1、HUBSPOT INCFORM 10-K(Annual Report)Filed 02/12/19 for the Period Ending 12/31/18 Address25 FIRST STREET2ND FLOORCAMBRIDGE,MA,02141Telephone(888)482-7768CIK0001404655SymbolHUBSSIC Code7372-Services-Prepackaged SoftwareIndustrySoftwareSectorTechnologyFiscal Year12/31http:/www.edgar- Copyright 2019,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 31,2018ORTRANSITION 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 registra
4、nt as specified in its charter)Delaware 20-2632791(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 class Name of each exchange on which registeredCommon Stock,par value$0.001 per share New York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:None.Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,as
6、definedinRule405oftheSecuritiesAct.YESNOIndicatebycheckmarkwhethertheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YESNOIndicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12m
7、onths(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YESNOIndicatebycheckmarkwhethertheregistranthassubmittedeveryInteractiveDatafilerequiredtobesubmittedpursuanttoRule405ofRegulationS-T(232.405ofthischapter)duringthe
8、preceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).YESNOIndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationS-Kisnotcontainedherein,andwillnotbecontained,tothebestofregistrantsknowledge,indefinitiveproxyorinformationstatementsincorporated
9、byreferenceinPartIIIofthisForm10-KoranyamendmenttothisForm10-K.Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,smallerreportingcompany,oranemerginggrowthcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler,”“smallerreportingcom
10、pany,”and“emerginggrowthcompany”inRule12b-2oftheExchangeAct.(Checkone):Largeacceleratedfiler Acceleratedfiler Non-acceleratedfiler Smallerreportingcompany Emerginggrowthcompany Ifanemerginggrowthcompany,indicatebycheckmarkiftheRegistranthaselectednottousetheextendedtransitionperiodforcomplyingwithan
11、yneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).YESNOTheaggregatemarketvalueofcommonstockheldbynon-affiliatesoftheregistrant,basedontheclosingpriceoftheregistrantscomm
12、onstockonJune30,2018,asreportedbytheNewYorkStockExchangeonsuchdatewasapproximately$4,536,600,064.Sharesoftheregistrantscommonstockheldbyeachexecutiveofficer,directorandholderof5%ormoreoftheoutstandingcommonstockhavebeenexcludedinthatsuchpersonsmaybedeemedtobeaffiliates.Thiscalculationdoesnotreflecta
13、determinationthatcertainpersonsareaffiliatesoftheregistrantforanyotherpurpose.OnFebruary11,2019,theregistranthad39,613,020sharesofcommonstockoutstanding.DOCUMENTS INCORPORATED BY REFERENCEPortionsoftheregistrantsdefinitiveProxyStatementforits2019AnnualMeetingofStockholdersareincorporatedbyreferencei
14、nPartIIIofthisAnnualReportonForm10-K.SuchProxyStatementwillbefiledwiththeU.S.SecuritiesandExchangeCommissionwithin120daysaftertheendofthefiscalyeartowhichthisreportrelates.ExceptwithrespecttoinformationspecificallyincorporatedbyreferenceinthisForm10-K,theProxyStatementisnotdeemedtobefiledaspartofthi
15、sForm10-K.HUBSPOT,INC.TABLE OF CONTENTS Page No.PART I ITEM1.Business3ITEM1A.RiskFactors9ITEM1B.UnresolvedStaffComments28ITEM2.Properties28ITEM3.LegalProceedings28ITEM4.MineSafetyDisclosures28PART II ITEM5.MarketforRegistrantsCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities
16、29ITEM6.SelectedFinancialData30ITEM7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations33ITEM7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk50ITEM8.FinancialStatementsandSupplementaryData51ITEM9.ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosur
17、es81ITEM9A.ControlsandProcedures81ITEM9B.OtherInformation82PART III ITEM10.Directors,ExecutiveOfficersandCorporateGovernance83ITEM11.ExecutiveCompensation83ITEM12.SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters83ITEM13.CertainRelationshipsandRelatedTransactions,an
18、dDirectorIndependence83ITEM14.PrincipalAccountingFeesandServices83PART IV ITEM15.Exhibits,FinancialStatementSchedules84ITEM16.10-KSummary84SIGNATURES87iSPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThisAnnualReportonForm10-Kcontainsforward-lookingstatementswithinthemeaningofSection27AoftheSecurit
19、iesActof1933,asamended,andSection21EoftheSecuritiesExchangeActof1934,asamended,andthesestatementsinvolvesubstantialrisksanduncertainties.AllstatementsotherthanstatementsofhistoricalfactcontainedinthisAnnualReportonForm10-Kareforward-lookingstatements.Forward-lookingstatementsgenerallyrelatetofuturee
20、ventsorourfuturefinancialoroperatingperformance.Insomecases,youcanidentifyforward-lookingstatementsbecausetheycontainwordssuchas“may,”“should,”“expects,”“plans,”“anticipates,”“could,”“intends,”“target,”“projects,”“contemplates,”“believes,”“estimates,”“predicts,”“potential”or“continue”orthenegativeof
21、thesewordsorothersimilartermsorexpressionsthatconcernourexpectations,strategy,plansorintentions.Forward-lookingstatementscontainedinthisAnnualReportonForm10-Kinclude,butarenotlimitedto,statementsabout:ourfuturefinancialperformance,includingourexpectationsregardingourrevenue,costofrevenue,grossmargin
22、andoperatingexpenses;maintainingandexpandingourcustomerbaseandincreasingouraveragesubscriptionrevenuepercustomer;theimpactofcompetitioninourindustryandinnovationbyourcompetitors;ouranticipatedgrowthandexpectationsregardingourabilitytomanageourfuturegrowth;ouranticipatedareasofinvestments,includingsa
23、lesandmarketing,researchanddevelopment,customerserviceandsupport,datacenterinfrastructureandservicecapabilities,andexpectationsrelatingtosuchinvestments;ourpredictionsaboutindustryandmarkettrends;ourabilitytoanticipateandaddresstheevolutionoftechnologyandthetechnologicalneedsofourcustomers,toroll-ou
24、tupgradestoourexistingsoftwareplatformandtodevelopnewandenhancedapplicationstomeettheneedsofourcustomers;ourabilitytomaintainourbrandandinboundmarketing,sellingandservicingthoughtleadershipposition;theimpactofourcorporatecultureandourabilitytoattract,hireandretainnecessaryqualifiedemployeestoexpando
25、uroperations;theanticipatedeffectonourbusinessoflitigationtowhichweareormaybecomeaparty;ourabilitytosuccessfullyacquireandintegratecompaniesandassets;theU.S.federaltaxconsequencesduetodividendsreceivedaspartofthemovetoaterritorialtaxsystemforforeignsubsidiaryearnings;ourplansregardingdeclaringorpayi
26、ngcashdividendsintheforeseeablefuture;andourabilitytostayabreastofnewormodifiedlawsandregulationsthatcurrentlyapplyorbecomeapplicabletoourbusinessbothintheUnitedStatesandinternationally.1Wecautionyouthattheforegoinglistmaynotcontainalloftheforward-lookingstatementsmadeinthisAnnualReportonForm10-K.Yo
27、ushouldnotrelyuponforward-lookingstatementsaspredictionsoffutureevents.Wehavebasedtheforward-lookingstatementscontainedinthisAnnualReportonForm10-Kprimarilyonourcurrentexpectationsandprojectionsaboutfutureeventsandtrendsthatwebelievemayaffectourbusiness,financialcondition,resultsofoperationsandprosp
28、ects.Theoutcomeoftheeventsdescribedintheseforward-lookingstatementsissubjecttorisks,uncertaintiesandotherfactorsdescribedin“RiskFactors”andelsewhereinthisAnnualReportonForm10-K.Moreover,weoperateinaverycompetitiveandrapidlychangingenvironment.Newrisksanduncertaintiesemergefromtimetotime,anditisnotpo
29、ssibleforustopredictallrisksanduncertaintiesthatcouldhaveanimpactontheforward-lookingstatementscontainedinthisAnnualReportonForm10-K.Theresults,eventsandcircumstancesreflectedintheforward-lookingstatementsmaynotbeachievedoroccur,andactualresults,eventsorcircumstancescoulddiffermateriallyfromthosedes
30、cribedintheforward-lookingstatements.Theforward-lookingstatementsmadeinthisAnnualReportonForm10-Krelateonlytoeventsasofthedateonwhichthestatementsaremade.Weundertakenoobligationtoupdateanyforward-lookingstatementsmadeinthisAnnualReportonForm10-KtoreflecteventsorcircumstancesafterthedateofthisAnnualR
31、eportonForm10-Kortoreflectnewinformationortheoccurrenceofunanticipatedevents,exceptasrequiredbylaw.Wemaynotactuallyachievetheplans,intentionsorexpectationsdisclosedinourforward-lookingstatementsandyoushouldnotplaceunduerelianceonourforward-lookingstatements.Ourforward-lookingstatementsdonotreflectth
32、epotentialimpactofanyfutureacquisitions,mergers,dispositions,jointventuresorinvestmentswemaymake.InthisAnnualReportonForm10-K,theterms“HubSpot,”“we,”“us,”and“our”refertoHubSpot,Inc.anditssubsidiaries,unlessthecontextindicatesotherwise.2PART 1ITEM I.BUSINESSOverview Weprovideacloud-basedmarketing,sal
33、es,andcustomerservicesoftwareplatform,whichwerefertointhisdocumentasourGrowthPlatform,thatenablesbusinessestogrowbetter.AtHubSpot,werecommittedtohelpingourcustomersgrowbetter,whichmeanshelpingthemgrowwithoutcompromise,alwayssolvingforthecustomer,andcreatingabetterexperienceforcustomersandcompanyalik
34、e.Tothatend,ourGrowthPlatform,comprisedofMarketingHub,SalesHub,ServiceHub,andafreecustomerrelationshipmanagement,orCRMsystem,featuresintegratedapplicationsandtoolsthatenablebusinessestocreatearelevantandcohesivecustomerexperiencethroughoutthecustomerlifecycle.Wefocusonsellingtomid-marketbusiness-to-
35、business,orB2B,companies,whichwedefineascompaniesthathavebetween2and2,000employees.WesellourGrowthPlatformonasubscriptionbasis.In2018,ourtotalrevenuewas$513.0million,andweincurrednetlossesof$63.8million.AsofDecember31,2018,wehad2,638full-timeemployeesand56,628totalcustomersofvaryingsizesinmorethan10
36、0countries.OurcompanywasformedasalimitedliabilitycompanyinDelawareonApril4,2005.WeconvertedtoaDelawarecorporationonJune7,2007.Ourprincipalexecutiveofficesarelocatedat25FirstStreet,Cambridge,Massachusetts,andourmaintelephonenumberis888-482-7768.Ourwebsiteaddressishttps:/.Informationcontainedonorthatc
37、anbeaccessedthroughourwebsitedoesnotconstitutepartofthisAnnualReportonForm10-K,andinclusionsofourwebsiteaddressinthisAnnualReportonForm10-Kareinactivetextualreferencesonly.The HubSpot ApproachWeprovideourGrowthPlatformtoenablebusinessestoattract,engage,anddelightcustomersthroughoutthecustomerlifecyc
38、le.OurGrowthPlatformfeaturesacentraldatabaseofleadandcustomerinteractionsandintegratedapplicationstohelpbusinessesattractvisitorstotheirwebsites,convertvisitorsintoleads,closeleadsintocustomers,anddelightcustomerssotheybecomepromotersofthosebusinesses.Designed to Help Companies Grow Better.OurGrowth
39、Platformwasarchitectedfromthegrounduptoenablebusinessestotransformtheirmarketing,sales,andservicesplaybooktomeetthedemandsoftodayscustomers.OurGrowthPlatformincludesintegratedapplicationsandtoolsthathelpbusinessesefficientlyattractmorecustomersthroughsearchengineoptimization,socialmedia,blogging,mar
40、ketingautomation,andotherusefulcontent.Inaddition,ourGrowthPlatformisdesignedtohelpbusinessespersonalizeandoptimizeinteractionswiththeircustomersthroughwebsitecontentmanagement,messaging,chatbots,landingpages,ticketing,knowledgebaseandemails.Ease of Use of an Expansible Platform.Weprovideasetofinteg
41、ratedapplicationsonacommonplatform,whichoffersbusinesseseaseofuseandsimplicity.OurGrowthPlatformhasonelogin,oneuserinterface,oneinbounddatabase,andoneteamforsupport.OurGrowthPlatformisdesignedtobeusedbypeoplewithouttechnicaltraining,doesnotrequireanexpertortechnicalsystemadministrator,andwasbuilttom
42、akeiteasytogetstarted.Inadditiontobeingacomprehensivesuiteitself,ourGrowthPlatformseamlesslyintegrateswithhundredsofexternalapplications,makingiteasytoextendthefunctionalityofourGrowthPlatformandcustomizeitforanybusiness.Power of a Unified Customer View.AtthecoreofourGrowthPlatformisasingleCRMdataba
43、seforeachbusinessthatcapturesitsleadandcustomeractivitythroughoutthecustomerlifecycle.OurGrowthPlatformcreatesaunifiedtimelineincorporatingalltheinteractionswithaparticularcustomer.WithourConversationstool,ourGrowthPlatformalsocentralizesallconversationsinauniversalinboxthatgivessales,marketing,andc
44、ustomerserviceteamsoneplacetoview,manage,andreplytoallconversationsregardlessofthemessagingchanneltheycamefrom.Scalability.OurGrowthPlatformwasdesignedandbuilttoservealargenumberofcustomersandwithdemandingusecases.OurGrowthPlatformcurrentlyprocessesbillionsofdatapointseachweek,andweuseleadingglobalc
45、loudinfrastructureprovidersandourownautomationtechnologytodynamicallyallocatecapacitytohandleprocessingworkloadsofallsizes.WehavebuiltourGrowthPlatformonmoderntechnologies,includingHBase,Kafka,andElasticSearch,whichwebelievearemorescalablethantraditionaldatabasetechnologies.Ourscalabilitygivesusflex
