
27、internationally.1Wecautionyouthattheforegoinglistmaynotcontainalloftheforward-lookingstatementsmadeinthisAnnualReportonForm10-K.Youshouldnotrelyuponforward-lookingstatementsaspredictionsoffutureevents.Wehavebasedtheforward-lookingstatementscontainedinthisAnnualReportonForm10-Kprimarilyonourcurrentex
28、pectationsandprojectionsaboutfutureeventsandtrendsthatwebelievemayaffectourbusiness,financialcondition,resultsofoperationsandprospects.Theoutcomeoftheeventsdescribedintheseforward-lookingstatementsissubjecttorisks,uncertaintiesandotherfactorsdescribedin“RiskFactors”andelsewhereinthisAnnualReportonFo
29、rm10-K.Moreover,weoperateinaverycompetitiveandrapidlychangingenvironment.Newrisksanduncertaintiesemergefromtimetotime,anditisnotpossibleforustopredictallrisksanduncertaintiesthatcouldhaveanimpactontheforward-lookingstatementscontainedinthisAnnualReportonForm10-K.Theresults,eventsandcircumstancesrefl
30、ectedintheforward-lookingstatementsmaynotbeachievedoroccur,andactualresults,eventsorcircumstancescoulddiffermateriallyfromthosedescribedintheforward-lookingstatements.Theforward-lookingstatementsmadeinthisAnnualReportonForm10-Krelateonlytoeventsasofthedateonwhichthestatementsaremade.Weundertakenoobl
31、igationtoupdateanyforward-lookingstatementsmadeinthisAnnualReportonForm10-KtoreflecteventsorcircumstancesafterthedateofthisAnnualReportonForm10-Kortoreflectnewinformationortheoccurrenceofunanticipatedevents,exceptasrequiredbylaw.Wemaynotactuallyachievetheplans,intentionsorexpectationsdisclosedinourf
32、orward-lookingstatementsandyoushouldnotplaceunduerelianceonourforward-lookingstatements.Ourforward-lookingstatementsdonotreflectthepotentialimpactofanyfutureacquisitions,mergers,dispositions,jointventures,orinvestmentswemaymake.InthisAnnualReportonForm10-K,theterms“HubSpot,”“we,”“us,”and“our”referto
33、HubSpot,Inc.anditssubsidiaries,unlessthecontextindicatesotherwise.2Risk Factor Summary The risk factors detailed in Item 1A entitled“Risk Factors”in this Annual Report on Form 10-K are the risks that we believe are material to our investors and a reader should carefully consider them.Those risks are
34、 not all of the risks we face and other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur.The following is a summary of the risk factors detailed in Item 1A:Wearedependentuponcustomerrenewals,theadditionofnewcustomers,increasedre
35、venuefromexistingcustomersandthecontinuedgrowthofthemarketforaCRMPlatform.Wefacesignificantcompetitionfrombothestablishedandnewcompaniesofferingmarketing,salesandcustomerservicesoftwareandotherrelatedapplications,aswellasinternallydevelopedsoftware,whichmayharmourabilitytoaddnewcustomers,retainexist
36、ingcustomersandgrowourbusiness.Failuretoeffectivelydevelopandexpandourmarketing,sales,customerservice,operations,andcontentmanagementcapabilitiescouldharmourabilitytoincreaseourcustomerbaseandachievebroadermarketacceptanceofourplatform.Ifwefailtoadaptandrespondeffectivelytorapidlychangingtechnology,
37、evolvingindustrystandardsandchangingcustomerneedsorrequirements,ourCRMPlatformmaybecomelesscompetitive.Ourabilitytointroducenewproductsandfeaturesisdependentonadequateresearchanddevelopmentresources.Ifwedonotadequatelyfundourresearchanddevelopmentefforts,wemaynotbeabletocompeteeffectivelyandourbusin
38、essandoperatingresultsmaybeharmed.Interruptionsordelaysinservicefromourthird-partydatacenterproviderscouldimpairourabilitytodeliverourplatformtoourcustomers,resultingincustomerdissatisfaction,damagetoourreputation,lossofcustomers,limitedgrowth,andreductioninrevenue.IfourCRMPlatformhasoutagesorfailsd
39、uetodefectsorsimilarproblems,andifwefailtocorrectanydefectorothersoftwareproblems,wecouldlosecustomers,becomesubjecttoserviceperformanceorwarrantyclaimsorincursignificantcosts.Ifourorourcustomerssecuritymeasuresarecompromisedorunauthorizedaccesstodataofourcustomersortheircustomersisotherwiseobtained
40、,ourCRMPlatformmaybeperceivedasnotbeingsecure,ourcustomersmaybeharmedandmaycurtailorceasetheiruseofourplatform,ourreputationmaybedamagedandwemayincursignificantliabilities.Wehaveahistoryoflossesandmaynotachieveprofitabilityinthefuture.Wemayexperiencequarterlyfluctuationsinouroperatingresultsduetoanu
41、mberoffactors,whichmakesourfutureresultsdifficulttopredictandcouldcauseouroperatingresultstofallbelowexpectationsorourguidance.Ifwedonotaccuratelypredictsubscriptionrenewalratesorotherwisefailtoforecastourrevenueaccurately,orifwefailtomatchourexpenditureswithcorrespondingrevenue,ouroperatingresultsc
42、ouldbeadverselyaffected.Ourabilitytoraisecapitalinthefuturemaybelimited,andourfailuretoraisecapitalwhenneededcouldpreventusfromgrowing.3PART 1ITEM I.BUSINESSOverviewWehelpscalingcompaniesdeliveradelightfulcustomerexperiencethroughourcloud-basedcustomerrelationshipmanagement(“CRM”)Platform.OurCRMPlat
43、formincludesmarketing,sales,service,operationsandacontentmanagementsystem,(“CMS”),aswellasothertools,integrationsandanativepaymentsolution,thatenablecompaniestoattract,engage,anddelightcustomersthroughoutthecustomerexperience.Additionally,weprovideeducation,servicesandsupporttohelpcustomersbesuccess
44、fulwithourCRMPlatform.Wefocusonsellingtomid-marketbusiness-to-business(“B2B”)companies,whichwedefineascompaniesthathavebetween2and2,000employees.WesellourCRMPlatformonasubscriptionbasis.In2021,ourtotalrevenuewas$1.3billionandweincurredanetlossof$77.8million.AsofDecember31,2021,wehad5,895full-timeemp
45、loyeesand135,442Customers,asdefinedinourKeyBusinessMetricsinItem7,ofvaryingsizesinmorethan120countries.OurcompanywasformedasalimitedliabilitycompanyinDelawareonApril4,2005.WeconvertedtoaDelawarecorporationonJune7,2007.Ourprincipalexecutiveofficesarelocatedat25FirstStreet,Cambridge,Massachusetts,ando
46、urmaintelephonenumberis888-482-7768.Ourwebsiteaddressishttps:/.InformationcontainedonorthatcanbeaccessedthroughourwebsitedoesnotconstitutepartofthisAnnualReportonForm10-K,andinclusionsofourwebsiteaddressinthisAnnualReportonForm10-Kareinactivetextualreferencesonly.The HubSpot ApproachOurCRMPlatformfe
47、aturesacentraldatabaseofleadandcustomerinteractionsandintegratedapplicationsdesignedtohelpbusinessesattractvisitorstotheirwebsites,convertvisitorsintoleads,closeleadsintocustomers,transactwiththosecustomers,anddelightthemsotheybecomepromotersofthosebusinesses.Designed to Help Companies Grow Better.O
48、urCRMPlatformwasarchitectedfromthegrounduptoenablebusinessestotransformtheirmarketing,sales,services,operationsandcontentmanagementplaybooktomeetthedemandsofcustomerstoday.OurCRMPlatformincludesbothasystemofrecordformaintainingaunifiedviewofthecustomerexperienceandasystemofengagementforefficientlyen
49、gagingcustomersthroughsearchengineoptimization(“SEO”),webcontent,social,blogging,email,marketingautomation,messaging,supportticketing,knowledgebase,commerce,conversationrouting,videohosting,andmore.Ease of Use of a Single,Extensible Platform.Weprovideasetofintegratedapplicationsonacommonplatform,whi
50、choffersbusinesseseaseofuseandsimplicity.OurCRMPlatformhasonelogin,oneuserinterface,onedatabase,andoneteamforsupport.OurCRMPlatformstartsfreeandgrowswithourcustomers.Itisdesignedtoscaleitspowerandtechnicalsophisticationwithoutlosingitsease-of-use.Inadditiontobeingacomprehensivesuiteitself,ourCRMPlat
51、formseamlesslyintegrateswithhundredsofexternalapplications,makingiteasytoextendthefunctionalityofourCRMPlatformandcustomizeitforanybusiness.Power of a Unified Customer View.AtthecoreofourCRMPlatformisasingleCRMdatabaseforeachbusinessthatcapturesitsleadandcustomeractivitythroughoutthecustomerlifecycl
52、e.OurCRMPlatformcreatesaunifiedtimelineincorporatingalltheinteractionswithaparticularcustomer.IncontrasttomanyCRMsuiteswhicharecobbledtogether,wehavecraftedasetofcorefunctionalities,includingreporting,content,messaging,data,andautomation,whichrunsacrossourproductlines,whichwerefertoasHubs.Scalabilit
53、y.OurCRMPlatformwasdesignedandbuilttoservealargenumberofcustomerswithdemandingusecases.OurCRMPlatformcurrentlyprocessesbillionsofdatapointseachweek,andweuseleadingglobalcloudinfrastructureprovidersandourownautomationtechnologytodynamicallyallocatecapacitytohandleprocessingworkloadsofallsizes.Wehaveb
54、uiltourCRMPlatformonmodern,scalabledistributedtechnologies.WebuilttheinfrastructuretosupporthundredsofmicroservicesandcaneasilyaddnewfeaturesandcapabilitiestotheCRMPlatform.Weutilizeavarietyofopen-sourcedistributedsystemsincludingHBase,Kafka,Vitess,andElasticsearchtoscaleourdatacollectionandprocessi
55、ng.Ourscalabilitygivesusflexibilityforfuturegrowthandenablesustoservicealargevarietyofbusinessesofdifferentsizesacrossdifferentindustries.Extensible and Open Architecture.OurCRMPlatformfeaturesavarietyofopenapplicationprogramminginterfaces(“APIs”)thatallowseasyintegrationofourplatformwithotherapplic
56、ations.Weenableourcustomerstoconnectourplatformtotheirotherapplications,suchasecommerce,eventmanagementandvideoconferencingapplications.Byconnectingthird-partyapplications,ourcustomerscanleverageourcentralizedinbounddatabasetoperformadditionalfunctionsandanalysis.4Our Competitive StrengthsWebelievet
57、hatourmarketleadershippositionisbasedonthefollowingkeystrengths:Leading Platform.Wehavedesignedandbuiltaworld-classCRMPlatform.WebelieveourcustomerschooseourCRMPlatformoverothersbecauseofitspowerful,integrated,andeasy-to-useapplications.WebuiltHubSpotonasingle,unified,andintuitiveplatform,whichwebel
58、ievecontrastspositivelywithmanyotherCRMsuites.Market Leadership and Strong Brand.Wearearecognizedthoughtleaderinthecloud-basedmarketing,sales,customerservice,operations,andcontentmanagementsoftwareindustrywithaleadingbrand.Ourfounders,BrianHalliganandDharmeshShah,wrotethebest-sellingmarketingbookInb
59、oundMarketing:GetFoundUsingGoogle,SocialMediaandBlogs.Ourmarketing,sales,service,operations,andcontentmanagementexperienceattracts,engages,anddelightscustomersbybeingmorerelevant,morehelpful,morepersonalized,andlessinterruptivethantraditionalmarketingandsalestactics.OurINBOUNDeventisoneofthelargesti
60、nboundindustryconferenceeventswithin-personregisteredattendanceincreasingfrom1,100in2011toover26,000in2019.Since2020,wehaveheldourINBOUNDeventasavirtual-onlyexperienceduetotheCOVID-19pandemic.Wehadmorethan70,000registeredattendeesin2020andover59,000in2021.Large and Growing Solutions Partner Program.
