1、HUBSPOT INCFORM 10-K(Annual Report)Filed 02/12/20 for the Period Ending 12/31/19 Address25 FIRST STREET2ND FLOORCAMBRIDGE,MA,02141Telephone(888)482-7768CIK0001404655SymbolHUBSSIC Code7372-Services-Prepackaged SoftwareIndustrySoftwareSectorTechnologyFiscal Year12/31http:/www.edgar- Copyright 2020,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 31,2019OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-36680HubSpot,Inc.(Exact name of registr
4、ant as specified in its charter)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)Securit
5、ies registered pursuant to Section 12(b)of the Act:Title of each class Trading symbol(s)Name of each exchange on which registeredCommon Stock,par value$0.001 per share HUBSNew York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:None.Indicatebycheckmarkiftheregistrantisawell-
6、knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YESNOIndicatebycheckmarkwhethertheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YESNOIndicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof193
7、4duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YESNOIndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulati
8、onS-T(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).YESNOIndicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethedefinition
9、sof“largeacceleratedfiler,”“acceleratedfiler,”“smallerreportingcompany,”and“emerginggrowthcompany”inRule12b-2oftheExchangeAct:Largeacceleratedfiler Acceleratedfiler Non-acceleratedfiler Smallerreportingcompany Emerginggrowthcompany Ifanemerginggrowthcompany,indicatebycheckmarkiftheRegistranthaselect
10、ednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).YESNOTheaggregatemarketvalueofcommonstockheldbynon-affiliatesoft
11、heregistrant,basedontheclosingpriceoftheregistrantscommonstockonJune30,2019,asreportedbytheNewYorkStockExchangeonsuchdatewasapproximately$6,810,732,158.Sharesoftheregistrantscommonstockheldbyeachexecutiveofficer,directorandholderof5%ormoreoftheoutstandingcommonstockhavebeenexcludedinthatsuchpersonsm
12、aybedeemedtobeaffiliates.Thiscalculationdoesnotreflectadeterminationthatcertainpersonsareaffiliatesoftheregistrantforanyotherpurpose.OnFebruary7,2020,theregistranthad43,287,812sharesofcommonstockoutstanding.DOCUMENTS INCORPORATED BY REFERENCEPortionsoftheregistrantsdefinitiveProxyStatementforits2020
13、AnnualMeetingofStockholdersareincorporatedbyreferenceinPartIIIofthisAnnualReportonForm10-K.SuchProxyStatementwillbefiledwiththeU.S.SecuritiesandExchangeCommissionwithin120daysaftertheendofthefiscalyeartowhichthisreportrelates.ExceptwithrespecttoinformationspecificallyincorporatedbyreferenceinthisFor
14、m10-K,theProxyStatementisnotdeemedtobefiledaspartofthisForm10-K.HUBSPOT,INC.TABLE OF CONTENTS Page No.PART I ITEM1.Business3ITEM1A.RiskFactors10ITEM1B.UnresolvedStaffComments28ITEM2.Properties28ITEM3.LegalProceedings28ITEM4.MineSafetyDisclosures28PART II ITEM5.MarketforRegistrantsCommonEquity,Relate
15、dStockholderMattersandIssuerPurchasesofEquitySecurities29ITEM6.SelectedFinancialData31ITEM7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations33ITEM7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk50ITEM8.FinancialStatementsandSupplementaryData51ITEM9.ChangesinandDisagr
16、eementswithAccountantsonAccountingandFinancialDisclosures85ITEM9A.ControlsandProcedures85ITEM9B.OtherInformation86PART III ITEM10.Directors,ExecutiveOfficersandCorporateGovernance87ITEM11.ExecutiveCompensation87ITEM12.SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatter
17、s87ITEM13.CertainRelationshipsandRelatedTransactions,andDirectorIndependence87ITEM14.PrincipalAccountingFeesandServices87PART IV ITEM15.Exhibits,FinancialStatementSchedules88ITEM16.10-KSummary88SIGNATURES91iiSPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThisAnnualReportonForm10-Kcontainsforward-l
18、ookingstatementswithinthemeaningofSection27AoftheSecuritiesActof1933,asamended,andSection21EoftheSecuritiesExchangeActof1934,asamended,andthesestatementsinvolvesubstantialrisksanduncertainties.AllstatementsotherthanstatementsofhistoricalfactcontainedinthisAnnualReportonForm10-Kareforward-lookingstat
19、ements.Forward-lookingstatementsgenerallyrelatetofutureeventsorourfuturefinancialoroperatingperformance.Insomecases,youcanidentifyforward-lookingstatementsbecausetheycontainwordssuchas“may,”“should,”“expects,”“plans,”“anticipates,”“could,”“intends,”“target,”“projects,”“contemplates,”“believes,”“esti
20、mates,”“predicts,”“potential”or“continue”orthenegativeofthesewordsorothersimilartermsorexpressionsthatconcernourexpectations,strategy,plansorintentions.Forward-lookingstatementscontainedinthisAnnualReportonForm10-Kinclude,butarenotlimitedto,statementsabout:ourfuturefinancialperformance,includingoure
21、xpectationsregardingourrevenue,costofrevenue,grossmarginandoperatingexpenses;maintainingandexpandingourcustomerbaseandincreasingouraveragesubscriptionrevenuepercustomer;theimpactofcompetitioninourindustryandinnovationbyourcompetitors;ouranticipatedgrowthandexpectationsregardingourabilitytomanageourf
22、uturegrowth;ouranticipatedareasofinvestments,includingsalesandmarketing,researchanddevelopment,customerserviceandsupport,datacenterinfrastructureandservicecapabilities,andexpectationsrelatingtosuchinvestments;ourpredictionsaboutindustryandmarkettrends;ourabilitytoanticipateandaddresstheevolutionofte
23、chnologyandthetechnologicalneedsofourcustomers,toroll-outupgradestoourexistingsoftwareplatformandtodevelopnewandenhancedapplicationstomeettheneedsofourcustomers;ourabilitytomaintainourbrandandinboundmarketing,sellingandservicingthoughtleadershipposition;theimpactofourcorporatecultureandourabilitytoa
24、ttract,hireandretainnecessaryqualifiedemployeestoexpandouroperations;theanticipatedeffectonourbusinessoflitigationtowhichweareormaybecomeaparty;ourabilitytosuccessfullyacquireandintegratecompaniesandassets;theU.S.federaltaxconsequencesduetodividendsreceivedaspartofthemovetoaterritorialtaxsystemforfo
25、reignsubsidiaryearnings;ourplansregardingdeclaringorpayingcashdividendsintheforeseeablefuture;andourabilitytostayabreastofnewormodifiedlawsandregulationsthatcurrentlyapplyorbecomeapplicabletoourbusinessbothintheUnitedStatesandinternationally.1Wecautionyouthattheforegoinglistmaynotcontainalloftheforw
26、ard-lookingstatementsmadeinthisAnnualReportonForm10-K.Youshouldnotrelyuponforward-lookingstatementsaspredictionsoffutureevents.Wehavebasedtheforward-lookingstatementscontainedinthisAnnualReportonForm10-Kprimarilyonourcurrentexpectationsandprojectionsaboutfutureeventsandtrendsthatwebelievemayaffectou
27、rbusiness,financialcondition,resultsofoperationsandprospects.Theoutcomeoftheeventsdescribedintheseforward-lookingstatementsissubjecttorisks,uncertaintiesandotherfactorsdescribedin“RiskFactors”andelsewhereinthisAnnualReportonForm10-K.Moreover,weoperateinaverycompetitiveandrapidlychangingenvironment.N
28、ewrisksanduncertaintiesemergefromtimetotime,anditisnotpossibleforustopredictallrisksanduncertaintiesthatcouldhaveanimpactontheforward-lookingstatementscontainedinthisAnnualReportonForm10-K.Theresults,eventsandcircumstancesreflectedintheforward-lookingstatementsmaynotbeachievedoroccur,andactualresult