46、ibilityforfuturegrowthandenablesustoservicealargevarietyofbusinessesofdifferentsizesacrossdifferentindustries.3Extendable and Open Architecture.OurGrowthPlatformfeaturesavarietyofopenAPIsthatallowseasyintegrationofourplatformwithotherapplications.Weenableourcustomerstoconnectourplatformtotheirothera
47、pplications,suchasecommerce,eventmanagementandvideoconferencingapplications.Byconnectingthird-partyapplications,ourcustomerscanleverageourcentralizedinbounddatabasetoperformadditionalfunctionsandanalysis.Our Competitive StrengthsWebelievethatourmarketleadershippositionisbasedonthefollowingkeystrengt
48、hs:Leading Platform.Wehavedesignedandbuiltaworld-classGrowthPlatform.WebelieveourcustomerschooseourGrowthPlatformoverothersbecauseofitspowerful,integrated,andeasy-to-useapplications.Market Leadership and Strong Brand.Wearearecognizedthoughtleaderinthecloud-basedmarketing,sales,andcustomerservicesoft
49、wareindustrywithaleadingbrand.Ourfounders,BrianHalliganandDharmeshShah,wrotethebest-sellingmarketingbookInbound Marketing:Get Found Using Google,SocialMedia and Blogs.Aninboundmarketing,sales,andserviceexperienceattracts,engages,anddelightscustomersbybeingmorerelevant,morehelpful,morepersonalized,an
50、dlessinterruptivethantraditionalmarketingandsalestactics.OurINBOUNDconferenceisoneofthelargestinboundindustryconferenceeventswithregisteredattendanceincreasingfrom1,100in2011toover24,000in2018.Large and Growing Partner Program.Thousandsofagenciesandconsultantsworldwide,whichwerefertoasourPartners,pr
51、omoteourbrandandofferourGrowthPlatformtotheirclients.PartnersandcustomersreferredtousbyourPartnersrepresentedapproximately36%ofourTotalCustomers,asdefinedinourKeyBusinessMetricsinItem7,asofDecember31,2018,andapproximately40%ofourrevenuefortheyearendedDecember31,2018.ThesePartnershelpustopromotethevi
52、sionoftheinboundexperience,efficientlyreachnewmid-marketbusinessesatscale,andprovideourmutualcustomerswithmorediverseandhigher-touchservices.Mid-Market Focus.Webelievewehavesignificantcompetitiveadvantagesreachingmid-marketbusinessesandefficientlyreachthismarketatscaleasaresultofourinboundmethodolog
53、y,freemiumpricingstrategy,andourPartnerchannel.Throughourfreemiumproducts,ourcustomersareabletoreceivevaluefromHubSpotbeforeconvertingtoapaidproductorengagingwithsales.Powerful Network Effects.WehavebuiltalargeandgrowingecosystemaroundourGrowthPlatformandcompany.Thousandsofourcustomersintegratethird
54、-partyapplicationswithourGrowthPlatform.Webelievethisecosystemdrivesmorebusinessesandprofessionalstoembracetheinboundplaybook.Asourengagedaudiencegrows,morePartnerscollaboratewithus,morethird-partydevelopersintegratetheirapplicationswithourGrowthPlatform,andmoreprofessionalscompleteourcertificationp
55、rograms,allofwhichhelptodrivemorebusinessestoadoptourGrowthPlatform.Our Growth StrategyThekeyelementstoourgrowthstrategyare:Grow Our Customer Base.ThemarketforourGrowthPlatformislargeandunderserved.Mid-marketbusinessesareparticularlyunderservedbyexistingpointapplicationvendorsandoftenlacksufficientr
56、esourcestoimplementcomplexsolutions.Ourall-in-oneGrowthPlatformallowsmid-marketbusinessestoefficientlyadoptandexecuteaneffectiveinboundmarketing,sales,andcustomerservicestrategytohelpthemexpandandgrow.Wewillcontinuetoleverageourinboundgo-to-marketapproach,freemiumpricingstrategyandournetworkofPartne
57、rstokeepgrowingourbusiness.Increase Revenue from Existing Customers.With56,628TotalCustomersinmorethan100countriesspanningmanyindustries,webelievewehaveasignificantopportunitytoincreaserevenuefromourexistingcustomers.WeplantoincreaserevenuefromourexistingcustomersbyexpandingtheiruseofourGrowthPlatfo
58、rmbyupsellingadditionalofferingsandfeatures,addingadditionalusers,andcross-sellingourmarketing,sales,andserviceproductstoexistingcustomersthroughtouchlessorlowtouchin-productpurchases.Ourscalablepricingmodelallowsustocapturemorespendasourcustomersgrow,increasethenumberoftheircustomersandprospectsman
59、agedonourGrowthPlatform,andofferadditionalfunctionalityavailablefromourhigherpricetiersandadd-ons,providinguswithasubstantialopportunitytoincreasethelifetimevalueofourcustomerrelationships.Keep Expanding Internationally.ThereisasignificantopportunityforourGrowthPlatformoutsideoftheUnitedStates.AsofD
60、ecember31,2018,approximately43%ofourTotalCustomerswerelocatedoutsideoftheUnitedStatesandthesecustomersgeneratedapproximately37%ofourtotalrevenuefortheyearendedDecember31,2018.WeselltothoseinternationalcustomersfromourU.S.,European,AsiaPacific,andSouthAmericanbasedoperations.Weintendtogrowourpresence
61、ininternationalmarketsthroughadditionalinvestmentsinlocalsales,marketingandprofessionalservicecapabilities,aswellasbyleveragingourPartnernetwork.Wehaveopenedsixinternationalofficesandplantoopenadditionalinternationaloffices.WealreadyhavesignificantwebsitetrafficfromregionsoutsidetheUnitedStates,andw
62、ebelievethatmarketsoutsidetheUnitedStatesrepresentasignificantgrowthopportunity.4Continue to Innovate and Expand Our Growth Platform.Mid-marketbusinessesareincreasinglyrealizingthevalueofhavinganintegratedmarketing,sales,andcustomerserviceplatform.Webelievewearewellpositionedtocapitalizeonthisopport
63、unitybyintroducingnewproductsandapplicationstoextendthefunctionalityofourGrowthPlatform.Forexample,in2018weannouncedtheavailabilityofnewSalesHubEnterpriseandServiceHubofferings,aswellasnumerousupdatestoourMarketingHubStarterandMarketingHubEnterpriseproducts.Selectively Pursue Acquisitions.Weplantose
64、lectivelypursueacquisitionsofcomplementarybusinesses,technologiesandteamsthatwouldallowustoaddnewfeaturesandfunctionalitiestoourplatformandacceleratethepaceofourinnovation.Our Growth PlatformOurGrowthPlatform,comprisedofMarketingHub,SalesHub,ServiceHub,andafreeCRM,featuresintegratedapplicationsandto
65、olsthatenablecompaniestocreateacohesiveandadaptablecustomerexperience.EachHubcanbeusedstandaloneorinconjunctionwiththeotherHubs.OurHubsareavailableinbothfreeandpaidtiers(i.e.,Starter,ProfessionalandEnterprise)withgraduallyincreasinglevelsoffunctionalitythatsupporttheneedsofourcustomersastheyseesucce
66、sswithourtoolsandtheirbusinessesgrow.HubSpot CRMThecoreofourGrowthPlatform,theHubSpotCRM,isasingledatabaseofleadandcustomerinformationthatallowsbusinessestotracktheirinteractionswithcontactsandcustomers,managetheirsalesactivities,andreportontheirpipelineandsales.Thisallowsacompleteviewofleadandcusto
67、merinteractionsacrossallofourintegratedapplications,givingourGrowthPlatformsubstantialpower.Thisintegrationmakesitpossibletopersonalizeeveryaspectofthecustomerinteractionacrosswebcontent,socialmediaengagement,andemailmessagesacrossdevices,includingmobile.TheintegratedapplicationsonourGrowthPlatformh
68、aveacommonuserinterface,areaccessedthroughasinglelogin,andarebasedonourCRMdatabase.HubSpotCRMisafreeproductthatcanbeusedstandalone,orwithanycombinationofMarketingHub,SalesHub,and/orServiceHub.Marketing HubMarketingHubisanall-in-onetoolsetformarketerstoattract,engage,andnurturenewleadstowardssalesrea
69、dinessovertheentirecustomerlifecycle.MarketingHubisavailableinbothfreeandpaidtiers,andcanbeusedstandalone,withHubSpotCRM,and/oranyversionofSalesHuborServiceHub.Featuresinclude:marketingautomationandemail,socialmedia,searchengineoptimization(SEO),CRMSync,andreportingandanalytics.Sales HubWedesignedSa
70、lesHubtoenhancetheproductivityandeffectivenessofsalesteams.Businessescanempowertheirteamswithtoolsthatdeliverapersonalizedexperienceforprospectswithlessworkforsalesrepresentatives.SalesHubisavailableinbothfreeandpaidtiers,andcanbeusedwithHubSpotCRM,athirdpartyCRMsystem,and/oranyversionofMarketingHub
71、orServiceHub.Featuresinclude:emailtemplatesandtracking,conversationsandlivechat,meetingandcallscheduling,leadandwebsitevisitalerts,salesautomation,andleadscoring.5Service HubServiceHubisourcustomerservicesoftwarethatisdesignedtohelpbusinessesmanageandconnectwithcustomers.ServiceHubisavailableinfreea
72、ndpaidtiers,andcanbeusedstandalone,withHubSpotCRMFree,and/oranyversionofMarketingHuborSalesHub.Featuresinclude:conversationsandlivechatfunctionality,conversationalbots,ticketsandhelpdesk,automationandrouting,knowledgebase,teamemails,feedbackandreportingtools,andcustomergoals.HubSpot CMSHubSpotCMScom
73、binesthepowerofcontentrelationshipmanagementandacontentmanagementsystemintooneintegratedplatform.Ourcontenttoolsenablebusinessestocreatenewandeditexistingwebcontentwhilealsopersonalizingtheirwebsitesfordifferentvisitorsandoptimizingtheirwebsitestoconvertmorevisitorsintoleadsandcustomers.HubSpotCMSca
74、nbepurchasedasastandaloneproductand/orwithanyversionofMarketingHub,SalesHub,orServiceHub.Featuresinclude:websitepages,businessblogging,smartcontent,landingpagesandforms,SEOtools,formsandleadflow,webanalyticsreporting,calls-to-action,andfilemanager.Platform PartnersBusinessesthatusesoftwareoutsideofH
75、ubSpotcanleverageourecosystemofcertifiedthird-partyintegrations.WemakeiteasytofindandinstallneworexistingsoftwaresolutionsthatcomplementourGrowthPlatform.Over200certifiedintegrationsareavailableforourusers,acrossawiderangeofcategories,includingintegrationswithleadingsocialmedia,email,sales,video,ana
76、lytics,contentandwebinartools.Our ServicesWecomplementourproductofferingswithprofessionalservicesandsupport.Themajorityofourservicesandsupportisofferedoverthephoneandviawebmeetingtechnologyratherthanin-person,whichisamoreefficientbusinessmodelforusandmorecost-effectiveforourcustomers.Professional Se
77、rvices.WeofferprofessionalservicestoeducateandtraincustomersonhowtoleverageourGrowthPlatformandinboundmethodologytotransformhowtheirbusinessattracts,engagesanddelightscustomers.Dependingonwhichproductplanandprofessionalservicesacustomerbuys,theyreceiveone-on-onetrainingandadvicefromoneofourimplement
78、ationspecialistsbyphoneandwebmeetingandcanpurchaseadditionalgrouptrainingandeducationinonlineorin-personclasses.Ourprofessionalservicesarealsoavailabletocustomerswhoneedadditionalassistanceonaone-timeorongoingbasisforanadditionalfee.Support.Inadditiontoassistanceprovidedbyouronlinearticlesandcustome
79、rdiscussionforums,weofferphoneand/oremailandchatbasedsupport,whichisincludedinthecostofasubscriptionforourMarketing,Sales,andServiceHubproducts.PhonesupportisavailablestartingattheProfessionalproductlevelforeachHub.Westrivetomaintainanexceptionalqualityofcustomerservice.Wecontinuouslymonitorkeycusto
80、merservicemetricssuchasphoneholdtime,ticketresponsetimeandticketresolutionrates,andwemonitorthecustomersatisfactionofourcustomersupportinteractions.WebelieveourcustomersupportisanimportantreasonwhybusinesseschooseourGrowthPlatformandrecommendittotheircolleagues.Our Total CustomersAsofDecember31,2018
81、,wehad56,628TotalCustomersinmorethan100countries,representingmanyindustries.Nosinglecustomerrepresentedmorethanonepercentofourrevenuein2018,2017or2016.Our TechnologyOur56,628TotalCustomershavechosenusastheirmarketing,sales,orcustomerserviceplatform,whichwearchitectedandbuilttobesecure,highlydistribu
82、tedandhighlyscalable.Sinceourfounding,wehaveembracedrapid,iterativeproductdevelopmentlifecycles,cloudautomationandopen-sourcetechnologies,includingbigdataplatforms,topowermarketing,salesandserviceprogramsandprovideinsightsnotpreviouslypossibleoravailable.OurGrowthPlatformisamulti-tenant,singlecode-b
83、ased,globallyavailablesoftware-as-a-servicedeliveredthroughwebbrowsersormobileapplications.Ourcommitmenttoahighlyavailable,reliable,andscalableplatformforbusinessesofallsizesisaccomplishedthroughtheuseofthesetechnologies.6Modern Database Architecture.Weprocessbillionsofdatapointsweeklyacrossvariousc
84、hannels,includingsocialmedia,email,SEOandwebsitevisits,andcontinuetodrivenearlyreal-timeanalyticsacrossthesechannels.ThisispossiblebecausewebuiltourdatabasefromthegroundupusingdistributedbigdatatechnologiessuchasHBase,Kafka,andElasticSearchtobothprocessandanalyzethelargeamountsofdatawecollectinourin
85、bounddatabase.Usingmoderndatabasetechnologies,wecanprovideactionableinsightsacrossdisparatedata-setsinamannernoteasilyachievableorcosteffective,atscaleorefficiently,withtraditionaldatabasesorplatformarchitectures.Agility.Ourinfrastructureanddevelopmentandsoftwarereleaseprocessesallowustoupdateourpla
86、tformforspecificgroupsofcustomersorourentirecustomerbaseatanytime.Thismeanswecanrapidlyinnovateanddelivernewfunctionalityfrequently,withoutwaitingforquarterlyorannualreleasecycles.Wetypicallydeployupdatestooursoftwareplatformhundredsoftimesaweek,enablingustogatherimmediatecustomerfeedbackandimproveo