61、ASolutionsPartnerisaserviceproviderthathelpsbusinesseswithstrategy,execution,andimplementationofgo-to-marketactivitiesandtechnologysolutions.OurSolutionsPartnerspromoteourbrandandofferourCRMPlatformtotheirclients.SolutionsPartnersandcustomersreferredtousbyourSolutionsPartnersrepresentedapproximately
62、34%ofourCustomersasofDecember31,2021,andapproximately44%ofourrevenuefortheyearendedDecember31,2021.TheseSolutionsPartnershelpustopromotethevisionoftheinboundexperience,efficientlyreachnewmid-marketbusinessesatscale,andprovideourmutualcustomerswithmorediverseandhigher-touchservices.Freemium Pricing S
63、trategy.OurfreemiummodelattractscustomerswhobeginusingourCRMPlatformthroughourfreeproductsandthenupgradetoourpaidHubs.Throughourfreemiumproducts,ourcustomersareabletoreceivevaluefromHubSpotbeforeconvertingtoapaidproductorengagingwithsales.Mid-Market Focus.Webelievewehavesignificantcompetitiveadvanta
64、gesreachingmid-marketbusinessesandefficientlyreachthismarketatscaleasaresultofourinboundmethodology,freemiumpricingstrategy,andourSolutionsPartnerchannel.Powerful Network Effects.WehavebuiltalargeandgrowingecosystemaroundourCRMPlatformandcompany.TensofthousandsofourCustomersintegratethird-partyappli
65、cationswithourCRMPlatform.Webelievethisecosystemdrivesmorebusinessesandprofessionalstoembracetheinboundplaybook.Asourengagedaudiencegrows,moreSolutionsPartnerscollaboratewithus,morethird-partydevelopersintegratetheirapplicationswithourCRMPlatform,andmoreprofessionalscompleteourcertificationprograms,
66、allofwhichhelptodrivemorebusinessestoadoptourCRMPlatform.Our Growth StrategyThekeyelementstoourgrowthstrategyare:Grow Our Customer Base.ThemarketforourCRMPlatformislargeandunderserved.Mid-marketbusinessesareparticularlyunderservedbyexistingpointapplicationvendorsandoftenlacksufficientresourcestoimpl
67、ementcomplexsolutions.Ourall-in-oneCRMPlatformallowsmid-marketbusinessestoefficientlyadoptandexecuteaneffectiveinboundmarketing,sales,customerservice,operations,andcontentmanagementstrategytohelpthemexpandandgrow.Wewillcontinuetoleverageourinboundgo-to-marketapproach,freemiumpricingstrategyandournet
68、workofSolutionsPartnerstokeepgrowingourbusiness.Increase Revenue from Existing Customers.With135,442Customersinmorethan120countriesspanningmanyindustries,webelievewehaveasignificantopportunitytoincreaserevenuefromourexistingcustomers.Weplantoincreaserevenuefromourexistingcustomersbyexpandingtheiruse
69、ofourCRMPlatformbyupsellingadditionalofferingsandfeatures,includingourend-to-endpaymentsolution,addingadditionalusers,andcross-sellingourmarketing,sales,service,operations,andcontentmanagementproductstoexistingcustomersthroughtouchlessorlowtouchin-productpurchases.Ourscalablepricingmodelallowsustoca
70、pturemorespendasourcustomersgrow,increasethenumberoftheircustomersandprospectsmanagedonourCRMPlatform,andofferadditionalfunctionalityavailablefromourhigherpricetiersandadd-ons,providinguswithasubstantialopportunitytoincreasethelifetimevalueofourcustomerrelationships.Keep Expanding Internationally.Th
71、ereisasignificantopportunityforourCRMPlatformoutsideoftheUnitedStates.AsofDecember31,2021,approximately52%ofourCustomerswerelocatedoutsideoftheUnitedStatesandtheseCustomersgeneratedapproximately46%ofourtotalrevenuefortheyearendedDecember31,2021.WeselltothoseinternationalCustomersfromourU.S.,European
72、,AsiaPacific,andSouthAmericanbasedoperations.Weintendtogrowourpresenceininternationalmarketsthroughadditionalinvestmentsinlocalsales,marketingandprofessionalservicecapabilities,aswellasbyleveragingourSolutionsPartner5network.Wehaveopenedanumberofinternationalofficesandplantoopenadditionalinternation
73、alofficesaswecontinuetoexpandinternationally.WehavesignificantwebsitetrafficfromregionsoutsidetheUnitedStates,andwebelievethatmarketsoutsidetheUnitedStatesrepresentasignificantgrowthopportunity.Continue to Innovate and Expand Our CRM Platform.Mid-marketbusinessesareincreasinglyrealizingthevalueofhav
74、inganintegratedmarketing,sales,customerservice,operations,andcontentmanagementplatform.WebelievewearewellpositionedtocapitalizeonthisopportunitybyintroducingnewproductsandapplicationstoextendthefunctionalityofourCRMPlatform.Selectively Pursue Acquisitions.Weplantoselectivelypursueacquisitionsofcompl
75、ementarybusinesses,technologiesandteamsthatwouldallowustoaddnewfeaturesandfunctionalitiestoourCRMPlatformandacceleratethepaceofourinnovation.Our CRM PlatformOurCRMPlatformfeaturesintegratedapplicationsandtoolsthatenablecompaniestocreateacohesiveandadaptablecustomerexperience.EachHubcanbeusedstandalo
76、ne,withourCRMPlatform,athirdpartyCRM,and/orinconjunctionwithanyversionoftheotherHubs.OurHubsareavailableinbothfreeandpaidtiers(i.e.,Starter,ProfessionalandEnterprise)withgraduallyincreasinglevelsoffunctionalitythatsupporttheneedsofourcustomersastheyseesuccesswithourtoolsandtheirbusinessesgrow.Busine
77、ssesthatwanttousesoftwareoutsideofourCRMPlatformcanleverageourecosystemofthird-partyintegrationsfromourplatformapplicationpartners.WemakeiteasytofindandinstallneworexistingsoftwaresolutionsthatcomplementourCRMPlatform.Over1,000integrationsandapplicationsareavailableforourusers,acrossawiderangeofcate
78、gories,includingintegrationswithleadingsocialmedia,email,sales,video,analytics,contentandwebinartools.HubSpot CRMThecoreofourCRMPlatformisasingledatabaseofleadandcustomerinformationthatallowsbusinessestotracktheirinteractionswithcontactsandcustomers,managetheircustomeractivities,andreportontheirpipe
79、lineandsales.ThisallowsacompleteviewofleadandcustomerinteractionsacrossallofourintegratedHubs,givingourCRMPlatformsubstantialpower.Thisintegrationmakesitpossibletopersonalizeeveryaspectofthecustomerinteractionacrosswebcontent,socialmediaengagement,andemailmessagesacrossdevices,includingmobile.Theint
80、egratedHubsonourCRMPlatformhaveacommonuserinterfaceandareaccessedthroughasinglelogin.Marketing HubMarketingHubisanall-in-onetoolsetformarketerstoattract,engage,andnurturenewleadstowardssalesreadinessovertheentirecustomerlifecycle.Featuresinclude:marketingautomationandemail,socialmedia,SEO,andreporti
81、ngandanalytics.Sales HubWedesignedSalesHubtoenhancetheproductivityandeffectivenessofsalesteams.Businessescanempowertheirteamswithtoolsthatdeliverapersonalizedexperienceforprospectswithlessworkforsalesrepresentatives.Featuresinclude:emailtemplatesandtracking,conversationsandlivechat,meetingandcallsch
82、eduling,leadandwebsitevisitalerts,leadscoring,salesautomation,pipelinemanagement,quoting,forecasting,andreporting.Service HubServiceHubisourcustomerservicesoftwarethatisdesignedtohelpbusinessesmanageandconnectwithcustomers.Featuresinclude:conversationsandlivechatfunctionality,conversationalbots,tick
83、etsandhelpdesk,automationandrouting,knowledgebase,teamemails,feedbackandreportingtools,andcustomergoals.CMS HubOurcontentmanagementsystem(“CMS”)Hubcombinesthepowerofcontentrelationshipmanagementandacontentmanagementsystemintooneintegratedplatform.Ourcontenttoolsenablebusinessestocreatenewandeditexis
84、tingwebcontentwhilealsopersonalizingtheirwebsitesfordifferentvisitorsandoptimizingtheirwebsitestoconvertmorevisitorsintoleadsandcustomers.Featuresinclude:websitepages,businessblogging,smartcontent,landingpagesandforms,SEOtools,formsandleadflow,webanalyticsreporting,calls-to-action,andfilemanager.6Op
85、erations HubOurOperationsHubisdesignedtohelpbusinessesunifycustomerdatainaconnectedplatform,automatebusinessprocesses,andeliminatetime-consumingdatacleanupwithease.Featuresinclude:programmableautomation,datasync,datacuration,anddataqualitytools.BuiltwithintheCRMPlatform,weofferanend-to-endpaymentsol
86、ution,Payments,whichenablescustomerstoacceptpaymentsfromtheircustomersinlesstimeandwithfewertools.WithPayments,customerscanbuyandpaydirectlyonawebsite,anemail,orchatandnativeintegrationwiththequotesfeatureinSalesHuballowsourcustomerstogetpaidimmediatelywhenaquoteisaccepted.Our ServicesWecomplementou
87、rproductofferingswithprofessionalservices,customersuccessandsupport,whichweviewascriticalelementsofensuringthelong-termretentionofourcustomers.Themajorityofourservicesandsupportisofferedoveremail,phone,chatapplicationsandviawebmeetingtechnologyratherthanin-person,whichisamoreefficientbusinessmodelfo
88、rusandourcustomers.Professional Services.WeofferprofessionalservicestoeducateandtraincustomersonhowtoleverageourCRMPlatformtotransformhowtheirbusinessattracts,engagesanddelightscustomers.DependingonwhichHubsandservicesacustomerpurchases,theyreceiveone-on-onetrainingorguidancefromoneofouron-boardingo
89、rtechnicalspecialistsbywebmeetingandcanpurchaseadditionalgrouptrainingandeducationinonlineorin-personclasses.Wealsoofferin-apptrainingmodulesthatcustomerscanuseaspartoftheiron-boarding.Ourprofessionalservicesarealsoavailabletocustomerswhoneedadditionalassistanceonaone-timeorongoingbasisforanaddition
90、alfee.Customer Success.OurcustomershaveaccesstoaCustomerSuccessManager(“CSM”),ChannelConsultant(CC)orCustomerSuccessTeam(“CST”)whichareresponsibleforourcustomerslongtermsuccess,retentionandgrowthonourCRMPlatform.Dependingonwhichproducttieracustomerpurchases,ourCSMsorCSTaddresstheuniqueneedsandgoalso
91、fourcustomersthatareassociatedwithaSolutionsPartnerthroughaseriesofongoinginteractionsandstrategycallsonhowtobestengageanduseourCRMPlatform.OurCCsplayasimilarroleasourCSMsandCST,butfocusonthegrowthandsuccessofourSolutionsPartnersandcustomersassociatedwithourSolutionsPartners.Support.Inadditiontoassi
92、stanceprovidedbyouronlinearticlesandcustomerdiscussionforums,weofferphoneand/oremailandchatbasedsupport,whichisincludedinthecostofasubscriptionforourHubs.Phone,emailandchatsupportisavailablestartingattheProfessionalproductlevelforallHubswhileemailandchatbasedsupportisavailableforStarterHubs.Westrive
93、tomaintainanexceptionalqualityofcustomerservice.Wecontinuouslymonitorkeycustomerservicemetricssuchasphoneholdtime,ticketresponsetimeandticketresolutionrates,andwemonitorthecustomersatisfactionofourcustomersupportinteractions.WebelieveourcustomersupportisanimportantreasonwhybusinesseschooseourCRMPlat
94、formandrecommendittotheircolleagues.Our CustomersAsofDecember31,2021,wehad135,442Customersinmorethan120countries,representingmanyindustries.Nosinglecustomerrepresentedmorethanonepercentofourrevenuein2021,2020,or2019.Our TechnologyOurCustomershavechosenusastheirCRMPlatform,whichwearchitectedandbuiltt
95、obesecure,highlydistributedandhighlyscalable.Sinceourfounding,wehaveembracedrapid,iterativeproductdevelopmentlifecycles,cloudautomationandopen-sourcetechnologies,includingbigdataplatforms,topowermarketing,sales,service,operations,andcontentmanagementprogramsandprovideinsightsnotpreviouslypossibleora
96、vailable.OurCRMPlatformisamulti-tenant,singlecode-based,globallyavailablesoftware-as-a-servicedeliveredthroughAPIs,webbrowsersormobileapplications.Ourcommitmenttoahighlyavailable,reliable,andscalableplatformforbusinessesofallsizesisaccomplishedthroughtheuseofthesetechnologies.Platform Approach.Webui
97、ltHubSpotonasingleplatformwithreusableandcomposablelibraries,allowingustorapidlyaddressnewfeatureareasandbringnewproductstomarketthathaveaconsistentuserexperienceanddatamodel.Wehavebuiltthisplatformwithscaleinmind,supportingthousandsofcomponentsincludinghundredsofmicroservices,Modern Database Archit
98、ecture.Weprocessbillionsofdatapointsweeklyacrossvariouschannels,includingsocialmedia,email,SEOandwebsitevisits,andcontinuetodrivenearlyreal-timeanalyticsacrossthesechannels.Thisispossiblebecausewebuilt7ourdatabasefromthegroundupusingdistributedbigdatatechnologiessuchasHBase,ElasticsearchandKafkatobo
99、thprocessandanalyzethelargeamountsofdatawecollect.WealsoutilizeVitesstooperateMySQLatscale,allowingourengineerstochoosethebestdatastoreforeachtask.Agility.Ourinfrastructureanddevelopmentandsoftwarereleaseprocessesallowustoupdateourplatformforspecificgroupsofcustomersorourentirecustomerbaseatanytime.