29、s,eventsorcircumstancescoulddiffermateriallyfromthosedescribedintheforward-lookingstatements.Theforward-lookingstatementsmadeinthisAnnualReportonForm10-Krelateonlytoeventsasofthedateonwhichthestatementsaremade.Weundertakenoobligationtoupdateanyforward-lookingstatementsmadeinthisAnnualReportonForm10-
30、KtoreflecteventsorcircumstancesafterthedateofthisAnnualReportonForm10-Kortoreflectnewinformationortheoccurrenceofunanticipatedevents,exceptasrequiredbylaw.Wemaynotactuallyachievetheplans,intentionsorexpectationsdisclosedinourforward-lookingstatementsandyoushouldnotplaceunduerelianceonourforward-look
31、ingstatements.Ourforward-lookingstatementsdonotreflectthepotentialimpactofanyfutureacquisitions,mergers,dispositions,jointventuresorinvestmentswemaymake.InthisAnnualReportonForm10-K,theterms“HubSpot,”“we,”“us,”and“our”refertoHubSpot,Inc.anditssubsidiaries,unlessthecontextindicatesotherwise.2PART 1IT
32、EM I.BUSINESSOverview Weprovideacloud-basedmarketing,sales,andcustomerservicesoftwareplatform,whichwerefertointhisdocumentasourGrowthPlatform,thatenablesbusinessestogrowbetter.AtHubSpot,werecommittedtohelpingourcustomersgrowbetter,whichmeanshelpingthemgrowwithoutcompromise,alwayssolvingforthecustome
33、r,andcreatingabetterexperienceforcustomersandcompanyalike.Tothatend,ourGrowthPlatform,comprisedofMarketingHub,SalesHub,ServiceHub,andafreecustomerrelationshipmanagementsystem,orCRM,featuresintegratedapplicationsandtoolsthatenablebusinessestocreatearelevantandcohesivecustomerexperiencethroughoutthecu
34、stomerlifecycle.Wefocusonsellingtomid-marketbusiness-to-business,orB2B,companies,whichwedefineascompaniesthathavebetween2and2,000employees.WesellourGrowthPlatformonasubscriptionbasis.In2019,ourtotalrevenuewas$674.9million,andweincurredanetlossof$53.7million.AsofDecember31,2019,wehad3,387full-timeemp
35、loyeesand73,483totalcustomersofvaryingsizesinmorethan120countries.OurcompanywasformedasalimitedliabilitycompanyinDelawareonApril4,2005.WeconvertedtoaDelawarecorporationonJune7,2007.Ourprincipalexecutiveofficesarelocatedat25FirstStreet,Cambridge,Massachusetts,andourmaintelephonenumberis888-482-7768.O
36、urwebsiteaddressishttps:/.InformationcontainedonorthatcanbeaccessedthroughourwebsitedoesnotconstitutepartofthisAnnualReportonForm10-K,andinclusionsofourwebsiteaddressinthisAnnualReportonForm10-Kareinactivetextualreferencesonly.The HubSpot ApproachWeprovideourGrowthPlatformtoenablebusinessestoattract
37、,engage,anddelightcustomersthroughoutthecustomerlifecycle.OurGrowthPlatformfeaturesacentraldatabaseofleadandcustomerinteractionsandintegratedapplicationstohelpbusinessesattractvisitorstotheirwebsites,convertvisitorsintoleads,closeleadsintocustomers,anddelightcustomerssotheybecomepromotersofthosebusi
38、nesses.Designed to Help Companies Grow Better.OurGrowthPlatformwasarchitectedfromthegrounduptoenablebusinessestotransformtheirmarketing,sales,andservicesplaybooktomeetthedemandsoftodayscustomers.OurGrowthPlatformincludesbothasystemofrecordformaintainingaunifiedviewofthecustomerexperienceandasystemof
39、engagementforefficientlyengagingcustomersthroughsearchengineoptimization(SEO),webcontent,social,blogging,email,marketingautomation,messaging,supportticketing,knowledgebaseandmore.Ease of Use of an Expansible Platform.Weprovideasetofintegratedapplicationsonacommonplatform,whichoffersbusinesseseaseofu
40、seandsimplicity.OurGrowthPlatformhasonelogin,oneuserinterface,onedatabase,andoneteamforsupport.Ourplatformstartsfreeandgrowswithyou.Itisdesignedtoscaleitspowerandtechnicalsophisticationwithoutlosingitsease-of-use.Inadditiontobeingacomprehensivesuiteitself,ourGrowthPlatformseamlesslyintegrateswithhun