87、urproductquicklyandcontinuously.Cost leverage.BecauseourGrowthPlatformwasbuiltonanalmostexclusivefootprintofopen-sourcesoftwareanddesignedtooperateincloud-baseddata-centers,wehavebenefitedfromlarge-scalepricereductionsbythesecloudcomputingserviceprovidersastheycontinuetoinnovateandcompeteformarketsh
88、are.Asourprocessingvolumecontinuestogrow,wecontinuetoreceivelargervolumediscountsonaper-unitbasisforcostssuchasstorage,bandwidthandcomputingcapacity.Wealsobelievethatourextensiveuseofopen-sourcesoftwarewillprovideadditionalleverageaswescaleourGrowthPlatformandinfrastructure.Scalability.Byleveragingl
89、eadingcloudinfrastructureprovidersalongwithourautomatedtechnologystack,weareabletoscaleworkloadsofvaryingsizesatanytime.Thisallowsustohandlecustomersofallsizesanddemandswithouttraditionaloperationallimitationssuchasnetworkbandwidth,computingcycles,orstoragecapacityaswecanscaleourplatformon-demand.Re
90、liability.Customerdataisdistributedandprocessedacrossmultipledatacenterswithinaregiontoprovideredundancy.WebuiltourGrowthPlatformonadistributedcomputingarchitecturewithnosinglepointsoffailureandweoperateacrossdata-centerboundariesdaily.Inadditiontodata-centerlevelredundancy,thisarchitecturesupportsm
91、ultiplelivecopiesofeachdatasetalongwithsnapshotcapabilitiesforfaster,point-in-timedatarecoveryinsteadoftraditionalbackupandrestoremethodologies.Security.Weleverageindustrystandardnetworkandperimeterdefensetechnologies,DDoSprotectionsystems(includingwebapplicationfirewalls)andenterprisegradeDNSservic
92、esacrossmultiplevendors.Ourdata-centerprovidersoperateandcertifytohighindustrycompliancelevels.Duetothebroadfootprintofourcustomerbase,weregularlytestandevaluateourplatformwithtrustedthird-partyvendorstoensurethesecurityandintegrityofourservices.Marketing and SalesWebelieveweareagloballeaderinimplem
93、entinganinboundexperienceinmarketingandsales.Webelievethatourmarketingandsalesmodelprovidesuswithacompetitiveadvantage,especiallywhentargetingmid-marketbusinesses,becausewecanattractandengagethesebusinessesefficientlyandatscale.Inbound Marketing.Ourmarketingteamfocusesoninboundmarketingandattractsne
94、wleadspermonththroughourindustry-leadingblogandothercontent,freetools,largesocialmediafollowing,highsearchenginerankingsandpersonalizedwebsiteandemailcontent.Inaddition,wearegeneratingleadsfornewandadd-onproductpurchasesthroughcontentandoffersdeliveredthroughourGrowthPlatformtoexistingcustomers.Inbo
95、und Direct Sales.OursalesrepresentativesarebasedinourofficesinCambridge,Massachusetts,Dublin,Ireland,Sydney,Australia,Singapore,Tokyo,Japan,Berlin,Germany,andBogota,Columbia,andusephone,email,andwebmeetingstointeractwithprospectsandcustomers.Themajorityofrevenuegeneratedbyoursalesrepresentativesorig
96、inateswithinboundleadsproducedbyourmarketingefforts.Inaddition,throughourrecentlylaunchedfreemiumproductsandin-productcross-sellofferings,wearestartingtoclosenewbusinesswithlittleornointeractionbyoursalesrepresentatives.Inbound Channel Sales.Inadditiontoourdirectsalesteam,wehavesalesrepresentativest
97、hatmanagerelationshipswithourworldwidenetworkofPartnerswhobothuseourplatformfortheirownbusinessesandalso,onacommissionedbasis,refercustomerstous.ThesePartnerscollaboratewithusnotonlytoleverageoursoftwareplatformandeducationalresources,butalsotobuildtheirownbusinessbyofferingnewservicesandshiftingthe
98、irrevenuemixtoincludemoreretainer-basedbusinesswitharecurringrevenuestream.Culture and EmployeesTransformingthebusinessworldtoembracetheinboundexperiencerequiresatrulyremarkableteam.Fromtheverybeginning,ourcompanywasfoundedonafundamentalbeliefinradicaltransparency,individualautonomy,andenlightenedem
99、pathy.7Wearepassionateaboutcreatinganinclusivecompanyculturewhereemployeescandotheirbestwork.OurCultureCodesharesourcorevaluesandbeliefs,includingHEART(Humility,Empathy,Adaptability,Remark-ability,andTransparency),anacronymweusetodescribewhatwebelievemakesagreatemployee.ByrecruitingpeoplewithHEART,i
100、nvestingintheirpersonalandprofessionalgrowth,andmakinginclusivecultureabusinesspriority,wevebeennamedagreatplacetoworkgloballyin2018.Thispastyear,HubSpotwasnamedaBestPlacetoWorkbyGlassdoor,oneofBostonBusinessJournalsBestPlacestoWork2018,aBestWorkplaceforWomenbyFortune,andaBestWorkplaceforParentsbyFo
101、rtune.WewerealsohonoredinanumberofcategoriesbyComparablysworkplaceawardsin2018,includingBestCEOs,BestCompaniesforWomen,BestCompaniesforDiversity,BestOverallCompanyCulture,andthe#1CompanyforEmployeeHappiness.AsofDecember31,2018,wehad2,638full-timeemployees,including808full-timeemployeeslocatedoutside
102、theUnitedStates.Althoughwehavestatutoryemployeerepresentationobligationsincertaincountries,ourU.S.employeesarenotrepresentedbyalaborunion.Wehavenotexperiencedanyworkstoppages,andweconsiderourrelationswithouremployeestobegood.CompetitionOurmarketisevolving,highlycompetitiveandfragmented,andweexpectco
103、mpetitiontoincreaseinthefuture.Webelievetheprincipalcompetitivefactorsinourmarketare:visionforthemarketandproductstrategyandpaceofinnovation;inboundmarketingfocusanddomainexpertise;integratedall-in-oneplatform;breadthanddepthofproductfunctionality;easeofuse;scalable,openarchitecture;timetovalueandto
104、talcostofownership;integrationwiththird-partyapplicationsanddatasources;andnamerecognitionandbrandreputation.Webelievewecompetefavorablywithrespecttoallofthesefactors.Wefaceintensecompetitionfromothersoftwarecompaniesthatdevelopmarketing,salesandservicesoftwareandfrommarketingservicescompaniesthatpr
105、ovideinteractivemarketingservices.Ourcompetitorsoffervariouspointapplicationsthatprovidecertainfunctionsandfeaturesthatweprovide,including:cloud-basedmarketingautomationproviders;emailmarketingsoftwarevendors;salesforceautomationandCRMsoftwarevendorscustomerserviceplatformvendors;andlarge-scaleenter
106、prisesuites.Inaddition,insteadofusingourGrowthPlatform,someprospectivecustomersmayelecttocombinedisparatepointapplications,suchascontentmanagement,marketingautomation,analytics,socialmediamanagement,ticketing,andconversationalbots.Weexpectthatnewwilldevelopandintroduce,oracquire,applicationsservingc
107、ustomer-facingandotherfrontofficefunctions.Intellectual PropertyOurabilitytoprotectourintellectualproperty,includingourtechnology,willbeanimportantfactorinthesuccessandcontinuedgrowthofourbusiness.Weprotectourintellectualpropertythroughtradesecretslaw,copyrights,trademarks,patents,andcontracts.Someo
108、fourtechnologyreliesuponthird-partylicensedintellectualproperty.WehavenoissuedU.S.patentsandeightU.S.patentapplicationspending;twoareprovisionalandsixarenon-provisional.Inaddition,wehavefiledthreeapplicationswiththePatentCooperationTreaty,whicharecurrentlypending.Weintendtopursueadditionalpatentprot
109、ectiontotheextentwebelieveitwouldbebeneficialandcost-effective.8Inadditiontotheforegoing,wehaveestablishedbusinessproceduresdesignedtomaintaintheconfidentialityofourproprietaryinformation,includingtheuseofconfidentialityagreementsandassignmentofinventionsagreementswithemployees,independentcontractor
110、s,consultants,andcompanieswithwhichweconductbusiness.Despiteoureffortstoprotectourintellectualproperty,unauthorizedpartiesmaystillcopyorotherwiseobtainanduseourtechnology.Inaddition,weintendtocontinuetoexpandourinternationaloperations,andeffectiveintellectualproperty,copyright,trademarkandtradesecre
111、tprotectionmaynotbeavailableormaybelimitedinforeigncountries.Anysignificantimpairmentofourintellectualpropertyrightscouldharmourbusinessorourabilitytocompete.Financial Information About SegmentsWeoperateasoneoperatingsegment.Operatingsegmentsaredefinedascomponentsofanenterpriseforwhichseparatefinanc
112、ialinformationisregularlyevaluatedbythechiefoperatingdecisionmakersorCODMs,whichareourchiefexecutiveofficerandchiefoperatingofficer,indecidinghowtoallocateresourcesandassessperformance.TheCODMsevaluateourfinancialinformationandresourcesandassesstheperformanceoftheseresourcesonaconsolidatedbasis.Sinc
113、eweoperateinoneoperatingsegment,allrequiredfinancialsegmentinformationcanbefoundintheconsolidatedfinancialstatements.SeeFootnote7withintheconsolidatedfinancialstatementsforinformationbygeographicarea.Available InformationOurwebsiteislocatedathttp:/,andourinvestorrelationswebsiteislocatedathttps:/ 1A
114、.RISK FACTORSAn investment in our common stock involves a high degree of risk.You should carefully consider the risks described below and the other information in thisAnnual Report on Form 10-Kand in our other public filings before making an investment decision.Our business,prospects,financial condi
115、tion,or operatingresults could be harmed by any of these risks,as well as other risks not currently known to us or that we currently consider immaterial.If any of such risks anduncertainties actually occurs,our business,financial condition or operating results could differ materially from the plans,
116、projections and other forward-lookingstatements included in the section titled“Managements Discussion and Analysis of Financial Condition and Results of Operations”and elsewhere in this reportand in our other public filings.The trading price of our common stock could decline due to any of these risk
117、s,and,as a result,you may lose all or part of yourinvestment.Risk s Related to Our Business and StrategyWe have a history of losses and may not achieve profitability in the future.Wegeneratednetlossesof$63.8millionin2018,$39.7millionin2017,and$45.6millionin2016.AsofDecember31,2018,wehadanaccumulated
118、deficitof$344.4million.Wewillneedtogenerateandsustainincreasedrevenuelevelsinfutureperiodstobecomeprofitable,and,evenifwedo,wemaynotbeabletomaintainorincreaseourlevelofprofitability.Weintendtocontinuetoexpendsignificantfundstogrowourmarketing,salesandcustomerserviceoperations,developandenhanceourGro
119、wthPlatform,scaleourdatacenterinfrastructureandservicescapabilitiesandexpandintonewmarkets.Oureffortstogrowourbusinessmaybemorecostlythanweexpect,andwemaynotbeabletoincreaseourrevenueenoughtooffsetourhigheroperatingexpenses.Wemayincursignificantlossesinthefutureforanumberofreasons,includingtheotherr
120、isksdescribedinthisAnnualReportonForm10-K,andunforeseenexpenses,difficulties,complicationsanddelaysandotherunknownevents.Ifweareunabletoachieveandsustainprofitability,themarketpriceofourcommonstockmaysignificantlydecrease.9We are dependent upon customer renewals,the addition of new customers,increas
121、ed revenue from existing customers and the conti nued growth of the marketfor a Growth Platform.Wederive,andexpecttocontinuetoderive,asubstantialportionofourrevenuefromthesaleofsubscriptionstoourGrowthPlatform.Themarketforinboundmarketing,salesandcustomerserviceproductsisstillevolving,andcompetitive
122、dynamicsmaycausepricinglevelstochangeasthemarketmaturesandasexistingandnewmarketparticipantsintroducenewtypesofpointapplicationsanddifferentapproachestoenablebusinessestoaddresstheirrespectiveneeds.Asaresult,wemaybeforcedtoreducethepriceswechargeforourplatformandmaybeunabletorenewexistingcustomeragr
123、eementsorenterintonewcustomeragreementsatthesamepricesanduponthesametermsthatwehavehistorically.Inaddition,ourgrowthstrategyinvolvesascalablepricingmodel(including“freemium”versionsofourproducts)intendedtoprovideuswithanopportunitytoincreasethevalueofourcustomerrelationshipsovertimeasweexpandtheirus
124、eofourplatform,selltootherpartsoftheirorganizations,cross-selloursalesproductstoexistingmarketingproductcustomersandviceversathroughtouchlessorlowtouchinproductpurchases,andupselladditionalofferingsandfeatures.Ifourcross-sellingeffortsareunsuccessfulorifourexistingcustomersdonotexpandtheiruseofourpl
125、atformoradoptadditionalofferingsandfeatures,ouroperatingresultsmaysuffer.Our subscription renewal rates may decrease,and any decrease could harm our future revenue and operating results.Ourcustomershavenoobligationtorenewtheirsubscriptionsforourplatformaftertheexpirationoftheirsubscriptionperiods,su
126、bstantiallyallofwhichareoneyearorless.Inaddition,ourcustomersmayseektorenewforlowersubscriptionamountsorforshortercontractlengths.Also,customersmaychoosenottorenewtheirsubscriptionsforavarietyofreasons.Ourrenewalratesmaydeclineorfluctuateasaresultofanumberoffactors,includinglimitedcustomerresources,
127、pricingchanges,thepricesofservicesofferedbyourcompetitors,adoptionandutilizationofourplatformandadd-onapplicationsbyourcustomers,adoptionofournewproducts,customersatisfactionwithourplatform,mergersandacquisitionsaffectingourcustomerbase,reductionsinourcustomersspendinglevelsordeclinesincustomeractiv