100、Thismeanswecanrapidlyinnovateanddelivernewfunctionalityfrequently,withoutwaitingforquarterlyorannualreleasecycles.Wetypicallydeployupdatestooursoftwareplatformthousandsoftimesaday,enablingustogatherimmediatecustomerfeedbackandimproveourproductquicklyandcontinuously.Cost leverage.BecauseourCRMPlatfor
101、mwasbuiltonanalmostexclusivefootprintofopen-sourcesoftwareanddesignedtooperateincloud-baseddatacenters,wehavebenefitedfromlarge-scalepricereductionsbythesecloudcomputingserviceprovidersastheycontinuetoinnovateandcompeteformarketshare.Asourprocessingvolumecontinuestogrow,wecontinuetoreceivelargervolu
102、mediscountsonaper-unitbasisforcostssuchasstorage,bandwidthandcomputingcapacity.Wealsobelievethatourextensiveuseofopen-sourcesoftwarewillprovideadditionalleverageaswescaleourCRMPlatformandinfrastructure.Scalability.Byleveragingleadingcloudinfrastructureprovidersalongwithourautomatedtechnologystack,we
103、areabletoscaleworkloadsofvaryingsizesatanytime.Thisallowsustohandlecustomersofallsizesanddemandswithouttraditionaloperationallimitationssuchasnetworkbandwidth,computingcycles,orstoragecapacityaswecanscaleourplatformon-demand.Reliability.Customerdataisdistributedandprocessedacrossmultipledatacentersw
104、ithinaregiontoprovideredundancy.WebuiltourCRMplatformonadistributedcomputingarchitecturewithreducedsinglepointsoffailureandweoperateacrossdatacenterboundariesdaily.Inadditiontodatacenterlevelredundancy,thisarchitecturesupportsmultiplelivecopiesofeachdatasetalongwithsnapshotcapabilitiesforfaster,poin
105、t-in-timedatarecoveryinsteadoftraditionalbackupandrestoremethodologies.Security.Weleverageindustrystandardnetworkandperimeterdefensetechnologies,distributeddenial-of-service,protectionsystems(includingwebapplicationfirewalls)andenterprisegradedomainnamesystem,servicesacrossmultiplevendors.Ourdata-ce
106、nterprovidersoperateandcertifytohighindustrycompliancelevels.Duetothebroadfootprintofourcustomerbase,weregularlytestandevaluateourplatformwithtrustedthird-partyvendorstoensurethesecurityandintegrityofourservices.Marketing and SalesWebelieveweareagloballeaderinimplementinganinboundexperienceinmarketi
107、ngandsales.Webelievethatourmarketingandsalesmodelprovidesuswithacompetitiveadvantage,especiallywhentargetingmid-marketbusinesses,becausewecanattractandengagethesebusinessesefficientlyandatscale.Inbound Marketing.Ourmarketingteamattractsnewleadsanduserseachmonththroughourindustry-leadingblog,podcastn
108、etwork,emailnewsletterandothercontent,freetools,largesocialmediafollowing,highsearchenginerankingsandpersonalizedwebsiteandemailcontent.Inaddition,wearegeneratingleadsfornewandadd-onproductpurchasesthroughcontentandoffersdeliveredthroughourCRMPlatformtoexistingcustomers.Inbound Direct Sales.Oursales
109、representativesthroughouttheworldusephone,email,andwebmeetingstointeractwithprospectsandcustomers.Themajorityofrevenuegeneratedbyoursalesrepresentativesoriginateswithinboundleadsproducedbyourmarketingefforts.Inaddition,throughourfreemiumproductsandin-productcross-sellofferings,weclosenewbusinesswith
110、littleornointeractionbyoursalesrepresentatives.Inbound Channel Sales.Inadditiontoourdirectsalesteam,wehavesalesrepresentativesthatmanagerelationshipswithourworldwidenetworkofSolutionsPartnerswhobothuseourplatformfortheirownbusinessesandalso,onacommissionedbasis,refercustomerstous.TheseSolutionsPartn
111、erscollaboratewithusnotonlytoleverageoursoftwareplatformandeducationalresources,butalsotobuildtheirownbusinessbyofferingnewservicesandshiftingtheirrevenuemixtoincluderecurringrevenuestreams.COVID-19 PandemicTheCOVID-19pandemicandviruscontainmentmeasurestakenbyfederalandstategovernmentshaveresultedin
112、,andareexpectedtocontinuetoresultin,businessslowdownsorshutdowns,weakenedeconomicconditions,economicuncertainty,andvolatilityinthefinancialmarkets,bothregionallyandworldwide.WehavecontinuedtoconductbusinessduringtheCOVID-19pandemicwithsubstantialmodificationstoemployeetravelandwhereemployeeswork,asw
113、ellasvirtualization,postponement,orcancellationofcertainevents,amongotherchanges.Whilethepandemichasnothadamaterialadversefinancialimpactonourbusinesstodate,thebroaderimplicationsofthepandemiconourresultsofoperationsandoverallfinancialperformancewilldependonfuturedevelopmentsandconditions.Wecontinue
114、toactivelymonitorthesituationandmaytakefurtheractionstoalterourbusinessoperationsasmayberequiredbyfederal,state,orlocalauthorities,orthatwedetermineareinthebestinterestsofouremployees,customers,partners,suppliers,andstockholders,includinginresponsetooutbreaksandvariants.Fordiscussionregarding8theimp
115、actoftheCOVID-19pandemiconourbusinessandfinancialresults,see“RiskFactors”inItem1Aand“ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations”inItem7ofthisreport.Governmental RegulationsWeoperategloballyandaresubjecttonumerousU.S.federal,state,andforeignlawsandregulationscoveringaw
116、idevarietyofsubjectmatters.Ourcompliancewiththeselawsandregulationsmaybeonerousandcould,individuallyorintheaggregate,increaseourcostofdoingbusiness,impactourcompetitivepositionrelativetoourpeers,and/orotherwisehaveanadverseimpactonourbusiness,reputation,financialcondition,andoperatingresults.Forinfo
117、rmationaboutgovernmentalregulationsapplicabletoourbusiness,referto“RiskFactors”inItem1A.Human Capital Management Helpingmillionsoforganizationsgrowbetterrequiresatrulyremarkableteam.Wearepassionateaboutbuildingacompanyculturewherepeoplecandotheirbestwork.Ourcompanycultureandourpeoplearenotjusthumanr
118、esourcesprioritiesbutcriticalbusinesspriorities.Asaresult,weconsistentlyfocusonhowwecancontinuetohelpemployeesgrow,bothpersonallyandprofessionally.HubSpotisproudtobenamedthe#2BestPlacetoWorkin2022and#4BestPlacetoWorkin2021bytheGlassdoorEmployeesChoiceAwards.Basedonemployeesreviewsandfeedback,thisrec
119、ognitionisastrongtestamenttotheinnovativeculturewearebuilding.Wehavealsobeenrecognizedasatopworkplacein2021byGreatPlacetoWork,andhonoredtobementionedinanumberofcategoriesbyComparablysworkplaceawardsin2021includingBestCompaniesforWomen,BestCompaniesforDiversity,BestOverallCompanyCulture,andaBestCompa
120、nyforEmployeeHappiness.AsofDecember31,2021,wehad5,895full-timeemployees,orHubSpotters.Ofthese,1,446areintheAmericas,1,166areinEurope,319areintheAsiaPacificregionand2,964are100%remote.Culture and Values.Ourcultureisbuiltonthefirmbeliefthatpersonalandprofessionalgrowthisjustasimportantasbusinessgrowth
121、.Webelievethebestpeopledonotonlyfitourculture,theyfurtherit.In2013,wepublishedtheHubSpotCultureCode,whichoutlinesourcorecompanyvalues,including,autonomy,flexibility,andHEART.HEARTisatthecenterofwhoweareandrepresentsthefivetraitswevaluethemostinHubSpotters:Humility,Empathy,Adaptability,Remarkableness
122、andTransparency.AcopyofourCultureCodecanbefoundat:https:/ Belonging.Diversity,inclusion,andbelonging(DI&B)isacorepartofourmission.WehaveincorporatedDI&Bintoourpoliciesandpractices,educationandevents,andlaunchedvariousinitiativestofurtherourgoalofbeingamorediverse,inclusive,andequitableworkplace.OurD
123、I&Binitiativesinclude,butarenotlimitedto:programstoincreaseourslateofdiversecandidates,anti-racismtrainingforemployeesandmanagers,keyexternalpartnerships,employeeresourcegroups,andprogramsandinitiativestoenhancethediversityandinclusionexperienceforcandidatesandemployees.Inaddition,ourannualHubSpotDi
124、versity,Inclusion,andBelongingReportisadetailedanalysisofourgender,ethnicity,andagedata,aswellasself-reportedidentitiesincludingparents,militaryveterans,disabilities,first-generationidentity,andthosewhoaregenderdiverse.AcopyofourDI&Breportcanbefoundat:https:/ and Benefits.Weprovidecompetitivecompens
125、ationandbenefitsforouremployeesglobally.Ourcompensationpackagesmayincludebasesalary,commissionorsemi-annualbonuses,andstock-basedcompensation.Wealsooffergeneralemployeemedicalanddentalplans,unlimitedvacationandanannualglobalweekofrest,lifeanddisabilityinsurance,andSection401(k)planmatchingcontributi
126、onsdesignedtoprovideemployeebenefitscompetitivewiththoseofferedbyourpeersandothercompanieswithwhichwecompetefortalent.Wealsoofferanemployeestockpurchaseplan.Weevaluatebothcompensationandbenefitofferingsonanannualbasisandwemakeadjustmentsasneeded.Learning and growth.Webelieveinlife-longlearningandinv
127、estinemployeedevelopmentateverystage.Weofferhands-on,regionalizedon-boarding,one-on-onementorship,year-roundmanagertrainingsandanannualmini-MBAFellowsprogram.Inaddition,weofferseveralself-pacedcoursesthroughLearnHubSpot,ourinternal,onlinelearningmanagementsystemdesignedbyourLearningandDevelopmenttea
128、m.Hybrid Culture.Weofferahybridworkingmodel,withemployeeschoosingannuallybetweenthreeoptions:home,office,flex.homeemployeeswillworkthemajorityofthetimefromhome,officeemployeeswillgointoa9HubSpotofficethreeormoredaysperweek,andflexemployeeswillgointoaHubSpotofficetwoorfewerdaysperweek.Mental Health a
129、nd Well-Being.Weofferamentalwellnessplatformasaglobalbenefitforemployees.Basedonfeedbackfromouremployees,wealsocreatedaninitiativecalledHubSpotUnpluggedtoaddressburnout,mentalhealthandwell-being.Welaterbuiltuponthisinitiativewithalong-termframeworktopreventandbattleburnoutanditsrootcauses,includinga
130、companyholidayweekforallemployeestotaketimeoffandrecharge,andprogrammingforemployeestolisten,learn,andidentifywaystoprioritizetheirmentalhealthatwork.Social Impact.WeprovidearangeofopportunitiesforouremployeestogetinvolvedwiththesenonprofitsorganizationsthroughHubSpotHelps,ourcharitypartnerprogram,i
131、ncluding:encouragingemployeevolunteerism,providingfinancialandin-kinddonations,andrunningothercreativeevents.Aspartofourcommitmenttohelpdismantlesystemicracismthroughlong-term,meaningfulchange,wearecommittedtoinvest$12.5millionintheBlackEconomicDevelopmentFundtosupportBlack-ledfinancialinstitutions,
132、Black-ledbusinesses,communitycenters,andanchorinstitutionswiththegoalofgrowingtheseorganizationsandstrengtheningtheircontributionstotheBlackcommunity.Wealsoinvestedanadditional$7.5millioninsupportofminoritydepositoryinstitutionstohelpclosetheracialwealth,health,andopportunitygapforthecommunitiesthey
133、serve.Employee Engagement and Feedback.Weadministeraquarterlyemployeeengagementsurvey,knownasoureNPS,toassessandunderstandtheemployeeexperienceandengagementatthecompanylevel.Thesurveyalsoenablesustoprovidedatatoleadersacrosstheorganization,empoweringthemtoidentify,address,andmonitorfeedbackatthedepa
134、rtmentlevel.OureNPSprocessincludesaGlobalInclusionIndexsurveywhichwemeasureannually,allowingustotrackprogressandcollectfeedbackonourdiversity,inclusion,andbelongingeffortsovertime.CompetitionOurmarketisevolving,highlycompetitiveandfragmented,andweexpectcompetitiontoincreaseinthefuture.Webelievethepr
135、incipalcompetitivefactorsinourmarketare:ovisionforthemarket,productstrategyandpaceofinnovation;oinboundmarketingfocusanddomainexpertise;ointegratedall-in-oneCRMPlatform;obreadthanddepthofproductfunctionality;oeaseofuse;oscalable,openarchitecture;otimetovalueandtotalcostofownership;ointegrationwithth
136、ird-partyapplicationsanddatasources;ouseofCRMdatatomakestrategicbusinessdecisions;onamerecognitionandbrandreputation;ando“freemium”go-to-marketmotion.Webelievewecompetefavorablywithrespecttoallofthesefactors.Wefaceintensecompetitionfromothersoftwarecompaniesthatdevelopmarketing,sales,service,andcont
137、entmanagementsoftware.Ourcompetitorsoffervariouspointapplicationsthatprovidecertainfunctionsandfeaturesthatweprovide,including:ocloud-basedmarketingautomationproviders;ocontentmanagementsystems;oemailmarketingsoftwarevendors;osalesforceautomationandCRMsoftwarevendors10ocustomerserviceplatformvendors
138、;andolarge-scaleenterprisesuites.Inaddition,insteadofusingourCRMPlatform,someprospectivecustomersmayelecttocombinedisparatepointapplications,suchascontentmanagement,marketingautomation,analytics,socialmediamanagement,ticketing,andconversationalbots.Weexpectthatwewilldevelopandintroduce,oracquire,app