41、dredsofexternalapplications,makingiteasytoextendthefunctionalityofourGrowthPlatformandcustomizeitforanybusiness.Power of a Unified Customer View.AtthecoreofourGrowthPlatformisasingleCRMdatabaseforeachbusinessthatcapturesitsleadandcustomeractivitythroughoutthecustomerlifecycle.OurGrowthPlatformcreate
42、saunifiedtimelineincorporatingalltheinteractionswithaparticularcustomer.WithourConversationstool,ourGrowthPlatformalsocentralizesallconversationsinauniversalinboxthatgivessales,marketing,andcustomerserviceteamsoneplacetoview,manage,andreplytoallconversationsregardlessofthemessagingchanneltheycamefro
43、m.Scalability.OurGrowthPlatformwasdesignedandbuilttoservealargenumberofcustomersandwithdemandingusecases.OurGrowthPlatformcurrentlyprocessesbillionsofdatapointseachweek,andweuseleadingglobalcloudinfrastructureprovidersandourownautomationtechnologytodynamicallyallocatecapacitytohandleprocessingworklo
44、adsofallsizes.WehavebuiltourGrowthPlatformonmoderntechnologies,includingHBase,Kafka,andElasticSearch,whichwebelievearemorescalablethantraditionaldatabasetechnologies.Ourscalabilitygivesusflexibilityforfuturegrowthandenablesustoservicealargevarietyofbusinessesofdifferentsizesacrossdifferentindustries
45、.Extendable and Open Architecture.OurGrowthPlatformfeaturesavarietyofopenAPIsthatallowseasyintegrationofourplatformwithotherapplications.Weenableourcustomerstoconnectourplatformtotheirotherapplications,suchasecommerce,eventmanagementandvideoconferencingapplications.Byconnectingthird-partyapplication
46、s,ourcustomerscanleverageourcentralizedinbounddatabasetoperformadditionalfunctionsandanalysis.WiththeacquisitionofPieSyncNVLTD(PieSync)thisyear,customersalsohavetheoptionofbi-directionallysynchingdataacrossmanyoftheseappssocontactdatastaysaccurateandconsistent.3Our Competitive StrengthsWebelievethat
47、ourmarketleadershippositionisbasedonthefollowingkeystrengths:Leading Platform.Wehavedesignedandbuiltaworld-classGrowthPlatform.WebelieveourcustomerschooseourGrowthPlatformoverothersbecauseofitspowerful,integrated,andeasy-to-useapplications.Market Leadership and Strong Brand.Wearearecognizedthoughtle
48、aderinthecloud-basedmarketing,sales,andcustomerservicesoftwareindustrywithaleadingbrand.Ourfounders,BrianHalliganandDharmeshShah,wrotethebest-sellingmarketingbookInbound Marketing:Get Found Using Google,Social Media andBlogs.Ourmarketing,sales,andserviceexperienceattracts,engages,anddelightscustomer
49、sbybeingmorerelevant,morehelpful,morepersonalized,andlessinterruptivethantraditionalmarketingandsalestactics.OurINBOUNDconferenceisoneofthelargestinboundindustryconferenceeventswithregisteredattendanceincreasingfrom1,100in2011toover26,000in2019.Large and Growing Solutions Partner Program.ASolutionsP
50、artnerisaserviceproviderthathelpsbusinesseswithstrategy,execution,andimplementationofgo-to-marketactivitiesandtechnologysolutions.OurSolutionsPartnerspromoteourbrandandofferourGrowthPlatformtotheirclients.SolutionsPartnersandcustomersreferredtousbyourSolutionsPartnersrepresentedapproximately36%ofour
51、TotalCustomers,asdefinedinourKeyBusinessMetricsinItem7,asofDecember31,2019,andapproximately41%ofourrevenuefortheyearendedDecember31,2019.TheseSolutionsPartnershelpustopromotethevisionoftheinboundexperience,efficientlyreachnewmid-marketbusinessesatscale,andprovideourmutualcustomerswithmorediverseandh
52、igher-touchservices.Mid-Market Focus.Webelievewehavesignificantcompetitiveadvantagesreachingmid-marketbusinessesandefficientlyreachthismarketatscaleasaresultofourinboundmethodology,freemiumpricingstrategy,andourSolutionsPartnerchannel.Throughourfreemiumproducts,ourcustomersareabletoreceivevaluefromH