128、ityasaresultofeconomicdownturnsoruncertaintyinfinancialmarkets.Ifourcustomersdonotrenewtheirsubscriptionsforourplatformordecreasetheamounttheyspendwithus,ourrevenuewilldeclineandourbusinesswillsuffer.Inaddition,asubscriptionmodelcreatescertainrisksrelatedtothetimingofrevenuerecognitionandpotentialre
129、ductionsincashflows.Aportionofthesubscription-basedrevenuewereporteachquarterresultsfromtherecognitionofdeferredrevenuerelatingtosubscriptionagreementsenteredintoduringpreviousquarters.Adeclineinneworrenewedsubscriptionsinanyperiodmaynotbeimmediatelyreflectedinourreportedfinancialresultsforthatperio
130、d,butmayresultinadeclineinourrevenueinfuturequarters.Ifweweretoexperiencesignificantdownturnsinsubscriptionsalesandrenewalrates,ourreportedfinancialresultsmightnotreflectsuchdownturnsuntilfutureperiods.We face significant competition from both established and new companies offering marketing,sales a
131、nd customer service software and other relatedapplications,as well as internally developed software,which may harm our ability to add new customers,retain existing customers and grow our business.Themarketing,salesandcustomerservicesoftwaremarketisevolving,highlycompetitiveandsignificantlyfragmented
132、.Withtheintroductionofnewtechnologiesandthepotentialentryofnewcompetitorsintothemarket,weexpectcompetitiontopersistandintensifyinthefuture,whichcouldharmourabilitytoincreasesales,maintainorincreaserenewalsandmaintainourprices.Wefaceintensecompetitionfromothersoftwarecompaniesthatdevelopmarketing,sal
133、esandcustomerservicesoftwareandfrommarketingservicescompaniesthatprovideinteractivemarketingservices.CompetitioncouldsignificantlyimpedeourabilitytosellsubscriptionstoourGrowthPlatformontermsfavorabletous.Ourcurrentandpotentialcompetitorsmaydevelopandmarketnewtechnologiesthatrenderourexistingorfutur
134、eproductslesscompetitive,orobsolete.Inaddition,ifthesecompetitorsdevelopproductswithsimilarorsuperiorfunctionalitytoourplatform,wemayneedtodecreasethepricesoracceptlessfavorabletermsforourplatformsubscriptionsinordertoremaincompetitive.Ifweareunabletomaintainourpricingduetocompetitivepressures,ourma
135、rginswillbereducedandouroperatingresultswillbenegativelyaffected.Ourcompetitorsinclude:cloud-basedmarketingautomationproviders;emailmarketingsoftwarevendors;salesforceautomationandCRMsoftwarevendors;andlarge-scaleenterprisesuites.Inaddition,insteadofusingourplatform,someprospectivecustomersmayelectt
136、ocombinedisparatepointapplications,suchascontentmanagement,marketingautomation,CRM,analyticsandsocialmediamanagement.Weexpectthatnewcompetitors,suchasenterprisesoftwarevendorsthathavetraditionallyfocusedonenterpriseresourceplanningorotherapplicationssupportingbackofficefunctions,willdevelopandintrod
137、uceapplicationsservingcustomer-facingandotherfrontofficefunctions.Thisdevelopment10couldhaveanadverseeffectonourbusiness,operatingresultsandfinancialcondition.Inaddition,salesforceautomationandCRMsystemvendorscouldacquireordevelopapplicationsthatcompetewithourmarketingsoftwareofferings.Someoftheseco
138、mpanieshaveacquiredsocialmediamarketingandothermarketingsoftwareproviderstointegratewiththeirbroaderofferings.Ourcurrentandpotentialcompetitorsmayhavesignificantlymorefinancial,technical,marketingandotherresourcesthanwehave,beabletodevotegreaterresourcestothedevelopment,promotion,saleandsupportofthe
139、irproductsandservices,mayhavemoreextensivecustomerbasesandbroadercustomerrelationshipsthanwehave,andmayhavelongeroperatinghistoriesandgreaternamerecognitionthanwehave.Asaresult,thesecompetitorsmayrespondfastertonewtechnologiesandundertakemoreextensivemarketingcampaignsfortheirproducts.Inafewcases,th
140、esevendorsmayalsobeabletooffermarketing,salesandcustomerservicesoftwareatlittleornoadditionalcostbybundlingitwiththeirexistingsuiteofapplications.Totheextentanyofourcompetitorshasexistingrelationshipswithpotentialcustomersforeithermarketingsoftwareorotherapplications,thosecustomersmaybeunwillingtopu
141、rchaseourplatformbecauseoftheirexistingrelationshipswithourcompetitor.Ifweareunabletocompetewithsuchcompanies,thedemandforourGrowthPlatformcouldsubstantiallydecline.Inaddition,ifoneormoreofourcompetitorsweretomergeorpartnerwithanotherofourcompetitors,ourabilitytocompeteeffectivelycouldbeadverselyaff
142、ected.Ourcompetitorsmayalsoestablishorstrengthencooperativerelationshipswithourcurrentorfuturestrategicdistributionandtechnologypartnersorotherpartieswithwhomwehaverelationships,therebylimitingourabilitytopromoteandimplementourplatform.Wemaynotbeabletocompetesuccessfullyagainstcurrentorfuturecompeti
143、tors,andcompetitivepressuresmayharmourbusiness,operatingresultsandfinancialcondition.We have experienced rapid growth and organizational change in recent periods and expect continued future growth.If we fail to manage our growtheffectively,we may be unable to execute our business plan,maintain high
144、levels of service or address competitive challenges adequately.Ourheadcountandoperationshavegrownsubstantially.Forexample,wehad2,638full-timeemployeesasofDecember31,2018,ascomparedwith2,081asofDecember31,2017andwehaveopened6internationalofficessince2013.Wealsoplantoopenadditionalinternationaloffices
145、inthefuture.Thisgrowthhasplaced,andwillcontinuetoplace,asignificantstrainonourmanagement,administrative,operationalandfinancialinfrastructure.Weanticipatefurthergrowthwillberequiredtoaddressincreasesinourproductofferingsandcontinuedexpansion.Oursuccesswilldependinpartuponourabilitytorecruit,hire,tra
146、in,manageandintegrateasignificantnumberofqualifiedmanagers,technicalpersonnelandemployeesinspecializedroleswithinourcompany,includingintechnology,salesandmarketing.Ifournewemployeesperformpoorly,orifweareunsuccessfulinrecruiting,hiring,training,managingandintegratingthesenewemployees,orretainingthes
147、eorourexistingemployees,ourbusinessmaysuffer.Inaddition,tomanagetheexpectedcontinuedgrowthofourheadcount,operationsandgeographicexpansion,wewillneedtocontinuetoimproveourinformationtechnologyinfrastructure,operational,financialandmanagementsystemsandprocedures.Ouranticipatedadditionalheadcountandcap
148、italinvestmentswillincreaseourcosts,whichwillmakeitmoredifficultforustoaddressanyfuturerevenueshortfallsbyreducingexpensesintheshortterm.Ifwefailtosuccessfullymanageourgrowth,wewillbeunabletosuccessfullyexecuteourbusinessplan,whichcouldhaveanegativeimpactonourbusiness,resultsofoperationsorfinancialc
149、ondition.Failure to effectively develop and expand our marketing,sales and customer service capabilities could harm our ability to increase our customer base andachieve broader market acceptance of our platform.ToincreasetotalcustomersandachievebroadermarketacceptanceofourGrowthPlatform,wewillneedto
150、expandourmarketing,salesandcustomerserviceoperations,includingoursalesforceandthird-partychannelpartners.Wewillcontinuetodedicatesignificantresourcestoinboundsalesandmarketingprograms.Theeffectivenessofourinboundsalesandmarketingandthird-partychannelpartnershasvariedovertimeandmayvaryinthefutureandd
151、ependsonourabilitytomaintainandimproveourGrowthPlatform.Alloftheseeffortswillrequireustoinvestsignificantfinancialandotherresources.Ourbusinesswillbeseriouslyharmedifoureffortsdonotgenerateacorrespondinglysignificantincreaseinrevenue.Wemaynotachieveanticipatedrevenuegrowthfromexpandingoursalesforcei
152、fweareunabletohire,developandretaintalentedsalespersonnel,ifournewsalespersonnelareunabletoachievedesiredproductivitylevelsinareasonableperiodoftimeorifoursalesandmarketingprogramsarenoteffective.The rate of growth of our business depends on the continued participation and level of service of our ma
153、rketing agency and sales partners.Werelyonourmarketingagencyandsalespartnerstoprovidecertainservicestoourcustomers,aswellaspursuesalesofourGrowthPlatformtocustomers.Totheextentwedonotattractnewmarketingagencyandsalespartners,orexistingornewmarketingagencyandsalespartnersdonotreferagrowingnumberofcus
154、tomerstous,ourrevenueandoperatingresultswouldbeharmed.Inaddition,ifourmarketingagencyandsalespartnersdonotcontinuetoprovideservicestoourcustomers,wewouldberequiredtoprovidesuchservicesourselveseitherbyexpandingourinternalteamorengagingotherthird-partyproviders,whichwouldincreaseouroperatingcosts.11I
155、f we cannot maintain our company culture as we grow,we could lose the innovation,teamwork,passion and focus on execution that we believe contribute toour success and o ur business may be harmed.Webelievethatacriticalcomponenttooursuccesshasbeenourcompanyculture,whichisbasedontransparencyandpersonala
156、utonomy.Wehaveinvestedsubstantialtimeandresourcesinbuildingourteamwithinthiscompanyculture.Anyfailuretopreserveourculturecouldnegativelyaffectourabilitytoretainandrecruitpersonnelandtoeffectivelyfocusonandpursueourcorporateobjectives.Aswegrowasandcontinuetodeveloptheinfrastructureofapubliccompany,we
157、mayfinditdifficulttomaintaintheseimportantaspectsofourcompanyculture.Ifwefailtomaintainourcompanyculture,ourbusinessmaybeadverselyimpacted.If we fail to maintain our inbound thought leadership position,our business may suffer.Webelievethatmaintainingourthoughtleadershippositionininboundmarketing,sal
158、esandservicesisanimportantelementinattractingnewcustomers.Wedevotesignificantresourcestodevelopandmaintainourthoughtleadershipposition,withafocusonidentifyingandinterpretingemergingtrendsintheinboundexperience,shapingandguidingindustrydialogandcreatingandsharingthebestinboundpractices.Ouractivitiesr
159、elatedtodevelopingandmaintainingourthoughtleadershipmaynotyieldincreasedrevenue,andeveniftheydo,anyincreasedrevenuemaynotoffsettheexpensesweincurredinsucheffort.Werelyuponthecontinuedservicesofourmanagementandemployeeswithdomainexpertisewithinboundmarketing,salesandservices,andthelossofanykeyemploye
160、esinthisareacouldharmourcompetitivepositionandreputation.Ifwefailtosuccessfullygrowandmaintainourthoughtleadershipposition,wemaynotattractenoughnewcustomersorretainourexistingcustomers,andourbusinesscouldsuffer.If we fail to further enhance our brand and maintain our existing strong brand awareness,
161、our ability to expand our customer base will be impaired and ourfinancial condition may suffer.WebelievethatourdevelopmentoftheHubSpotbrandiscriticaltoachievingwidespreadawarenessofourexistingandfutureinboundexperiencesolutions,and,asaresult,isimportanttoattractingnewcustomersandmaintainingexistingc
162、ustomers.Inthepast,oureffortstobuildourbrandhaveinvolvedsignificantexpenses,andwebelievethatthisinvestmenthasresultedinstrongbrandrecognitionintheB2Bmarket.SuccessfulpromotionandmaintenanceofourbrandswilldependlargelyontheeffectivenessofourmarketingeffortsandonourabilitytoprovideareliableandusefulGr
163、owthPlatformatcompetitiveprices.Brandpromotionactivitiesmaynotyieldincreasedrevenue,andeveniftheydo,anyincreasedrevenuemaynotoffsettheexpensesweincurredinbuildingourbrand.Ifwefailtosuccessfullypromoteandmaintainourbrand,ourbusinesscouldsuffer.If we fail to adapt and respond effectively to rapidly ch
164、anging technology,evolving industry standards and changing customer needs or requirements,ourGrowth Platform may become less competitive.OurfuturesuccessdependsonourabilitytoadaptandinnovateourGrowthPlatform.Toattractnewcustomersandincreaserevenuefromexistingcustomers,weneedtocontinuetoenhanceandimp
165、roveourofferingstomeetcustomerneedsatpricesthatourcustomersarewillingtopay.Sucheffortswillrequireaddingnewfunctionalityandrespondingtotechnologicaladvancements,whichwillincreaseourresearchanddevelopmentcosts.Ifweareunabletodevelopnewapplicationsthataddressourcustomersneeds,ortoenhanceandimproveourpl
166、atforminatimelymanner,wemaynotbeabletomaintainorincreasemarketacceptanceofourplatform.Ourabilitytogrowisalsosubjecttotheriskoffuturedisruptivetechnologies.AccessanduseofourGrowthPlatformisprovidedviathecloud,which,itself,wasdisruptivetothepreviousenterprisesoftwaremodel.Ifnewtechnologiesemergethatar
167、eabletodeliverinboundmarketingsoftwareandrelatedapplicationsatlowerprices,moreefficiently,moreconvenientlyormoresecurely,suchtechnologiescouldadverselyaffectourabilitytocompete.We rely on our management team and other key employees,and the loss of one or more key employees could harm our business.Ou
168、rsuccessandfuturegrowthdependuponthecontinuedservicesofourmanagementteam,includingourco-founders,BrianHalliganandDharmeshShah,andotherkeyemployeesintheareasofresearchanddevelopment,marketing,sales,servicesandgeneralandadministrativefunctions.Fromtimetotime,theremaybechangesinourmanagementteamresulti