139、licationsservingcustomer-facingandotherfrontofficefunctions.Intellectual PropertyOurabilitytoprotectourintellectualproperty,includingourtechnology,willbeanimportantfactorinthesuccessandcontinuedgrowthofourbusiness.Weprotectourintellectualpropertythroughtradesecretslaw,copyrights,trademarks,patents,a
140、ndcontracts.Someofourtechnologyreliesuponthird-partylicensedintellectualproperty.Wehave8issuedU.S.Patents,1allowedpatentpendingissuance,15U.S.utilitypatentsapplicationspending,and5provisionalpatentsfiled.Weintendtopursueandarepursuingadditionalpatentprotectiontotheextentwebelieveitwouldbebeneficiala
141、ndcost-effective.Inadditiontotheforegoing,wehaveestablishedbusinessproceduresdesignedtomaintaintheconfidentialityofourproprietaryinformation,includingtheuseofconfidentialityagreementsandassignmentofinventionsagreementswithemployees,independentcontractors,consultants,andcompanieswithwhichweconductbus
142、iness.Despiteoureffortstoprotectourintellectualproperty,unauthorizedpartiesmaystillcopyorotherwiseobtainanduseourtechnology.Inaddition,weintendtocontinuetoexpandourinternationaloperations,andeffectiveintellectualproperty,copyright,trademarkandtradesecretprotectionmaynotbeavailableormaybelimitedinfor
143、eigncountries.Anysignificantimpairmentofourintellectualpropertyrightscouldharmourbusinessorourabilitytocompete.Financial Information About SegmentsWeoperateasoneoperatingsegment.Operatingsegmentsaredefinedascomponentsofanenterpriseforwhichseparatefinancialinformationisregularlyevaluatedbythechiefope
144、ratingdecisionmaker(“CODM”),whichisourchiefexecutiveofficer,indecidinghowtoallocateresourcesandassessperformance.TheCODMevaluatesourfinancialinformationandresourcesandassessestheperformanceoftheseresourcesonaconsolidatedbasis.Sinceweoperateinoneoperatingsegment,allrequiredfinancialsegmentinformation
145、canbefoundintheconsolidatedfinancialstatements.SeeFootnote10withintheconsolidatedfinancialstatementsforinformationbygeographicarea.Available InformationOurwebsiteislocatedathttp:/,andourinvestorrelationswebsiteislocatedathttps:/ 1A.RISK FACTORSAn investment in our common stock involves a high degree
146、 of risk.You should carefully consider the risks described below and the other information in this Annual Report on Form 10-K and in our other public filings before making an investment decision.Our business,prospects,financial condition,or operating results could be harmed by any of these risks,as
147、well as other risks not currently known to us or that we currently consider immaterial.If any such risks and uncertainties actually occurs,our business,financial condition or operating results could differ materially from the plans,projections and other forward-looking statements included in the sec
148、tion titled“Managements Discussion and Analysis of Financial Condition and Results of Operations”and elsewhere in this report and in our other public filings.The trading price of our common stock could decline due to any of these risks,and,as a result,you may lose all or part of your investment.Risk
149、s Related to Our Business and StrategyWe are dependent upon customer renewals,the addition of new customers,increased revenue from existing customers and the continued growth of the market for a CRM Platform.Wederive,andexpecttocontinuetoderive,asubstantialportionofourrevenuefromthesaleofsubscriptio
150、nstoourCRMPlatform.Themarketforinboundmarketing,salesandcustomerserviceproductsisstillevolving,andcompetitivedynamicsmaycausepricinglevelstochangeasthemarketmaturesandasexistingandnewmarketparticipantsintroducenewtypesofpointapplicationsanddifferentapproachestoenablebusinessestoaddresstheirrespectiv
151、eneeds.Asaresult,wemaybeforcedtoreducethepriceswechargeforourplatformandmaybeunabletorenewexistingcustomeragreementsorenterintonewcustomeragreementsatthesamepricesanduponthesametermsthatwehavehistorically.Inaddition,ourgrowthstrategyinvolvesascalablepricingmodel(includingfreemiumversionsofourproduct
152、s)intendedtoprovideuswithanopportunitytoincreasethevalueofourcustomerrelationshipsovertimeasweexpandtheiruseofourplatform,selltootherpartsoftheirorganizations,cross-selloursalesproductstoexistingmarketingproductcustomersandviceversathroughtouchlessorlowtouchinproductpurchases,andupselladditionaloffe
153、ringsandfeatures.Ifourcross-sellingeffortsareunsuccessfulorifourexistingcustomersdonotexpandtheiruseofourplatformoradoptadditionalofferingsandfeatures,ouroperatingresultsmaysuffer.Our subscription renewal rates may decrease,and any decrease could harm our future revenue and operating results.Ourcust
154、omershavenoobligationtorenewtheirsubscriptionsforourplatformaftertheexpirationoftheirsubscriptionperiods,substantiallyallofwhichareoneyearorless.Inaddition,ourcustomersmayseektorenewforlowersubscriptiontiers,forfewercontactsorseats,orforshortercontractlengths.Also,customersmaychoosenottorenewtheirsu
155、bscriptionsforavarietyofreasons.Ourrenewalratesmaydeclineorfluctuateasaresultofanumberoffactors,includinglimitedcustomerresources,pricingchanges,thepricesofservicesofferedbyourcompetitors,adoptionandutilizationofourplatformandadd-onapplicationsbyourcustomers,adoptionofournewproducts,customersatisfac
156、tionwithourplatform,mergersandacquisitionsaffectingourcustomerbase,reductionsinourcustomersspendinglevelsordeclinesincustomeractivityasaresultofeconomicdownturnsoruncertaintyinfinancialmarkets.Ifourcustomersdonotrenewtheirsubscriptionsforourplatformordecreasetheamounttheyspendwithus,ourrevenuewillde
157、clineandourbusinesswillsuffer.Inaddition,asubscriptionmodelcreatescertainrisksrelatedtothetimingofrevenuerecognitionandpotentialreductionsincashflows.Aportionofthesubscription-basedrevenuewereporteachquarterresultsfromtherecognitionofdeferredrevenuerelatingtosubscriptionagreementsenteredintoduringpr
158、eviousquarters.Adeclineinneworrenewedsubscriptionsinanyperiodmaynotbeimmediatelyreflectedinourreportedfinancialresultsforthatperiod,butmayresultinadeclineinourrevenueinfuturequarters.Ifweweretoexperiencesignificantdownturnsinsubscriptionsalesandrenewalrates,ourreportedfinancialresultsmightnotreflect
159、suchdownturnsuntilfutureperiods.12We face significant competition from both established and new companies offering marketing,sales and customer service software and other related applications,as well as internally developed software,which may harm our ability to add new customers,retain existing cus
160、tomers and grow our business.Themarketing,sales,customerservice,operations,andcontentmanagementsoftwaremarketisevolving,highlycompetitiveandsignificantlyfragmented.Withtheintroductionofnewtechnologiesandthepotentialentryofnewcompetitorsintothemarket,weexpectcompetitiontopersistandintensifyinthefutur
161、e,whichcouldharmourabilitytoincreasesales,maintainorincreaserenewalsandmaintainourprices.Wefaceintensecompetitionfromothersoftwarecompaniesthatdevelopmarketing,sales,customerservice,operations,andcontentmanagementsoftwareandfrommarketingservicescompaniesthatprovideinteractivemarketingservices.Compet
162、itioncouldsignificantlyimpedeourabilitytosellsubscriptionstoourCRMPlatformontermsfavorabletous.Ourcurrentandpotentialcompetitorsmaydevelopandmarketnewtechnologiesthatrenderourexistingorfutureproductslesscompetitive,orobsolete.Inaddition,ifthesecompetitorsdevelopproductswithsimilarorsuperiorfunctiona
163、litytoourplatform,wemayneedtodecreasethepricesoracceptlessfavorabletermsforourplatformsubscriptionsinordertoremaincompetitive.Ifweareunabletomaintainourpricingduetocompetitivepressures,ourmarginswillbereducedandouroperatingresultswillbenegativelyaffected.Ourcompetitorsinclude:cloud-basedmarketingaut
164、omationproviders;emailmarketingsoftwarevendors;salesforceautomationandCRMsoftwarevendors;large-scaleenterprisesuites;customerservicesoftwareproviders;andcontentmanagementsystems.Inaddition,insteadofusingourplatform,someprospectivecustomersmayelecttocombinedisparatepointapplications,suchascontentmana
165、gement,marketingautomation,CRM,analyticsandsocialmediamanagement.Weexpectthatnewcompetitors,suchasenterprisesoftwarevendorsthathavetraditionallyfocusedonenterpriseresourceplanningorotherapplicationssupportingbackofficefunctions,willdevelopandintroduceapplicationsservingcustomer-facingandotherfrontof
166、ficefunctions.Thisdevelopmentcouldhaveanadverseeffectonourbusiness,operatingresultsandfinancialcondition.Inaddition,salesforceautomationandCRMvendorscouldacquireordevelopapplicationsthatcompetewithourmarketingsoftwareofferings.Someofthesecompanieshaveacquiredsocialmediamarketingandothermarketingsoft
167、wareproviderstointegratewiththeirbroaderofferings.Ourcurrentandpotentialcompetitorsmayhavesignificantlymorefinancial,technical,marketingandotherresourcesthanwehave,beabletodevotegreaterresourcestothedevelopment,promotion,saleandsupportoftheirproductsandservices,mayhavemoreextensivecustomerbasesandbr
168、oadercustomerrelationshipsthanwehave,andmayhavelongeroperatinghistoriesandgreaternamerecognitionthanwehave.Asaresult,thesecompetitorsmayrespondfastertonewtechnologiesandundertakemoreextensivemarketingcampaignsfortheirproducts.Inafewcases,thesevendorsmayalsobeabletooffermarketing,sales,customerservic
169、eandcontentmanagementsoftwareatlittleornoadditionalcostbybundlingitwiththeirexistingsuiteofapplications.Totheextentanyofourcompetitorshasexistingrelationshipswithpotentialcustomersforeithermarketingsoftwareorotherapplications,thosecustomersmaybeunwillingtopurchaseourplatformbecauseoftheirexistingrel
170、ationshipswithourcompetitor.Ifweareunabletocompetewithsuchcompanies,thedemandforourCRMPlatformcouldsubstantiallydecline.Inaddition,ifoneormoreofourcompetitorsweretomergeorpartnerwithanotherofourcompetitors,ourabilitytocompeteeffectivelycouldbeadverselyaffected.Ourcompetitorsmayalsoestablishorstrengt
171、hencooperativerelationshipswithourcurrentorfuturestrategicdistributionandtechnologypartnersorotherpartieswithwhomwehaverelationships,therebylimitingourabilitytopromoteandimplementourplatform.Wemaynotbeabletocompetesuccessfullyagainstcurrentorfuturecompetitors,andcompetitivepressuresmayharmourbusines
172、s,operatingresultsandfinancialcondition.We have experienced rapid growth and organizational change in recent periods and expect continued future growth.If we fail to manage our growth effectively,we may be unable to execute our business plan,maintain high levels of service or address competitive cha
173、llenges adequately.Ourheadcountandoperationshavegrownsubstantially.Forexample,wehad5,895full-timeemployeesasofDecember31,2021,ascomparedwith4,225asofDecember31,2020andwehaveopenedseveralinternationalofficesandplantoopenadditional13officesinthefuture.Thisgrowthhasplaced,andwillcontinuetoplace,asignif
174、icantstrainonourmanagement,administrative,operationalandfinancialinfrastructure.Weanticipatefurthergrowthwillberequiredtoaddressincreasesinourproductofferingsandcontinuedexpansion.Oursuccesswilldependinpartuponourabilitytorecruit,hire,train,manageandintegrateasignificantnumberofqualifiedmanagers,tec
175、hnicalpersonnelandemployeesinspecializedroleswithinourcompany,includingintechnology,salesandmarketing.Furthermore,whilewehavebeguntoslowlyre-openourofficesonastaggered,region-by-regionbasisinaccordancewithlocalauthorityguidelines,preservationofourcorporateculturehasbeenmademoredifficultasourworkforc
176、ehasbeenworkingfromhomeinconnectionwithrestrictionsplaceduponbusinessesduetothepandemic.Along-termcontinuationoftheserestrictionscould,amongotherthings,negativelyimpactemployeemoraleandproductivity.Anyfailuretopreserveourculturecouldharmourfuturesuccess,includingourabilitytoretainandrecruitpersonnel
177、,innovateandoperateeffectivelyandexecuteonourbusinessstrategy.Additionally,asouremployeesworkremotelyfromgeographicareasacrosstheglobeandmoreofouremployeesworkremotelyonapermanentbasisduetothepandemic,andpursuanttoournewlyimplementedhybridworkplacemodel(whichprovidesouremployeeswiththeoptiontobefull