53、ubSpotbeforeconvertingtoapaidproductorengagingwithsales.Powerful Network Effects.WehavebuiltalargeandgrowingecosystemaroundourGrowthPlatformandcompany.Thousandsofourcustomersintegratethird-partyapplicationswithourGrowthPlatform.Webelievethisecosystemdrivesmorebusinessesandprofessionalstoembracethein
54、boundplaybook.Asourengagedaudiencegrows,moreSolutionsPartnerscollaboratewithus,morethird-partydevelopersintegratetheirapplicationswithourGrowthPlatform,andmoreprofessionalscompleteourcertificationprograms,allofwhichhelptodrivemorebusinessestoadoptourGrowthPlatform.Our Growth StrategyThekeyelementsto
55、ourgrowthstrategyare:Grow Our Customer Base.ThemarketforourGrowthPlatformislargeandunderserved.Mid-marketbusinessesareparticularlyunderservedbyexistingpointapplicationvendorsandoftenlacksufficientresourcestoimplementcomplexsolutions.Ourall-in-oneGrowthPlatformallowsmid-marketbusinessestoefficientlya
56、doptandexecuteaneffectiveinboundmarketing,sales,andcustomerservicestrategytohelpthemexpandandgrow.Wewillcontinuetoleverageourinboundgo-to-marketapproach,freemiumpricingstrategyandournetworkofSolutionsPartnerstokeepgrowingourbusiness.Increase Revenue from Existing Customers.With73,483TotalCustomersin
57、morethan120countriesspanningmanyindustries,webelievewehaveasignificantopportunitytoincreaserevenuefromourexistingcustomers.WeplantoincreaserevenuefromourexistingcustomersbyexpandingtheiruseofourGrowthPlatformbyupsellingadditionalofferingsandfeatures,addingadditionalusers,andcross-sellingourmarketing
58、,sales,andserviceproductstoexistingcustomersthroughtouchlessorlowtouchin-productpurchases.Ourscalablepricingmodelallowsustocapturemorespendasourcustomersgrow,increasethenumberoftheircustomersandprospectsmanagedonourGrowthPlatform,andofferadditionalfunctionalityavailablefromourhigherpricetiersandadd-
59、ons,providinguswithasubstantialopportunitytoincreasethelifetimevalueofourcustomerrelationships.Keep Expanding Internationally.ThereisasignificantopportunityforourGrowthPlatformoutsideoftheUnitedStates.AsofDecember31,2019,approximately45%ofourTotalCustomerswerelocatedoutsideoftheUnitedStatesandthesec
60、ustomersgeneratedapproximately40%ofourtotalrevenuefortheyearendedDecember31,2019.WeselltothoseinternationalcustomersfromourU.S.,European,AsiaPacific,andSouthAmericanbasedoperations.Weintendtogrowourpresenceininternationalmarketsthroughadditionalinvestmentsinlocalsales,marketingandprofessionalservice
61、capabilities,aswellasbyleveragingourSolutionsPartnernetwork.Wehaveopenedeightinternationalofficesandplantoopenadditionalinternationaloffices.WealreadyhavesignificantwebsitetrafficfromregionsoutsidetheUnitedStates,andwebelievethatmarketsoutsidetheUnitedStatesrepresentasignificantgrowthopportunity.4Co
62、ntinue to Innovate and Expand Our Growth Platform.Mid-marketbusinessesareincreasinglyrealizingthevalueofhavinganintegratedmarketing,sales,andcustomerserviceplatform.WebelievewearewellpositionedtocapitalizeonthisopportunitybyintroducingnewproductsandapplicationstoextendthefunctionalityofourGrowthPlat
63、form.Forexample,in2019,weaddedemailandadstoourfreeCRM,launchednewintegrationsandacquiredPieSync,asoftwareforbi-directionallysynchingsoftwareforcontactdataacrossapplications.Selectively Pursue Acquisitions.Weplantoselectivelypursueacquisitionsofcomplementarybusinesses,technologiesandteamsthatwouldall
64、owustoaddnewfeaturesandfunctionalitiestoourplatformandacceleratethepaceofourinnovation.WiththeacquisitionofPieSyncin2019,customersalsohavetheoptionofbi-directionallysynchingdataacrossmanyoftheseapps.Our Growth PlatformOurGrowthPlatformfeaturesintegratedapplicationsandtoolsthatenablecompaniestocreate