169、ngfromthehiringordepartureofexecutives,whichcoulddisruptourbusiness.Wealsoaredependentonthecontinuedserviceofourexistingsoftwareengineersandinformationtechnologypersonnelbecauseofthecomplexityofourplatform,technologiesandinfrastructure.Wemayterminateanyemployeesemploymentatanytime,withorwithoutcause
170、,andanyemployeemayresignatanytime,withorwithoutcause.Wedonothaveemploymentagreementswithanyofourkeypersonnel.Thelossofoneormoreofourkeyemployeescouldharmourbusiness.12The failure to attract and retain additional qualified personnel could prevent us from executing our business strategy.Toexecuteourbu
171、sinessstrategy,wemustattractandretainhighlyqualifiedpersonnel.Inparticular,wecompetewithmanyothercompaniesforsoftwaredeveloperswithhighlevelsofexperienceindesigning,developingandmanagingcloud-basedsoftware,aswellasforskilledinformationtechnology,marketing,salesandoperationsprofessionals,andwemaynotb
172、esuccessfulinattractingandretainingtheprofessionalsweneed.Also,inboundsales,marketingandservicesdomainexpertsareveryimportanttooursuccessandaredifficulttoreplace.Wehavefromtimetotimeinthepastexperienced,andweexpecttocontinuetoexperienceinthefuture,difficultyinhiringanddifficultyinretaininghighlyskil
173、ledemployeeswithappropriatequalifications.Inparticular,wehaveexperiencedacompetitivehiringenvironmentintheGreaterBostonarea,whereweareheadquartered.Manyofthecompanieswithwhichwecompeteforexperiencedpersonnelhavegreaterresourcesthanwedo.Inaddition,inmakingemploymentdecisions,particularlyinthesoftware
174、industry,jobcandidatesoftenconsiderthevalueofthestockoptionsorotherequityincentivestheyaretoreceiveinconnectionwiththeiremployment.Ifthepriceofourstockdeclines,orexperiencessignificantvolatility,ourabilitytoattractorretainkeyemployeeswillbeadverselyaffected.Ifwefailtoattractnewpersonnelorfailtoretai
175、nandmotivateourcurrentpersonnel,ourgrowthprospectscouldbeseverelyharmed.If we fail to offer high-quality customer support,our business and reputation may suffer.High-qualityeducation,trainingandcustomersupportareimportantforthesuccessfulmarketing,saleanduseofourGrowthPlatformandfortherenewalofexisti
176、ngcustomers.Providingthiseducation,trainingandsupportrequiresthatourpersonnelwhomanageouronlinetrainingresource,HubSpotAcademy,orprovidecustomersupporthavespecificinboundexperiencedomainknowledgeandexpertise,makingitmoredifficultforustohirequalifiedpersonnelandtoscaleupoursupportoperations.Theimport
177、anceofhigh-qualitycustomersupportwillincreaseasweexpandourbusinessandpursuenewcustomers.IfwedonothelpourcustomersusemultipleapplicationswithinourGrowthPlatformandprovideeffectiveongoingsupport,ourabilitytoselladditionalfunctionalityandservicesto,ortoretain,existingcustomersmaysufferandourreputationw
178、ithexistingorpotentialcustomersmaybeharmed.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 resultscould be harmed.AsusageofourGrowthPlatformgrowsandascustomersuseourplatformforadditionalinboundapplic
179、ations,suchassalesandservices,wewillneedtodevoteadditionalresourcestoimprovingourapplicationarchitecture,integratingwiththird-partysystemsandmaintaininginfrastructureperformance.Inaddition,wewillneedtoappropriatelyscaleourinternalbusinesssystemsandourservicesorganization,includingcustomersupportandp
180、rofessionalservices,toserveourgrowingcustomerbase,particularlyasourcustomerdemographicschangeovertime.Anyfailureofordelayintheseeffortscouldcauseimpairedsystemperformanceandreducedcustomersatisfaction.TheseissuescouldreducetheattractivenessofourGrowthPlatformtocustomers,resultingindecreasedsalestone
181、wcustomers,lowerrenewalratesbyexistingcustomers,theissuanceofservicecredits,orrequestedrefunds,whichcouldimpedeourrevenuegrowthandharmourreputation.Evenifweareabletoupgradeoursystemsandexpandourstaff,anysuchexpansionwillbeexpensiveandcomplex,requiringmanagementstimeandattention.Wecouldalsofaceineffi
182、cienciesoroperationalfailuresasaresultofoureffortstoscaleourinfrastructure.Moreover,thereareinherentrisksassociatedwithupgrading,improvingandexpandingourinformationtechnologysystems.Wecannotbesurethattheexpansionandimprovementstoourinfrastructureandsystemswillbefullyoreffectivelyimplementedonatimely
183、basis,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 researchand development efforts,we may not be able to compete e
184、ffectively and our business and operating results may be harmed.Toremaincompetitive,wemustcontinuetodevelopnewproductofferings,applications,featuresandenhancementstoourexistingGrowthPlatform.Maintainingadequateresearchanddevelopmentpersonnelandresourcestomeetthedemandsofthemarketisessential.Ifweareu
185、nabletodevelopourplatforminternallyduetocertainconstraints,suchashighemployeeturnover,lackofmanagementabilityoralackofotherresearchanddevelopmentresources,wemaymissmarketopportunities.Further,manyofourcompetitorsexpendaconsiderablygreateramountoffundsontheirresearchanddevelopmentprograms,andthosetha
186、tdonotmaybeacquiredbylargercompaniesthatwouldallocategreaterresourcestoourcompetitorsresearchanddevelopmentprograms.Ourfailuretomaintainadequateresearchanddevelopmentresourcesortocompeteeffectivelywiththeresearchanddevelopmentprogramsofourcompetitorscouldmateriallyadverselyaffectourbusiness.13Change
187、s in the sizes or types of businesses that purchase our platform o r in the applications within our Growth Platform purchased or used by our customerscould negatively affect our operating results.OurstrategyistosellsubscriptionstoourGrowthPlatformtomid-sizedbusinesses,butwehavesoldandwillcontinuetos
188、elltoorganizationsrangingfromsmallbusinessestoenterprises.OurgrossmarginscanvarydependingonnumerousfactorsrelatedtotheimplementationanduseofourGrowthPlatform,includingthesophisticationandintensityofourcustomersuseofourplatformandthelevelofprofessionalservicesandsupportrequiredbyacustomer.Salestoente
189、rprisecustomersmayentaillongersalescyclesandmoresignificantsellingefforts.Sellingtosmallbusinessesmayinvolvegreatercreditriskanduncertainty.Iftherearechangesinthemixofbusinessesthatpurchaseourplatformorthemixoftheproductplanspurchasedbyourcustomers,ourgrossmarginscoulddecreaseandouroperatingresultsc
190、ouldbeadverselyaffected.We have in the past completed acquisitions and may acquire or invest in other companies or technologies in the future,which could divert managementsattention,fail to meet our expectations,result in additional dilution to our stockholders,increase expenses,disrupt our operatio
191、ns or harm our operatingresults.Wehaveinthepastacquired,andwemayinthefutureacquireorinvestin,businesses,productsortechnologiesthatwebelievecouldcomplementorexpandourplatform,enhanceourtechnicalcapabilitiesorotherwiseoffergrowthopportunities.Wemaynotbeabletofullyrealizetheanticipatedbenefitsoftheseor
192、anyfutureacquisitions.Thepursuitofpotentialacquisitionsmaydiverttheattentionofmanagementandcauseustoincurvariousexpensesrelatedtoidentifying,investigatingandpursuingsuitableacquisitions,whetherornottheyareconsummated.Thereareinherentrisksinintegratingandmanagingacquisitions.Ifweacquireadditionalbusi
193、nesses,wemaynotbeabletoassimilateorintegratetheacquiredpersonnel,operationsandtechnologiessuccessfullyoreffectivelymanagethecombinedbusinessfollowingtheacquisitionandourmanagementmaybedistractedfromoperatingourbusiness.Wealsomaynotachievetheanticipatedbenefitsfromtheacquiredbusinessduetoanumberoffac
194、tors,including:unanticipatedcostsorliabilitiesassociatedwiththeacquisition;incurrenceofacquisition-relatedcosts,whichwouldberecognizedasacurrentperiodexpense;inabilitytogeneratesufficientrevenuetooffsetacquisitionorinvestmentcosts;theinabilitytomaintainrelationshipswithcustomersandpartnersoftheacqui
195、redbusiness;thedifficultyofincorporatingacquiredtechnologyandrightsintoourplatformandofmaintainingqualityandsecuritystandardsconsistentwithourbrand;delaysincustomerpurchasesduetouncertaintyrelatedtoanyacquisition;theneedtointegrateorimplementadditionalcontrols,proceduresandpolicies;challengescausedb
196、ydistance,languageandculturaldifferences;harmtoourexistingbusinessrelationshipswithbusinesspartnersandcustomersasaresultoftheacquisition;thepotentiallossofkeyemployees;useofresourcesthatareneededinotherpartsofourbusinessanddiversionofmanagementandemployeeresources;theinabilitytorecognizeacquireddefe
197、rredrevenueinaccordancewithourrevenuerecognitionpolicies;anduseofsubstantialportionsofouravailablecashortheincurrenceofdebttoconsummatetheacquisition.Acquisitionsalsoincreasetheriskofunforeseenlegalliability,includingforpotentialviolationsofapplicablelaworindustryrulesandregulations,arisingfromprior
198、orongoingactsoromissionsbytheacquiredbusinesseswhicharenotdiscoveredbyduediligenceduringtheacquisitionprocess.Generally,ifanacquiredbusinessfailstomeetourexpectations,ouroperatingresults,businessandfinancialconditionmaysuffer.Acquisitionscouldalsoresultindilutiveissuancesofequitysecuritiesortheincur
199、renceofdebt,whichcouldadverselyaffectourbusiness,resultsofoperationsorfinancialcondition.Inaddition,asignificantportionofthepurchasepriceofcompaniesweacquiremaybeallocatedtogoodwillandotherintangibleassets,whichmustbeassessedforimpairmentatleastannually.Ifouracquisitionsdonotultimatelyyieldexpectedr
200、eturns,wemayberequiredtomakechargestoouroperatingresultsbasedonourimpairmentassessmentprocess,whichcouldharmourresultsofoperations.Because our long-term growth strategy involves further expansion of our sales to customers outside the United States,our business will be susceptible to risksassociated
201、with international operations.Acomponentofourgrowthstrategyinvolvesthefurtherexpansionofouroperationsandcustomerbaseinternationally.Wehaveopened6internationalofficessince2013.Wealsoplantoopenadditionalofficesinthefuture.Theseinternationalofficesfocusprimarilyonsales,professionalservicesandsupport.We
202、alsohaveadevelopmentteaminDublin,Ireland.Ourcurrentinternationaloperationsandfutureinitiativeswillinvolveavarietyofrisks,including:difficultiesinmaintainingourcompanyculturewithadispersedanddistantworkforce;morestringentregulationsrelatingtodatasecurityandtheunauthorizeduseof,oraccessto,commercialan
203、dpersonalinformation,particularlyintheEuropeanUnion;unexpectedchangesinregulatoryrequirements,taxesortradelaws;differinglaborregulations,especiallyintheEuropeanUnion,wherelaborlawsaregenerallymoreadvantageoustoemployeesascomparedtotheUnitedStates,includingdeemedhourlywageandovertimeregulationsinthes
204、elocations;14challengesinherentinefficientlymanaginganincreasednumberofemployeesoverlargegeographicdistances,includingtheneedtoimplementappropriatesystems,policies,benefitsandcomplianceprograms;difficultiesinmanagingabusinessinnewmarketswithdiversecultures,languages,customs,legalsystems,alternatived
205、isputesystemsandregulatorysystems;currencyexchangeratefluctuationsandtheresultingeffectonourrevenueandexpenses,andthecostandriskofenteringintohedgingtransactionsifwechosetodosointhefuture;globaleconomicuncertaintycausedbyglobalpoliticalevents,includingtheUnitedKingdoms2016voteinfavorofexistingtheEur
206、opeanUnion,orBrexit,andsimilargeopoliticaldevelopments;limitationsonourabilitytoreinvestearningsfromoperationsinonecountrytofundthecapitalneedsofouroperationsinothercountries;limitedorinsufficientintellectualpropertyprotection;politicalinstabilityorterroristactivities;likelihoodofpotentialoractualvi
207、olationsofdomesticandinternationalanticorruptionlaws,suchastheU.S.ForeignCorruptPracticesActandtheU.K.BriberyAct,orofU.S.andinternationalexportcontrolandsanctionsregulations,whichlikelihoodmayincreasewithanincreaseofsalesoroperationsinforeignjurisdictionsandoperationsincertainindustries;andadverseta
208、xburdensandforeignexchangecontrolsthatcouldmakeitdifficulttorepatriateearningsandcash.Ourlimitedexperienceinoperatingourbusinessinternationallyincreasestheriskthatanypotentialfutureexpansioneffortsthatwemayundertakewillnotbesuccessful.Ifweinvestsubstantialtimeandresourcestoexpandourinternationaloper
209、ationsandareunabletodososuccessfullyandinatimelymanner,ourbusinessandoperatingresultswillsuffer.WecontinuetoimplementpoliciesandprocedurestofacilitateourcompliancewithU.S.lawsandregulationsapplicabletoorarisingfromourinternationalbusiness.Inadequaciesinourpastorcurrentcompliancepracticesmayincreaset
210、heriskofinadvertentviolationsofsuchlawsandregulations,whichcouldleadtofinancialandotherpenaltiesthatcoulddamageourreputationandimposecostsonus.Interruptions or delays in service from our third-party data center providers could impair our ability to deliver our platform to our customers,resulting inc