178、yremote,workfull-timefromoneofouroffices,orhavetheflexibilitytoworkbothintheofficeandremotely),wemayneedtoreallocateourinvestmentofresourcesandcloselymonitoravarietyoflocalregulationsandrequirements,includinglocaltaxlaws,andwemayexperienceunpredictabilityinourexpensesandemployeeworkculture.Ifweexper
179、ienceanyoftheseeffectsinconnectionwithfuturegrowth,ifournewemployeesperformpoorly,orifweareunsuccessfulinrecruiting,hiring,training,managingandintegratingthesenewemployees,orretainingtheseorourexistingemployees,itcouldmateriallyimpairourabilitytoattractnewcustomers,retainexistingcustomersandexpandth
180、eiruseofourplatform,allofwhichwouldmateriallyandadverselyaffectourbusiness,financialconditionandresultsofoperations.Inaddition,tomanagetheexpectedcontinuedgrowthofourheadcount,operationsandgeographicexpansion,wewillneedtocontinuetoexpandourinformationtechnologyinfrastructure,operational,financialand
181、managementsystemsandprocedures.Ouranticipatedadditionalheadcountandcapitalinvestmentswillincreaseourcosts,whichwillmakeitmoredifficultforustoaddressanyfuturerevenueshortfallsbyreducingexpensesintheshortterm.Ifwefailtosuccessfullymanageourgrowth,wewillbeunabletosuccessfullyexecuteourbusinessplan,whic
182、hcouldhaveanegativeimpactonourbusiness,resultsofoperationsorfinancialcondition.Failure to effectively develop and expand our marketing,sales,customer service,operations,and content management capabilities could harm our ability to increase our customer base and achieve broader market acceptance of o
183、ur platform.ToincreaseCustomersandachievebroadermarketacceptanceofourCRMPlatform,wewillneedtocontinuetoexpandourmarketing,sales,customerservice,operations,andcontentmanagementcapabilities,includingoursalesforceandthird-partychannelpartners.Wewillcontinuetodedicatesignificantresourcestoinboundsalesan
184、dmarketingprograms.Theeffectivenessofourinboundsalesandmarketingandthird-partychannelpartnershasvariedovertimeandmayvaryinthefutureanddependsonourabilitytomaintainandimproveourCRMPlatform.Alloftheseeffortswillrequireustoinvestsignificantfinancialandotherresources.Ourbusinesswillbeseriouslyharmedifou
185、reffortsdonotgenerateacorrespondinglysignificantincreaseinrevenue.Wemaynotachieveanticipatedrevenuegrowthfromexpandingoursalesforceifweareunabletohire,developandretaintalentedsalespersonnel,ifournewsalespersonnelareunabletoachievedesiredproductivitylevelsinareasonableperiodoftimeorifoursalesandmarke
186、tingprogramsarenoteffective.The rate of growth of our business depends on the continued participation and level of service of our Solutions Partners.WerelyonourSolutionsPartnerstoprovidecertainservicestoourcustomers,aswellaspursuesalesofourCRMPlatformtocustomers.TotheextentwedonotattractnewSolutions
187、Partners,orexistingornewSolutionsPartnersdonotreferagrowingnumberofcustomerstous,ourrevenueandoperatingresultswouldbeharmed.Inaddition,ifourSolutionsPartnersdonotcontinuetoprovideservicestoourcustomers,wewouldberequiredtoprovidesuchservicesourselveseitherbyexpandingourinternalteamorengagingotherthir
188、d-partyproviders,whichwouldincreaseouroperatingcosts.If we fail to maintain our inbound thought leadership position,our business may suffer.Webelievethatmaintainingourthoughtleadershippositionininboundmarketing,sales,services,operationsandcontentmanagementisanimportantelementinattractingnewcustomers
189、.Wedevotesignificantresourcestodevelopandmaintainourthoughtleadershipposition,withafocusonidentifyingandinterpretingemergingtrendsintheinboundexperience,shapingandguidingindustrydialogandcreatingandsharingthebestinboundpractices.Ouractivitiesrelatedtodevelopingandmaintainingourthoughtleadershipmayno
190、tyieldincreasedrevenue,andeveniftheydo,anyincreasedrevenuemaynotoffsettheexpensesweincurredinsucheffort.Werelyuponthecontinuedservicesofourmanagementandemployeeswithdomainexpertisewithinboundmarketing,sales,services,operations,andcontentmanagement,andthelossofanykeyemployeesinthisareacouldharmourcom
191、petitivepositionandreputation.Ifwefailtosuccessfullygrowandmaintainourthoughtleadershipposition,wemaynotattractenoughnewcustomersorretainourexistingcustomers,andourbusinesscouldsuffer.14If we fail to further enhance our brand and maintain our existing strong brand awareness,our ability to expand our
192、 customer base will be impaired and our financial condition may suffer.WebelievethatourdevelopmentoftheHubSpotbrandiscriticaltoachievingwidespreadawarenessofourexistingandfutureinboundexperiencesolutions,and,asaresult,isimportanttoattractingnewcustomersandmaintainingexistingcustomers.Inthepast,ouref
193、fortstobuildourbrandhaveinvolvedsignificantexpenses,andwebelievethatthisinvestmenthasresultedinstrongbrandrecognitionintheB2Bmarket.SuccessfulpromotionandmaintenanceofourbrandswilldependlargelyontheeffectivenessofourmarketingeffortsandonourabilitytoprovideareliableandusefulCRMPlatformatcompetitivepr
194、ices.Brandpromotionactivitiesmaynotyieldincreasedrevenue,andeveniftheydo,anyincreasedrevenuemaynotoffsettheexpensesweincurredinbuildingourbrand.Ifwefailtosuccessfullypromoteandmaintainourbrand,ourbusinesscouldsuffer.If we fail to adapt and respond effectively to rapidly changing technology,evolving
195、industry standards and changing customer needs or requirements,our CRM Platform may become less competitive.OurfuturesuccessdependsonourabilitytoadaptandinnovateourCRMPlatform.Toattractnewcustomersandincreaserevenuefromexistingcustomers,weneedtocontinuetoenhanceandimproveourofferingstomeetcustomerne
196、edsatpricesthatourcustomersarewillingtopay.Sucheffortswillrequireaddingnewfunctionalityandrespondingtotechnologicaladvancements,whichwillincreaseourresearchanddevelopmentcosts.Ifweareunabletodevelopnewapplicationsthataddressourcustomersneeds,ortoenhanceandimproveourplatforminatimelymanner,wemaynotbe
197、abletomaintainorincreasemarketacceptanceofourplatform.Ourabilitytogrowisalsosubjecttotheriskoffuturedisruptivetechnologies.AccessanduseofourCRMPlatformisprovidedviathecloud,which,itself,wasdisruptivetothepreviousenterprisesoftwaremodel.Ifnewtechnologiesemergethatareabletodeliverinboundmarketingsoftw
198、areandrelatedapplicationsatlowerprices,moreefficiently,moreconvenientlyormoresecurely,suchtechnologiescouldadverselyaffectourabilitytocompete.If we fail to offer high-quality customer support,our business and reputation may suffer.High-qualityeducation,trainingandcustomersupportareimportantforthesuc
199、cessfulmarketing,saleanduseofourCRMPlatformandfortherenewalofexistingcustomers.Providingthiseducation,trainingandsupportrequiresthatourpersonnelwhomanageouronlinetrainingresource,HubSpotAcademy,orprovidecustomersupporthavespecificinboundexperiencedomainknowledgeandexpertise,makingitmoredifficultforu
200、stohirequalifiedpersonnelandtoscaleupoursupportoperations.Theimportanceofhigh-qualitycustomersupportwillincreaseasweexpandourbusinessandpursuenewcustomers.IfwedonothelpourcustomersusemultipleapplicationswithinourCRMPlatformandprovideeffectiveongoingsupport,ourabilitytoselladditionalfunctionalityands
201、ervicesto,ortoretain,existingcustomersmaysufferandourreputationwithexistingorpotentialcustomersmaybeharmed.We may not be able to scale our business quickly enough to meet our customers growing needs and if we are not able to grow efficiently,our operating results could be harmed.15AsusageofourCRMPla
202、tformgrowsandascustomersuseourplatformforadditionalinboundapplications,suchassalesandservices,wewillneedtodevoteadditionalresourcestoimprovingourapplicationarchitecture,integratingwiththird-partysystemsandmaintaininginfrastructureperformance.Inaddition,wewillneedtoappropriatelyscaleourinternalbusine
203、sssystemsandourservicesorganization,includingcustomersupportandprofessionalservices,toserveourgrowingcustomerbase,particularlyasourcustomerdemographicschangeovertime.Anyfailureofordelayintheseeffortscouldcauseimpairedsystemperformanceandreducedcustomersatisfaction.Theseissuescouldreducetheattractive
204、nessofourCRMPlatformtocustomers,resultingindecreasedsalestonewcustomers,lowerrenewalratesbyexistingcustomers,theissuanceofservicecredits,orrequestedrefunds,whichcouldimpedeourrevenuegrowthandharmourreputation.Evenifweareabletoupgradeoursystemsandexpandourstaff,anysuchexpansionwillbeexpensiveandcompl
205、ex,requiringmanagementstimeandattention.Wecouldalsofaceinefficienciesoroperationalfailuresasaresultofoureffortstoscaleourinfrastructure.Moreover,thereareinherentrisksassociatedwithupgrading,improvingandexpandingourinformationtechnologysystems.Wecannotbesurethattheexpansionandimprovementstoourinfrast
206、ructureandsystemswillbefullyoreffectivelyimplementedonatimelybasis,ifatall.Theseeffortsmayreducerevenueandourmarginsandadverselyaffectourfinancialresults.Our ability to introduce new products and features is dependent on adequate research and development resources.If we do not adequately fund our re
207、search and development efforts,we may not be able to compete effectively and our business and operating results may be harmed.Toremaincompetitive,wemustcontinuetodevelopnewproductofferings,applications,featuresandenhancementstoourexistingCRMPlatform.Maintainingadequateresearchanddevelopmentpersonnel
208、andresourcestomeetthedemandsofthemarketisessential.Ifweareunabletodevelopourplatforminternallyduetocertainconstraints,suchashighemployeeturnover,lackofmanagementabilityoralackofotherresearchanddevelopmentresources,wemaymissmarketopportunities.Further,manyofourcompetitorsexpendaconsiderablygreateramo
209、untoffundsontheirresearchanddevelopmentprograms,andthosethatdonotmaybeacquiredbylargercompaniesthatwouldallocategreaterresourcestoourcompetitorsresearchanddevelopmentprograms.Ourfailuretomaintainadequateresearchanddevelopmentresourcesortocompeteeffectivelywiththeresearchanddevelopmentprogramsofourco
210、mpetitorscouldmateriallyadverselyaffectourbusiness.Changes in the sizes or types of businesses that purchase our platform or in the applications within our CRM Platform purchased or used by our customers could negatively affect our operating results.OurstrategyistosellsubscriptionstoourCRMPlatformto
211、mid-sizedbusinesses,butwehavesoldandwillcontinuetoselltoorganizationsrangingfromsmallbusinessestoenterprises.OurgrossmarginscanvarydependingonnumerousfactorsrelatedtotheimplementationanduseofourCRMPlatform,includingthesophisticationandintensityofourcustomersuseofourplatformandthelevelofprofessionals
212、ervicesandsupportrequiredbyacustomer.Salestoenterprisecustomersmayentaillongersalescyclesandmoresignificantsellingefforts.Sellingtosmallbusinessesmayinvolvegreatercreditriskanduncertainty.Iftherearechangesinthemixofbusinessesthatpurchaseourplatformorthemixoftheproductplanspurchasedbyourcustomers,our
213、grossmarginscoulddecreaseandouroperatingresultscouldbeadverselyaffected.We have in the past completed acquisitions and may acquire or invest in other companies or technologies in the future,which could divert managements attention,fail to meet our expectations,result in additional dilution to our st
214、ockholders,increase expenses,disrupt our operations or harm our operating results.Wehaveinthepastacquired,andwemayinthefutureacquireorinvestin,businesses,productsortechnologiesthatwebelievecouldcomplementorexpandourplatform,enhanceourtechnicalcapabilitiesorotherwiseoffergrowthopportunities.Wemaynotb
215、eabletofullyrealizetheanticipatedbenefitsofhistoricaloranyfutureacquisitions.Thepursuitofpotentialacquisitionsmaydiverttheattentionofmanagementandcauseustoincurvariousexpensesrelatedtoidentifying,investigatingandpursuingsuitableacquisitions,whetherornottheyareconsummated.Thereareinherentrisksininteg
216、ratingandmanagingacquisitions.Ifweacquireadditionalbusinesses,wemaynotbeabletoassimilateorintegratetheacquiredpersonnel,operationsandtechnologiessuccessfullyoreffectivelymanagethecombinedbusinessfollowingtheacquisitionandourmanagementmaybedistractedfromoperatingourbusiness.Wealsomaynotachievetheanti
217、cipatedbenefitsfromtheacquiredbusinessduetoanumberoffactors,including:unanticipatedcostsorliabilitiesassociatedwiththeacquisition;incurrenceofacquisition-relatedcosts,whichwouldberecognizedasacurrentperiodexpense;inabilitytogeneratesufficientrevenuetooffsetacquisitionorinvestmentcosts;theinabilityto
218、maintainrelationshipswithcustomersandpartnersoftheacquiredbusiness;thedifficultyofincorporatingacquiredtechnologyandrightsintoourplatformandofmaintainingqualityandsecuritystandardsconsistentwithourbrand;delaysincustomerpurchasesduetouncertaintyrelatedtoanyacquisition;theneedtointegrateorimplementadd
219、itionalcontrols,proceduresandpolicies;challengescausedbydistance,languageandculturaldifferences;harmtoourexistingbusinessrelationshipswithbusinesspartnersandcustomersasaresultoftheacquisition;thepotentiallossofkeyemployees;useofresourcesthatareneededinotherpartsofourbusinessanddiversionofmanagementa
220、ndemployeeresources;the16inabilitytorecognizeacquireddeferredrevenueinaccordancewithourrevenuerecognitionpolicies;anduseofsubstantialportionsofouravailablecashortheincurrenceofdebttoconsummatetheacquisition.Acquisitionsalsoincreasetheriskofunforeseenlegalliability,includingforpotentialviolationsofap
221、plicablelaworindustryrulesandregulations,arisingfrompriororongoingactsoromissionsbytheacquiredbusinesseswhicharenotdiscoveredbyduediligenceduringtheacquisitionprocess.Generally,ifanacquiredbusinessfailstomeetourexpectations,ouroperatingresults,businessandfinancialconditionmaysuffer.Acquisitionscould
222、alsoresultindilutiveissuancesofequitysecuritiesortheincurrenceofdebt,whichcouldadverselyaffectourbusiness,resultsofoperationsorfinancialcondition.Inaddition,asignificantportionofthepurchasepriceofcompaniesweacquiremaybeallocatedtogoodwillandotherintangibleassets,whichmustbeassessedforimpairmentatlea
223、stannually.Ifouracquisitionsdonotultimatelyyieldexpectedreturns,wemayberequiredtomakechargestoouroperatingresultsbasedonourimpairmentassessmentprocess,whichcouldharmourresultsofoperations.Because our long-term growth strategy involves further expansion of our sales to customers outside the United St
224、ates,our business will be susceptible to risks associated with international operations.Acomponentofourgrowthstrategyinvolvesthefurtherexpansionofouroperationsandcustomerbaseinternationally.Wehaveopenedseveralinternationalofficesandplantoopenadditionalofficesinthefuture.Theseinternationalofficesfocu
225、sprimarilyonsales,professionalservicesandsupport.WealsohaveadevelopmentteaminDublin,Ireland.Ourcurrentinternationaloperationsandfutureinitiativeswillinvolveavarietyofrisks,including:difficultiesinmaintainingourcompanyculturewithadispersedanddistantworkforce;morestringentregulationsrelatingtodatasecu
226、rityandtheunauthorizeduseof,oraccessto,commercialandpersonalinformation,particularlyintheEuropeanUnion;unexpectedchangesinregulatoryrequirements,taxesortradelaws;differinglaborregulations,especiallyintheEuropeanUnion,wherelaborlawsaregenerallymoreadvantageoustoemployeesascomparedtotheUnitedStates,in
227、cludingdeemedhourlywageandovertimeregulationsintheselocations;challengesinherentinefficientlymanaginganincreasednumberofemployeesoverlargegeographicdistances,includingtheneedtoimplementappropriatesystems,policies,benefitsandcomplianceprograms;difficultiesinmanagingabusinessinnewmarketswithdiversecul
228、tures,languages,customs,legalsystems,alternativedisputesystemsandregulatorysystems;currencyexchangeratefluctuationsandtheresultingeffectonourrevenueandexpenses,andthecostandriskofenteringintohedgingtransactionsifwechosetodosointhefuture;globaleconomicuncertaintycausedbyglobalpoliticalevents,includin
229、gtheUnitedKingdomsexitfromtheEuropeanUnion,onJanuary31,2020(Brexit),andsimilargeopoliticaldevelopments;limitationsonourabilitytoreinvestearningsfromoperationsinonecountrytofundthecapitalneedsofouroperationsinothercountries;limitedorinsufficientintellectualpropertyprotection;politicalinstabilityorter
230、roristactivities;likelihoodofpotentialoractualviolationsofdomesticandinternationalanticorruptionlaws,suchastheU.S.ForeignCorruptPracticesActandtheU.K.BriberyAct,orofU.S.andinternationalexportcontrolandsanctionsregulations,whichlikelihoodmayincreasewithanincreaseofsalesoroperationsinforeignjurisdicti
231、onsandoperationsincertainindustries;andadversetaxburdensandforeignexchangecontrolsthatcouldmakeitdifficulttorepatriateearningsandcash.Ourlimitedexperienceinoperatingourbusinessinternationallyincreasestheriskthatanypotentialfutureexpansioneffortsthatwemayundertakewillnotbesuccessful.Ifweinvestsubstan
232、tialtimeandresourcestoexpandourinternationaloperationsandareunabletodososuccessfullyandinatimelymanner,ourbusinessandoperatingresultswillsuffer.WecontinuetoimplementpoliciesandprocedurestofacilitateourcompliancewithU.S.lawsandregulationsapplicabletoorarisingfromourinternationalbusiness.17Inadequacie
233、sinourpastorcurrentcompliancepracticesmayincreasetheriskofinadvertentviolationsofsuchlawsandregulations,whichcouldleadtofinancialandotherpenaltiesthatcoulddamageourreputationandimposecostsonus.Risks Related to Employee MattersIf we cannot maintain our company culture as we grow,we could lose the inn
234、ovation,teamwork,passion and focus on execution that we believe contribute to our success and our business may be harmed.Webelievethatacriticalcomponenttooursuccesshasbeenourcompanyculture,whichisbasedontransparencyandpersonalautonomy.Wehaveinvestedsubstantialtimeandresourcesinbuildingourteamwithint
235、hiscompanyculture.In2020,wemadethedecisiontopermanentlymovetoahybridworkplacemodel,whichmeanssinceJanuary1,2021,ouremployeeshadtheoptiontobefullyremote,workfull-timefromoneofouroffices,orworkbothintheofficeandremotely.Furthermore,whilewehavebeguntoslowlyre-openourofficesonastaggered,region-by-region
236、basisinaccordancewithlocalauthorityguidelines,preservationofourcorporateculturehasbeenmademoredifficultasourworkforcehasbeenworkingfromhomeinconnectionwithrestrictionsplaceduponbusinessesduetothepandemic.Anyfailuretopreserveourculturecouldnegativelyaffectourabilitytoretainandrecruitpersonnelandtoeff
237、ectivelyfocusonandpursueourcorporateobjectives.Aswegrowandcontinuetodevelopourcompanyinfrastructure,wemayfinditdifficulttomaintaintheseimportantaspectsofourcompanycultureandourbusinessmaybeadverselyimpacted.We rely on our management team and other key employees,and the loss of one or more key employ
238、ees could harm our business.Oursuccessandfuturegrowthdependuponthecontinuedservicesofourmanagementteam,includingourco-founders,BrianHalliganandDharmeshShah,ourchiefexecutiveofficer,YaminiRangan,andotherkeyemployeesintheareasofresearchanddevelopment,marketing,sales,services,operations,contentmanageme
239、nt,andgeneralandadministrativefunctions.Fromtimetotime,theremaybechangesinourmanagementteamresultingfromthehiringordepartureofexecutives,whichcoulddisruptourbusiness.Wealsoaredependentonthecontinuedserviceofourexistingsoftwareengineersandinformationtechnologypersonnelbecauseofthecomplexityofourplatf
240、orm,technologiesandinfrastructure.Wemayterminateanyemployeesemploymentatanytime,withorwithoutcause,andanyemployeemayresignatanytime,withorwithoutcause.Wedonothaveemploymentagreementswithanyofourkeypersonnel.Thelossofoneormoreofourkeyemployeescouldharmourbusiness.The failure to attract and retain add
241、itional qualified personnel could prevent us from executing our business strategy.Toexecuteourbusinessstrategy,wemustattractandretainhighlyqualifiedpersonnel.Inparticular,wecompetewithmanyothercompaniesforsoftwaredeveloperswithhighlevelsofexperienceindesigning,developingandmanagingcloud-basedsoftwar
242、e,aswellasforskilledinformationtechnology,marketing,salesandoperationsprofessionals,andwemaynotbesuccessfulinattractingandretainingtheprofessionalsweneed.Also,inboundsales,marketing,services,operations,andcontentmanagementdomainexpertsareveryimportanttooursuccessandaredifficulttoreplace.Wehavefromti
243、metotimeinthepastexperienced,andweexpecttocontinuetoexperienceinthefuture,difficultyinhiringanddifficultyinretaininghighlyskilledemployeeswithappropriatequalifications.Inparticular,wehaveexperiencedacompetitivehiringenvironmentintheGreaterBostonarea,whereweareheadquarteredandwillcontinuetoexperience
244、acompetitivehiringenvironmentaswerecruitforremotetalentworldwide.Manyofthecompanieswithwhichwecompeteforexperiencedpersonnelhavegreaterresourcesthanwedo.Inaddition,inmakingemploymentdecisions,particularlyinthesoftwareindustry,jobcandidatesoftenconsiderthevalueofthestockoptionsorotherequityincentives
245、theyaretoreceiveinconnectionwiththeiremployment.Ifthepriceofourstockdeclines,orexperiencessignificantvolatility,ourabilitytoattractorretainkeyemployeeswillbeadverselyaffected.Ifwefailtoattractnewpersonnelorfailtoretainandmotivateourcurrentpersonnel,ourgrowthprospectscouldbeseverelyharmed.Risks Relat
246、ed to Our Technical Operations Infrastructure and Dependence on Third PartiesInterruptions or delays in service from our third-party data center providers could impair our ability to deliver our platform to our customers,resulting in customer dissatisfaction,damage to our reputation,loss of customer
247、s,limited growth and reduction in revenue.Wecurrentlyservethemajorityofourplatformfunctionsfromthird-partydatacenterhostingfacilitiesoperatedbyAmazonWebServiceslocatedinnorthernVirginiaandFrankfurt,GermanyandGoogleCloudPlatformlocatedinFrankfurt,Germany.Inaddition,weserveancillaryfunctionsforourcust
248、omersfromthird-partydatacenterhostingfacilitiesoperatedbyRackspacelocatedinDallas,Texas,withabackupfacilityinChicago,Illinois.Ouroperationsdepend,inpart,onourthird-partyfacilityprovidersabilitiestoprotectthesefacilitiesagainstdamageorinterruptionfromnaturaldisasters,suchasearthquakesandhurricanes,ac
249、tualorthreatenedpublichealthemergencies(e.g.,COVID-19),powerortelecommunicationsfailures,criminalactsandsimilarevents.Intheeventthatanyofourthird-partyfacilitiesarrangementsisterminated,orifthereisalapseofserviceordamagetoafacility,wecouldexperienceinterruptionsinourplatformaswellasdelaysandaddition
250、alexpensesinarrangingnewfacilitiesandservices.18Anydamageto,orfailureof,thesystemsofourthird-partyproviderscouldresultininterruptionstoourplatform.Despiteprecautionstakenatourdatacenters,theoccurrenceofspikesinusagevolume,anaturaldisaster,suchasearthquakesorhurricane,anactofterrorism,vandalismorsabo
251、tage,adecisiontocloseafacilitywithoutadequatenotice,orotherunanticipatedproblemsatafacilitycouldresultinlengthyinterruptionsintheavailabilityofouron-demandsoftware.Evenwithcurrentandplanneddisasterrecoveryarrangements,ourbusinesscouldbeharmed.Also,intheeventofdamageorinterruption,ourinsurancepolicie
252、smaynotadequatelycompensateusforanylossesthatwemayincur.Thesefactorsinturncouldfurtherreduceourrevenue,subjectustoliabilityandcauseustoissuecreditsorcausecustomerstofailtorenewtheirsubscriptions,anyofwhichcouldmateriallyadverselyaffectourbusiness.If our CRM Platform has outages or fails due to defec
253、ts or similar problems,and if we fail to correct any defect or other software problems,we could lose customers,become subject to service performance or warranty claims or incur significant costs.OurCRMPlatformanditsunderlyinginfrastructureareinherentlycomplexandmaycontainmaterialdefectsorerrors.Were
254、leasemodifications,updates,bugfixesandotherchangestooursoftwareseveraltimesperday,withouttraditionalhuman-performedqualitycontrolreviewsforeachrelease.Wehavefromtimetotimefounddefectsinoursoftwareandmaydiscoveradditionaldefectsinthefuture.Wemaynotbeabletodetectandcorrectdefectsorerrorsbeforecustomer
255、sbegintouseourplatformoritsapplications.Consequently,weorourcustomersmaydiscoverdefectsorerrorsafterourplatformhasbeenimplemented.Defectsorerrorscouldresultinproductoutagesandcouldalsocauseinaccuraciesinthedatawecollectandprocessforourcustomers,oreventheloss,damageorinadvertentreleaseofsuchconfident