211、ustomer dissatisfaction,damage to our reputation,loss of customers,limited growth and reduction in revenue.Wecurrentlyservethemajorityofourplatformfunctionsfromthird-partydatacenterhostingfacilitiesoperatedbyAmazonWebServiceslocatedinnorthernVirginiaandGoogleCloudPlatformlocatedinFrankfurt,Germany.I
212、naddition,weserveancillaryfunctionsforourcustomersfromthird-partydatacenterhostingfacilitiesoperatedbyRackspacelocatedinDallas,Texas,withabackupfacilityinChicago,Illinois.Ouroperationsdepend,inpart,onourthird-partyfacilityprovidersabilitiestoprotectthesefacilitiesagainstdamageorinterruptionfromnatur
213、aldisasters,suchasearthquakesandhurricanes,powerortelecommunicationsfailures,criminalactsandsimilarevents.Intheeventthatanyofourthird-partyfacilitiesarrangementsisterminated,orifthereisalapseofserviceordamagetoafacility,wecouldexperienceinterruptionsinourplatformaswellasdelaysandadditionalexpensesin
214、arrangingnewfacilitiesandservices.Anydamageto,orfailureof,thesystemsofourthird-partyproviderscouldresultininterruptionstoourplatform.Despiteprecautionstakenatourdatacenters,theoccurrenceofspikesinusagevolume,anaturaldisaster,suchasearthquakesorhurricane,anactofterrorism,vandalismorsabotage,adecision
215、tocloseafacilitywithoutadequatenotice,orotherunanticipatedproblemsatafacilitycouldresultinlengthyinterruptionsintheavailabilityofouron-demandsoftware.Evenwithcurrentandplanneddisasterrecoveryarrangements,ourbusinesscouldbeharmed.Also,intheeventofdamageorinterruption,ourinsurancepoliciesmaynotadequat
216、elycompensateusforanylossesthatwemayincur.Thesefactorsinturncouldfurtherreduceourrevenue,subjectustoliabilityandcauseustoissuecreditsorcausecustomerstofailtorenewtheirsubscriptions,anyofwhichcouldmateriallyadverselyaffectourbusiness.We are dependent on the continued availability of third-party data
217、hosting and transmission services.Asignificantportionofouroperatingcostisfromourthird-partydatahostingandtransmissionservices.Ifthecostsforsuchservicesincreaseduetovendorconsolidation,regulation,contractrenegotiation,orotherwise,wemaynotbeabletoincreasethefeesforourGrowthPlatformorservicestocoverthe
218、changes.Asaresult,ouroperatingresultsmaybesignificantlyworsethanforecasted.15If we do not or cannot maintain the compatibility of our Growth Platform with third-party applications that our customers use in their businesses,our revenuewill decline.Asignificantpercentageofourcustomerschoosetointegrate
219、ourplatformwithcertaincapabilitiesprovidedbythird-partyapplicationprovidersusingapplicationprogramminginterfaces,orAPIs,publishedbytheseproviders.ThefunctionalityandpopularityofourGrowthPlatformdepends,inpart,onourabilitytointegrateourplatformwiththird-partyapplicationsandplatforms,includingCRM,CMS,
220、e-commerce,callcenter,analyticsandsocialmediasitesthatourcustomersuseandfromwhichtheyobtaindata.Third-partyprovidersofapplicationsandAPIsmaychangethefeaturesoftheirapplicationsandplatforms,restrictouraccesstotheirapplicationsandplatformsoralterthetermsgoverninguseoftheirapplicationsandAPIsandaccesst
221、othoseapplicationsandplatformsinanadversemanner.Suchchangescouldfunctionallylimitorterminateourabilitytousethesethird-partyapplicationsandplatformsinconjunctionwithourplatform,whichcouldnegativelyimpactourofferingsandharmourbusiness.Ifwefailtointegrateourplatformwithnewthird-partyapplicationsandplat
222、formsthatourcustomersuseformarketing,salesorservicespurposes,wemaynotbeabletoofferthefunctionalitythatourcustomersneed,whichwouldnegativelyimpactourabilitytogeneraterevenueandadverselyimpactourbusiness.We rely on data provided by third parties,the loss of which could limit the functionality of our p
223、latform and disrupt our business.SelectfunctionalityofourGrowthPlatformdependsonourabilitytodeliverdata,includingsearchengineresultsandsocialmediaupdates,providedbyunaffiliatedthirdparties,suchasFacebook,Google,LinkedInandTwitter.Someofthisdataisprovidedtouspursuanttothird-partydatasharingpoliciesan
224、dtermsofuse,underdatasharingagreementsbythird-partyprovidersorbycustomerconsent.Inthefuture,anyofthesethirdpartiescouldchangeitsdatasharingpolicies,includingmakingthemmorerestrictive,oralteritsalgorithmsthatdeterminetheplacement,display,andaccessibilityofsearchresultsandsocialmediaupdates,anyofwhich
225、couldresultinthelossof,orsignificantimpairmentto,ourabilitytocollectandprovideusefuldatatoourcustomers.Thesethirdpartiescouldalsointerpretour,orourserviceproviders,datacollectionpoliciesorpracticesasbeinginconsistentwiththeirpolicies,whichcouldresultinthelossofourabilitytocollectthisdataforourcustom
226、ers.Anysuchchangescouldimpairourabilitytodeliverdatatoourcustomersandcouldadverselyimpactselectfunctionalityofourplatform,impairingthereturnoninvestmentthatourcustomersderivefromusingoursolution,aswellasadverselyaffectingourbusinessandourabilitytogeneraterevenue.Privacy concerns and end users accept
227、ance of Internet behavior tracking may limit the applicability,use and adoption of our Growth Platform.Privacyconcernsmaycauseenduserstoresistprovidingthepersonaldatanecessarytoallowourcustomerstouseourplatformeffectively.Wehaveimplementedvariousfeaturesintendedtoenableourcustomerstobetterprotectend
228、userprivacy,butthesemeasuresmaynotalleviateallpotentialprivacyconcernsandthreats.Eventheperceptionofprivacyconcerns,whetherornotvalid,mayinhibitmarketadoptionofourplatform,especiallyincertainindustriesthatrelyonsensitivepersonalinformation.Privacyadvocacygroupsandthetechnologyandotherindustriesareco
229、nsideringvariousnew,additionalordifferentself-regulatorystandardsthatmayplaceadditionalburdensonus.Thecostsofcompliancewith,andotherburdensimposedbythesegroupspoliciesandactionsmaylimittheuseandadoptionofourGrowthPlatformandreduceoveralldemandforit,orleadtosignificantfines,penaltiesorliabilitiesfora
230、nynoncomplianceorlossofanysuchaction.We are subject to governmental regulation and other legal obligations,particularly related to privacy,data protection and information security,and our actualor perceived failure to comply with such obligations could harm our business.Compliance with such laws cou
231、ld also impair our efforts to maintain and expandour customer base,and thereby decrease our revenue.Ourhandlingofdataissubjecttoavarietyoflawsandregulations,includingregulationbyvariousgovernmentagencies,includingtheU.S.FederalTradeCommission,orFTC,andvariousstate,localandforeignagencies.Wecollectpe
232、rsonallyidentifiableinformationandotherdatafromourcustomersandleads.Wealsohandlepersonallyidentifiableinformationaboutourcustomerscustomers.Weusethisinformationtoprovideservicestoourcustomers,tosupport,expandandimproveourbusiness.Wemayalsosharecustomerspersonallyidentifiableinformationwiththirdparti
233、esasauthorizedbythecustomerorasdescribedinourprivacypolicy.TheU.S.federalandvariousstateandforeigngovernmentshaveadoptedorproposedlimitationsonthecollection,distribution,useandstorageofpersonalinformationofindividuals.IntheUnitedStates,theFTCandmanystateattorneysgeneralareapplyingfederalandstatecons
234、umerprotectionlawsasimposingstandardsfortheonlinecollection,useanddisseminationofdata.However,theseobligationsmaybeinterpretedandappliedinamannerthatisinconsistentfromonejurisdictiontoanotherandmayconflictwithotherrequirementsorourpractices.Anyfailureorperceivedfailurebyustocomplywithprivacyorsecuri
235、tylaws,policies,legalobligationsorindustrystandardsoranysecurityincidentthatresultsintheunauthorizedreleaseortransferofpersonallyidentifiableinformationorothercustomerdatamayresultingovernmentalenforcementactions,litigation,finesandpenaltiesand/oradversepublicity,andcouldcauseourcustomerstolosetrust
236、inus,whichcouldhaveanadverseeffectonourreputationandbusiness.16Lawsandregulationsconcerningprivacy,dataprotectionandinformationsecurityareevolving,andchangestosuchlawsandregulationscouldrequireustochangefeaturesofourplatformorrestrictourcustomersabilitytocollectanduseemailaddresses,pageviewingdataan
237、dpersonalinformation,whichmayreducedemandforourplatform.Ourfailuretocomplywithfederal,stateandinternationaldataprivacylawsandregulationscouldharmourabilitytosuccessfullyoperateourbusinessandpursueourbusinessgoals.Inaddition,severalforeigncountriesandgovernmentalbodies,includingtheEuropeanUnionandCan
238、ada,haveregulationsdealingwiththecollectionanduseofpersonalinformationobtainedfromtheirresidents,whichareoftenmorerestrictivethanthoseintheUnitedStates.Lawsandregulationsinthesejurisdictionsapplybroadlytothecollection,use,storage,disclosureandsecurityofpersonalinformationthatidentifiesormaybeusedtoi
239、dentifyanindividual.WithintheEuropeanUnion,legislatorshaveadoptedtheGeneralDataProtectionRegulation,orGDPR,whichbecameeffectiveinMay2018whichmayimposeadditionalobligationsandriskuponourbusinessandwhichmayincreasesubstantiallythepenaltiestowhichwecouldbesubjectintheeventofanynon-compliance.Inaddition
240、,BrexitcouldalsoleadtofurtherlegislativeandregulatorychangesbytheplannedexitdateofMarch2019.ItremainsunclearhowtheUnitedKingdomdataprotectionlawsorregulationswilldevelopinthemediumtolongertermandhowdatatransferstoandfromtheUnitedKingdomwillberegulated.Wemayincursubstantialexpenseincomplyingwiththene
241、wobligationstobeimposedbytheGDPRandwemayberequiredtomakesignificantchangesinourbusinessoperations,allofwhichmayadverselyaffectourrevenuesandourbusinessoverall.OnMay23,2016,theEuropeanParliamentadoptedaresolutionandonJuly8,2016theEuropeanMemberStaterepresentativesapprovedthefinalversionoftheEU-USPriv
242、acyShieldasasuccessortotheSafeHarborframework.AsofAugust1,2016,interestedcompanieshavebeenpermittedtoregisterfortheprogram.WearecurrentlycertifiedtotheEU-USPrivacyShield.TherecontinuetobeconcernsaboutwhethertheEU-USPrivacyShieldwillfaceadditionalchallenges.Untiltheremaininglegaluncertaintiesregardin
243、gthefutureoftheEU-USPrivacyShieldaresettled,wewillcontinuetofaceuncertaintyastowhetheroureffortstocomplywithourobligationsunderEuropeanprivacylawswillbesufficient.IfweareinvestigatedbyaEuropeandataprotectionauthority,wemayfacefinesandotherpenalties.AnysuchinvestigationorchargesbyEuropeandataprotecti
244、onauthoritiescouldhaveanegativeeffectonourexistingbusinessandonourabilitytoattractandretainnewcustomers.Wemayalsoexperiencehesitancy,reluctance,orrefusalbyEuropeanormulti-nationalcustomerstocontinuetouseourservicesduetothepotentialriskexposuretosuchcustomersasaresultoftheECJrulinginCaseC-362/14andth
245、ecurrentdataprotectionobligationsimposedonthembycertaindataprotectionauthorities.Suchcustomersmayalsoviewanyalternativeapproachestocomplianceasbeingtoocostly,tooburdensome,toolegallyuncertainorotherwiseobjectionableandthereforedecidenottodobusinesswithus.Forexample,someofourcustomersorpotentialcusto
246、mersintheEUmayrequiretheirvendorstohostallpersonaldatawithintheEUandmaydecidetodobusinesswithoneofourcompetitorswhohostspersonaldatawithintheEUinsteadofdoingbusinesswithus.WeandourcustomersareatriskofenforcementactionstakenbycertainEUdataprotectionauthoritiesuntilsuchpointintimethatwemaybeabletoensu
247、rethatalltransfersofpersonaldatatousfromtheEEAareconductedincompliancewithallapplicableregulatoryobligations,theguidanceofdataprotectionauthorities,andevolvingbestpractices.WemayfinditnecessarytoestablishsystemstomaintainpersonaldataoriginatingfromtheEUintheEEA,whichmayinvolvesubstantialexpenseandma
248、ycauseustoneedtodivertresourcesfromotheraspectsofourbusiness,allofwhichmayadverselyaffectourbusiness.Inaddition,ifourprivacyordatasecuritymeasuresfailtocomplywithcurrentorfuturelawsandregulations,wemaybesubjecttoclaims,legalproceedingsorotheractionsbyindividualsorgovernmentalauthoritiesbasedonprivac
249、yordataprotectionregulationsandourcommitmentstocustomersorothers,aswellasnegativepublicityandapotentiallossofbusiness.Moreover,iffuturelawsandregulationslimitoursubscribersabilitytouseandsharepersonalinformationorourabilitytostore,processandsharepersonalinformation,demandforoursolutionscoulddecrease
250、,ourcostscouldincrease,andourbusiness,resultsofoperationsandfinancialconditioncouldbeharmed.If our or our customers security measures are compromised or unauthorized access to data of our customers or their customers is otherwise obtained,ourGrowth Platform may be perceived as not being secure,our c
251、ustomers may be harmed and may curtail or cease their use of our platform,our reputation maybe damaged and we may incur significant liabilities.Ouroperationsinvolvethestorageandtransmissionofdataofourcustomersandtheircustomers,includingpersonallyidentifiableinformation.Ourstorageistypicallythesoleso