256、ialdata.Weimplementbugfixesandupgradesaspartofourregularsystemmaintenance,whichmayleadtosystemdowntime.Evenifweareabletoimplementthebugfixesandupgradesinatimelymanner,anyhistoryofproductoutages,defectsorinaccuraciesinthedatawecollectforourcustomers,ortheloss,damageorinadvertentreleaseofconfidentiald
257、atacouldcauseourreputationtobeharmed,andcustomersmayelectnottopurchaseorrenewtheiragreementswithus.Furthermore,theseissuescouldsubjectustoserviceperformancecredits(whetherofferedbyusorrequiredbycontract),warrantyclaimsorincreasedinsurancecosts.Thecostsassociatedwithproductoutages,anymaterialdefectso
258、rerrorsinourplatformorotherperformanceproblemsmaybesubstantialandcouldmateriallyadverselyaffectouroperatingresults.Inaddition,third-partyapplicationsandfeaturesonourCRMPlatformmaynotmeetthesamequalitystandardsthatweapplytoourowndevelopmenteffortsand,totheextenttheycontainbugs,vulnerabilitiesordefect
259、s,theymaycreatedisruptionsinourcustomersuseofourproducts,leadtodataloss,unauthorizedaccesstocustomerdata,damageourbrandandreputationandaffectthecontinueduseofourproducts,anyofwhichcouldharmourbusiness,resultsofoperationsandfinancialcondition.If our information technology systems,including our CRM Pl
260、atform,have outages or fail due to defects or similar problems,and if we fail to correct any defect or other software problems,it could disrupt our internal operations or services provided to customers,and could reduce our revenue,increase our expenses,damage our reputation and adversely affect our
261、cash flows and stock price.Werelyonourinformationtechnologysystems,includingthesustainedanduninterruptedperformanceofourCRMPlatform,tomanagenumerousaspectsofourbusiness,includingtomarketing,sales,contentmanagement,customerserviceandotherinternaloperations.Ourinformationtechnologysystemsareanessentia
262、lcomponentofourbusinessandanydisruptioncouldsignificantlylimitourabilitytomanageandoperateourbusinessefficiently.OurCRMPlatformanditsunderlyinginfrastructureareinherentlycomplexandmaycontainmaterialdefectsorerrors.Wereleasemodifications,updates,bugfixesandotherchangestooursoftwareseveraltimesperday,
263、withouttraditionalhuman-performedqualitycontrolreviewsforeachrelease.Wehavefromtimetotimefounddefectsinoursoftwareandmaydiscoverinthefutureadditionaldefects,outages,delaysorcessationsofservice,performanceandqualityproblemsormayproduceerrorsinconnectionwithsystemsintegrations,migrationworkorothercaus
264、es,whichcouldresultinbusinessdisruptionsandtheprocessofremediatingthemcouldbemoreexpensive,time-consuming,disruptiveandresourceintensivethanplanned.Suchdisruptionscouldadverselyimpactourinternaloperationsandinterruptotherprocesses.Delayedsales,lowermarginsorlostcustomersresultingfromthesedisruptions
265、couldreduceourrevenue,increaseourexpenses,damageourreputationandadverselyaffectourcashflowsandstockprice.We are dependent on the continued availability of third-party data hosting and transmission services.Asignificantportionofouroperatingcostisfromourthird-partydatahostingandtransmissionservices,in
266、cludingAmazonWebServices(“AWS”),whichhoststhesubstantialmajorityofourproductsandplatform.Ifthecostsforsuchservicesincreaseduetovendorconsolidation,regulation,contractrenegotiation,orotherwise,wemaynotbeabletoincreasethefeesforourCRMPlatformorservicestocoverthechanges,whichcouldhaveanegativeimpactono
267、uroperatingresults.Additionally,ourcustomersneedtobeabletoaccessourplatformatanytime,withoutinterruptionordegradationofperformance.AWSrunsitsownplatformthatweaccess,andweare,therefore,vulnerabletoserviceinterruptionsatAWS.Wehave19experienced,andexpectthatinthefuturewemayexperienceinterruptions,delay
268、sandoutagesinserviceandavailabilityduetoavarietyoffactors,includinginfrastructurechanges,humanorsoftwareerrors,websitehostingdisruptionsandcapacityconstraints.Insomeinstances,includingbecausewedonotcontrolourserviceproviders,wemaynotbeabletoidentifythecauseorcausesoftheseproblemswithinaperiodoftimea
269、cceptabletoourcustomers.Additionally,asourbusinesscontinuestogrow,totheextentthatwedonoteffectivelyaddresscapacityconstraints,throughourprovidersofcloudinfrastructure,ourresultsofoperationsmaybeadverselyaffected.Inaddition,anychangesinservicelevelsfromourserviceprovidersmayadverselyaffectourabilityt
270、omeetourcustomersrequirements,resultinnegativepublicitywhichcouldharmourreputationandbrandandmayadverselyaffecttheusageofourplatform.If we do not or cannot maintain the compatibility of our CRM Platform with third-party applications that our customers use in their businesses,our revenue will decline
271、.Asignificantpercentageofourcustomerschoosetointegrateourplatformwithcertaincapabilitiesprovidedbythird-partyapplicationprovidersusingapplicationprogramminginterfaces(“APIs”)publishedbytheseproviders.ThefunctionalityandpopularityofourCRMPlatformdepends,inpart,onourabilitytointegrateourplatformwithth
272、ird-partyapplicationsandplatforms,includingCRM,CMS,e-commerce,callcenter,analyticsandsocialmediasitesthatourcustomersuseandfromwhichtheyobtaindata.Third-partyprovidersofapplicationsandAPIsmaychangethefeaturesoftheirapplicationsandplatforms,restrictouraccesstotheirapplicationsandplatforms,oralterthet
273、ermsgoverninguseoftheirapplicationsandAPIsandaccesstothoseapplicationsandplatformsinanadversemanner.Suchchangescouldfunctionallylimitorterminateourabilitytousethesethird-partyapplicationsandplatformsinconjunctionwithourplatform,whichcouldnegativelyimpactourofferingsandharmourbusiness.Ifwefailtointeg
274、rateourplatformwithnewthird-partyapplicationsandplatformsthatourcustomersuseformarketing,sales,services,operationsorcontentmanagementpurposes,orfailtorenewexistingrelationshipspursuanttowhichwecurrentlyprovidesuchintegration,wemaynotbeabletoofferthefunctionalitythatourcustomersneed,whichwouldnegativ
275、elyimpactourabilitytogeneratenewrevenueormaintainexistingrevenueandadverselyimpactourbusiness.We rely on data provided by third parties,the loss of which could limit the functionality of our platform and disrupt our business.SelectfunctionalityofourCRMPlatformdependsonourabilitytodeliverdata,includi
276、ngsearchengineresultsandsocialmediaupdates,providedbyunaffiliatedthirdparties,suchasFacebook,Google,LinkedInandTwitter.Someofthisdataisprovidedtouspursuanttothird-partydatasharingpoliciesandtermsofuse,underdatasharingagreementsbythird-partyprovidersorbycustomerconsent.Inthefuture,anyofthesethirdpart
277、iescouldchangeitsdatasharingpolicies,includingmakingthemmorerestrictive,oralteritsalgorithmsthatdeterminetheplacement,display,andaccessibilityofsearchresultsandsocialmediaupdates,anyofwhichcouldresultinthelossof,orsignificantimpairmentto,ourabilitytocollectandprovideusefuldatatoourcustomers.Thesethi
278、rdpartiescouldalsointerpretour,orourserviceprovidersdatacollectionpoliciesorpracticesasbeinginconsistentwiththeirpolicies,whichcouldresultinthelossofourabilitytocollectthisdataforourcustomers.Anysuchchangescouldimpairourabilitytodeliverdatatoourcustomersandcouldadverselyimpactselectfunctionalityofou
279、rplatform,impairingthereturnoninvestmentthatourcustomersderivefromusingoursolution,aswellasadverselyaffectingourbusinessandourabilitytogeneraterevenue.Privacy concerns and end users acceptance of Internet behavior tracking may limit the applicability,use and adoption of our CRM Platform.Privacyconce
280、rnsmaycauseenduserstoresistprovidingthepersonaldatanecessarytoallowourcustomerstouseourplatformeffectively.Wehaveimplementedvariousfeaturesintendedtoenableourcustomerstobetterprotectenduserprivacy,butthesemeasuresmaynotalleviateallpotentialprivacyconcernsandthreats.Eventheperceptionofprivacyconcerns
281、,whetherornotvalid,mayinhibitmarketadoptionofourplatform,especiallyincertainindustriesthatrelyonsensitivepersonalinformation.Privacyadvocacygroupsandthetechnologyandotherindustriesareconsideringvariousnew,additionalordifferentself-regulatorystandardsthatmayplaceadditionalburdensonus.Thecostsofcompli
282、ancewith,andotherburdensimposedbythesegroupspoliciesandactionsmaylimittheuseandadoptionofourCRMPlatformandreduceoveralldemandforit,orleadtosignificantfines,penaltiesorliabilitiesforanynoncomplianceorlossofanysuchaction.If our or our customers security measures are compromised or unauthorized access
283、to data of our customers or their customers is otherwise obtained,our CRM Platform may be perceived as not being secure,our customers may be harmed and may curtail or cease their use of our platform,our reputation may be damaged and we may incur significant liabilities.Ouroperationsinvolvethestorage
284、andtransmissionofdataofourcustomersandtheircustomers,includingpersonallyidentifiableinformation.Ourstorageistypicallythesolesourceofrecordforportionsofourcustomersbusinessesandenduserdata,suchasinitialcontactinformationandonlineinteractions.Securityincidentscouldresultinunauthorizedaccessto,lossofor
285、unauthorizeddisclosureofthisinformation,litigation,indemnityobligationsandotherpossibleliabilities,aswellasnegativepublicity,whichcoulddamageourreputation,impairoursalesandharmourcustomersandourbusiness.Cyber-attacksandother20maliciousInternet-basedactivitycontinuetoincreasegenerally,andcloud-basedp
286、latformprovidersofmarketingserviceshavebeentargeted.Ifoursecuritymeasures,orthoseofourserviceproviders,arecompromisedasaresultofthird-partyaction,employeeorcustomererror,malfeasance,stolenorfraudulentlyobtainedlog-incredentialsorotherwise,ourreputationcouldbedamaged,ourbusinessmaybeharmedandwecouldi
287、ncursignificantliability.Additionally,ifthirdpartieswithwhomwework,suchasvendorsordevelopers,violateapplicablelaws,oursecuritypoliciesorouracceptableusepolicy,suchviolationsmayalsoputourcustomersinformationatriskandcouldinturnhaveanadverseeffectonourbusiness.Inaddition,ifthesecuritymeasuresofourcust
288、omersorourserviceproviders,arecompromised,evenwithoutanyactualcompromiseofourownsystems,wemayfacenegativepublicityorreputationalharmifourcustomersoranyoneelseincorrectlyattributestheblameforsuchsecuritybreachestousoroursystems.Wemaybeunabletoanticipateorpreventtechniquesusedtoobtainunauthorizedacces
289、sortosabotagesystemsbecausetheychangefrequentlyandgenerallyarenotdetecteduntilafteranincidenthasoccurred.Asweincreaseourcustomerbaseandourbrandbecomesmorewidelyknownandrecognized,wemaybecomemoreofatargetforthirdpartiesseekingtocompromiseoursecuritysystemsorgainunauthorizedaccesstoourcustomersdata.Ad
290、ditionally,weprovideextensiveaccesstoourdatabase,whichstoresourcustomerdata,toourdevelopmentteamtofacilitateourrapidpaceofproductdevelopment.Ifsuchaccessorourownoperationscausetheloss,damageordestructionofourcustomersbusinessdata,theirsales,leadgeneration,supportandotherbusinessoperationsmaybeperman
291、entlyharmed.Asaresult,ourcustomersmaybringclaimsagainstusforlostprofitsandotherdamages.Cyber-attacks,denial-of-serviceattacks,ransomwareattacks,businessemailcompromises,computermalware,viruses,andsocialengineering(includingphishing)areprevalentinourindustry,theindustriesofcertainofourserviceprovider
292、sandourcustomersindustries.Ourinternalcomputersystemsandthoseofourcurrentandanyfuturestrategiccollaborators,vendors,andothercontractorsorconsultantsarevulnerabletodamagefromcyber-attacks,computerviruses,unauthorizedaccess,naturaldisasters,cybersecuritythreats,terrorism,warandtelecommunicationandelec
293、tricalfailures.Accordingly,ifourcybersecuritymeasuresorthoseofourserviceprovidersfailtoprotectagainstunauthorizedaccess,attacks(whichmayincludesophisticatedcyberattacks),compromiseorthemishandlingofdatabyouremployeesandcontractors,thenourreputation,customertrust,business,resultsofoperationsandfinanc
294、ialconditioncouldbeadverselyaffected.Cyberincidentshavebeenincreasinginsophisticationandfrequencyandcanincludethirdpartiesgainingaccesstoemployeeorcustomerdatausingstolenorinferredcredentials,computermalware,viruses,spamming,phishingattacks,ransomware,cardskimmingcode,andotherdeliberateattacksandatt
295、emptstogainunauthorizedaccess.Thetechniquesusedtosabotageortoobtainunauthorizedaccesstoourplatform,systems,networks,orphysicalfacilitiesinwhichdataisstoredorthroughwhichdataistransmittedchangefrequently,andwemaybeunabletoimplementadequatepreventativemeasuresorstopsecuritybreacheswhiletheyareoccurrin
296、g.Becausethetechniquesusedbythreatactorswhomayattempttopenetrateandsabotageourcomputersystemschangefrequentlyandmaynotberecognizeduntillaunchedagainstatarget,wemaybeunabletoanticipatethesetechniques.Additionally,duringtheongoingpandemic,andpotentiallybeyondasremoteworkandresourceaccessexpand,thereis
297、anincreasedriskthatwemayexperiencecybersecurity-relatedeventssuchasCOVID-19themedphishingattacks,exploitationofanycybersecurityflawsthatmayexist,anincreaseinthenumberofcybersecuritythreatsorattacks,andothersecuritychallengesasaresultofmostofouremployeesandourserviceproviderscontinuingtoworkremotelyf
298、romnon-corporatemanagednetworks.Wehavepreviouslybeen,andmayinthefuturebecome,thetargetofcyber-attacksbythirdpartiesseekingunauthorizedaccesstoourorourcustomersdataortodisruptouroperationsorabilitytoprovideourservices.Additionally,itisalsopossiblethatunauthorizedaccesstosensitivecustomerandbusinessda
299、tamaybeobtainedthroughinadequateuseofsecuritycontrolsbyourcustomers,suppliersorothervendors.WhilewearenotcurrentlyawareofanymaterialimpactthattheSolarWinds,Log4j,Kaseya,orotherrecentsupplychainattackshadonourbusiness,newinformationonthescopeofsuchattacksiscontinuingtoemergeandthereisaresidualrisktha
300、twemayexperienceasecuritybreacharisingfromoneofthese,orasimilar,supplychainattackinthefuture.Supplychainattacksarebecomingincreasinglycommon,andwemaynotbeabletoanticipateandpreventnegativeimpactsfromsuchanattack.Ifweareimpactedbyasupplychainattack,wecouldincurliability,ourcompetitivepositioncouldbeh
301、armedandthefurtherdevelopmentandcommercializationofourproductandservicescouldbehinderedordelayed.Recenthigh-profilesecuritybreachesandrelateddisclosuresofsensitivedatabylargeinstitutionssuggestthattheriskofsucheventsissignificant,evenifprivacyprotectionandsecuritymeasuresareimplementedandenforced.If
302、weweretoexperienceacyberattackandsufferinterruptionsinouroperations,itcouldresultinamaterialdisruptionofourdevelopmentprogramsandourbusinessoperations,whetherduetoalossofourtradesecretsorotherproprietaryinformationorotherdisruptions.Thesecyberattackscouldbecarriedoutbythreatactorsofalltypes(includin
303、gbutnotlimitedtonationstates,organizedcrime,othercriminalenterprises,individualactorsand/oradvancedpersistentthreatgroups).Inaddition,wemayexperienceintrusionsonourphysicalpremisesbyanyofthesethreatactors.Totheextentthatanydisruptionorsecuritybreachweretoresultinalossof,ordamageto,ourdataorapplicati
304、ons,orinappropriatedisclosureofconfidentialorproprietaryinformation,wecouldincurliability,incursignificantcostsassociatedwithremediationandtheimplementationofadditionalsecuritymeasures,includingcoststodeployadditionalpersonnelandprotectiontechnologies,trainemployees,andengagethird-partyexpertsandcon
305、sultants,andourcompetitivepositioncouldbeharmed.Anybreach,loss,orcompromiseofpersonaldatamayalsosubjectustocivilfinesandpenalties,orclaimsfordamageseitherundertheGeneralDataProtectionRegulation(the“GDPR”)andrelevantmemberstatelawintheEuropeanUnion,otherforeignlaws,andotherrelevantstateandfederalpriv
306、acylawsintheUnitedStates.21Manygovernmentshaveenactedlawsrequiringcompaniestonotifyindividualsofdatasecurityincidentsorunauthorizedtransfersinvolvingcertaintypesofpersonaldata.Inaddition,thedataprocessingagreementweexecutewithourcustomerscontractuallyrequiresustonotifythemofanypersonaldatabreach.Und
307、erpaymentcardnetworkrulesandourcontractswithourpaymentprocessors,ifthereisabreachofpaymentcardinformationthatwestore,orthatisstoredbyourdirectpaymentcardprocessingvendors,wecouldbeliabletothepaymentcardissuingbanksfortheircostofissuingnewcardsandrelatedexpenses.Databreachesandotherdatasecuritycompro
308、misesexperiencedbyourcompetitors,byourcustomersorbyusmayleadtopublicdisclosures,whichmayleadtowidespreadnegativepublicity.Anysecuritycompromiseinourindustry,whetheractualorperceived,couldharmourreputation,erodecustomerconfidenceintheeffectivenessofoursecuritymeasures,negativelyimpactourabilitytoattr
309、actnewcustomers,causeexistingcustomerstoelectnottorenewtheirsubscriptionsorsubjectustothird-partylawsuits,regulatoryfinesorotheractionorliability,whichcouldmateriallyandadverselyaffectourbusinessandoperatingresults.Therecanbenoassurancethatanylimitationsofliabilityprovisionsinourcontractsforasecurit
310、ybreachwouldbeenforceableoradequateorwouldotherwiseprotectusfromanysuchliabilitiesordamageswithrespecttoanyparticularclaim.Wealsocannotbesurethatourexistinggeneralliabilityinsurancecoverageandcoverageforerrorsoromissionswillcontinuetobeavailableonacceptabletermsorwillbeavailableinsufficientamountsto
311、coveroneormorelargeclaims,orthattheinsurerwillnotdenycoverageastoanyfutureclaim.Thesuccessfulassertionofoneormorelargeclaimsagainstusthatexceedavailableinsurancecoverage,ortheoccurrenceofchangesinourinsurancepolicies,includingpremiumincreasesortheimpositionoflargedeductibleorco-insurancerequirements
312、,couldhaveamaterialadverseeffectonourbusiness,financialconditionandoperatingresults.Risks Related to Intellectual PropertyOur business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others.Thesoftwareindustryischaracterizedbytheexistenceof
313、alargenumberofpatents,copyrights,trademarks,tradesecretsandotherintellectualandproprietaryrights.Companiesinthesoftwareindustry,includingthoseinmarketingsoftware,areoftenrequiredtodefendagainstlitigationclaimsbasedonallegationsofinfringementorotherviolationsofintellectualpropertyrights.Manyofourcomp
314、etitorsandotherindustryparticipantshavebeenissuedpatentsand/orhavefiledpatentapplicationsandmayassertpatentorotherintellectualpropertyrightswithintheindustry.Moreover,inrecentyears,individualsandgroupsthatarenon-practicingentities,commonlyreferredtoas“patenttrolls,”havepurchasedpatentsandotherintell
315、ectualpropertyassetsforthepurposeofmakingclaimsofinfringementinordertoextractsettlements.Fromtimetotime,wemayreceivethreateninglettersornoticesormaybethesubjectofclaimsthatourservicesand/orplatformandunderlyingtechnologyinfringeorviolatetheintellectualpropertyrightsofothers.Respondingtosuchclaims,re
316、gardlessoftheirmerit,canbetimeconsuming,costlytodefendinlitigation,divertmanagementsattentionandresources,damageourreputationandbrandandcauseustoincursignificantexpenses.Ourtechnologiesmaynotbeabletowithstandanythird-partyclaimsorrightsagainsttheiruse.Claimsofintellectualpropertyinfringementmightreq
317、uireustoredesignourapplication,delayreleases,enterintocostlysettlementorlicenseagreementsorpaycostlydamageawards,orfaceatemporaryorpermanentinjunctionprohibitingusfrommarketingorsellingourplatform.Ifwecannotordonotlicensetheinfringedtechnologyonreasonabletermsoratall,orsubstitutesimilartechnologyfro
318、manothersource,ourrevenueandoperatingresultscouldbeadverselyimpacted.Additionally,ourcustomersmaynotpurchaseourCRMPlatformiftheyareconcernedthattheymayinfringethird-partyintellectualpropertyrights.Theoccurrenceofanyoftheseeventsmayhaveamaterialadverseeffectonourbusiness.Inoursubscriptionagreementswi
319、thourcustomers,wegenerallydonotagreetoindemnifyourcustomersagainstanylossesorcostsincurredinconnectionwithclaimsbyathirdpartyallegingthatacustomersuseofourservicesorplatforminfringestheintellectualpropertyrightsofthethirdparty.Therecanbenoassurance,however,thatcustomerswillnotassertacommonlawindemni
320、tyclaimorthatanyexistinglimitationsofliabilityprovisionsinourcontractswouldbeenforceableoradequate,orwouldotherwiseprotectusfromanysuchliabilitiesordamageswithrespecttoanyparticularclaim.Ourcustomerswhoareaccusedofintellectualpropertyinfringementmayinthefutureseekindemnificationfromusundercommonlawo
321、rotherlegaltheories.Ifsuchclaimsaresuccessful,orifwearerequiredtoindemnifyordefendourcustomersfromtheseorotherclaims,thesematterscouldbedisruptivetoourbusinessandmanagementandhaveamaterialadverseeffectonourbusiness,operatingresultsandfinancialcondition.If we fail to adequately protect our proprietar
322、y rights,in the United States and abroad,our competitive position could be impaired and we may lose valuable assets,experience reduced revenue and incur costly litigation to protect our rights.Oursuccessisdependent,inpart,uponprotectingourproprietarytechnology.Werelyonacombinationofcopyrights,tradem
323、arks,servicemarks,tradesecretlawsandcontractualrestrictionstoestablishandprotectourproprietaryrightsinourproductsandservices.However,thestepswetaketoprotectourintellectualpropertymaybeinadequate.Wewillnotbeabletoprotectourintellectualpropertyifweareunabletoenforceourrightsorifwedonotdetectunauthoriz
324、eduseofourintellectualproperty.Anyofourtrademarksorotherintellectualpropertyrightsmaybechallengedbyothersorinvalidatedthroughadministrativeprocessorlitigation.Furthermore,legalstandardsrelatingtothevalidity,enforceabilityandscopeofprotectionofintellectualpropertyrightsareuncertain.Despiteourprecauti
325、ons,itmaybepossibleforunauthorizedthirdpartiestocopyourtechnologyanduseinformationthat22weregardasproprietarytocreateproductsandservicesthatcompetewithours.Somelicenseprovisionsprotectingagainstunauthorizeduse,copying,transferanddisclosureofourofferingsmaybeunenforceableunderthelawsofcertainjurisdic
326、tionsandforeigncountries.Inaddition,thelawsofsomecountriesdonotprotectproprietaryrightstothesameextentasthelawsoftheUnitedStates.Totheextentweexpandourinternationalactivities,ourexposuretounauthorizedcopyinganduseofourtechnologyandproprietaryinformationmayincrease.Weenterintoconfidentialityandinvent
327、ionassignmentagreementswithouremployeesandconsultantsandenterintoconfidentialityagreementswiththepartieswithwhomwehavestrategicrelationshipsandbusinessalliances.Noassurancecanbegiventhattheseagreementswillbeeffectiveincontrollingaccesstoanddistributionofourproductsandproprietaryinformation.Further,t
328、heseagreementsmaynotpreventourcompetitorsfromindependentlydevelopingtechnologiesthataresubstantiallyequivalentorsuperiortoourplatformandofferings.Wemayberequiredtospendsignificantresourcestomonitorandprotectourintellectualpropertyrights.Litigationmaybenecessaryinthefuturetoenforceourintellectualprop
329、ertyrightsandtoprotectourtradesecrets.Suchlitigationcouldbecostly,timeconsuminganddistractingtomanagementandcouldresultintheimpairmentorlossofportionsofourintellectualproperty.Furthermore,oureffortstoenforceourintellectualpropertyrightsmaybemetwithdefenses,counterclaimsandcountersuitsattackingtheval
330、idityandenforceabilityofourintellectualpropertyrights.Ourinabilitytoprotectourproprietarytechnologyagainstunauthorizedcopyingoruse,aswellasanycostlylitigation,coulddelayfurthersalesortheimplementationofourplatformandofferings,impairthefunctionalityofourplatformandofferings,delayintroductionsofnewfea
331、turesorenhancements,resultinoursubstitutinginferiorormorecostlytechnologiesintoourplatformandofferings,orinjureourreputation.Our use of“open source”software could negatively affect our ability to offer our platform and subject us to possible litigation.Asubstantialportionofourcloud-basedplatforminco
332、rporatesso-called“opensource”software,andwemayincorporateadditionalopensourcesoftwareinthefuture.Opensourcesoftwareisgenerallyfreelyaccessible,usableandmodifiable.Certainopensourcelicensesmay,incertaincircumstances,requireustoofferthecomponentsofourplatformthatincorporatetheopensourcesoftwarefornoco
333、st,thatwemakeavailablesourcecodeformodificationsorderivativeworkswecreatebasedupon,incorporatingorusingtheopensourcesoftwareandthatwelicensesuchmodificationsorderivativeworksunderthetermsoftheparticularopensourcelicense.Ifanauthororotherthirdpartythatdistributesopensourcesoftwareweuseweretoallegethatwehadnotcompliedwiththeconditionsofoneormoreoftheselicenses,wecouldberequiredtoincursignificantlega
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