252、urceofrecordforportionsofourcustomersbusinessesandenduserdata,suchasinitialcontactinformationandonlineinteractions.Securityincidentscouldresultinunauthorizedaccessto,lossoforunauthorizeddisclosureofthisinformation,litigation,indemnityobligationsandotherpossibleliabilities,aswellasnegativepublicity,w
253、hichcoulddamageourreputation,impairoursalesandharmourcustomersandourbusiness.Cyber-attacksandothermaliciousInternet-basedactivitycontinuetoincreasegenerally,andcloud-basedplatformprovidersofmarketingserviceshavebeentargeted.Ifoursecuritymeasuresarecompromisedasaresultofthird-partyaction,employeeorcu
254、stomererror,malfeasance,stolenorfraudulentlyobtainedlog-incredentialsorotherwise,ourreputationcouldbedamaged,ourbusinessmaybeharmedandwecouldincursignificantliability.Ifthirdpartieswithwhomwework,suchasvendorsordevelopers,violateapplicablelaws,oursecuritypoliciesorouracceptableusepolicy,suchviolatio
255、nsmayalsoputourcustomersinformationatriskandcouldinturnhave17anadverseeffectonourbusiness.Inaddition,ifthesecuritymeasuresofourcustomersarecompromised,evenwithoutanyactualcompromiseofourownsystems,wemayfacenegativepublicityorreputationalharmifourcustomersoranyoneelseincorrectlyattributestheblamefors
256、uchsecuritybreachestousoroursystems.Wemaybeunabletoanticipateorpreventtechniquesusedtoobtainunauthorizedaccessortosabotagesystemsbecausetheychangefrequentlyandgenerallyarenotdetecteduntilafteranincidenthasoccurred.Asweincreaseourcustomerbaseandourbrandbecomesmorewidelyknownandrecognized,wemaybecomem
257、oreofatargetforthirdpartiesseekingtocompromiseoursecuritysystemsorgainunauthorizedaccesstoourcustomersdata.Additionally,weprovideextensiveaccesstoourdatabase,whichstoresourcustomerdata,toourdevelopmentteamtofacilitateourrapidpaceofproductdevelopment.Ifsuchaccessorourownoperationscausetheloss,damageo
258、rdestructionofourcustomersbusinessdata,theirsales,leadgeneration,supportandotherbusinessoperationsmaybepermanentlyharmed.Asaresult,ourcustomersmaybringclaimsagainstusforlostprofitsandotherdamages.Manygovernmentshaveenactedlawsrequiringcompaniestonotifyindividualsofdatasecurityincidentsorunauthorized
259、transfersinvolvingcertaintypesofpersonaldata.Inaddition,someofourcustomerscontractuallyrequirenotificationofanydatasecuritycompromise.Securitycompromisesexperiencedbyourcompetitors,byourcustomersorbyusmayleadtopublicdisclosures,whichmayleadtowidespreadnegativepublicity.Anysecuritycompromiseinourindu
260、stry,whetheractualorperceived,couldharmourreputation,erodecustomerconfidenceintheeffectivenessofoursecuritymeasures,negativelyimpactourabilitytoattractnewcustomers,causeexistingcustomerstoelectnottorenewtheirsubscriptionsorsubjectustothird-partylawsuits,regulatoryfinesorotheractionorliability,whichc
261、ouldmateriallyandadverselyaffectourbusinessandoperatingresults.Therecanbenoassurancethatanylimitationsofliabilityprovisionsinourcontractsforasecuritybreachwouldbeenforceableoradequateorwouldotherwiseprotectusfromanysuchliabilitiesordamageswithrespecttoanyparticularclaim.Wealsocannotbesurethatourexis
262、tinggeneralliabilityinsurancecoverageandcoverageforerrorsoromissionswillcontinuetobeavailableonacceptabletermsorwillbeavailableinsufficientamountstocoveroneormorelargeclaims,orthattheinsurerwillnotdenycoverageastoanyfutureclaim.Thesuccessfulassertionofoneormorelargeclaimsagainstusthatexceedavailable
263、insurancecoverage,ortheoccurrenceofchangesinourinsurancepolicies,includingpremiumincreasesortheimpositionoflargedeductibleorco-insurancerequirements,couldhaveamaterialadverseeffectonourbusiness,financialconditionandoperatingresults.If our Growth Platform fails due to defects or similar problems,and
264、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.Ourplatformanditsunderlyinginfrastructureareinherentlycomplexandmaycontainmaterialdefectsorerrors.Wereleasemodifications,updates,bug
265、fixesandotherchangestooursoftwareseveraltimesperday,withouttraditionalhuman-performedqualitycontrolreviewsforeachrelease.Wehavefromtimetotimefounddefectsinoursoftwareandmaydiscoveradditionaldefectsinthefuture.Wemaynotbeabletodetectandcorrectdefectsorerrorsbeforecustomersbegintouseourplatformoritsapp
266、lications.Consequently,weorourcustomersmaydiscoverdefectsorerrorsafterourplatformhasbeenimplemented.Thesedefectsorerrorscouldalsocauseinaccuraciesinthedatawecollectandprocessforourcustomers,oreventheloss,damageorinadvertentreleaseofsuchconfidentialdata.Weimplementbugfixesandupgradesaspartofourregula
267、rsystemmaintenance,whichmayleadtosystemdowntime.Evenifweareabletoimplementthebugfixesandupgradesinatimelymanner,anyhistoryofdefectsorinaccuraciesinthedatawecollectforourcustomers,ortheloss,damageorinadvertentreleaseofconfidentialdatacouldcauseourreputationtobeharmed,andcustomersmayelectnottopurchase
268、orrenewtheiragreementswithusandsubjectustoserviceperformancecredits,warrantyclaimsorincreasedinsurancecosts.Thecostsassociatedwithanymaterialdefectsorerrorsinourplatformorotherperformanceproblemsmaybesubstantialandcouldmateriallyadverselyaffectouroperatingresults.Risks Related to Intellectual Proper
269、tyOur business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others.Thesoftwareindustryischaracterizedbytheexistenceofalargenumberofpatents,copyrights,trademarks,tradesecretsandotherintellectualandproprietaryrights.Companiesinthesoftwarei
270、ndustry,includingthoseinmarketingsoftware,areoftenrequiredtodefendagainstlitigationclaimsbasedonallegationsofinfringementorotherviolationsofintellectualpropertyrights.Manyofourcompetitorsandotherindustryparticipantshavebeenissuedpatentsand/orhavefiledpatentapplicationsandmayassertpatentorotherintell
271、ectualpropertyrightswithintheindustry.Moreover,inrecentyears,individualsandgroupsthatarenon-practicingentities,commonlyreferredtoas“patenttrolls,”havepurchasedpatentsandotherintellectualpropertyassetsforthepurposeofmakingclaimsofinfringementinordertoextractsettlements.Fromtimetotime,wemayreceivethre
272、ateninglettersornoticesormaybethesubjectofclaimsthatourservicesand/orplatformandunderlyingtechnologyinfringeorviolatetheintellectualpropertyrightsofothers.Respondingtosuchclaims,regardlessoftheirmerit,canbetimeconsuming,costlytodefendinlitigation,divertmanagementsattentionandresources,damageourreput
273、ationandbrandandcauseustoincursignificantexpenses.Ourtechnologiesmaynotbeabletowithstandanythird-partyclaimsorrightsagainsttheiruse.Claimsofintellectualpropertyinfringementmightrequireustoredesignourapplication,delayreleases,enterintocostlysettlementorlicenseagreementsorpaycostlydamageawards,orfacea
274、temporaryorpermanentinjunctionprohibitingusfrommarketingorsellingourplatform.Ifwecannotordonotlicensetheinfringedtechnologyonreasonabletermsoratall,orsubstitutesimilartechnologyfromanothersource,ourrevenueandoperatingresultscouldbeadverselyimpacted.Additionally,ourcustomersmaynotpurchaseourGrowthPla
275、tformiftheyareconcernedthattheymayinfringethird-partyintellectualpropertyrights.Theoccurrenceofanyoftheseeventsmayhaveamaterialadverseeffectonourbusiness.18Inoursubscriptionagreementswithourcustomers,wegenerallydonotagreetoindemnifyourcustomersagainstanylossesorcostsincurredinconnectionwithclaimsbya
276、thirdpartyallegingthatacustomersuseofourservicesorplatforminfringestheintellectualpropertyrightsofthethirdparty.Therecanbenoassurance,however,thatcustomerswillnotassertacommonlawindemnityclaimorthatanyexistinglimitationsofliabilityprovisionsinourcontractswouldbeenforceableoradequate,orwouldotherwise
277、protectusfromanysuchliabilitiesordamageswithrespecttoanyparticularclaim.Ourcustomerswhoareaccusedofintellectualpropertyinfringementmayinthefutureseekindemnificationfromusundercommonlaworotherlegaltheories.Ifsuchclaimsaresuccessful,orifwearerequiredtoindemnifyordefendourcustomersfromtheseorotherclaim
278、s,thesematterscouldbedisruptivetoourbusinessandmanagementandhaveamaterialadverseeffectonourbusiness,operatingresultsandfinancialcondition.If we fail to adequately protect our proprietary rights,in the United States and abroad,our competitive position could be impaired and we may lose valuableassets,
279、experience reduced revenue and incur costly litigation to protect our rights.Oursuccessisdependent,inpart,uponprotectingourproprietarytechnology.Werelyonacombinationofcopyrights,trademarks,servicemarks,tradesecretlawsandcontractualrestrictionstoestablishandprotectourproprietaryrightsinourproductsand
280、services.However,thestepswetaketoprotectourintellectualpropertymaybeinadequate.Wewillnotbeabletoprotectourintellectualpropertyifweareunabletoenforceourrightsorifwedonotdetectunauthorizeduseofourintellectualproperty.Anyofourtrademarksorotherintellectualpropertyrightsmaybechallengedbyothersorinvalidat
281、edthroughadministrativeprocessorlitigation.Furthermore,legalstandardsrelatingtothevalidity,enforceabilityandscopeofprotectionofintellectualpropertyrightsareuncertain.Despiteourprecautions,itmaybepossibleforunauthorizedthirdpartiestocopyourtechnologyanduseinformationthatweregardasproprietarytocreatep
282、roductsandservicesthatcompetewithours.Somelicenseprovisionsprotectingagainstunauthorizeduse,copying,transferanddisclosureofourofferingsmaybeunenforceableunderthelawsofcertainjurisdictionsandforeigncountries.Inaddition,thelawsofsomecountriesdonotprotectproprietaryrightstothesameextentasthelawsoftheUn
283、itedStates.Totheextentweexpandourinternationalactivities,ourexposuretounauthorizedcopyinganduseofourtechnologyandproprietaryinformationmayincrease.Weenterintoconfidentialityandinventionassignmentagreementswithouremployeesandconsultantsandenterintoconfidentialityagreementswiththepartieswithwhomwehave
284、strategicrelationshipsandbusinessalliances.Noassurancecanbegiventhattheseagreementswillbeeffectiveincontrollingaccesstoanddistributionofourproductsandproprietaryinformation.Further,theseagreementsmaynotpreventourcompetitorsfromindependentlydevelopingtechnologiesthataresubstantiallyequivalentorsuperi
285、ortoourplatformandofferings.Wemayberequiredtospendsignificantresourcestomonitorandprotectourintellectualpropertyrights.Litigationmaybenecessaryinthefuturetoenforceourintellectualpropertyrightsandtoprotectourtradesecrets.Suchlitigationcouldbecostly,timeconsuminganddistractingtomanagementandcouldresul
286、tintheimpairmentorlossofportionsofourintellectualproperty.Furthermore,oureffortstoenforceourintellectualpropertyrightsmaybemetwithdefenses,counterclaimsandcountersuitsattackingthevalidityandenforceabilityofourintellectualpropertyrights.Ourinabilitytoprotectourproprietarytechnologyagainstunauthorized
287、copyingoruse,aswellasanycostlylitigation,coulddelayfurthersalesortheimplementationofourplatformandofferings,impairthefunctionalityofourplatformandofferings,delayintroductionsofnewfeaturesorenhancements,resultinoursubstitutinginferiorormorecostlytechnologiesintoourplatformandofferings,orinjureourrepu
288、tation.Our use of“open source”software could negatively affect our ability to offer our platform and subject us to possible litigation.Asubstantialportionofourcloud-basedplatformincorporatesso-called“opensource”software,andwemayincorporateadditionalopensourcesoftwareinthefuture.Opensourcesoftwareisg
289、enerallyfreelyaccessible,usableandmodifiable.Certainopensourcelicensesmay,incertaincircumstances,requireustoofferthecomponentsofourplatformthatincorporatetheopensourcesoftwarefornocost,thatwemakeavailablesourcecodeformodificationsorderivativeworkswecreatebasedupon,incorporatingorusingtheopensourceso
290、ftwareandthatwelicensesuchmodificationsorderivativeworksunderthetermsoftheparticularopensourcelicense.Ifanauthororotherthirdpartythatdistributesopensourcesoftwareweuseweretoallegethatwehadnotcompliedwiththeconditionsofoneormoreoftheselicenses,wecouldberequiredtoincursignificantlegalexpensesdefending
291、againstsuchallegationsandcouldbesubjecttosignificantdamages,includingbeingenjoinedfromtheofferingofthecomponentsofourplatformthatcontainedtheopensourcesoftwareandbeingrequiredtocomplywiththeforegoingconditions,whichcoulddisruptourabilitytooffertheaffectedsoftware.Wecouldalsobesubjecttosuitsbyparties
292、claimingownershipofwhatwebelievetobeopensourcesoftware.Litigationcouldbecostlyforustodefend,haveanegativeeffectonouroperatingresultsandfinancialconditionandrequireustodevoteadditionalresearchanddevelopmentresourcestochangeourproducts.19Weakened global economic conditions may harm our industry,busine
293、ss and results of operations.Ouroverallperformancedependsinpartonworldwideeconomicconditions.Globalfinancialdevelopmentsanddownturnsseeminglyunrelatedtousorthesoftwareindustrymayharmus.TheUnitedStatesandotherkeyinternationaleconomieshavebeenaffectedfromtimetotimebyfallingdemandforavarietyofgoodsands
294、ervices,restrictedcredit,poorliquidity,reducedcorporateprofitability,volatilityincredit,equityandforeignexchangemarkets,bankruptcies,andoveralluncertaintywithrespecttotheeconomy,includingwithrespecttotariffandtradeissues.Inparticular,theeconomiesofcountriesinEuropehavebeenexperiencingweaknessassocia
295、tedwithhighsovereigndebtlevels,weaknessinthebankingsectoranduncertaintyoverthefutureoftheEurozone,includinginstabilitysurroundingBrexit.Wehaveoperations,aswellascurrentandpotentialnewcustomers,throughoutmostofEurope.IfeconomicconditionsinEuropeandotherkeymarketsforourplatformcontinuetoremainuncertai
296、nordeterioratefurther,itcouldadverselyaffectourcustomersabilityorwillingnesstosubscribetoourplatform,delayprospectivecustomerspurchasingdecisions,reducethevalueordurationoftheirsubscriptionsoraffectrenewalrates,allofwhichcouldharmouroperatingresults.Risks Related to Government Regulation and Taxatio
297、n We could face liability,or our reputation might be harmed,as a result of the activities of our customers,the content of their websites or the data they store onour servers.Asaproviderofacloud-basedinboundmarketing,salesandcustomerservicesoftwareplatform,wemaybesubjecttopotentialliabilityfortheacti
298、vitiesofourcustomersonorinconnectionwiththedatatheystoreonourservers.Althoughourcustomertermsofuseprohibitillegaluseofourservicesbyourcustomersandpermitustotakedownwebsitesortakeotherappropriateactionsforillegaluse,customersmaynonethelessengageinprohibitedactivitiesoruploadorstorecontentwithusinviol
299、ationofapplicablelaworthecustomersownpolicies,whichcouldsubjectustoliabilityorharmourreputation.Furthermore,customersmayupload,store,orusecontentonourGrowthPlatformthatmaybeviolateourpolicyonacceptableusewhichprohibitscontentthatisthreatening,abusive,harassing,deceptive,false,misleading,vulgar,obsce
300、ne,orindecent.Whilesuchcontentmaynotbeillegal,useofourGrowthPlatformforsuchcontentcouldharmourreputationresultinginalossofbusiness.SeveralU.S.federalstatutesmayapplytouswithrespecttovariouscustomeractivities:TheDigitalMillenniumCopyrightActof1998,orDMCA,providesrecourseforownersofcopyrightedmaterial
301、whobelievethattheirrightsunderU.S.copyrightlawhavebeeninfringedontheInternet.UndertheDMCA,basedonourcurrentbusinessactivityasanInternetserviceproviderthatdoesnotownorcontrolwebsitecontentpostedbyourcustomers,wegenerallyarenotliableforinfringingcontentpostedbyourcustomersorotherthirdparties,providedt
302、hatwefollowtheproceduresforhandlingcopyrightinfringementclaimssetforthintheDMCA.Generally,ifwereceiveapropernoticefrom,oronbehalf,ofacopyrightowneralleginginfringementofcopyrightedmateriallocatedonwebsiteswehost,andwefailtoexpeditiouslyremoveordisableaccesstotheallegedlyinfringingmaterialorotherwise
303、failtomeettherequirementsofthesafeharborprovidedbytheDMCA,thecopyrightownermayseektoimposeliabilityonus.TechnicalmistakesincomplyingwiththedetailedDMCAtake-downprocedurescouldsubjectustoliabilityforcopyrightinfringement.TheCommunicationsDecencyActof1996,orCDA,generallyprotectsonlineserviceproviders,
304、suchasus,fromliabilityforcertainactivitiesoftheircustomers,suchasthepostingofdefamatoryorobscenecontent,unlesstheonlineserviceproviderisparticipatingintheunlawfulconduct.UndertheCDA,wearegenerallynotresponsibleforthecustomer-createdcontenthostedonourservers.Consequently,wedonotmonitorhostedwebsiteso
305、rprescreenthecontentplacedbyourcustomersontheirsites.However,theCDAdoesnotapplyinforeignjurisdictionsandwemaynonethelessbebroughtintodisputesbetweenourcustomersandthirdpartieswhichwouldrequireustodevotemanagementtimeandresourcestoresolvesuchmattersandanypublicityfromsuchmatterscouldalsohaveanadverse
306、effectonourreputationandthereforeourbusiness.InadditiontotheCDA,theSecuringtheProtectionofourEnduringandEstablishedConstitutionalHeritageAct,ortheSPEECHAct,providesastatutoryexceptiontotheenforcementbyaU.S.courtofaforeignjudgmentfordefamationundercertaincircumstances.Generally,theexceptionappliesift
307、hedefamationlawappliedintheforeigncourtdidnotprovideatleastasmuchprotectionforfreedomofspeechandpressaswouldbeprovidedbytheFirstAmendmentoftheU.S.ConstitutionorbytheconstitutionandlawofthestateinwhichtheU.S.courtislocated,orifnofindingofdefamationwouldbesupportedundertheFirstAmendmentoftheU.S.Consti
308、tutionorundertheconstitutionandlawofthestateinwhichtheU.S.courtislocated.AlthoughtheSPEECHActmayprotectusfromtheenforcementofforeignjudgmentsintheUnitedStates,itdoesnotaffecttheenforceabilityofthejudgmentintheforeigncountrythatissuedthejudgment.Givenourinternationalpresence,wemaytherefore,nonetheles
309、s,havetodefendagainstorcomplywithanyforeignjudgmentsmadeagainstus,whichcouldtakeupsubstantialmanagementtimeandresourcesanddamageourreputation.20AlthoughthesestatutesandcaselawintheUnitedStateshavegenerallyshieldedusfromliabilityforcustomeractivitiestodate,courtrulingsinpendingorfuturelitigationmayna
310、rrowthescopeofprotectionaffordedusundertheselaws.Inaddition,lawsgoverningtheseactivitiesareunsettledinmanyinternationaljurisdictions,ormayprovedifficultorimpossibleforustocomplywithinsomeinternationaljurisdictions.Also,notwithstandingtheexculpatorylanguageofthesebodiesoflaw,wemaybecomeinvolvedincomp
311、laintsandlawsuitswhich,evenifultimatelyresolvedinourfavor,addcosttoourdoingbusinessandmaydivertmanagementstimeandattention.Finally,otherexistingbodiesoflaw,includingthecriminallawsofvariousstates,maybedeemedtoapplyornewstatutesorregulationsmaybeadoptedinthefuture,anyofwhichcouldexposeustofurtherliab
312、ilityandincreaseourcostsofdoingbusiness.We may be subject to additional obligations to collect and remit sales tax and other taxes,and we may be subject to tax liability for past sales,which could harmour business.State,localandforeignjurisdictionshavedifferingrulesandregulationsgoverningsales,use,v
313、alueaddedandothertaxes,andtheserulesandregulationsaresubjecttovaryinginterpretationsthatmaychangeovertime.Inparticular,theapplicabilityofsuchtaxestoourGrowthPlatforminvariousjurisdictionsisunclear.Further,thesejurisdictionsrulesregardingtaxnexusarecomplexandvarysignificantly.Asaresult,wecouldfacethe
314、possibilityoftaxassessmentsandaudits,andourliabilityforthesetaxesandassociatedpenaltiescouldexceedouroriginalestimates.Asuccessfulassertionthatweshouldbecollectingadditionalsales,use,valueaddedorothertaxesinthosejurisdictionswherewehavenothistoricallydonesoanddonotaccrueforsuchtaxescouldresultinsubs
315、tantialtaxliabilitiesandrelatedpenaltiesforpastsales,discouragecustomersfrompurchasingourapplicationorotherwiseharmourbusinessandoperatingresults.Changes in tax laws or regulations that are applied adversely to us or our customers could increase the costs of our Growth Platform and adversely impact
316、ourbusiness.Newincome,sales,useorothertaxlaws,statutes,rules,regulationsorordinancescouldbeenactedatanytime.Anynewtaxescouldadverselyaffectourdomesticandinternationalbusinessoperations,andourbusinessandfinancialperformance.Further,existingtaxlaws,statutes,rules,regulationsorordinancescouldbeinterpre
317、ted,changed,modifiedorappliedadverselytous.Theseeventscouldrequireusorourcustomerstopayadditionaltaxamountsonaprospectiveorretroactivebasis,aswellasrequireusorourcustomerstopayfinesand/orpenaltiesandinterestforpastamountsdeemedtobedue.Ifweraiseourpricestooffsetthecostsofthesechanges,existingandpoten
318、tialfuturecustomersmayelectnottocontinueorpurchaseourGrowthPlatforminthefuture.Additionally,new,changed,modifiedornewlyinterpretedorappliedtaxlawscouldincreaseourcustomersandourcompliance,operatingandothercosts,aswellasthecostsofourplatform.Anyoralloftheseeventscouldadverselyimpactourbusinessandfina
319、ncialperformance.We are a multinational organization faced with increasingly complex tax issues in many jurisdictions,and we could be obligated to pay additional taxes invarious jurisdictions.Asamultinationalorganization,wemaybesubjecttotaxationinseveraljurisdictionsaroundtheworldwithincreasinglycom
320、plextaxlaws,theapplicationofwhichcanbeuncertain.Theamountoftaxeswepayinthesejurisdictionscouldincreasesubstantiallyasaresultofchangesintheapplicabletaxprinciples,includingincreasedtaxrates,newtaxlawsorrevisedinterpretationsofexistingtaxlawsandprecedents,whichcouldhaveamaterialadverseeffectonourliqui
321、dityandoperatingresults.Changesintaxlaws,suchastaxreformintheUnitedStatesorchangesintaxlawsresultingfromtheOrganizationforEconomicCo-operationandDevelopmentsmulti-jurisdictionalplanofactiontoaddress“baseerosionandprofitshifting,”couldimpactoureffectivetaxrate.Inaddition,theauthoritiesinthesejurisdic
322、tionscouldreviewourtaxreturnsandimposeadditionaltax,interestandpenalties,andtheauthoritiescouldclaimthatvariouswithholdingrequirementsapplytousoroursubsidiariesorassertthatbenefitsoftaxtreatiesarenotavailabletousoroursubsidiaries,anyofwhichcouldhaveamaterialimpactonusandtheresultsofouroperations.Fai
323、lure to comply with laws and regulations could harm our business.Ourbusinessissubjecttoregulationbyvariousfederal,state,localandforeigngovernmentalagencies,includingagenciesresponsibleformonitoringandenforcingemploymentandlaborlaws,workplacesafety,environmentallaws,consumerprotectionlaws,anti-briber
324、ylaws,import/exportcontrols,federalsecuritieslawsandtaxlawsandregulations.Incertainjurisdictions,theseregulatoryrequirementsmaybemorestringentthanthoseintheUnitedStates.Noncompliancewithapplicableregulationsorrequirementscouldsubjectustoinvestigations,sanctions,mandatoryrecalls,enforcementactions,di
325、sgorgementofprofits,fines,damages,civilandcriminalpenaltiesorinjunctions.21We may not be able to utilize a significant portion of our net operating loss carryforwards,which could adversely affect our profitability.AsofDecember31,2018,wehadfederalandstatenetoperatinglosscarryforwardsduetopriorperiodl
326、osses,which,ifnotutilized,willbegintoexpirein2027forfederalpurposesandbegintoexpirein2023forstatepurposes.Thesenetoperatinglosscarryforwardscouldexpireunusedandbeunavailabletooffsetfutureincometaxliabilities,whichcouldadverselyaffectourprofitability.Inaddition,underSection382oftheInternalRevenueCode
327、of1986,asamended,whichwerefertoastheCode,ourabilitytoutilizenetoperatinglosscarryforwardsorothertaxattributes,suchasresearchtaxcredits,inanytaxableyearmaybefurtherlimitedifweexperienceanownershipchange.ASection382ownershipchangegenerallyoccursifoneormorestockholdersorgroupsofstockholderswhoownatleas
328、t5%ofourstockincreasetheirownershipbymorethan50percentagepointsovertheirlowestownershippercentagewithinarollingthree-yearperiod.Similarrulesmayapplyunderstatetaxlaws.Futureissuancesofourstockcouldcauseanownershipchange.Itispossiblethatanownershipchangeinconnectionwithafutureoffering,oranyfutureowner
329、shipchange,couldhaveamaterialeffectontheuseofournetoperatinglosscarryforwardsorothertaxattributes,whichcouldadverselyaffectourprofitability.NetoperatinglosscarryforwardsincurredforperiodsbeginningonorafterJanuary1,2018wouldnotexpireunusedasaresultoftheselimitationsbecausetheycanbecarriedforwardindef
330、initely.The standards that private entities use to regulate the use of email have in the past interfered with,and may in the future interfere with,the effectiveness of ourGrowth Platform and our ability to conduct business.Ourcustomersrelyonemailtocommunicatewiththeirexistingorprospectivecustomers.V
331、ariousprivateentitiesattempttoregulatetheuseofemailforcommercialsolicitation.Theseentitiesoftenadvocatestandardsofconductorpracticethatsignificantlyexceedcurrentlegalrequirementsandclassifycertainemailsolicitationsthatcomplywithcurrentlegalrequirementsasspam.Someoftheseentitiesmaintain“blacklists”of
332、companiesandindividuals,andthewebsites,internetserviceprovidersandinternetprotocoladdressesassociatedwiththoseentitiesorindividualsthatdonotadheretothosestandardsofconductorpracticesforcommercialemailsolicitationsthattheblacklistingentitybelievesareappropriate.Ifacompanysinternetprotocoladdressesare
333、listedbyablacklistingentity,emailssentfromthoseaddressesmaybeblockediftheyaresenttoanyinternetdomainorinternetaddressthatsubscribestotheblacklistingentitysserviceorpurchasesitsblacklist.Fromtimetotime,someofourinternetprotocoladdressesmaybecomelistedwithoneormoreblacklistingentitiesduetothemessagingpracticesofourcustomers.Therecanbenoguaranteethatwewillbeabletosuccessfullyremoveourselvesfromthosel
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