65、acohesiveandadaptablecustomerexperience.EachHubcanbeusedstandaloneorinconjunctionwiththeotherHubs.OurHubsareavailableinbothfreeandpaidtiers(i.e.,Starter,ProfessionalandEnterprise)withgraduallyincreasinglevelsoffunctionalitythatsupporttheneedsofourcustomersastheyseesuccesswithourtoolsandtheirbusiness
66、esgrow.HubSpot CRMThecoreofourGrowthPlatform,theHubSpotCRM,isasingledatabaseofleadandcustomerinformationthatallowsbusinessestotracktheirinteractionswithcontactsandcustomers,managetheirsalesactivities,andreportontheirpipelineandsales.Thisallowsacompleteviewofleadandcustomerinteractionsacrossallofouri
67、ntegratedapplications,givingourGrowthPlatformsubstantialpower.Thisintegrationmakesitpossibletopersonalizeeveryaspectofthecustomerinteractionacrosswebcontent,socialmediaengagement,andemailmessagesacrossdevices,includingmobile.TheintegratedapplicationsonourGrowthPlatformhaveacommonuserinterface,areacc
68、essedthroughasinglelogin,andarebasedonourCRMdatabase.HubSpotCRMisafreeproductthatcanbeusedstandalone,orwithanycombinationofMarketingHub,SalesHub,and/orServiceHub.Marketing HubMarketingHubisanall-in-onetoolsetformarketerstoattract,engage,andnurturenewleadstowardssalesreadinessovertheentirecustomerlif
69、ecycle.MarketingHubisavailableinbothfreeandpaidtiers,andcanbeusedstandalone,withHubSpotCRM,and/oranyversionofSalesHuborServiceHub.Featuresinclude:marketingautomationandemail,socialmedia,SEO,CRMSync,andreportingandanalytics.Sales HubWedesignedSalesHubtoenhancetheproductivityandeffectivenessofsalestea
70、ms.Businessescanempowertheirteamswithtoolsthatdeliverapersonalizedexperienceforprospectswithlessworkforsalesrepresentatives.SalesHubisavailableinbothfreeandpaidtiers,andcanbeusedwithHubSpotCRM,athirdpartyCRM,and/oranyversionofMarketingHuborServiceHub.Featuresinclude:emailtemplatesandtracking,convers
71、ationsandlivechat,meetingandcallscheduling,leadandwebsitevisitalerts,salesautomation,andleadscoring.5Service HubServiceHubisourcustomerservicesoftwarethatisdesignedtohelpbusinessesmanageandconnectwithcustomers.ServiceHubisavailableinfreeandpaidtiers,andcanbeusedstandalone,withHubSpotCRMFree,and/oran
72、yversionofMarketingHuborSalesHub.Featuresinclude:conversationsandlivechatfunctionality,conversationalbots,ticketsandhelpdesk,automationandrouting,knowledgebase,teamemails,feedbackandreportingtools,andcustomergoals.HubSpot CMSHubSpotcontentmanagementsystem(CMS)combinesthepowerofcontentrelationshipman
73、agementandacontentmanagementsystemintooneintegratedplatform.Ourcontenttoolsenablebusinessestocreatenewandeditexistingwebcontentwhilealsopersonalizingtheirwebsitesfordifferentvisitorsandoptimizingtheirwebsitestoconvertmorevisitorsintoleadsandcustomers.HubSpotCMScanbepurchasedasastandaloneproductand/o
74、rwithanyversionofMarketingHub,SalesHub,orServiceHub.Featuresinclude:websitepages,businessblogging,smartcontent,landingpagesandforms,SEOtools,formsandleadflow,webanalyticsreporting,calls-to-action,andfilemanager.Platform Application(App)PartnersBusinessesthatusesoftwareoutsideofHubSpotcanleverageoure
75、cosystemofcertifiedthird-partyintegrations.WemakeiteasytofindandinstallneworexistingsoftwaresolutionsthatcomplementourGrowthPlatform.Over380certifiedintegrationsareavailableforourusers,acrossawiderangeofcategories,includingintegrationswithleadingsocialmedia,email,sales,video,analytics,contentandwebi
76、nartools.Our ServicesWecomplementourproductofferingswithprofessionalservices,customersuccessandsupport.Themajorityofourservicesandsupportisofferedoveremail,phone,chatapplicationsandviawebmeetingtechnologyratherthanin-person,whichisamoreefficientbusinessmodelforusandmorecost-effectiveforourcustomers.
77、Professional Services.WeofferprofessionalservicestoeducateandtraincustomersonhowtoleverageourGrowthPlatformandinboundmethodologytotransformhowtheirbusinessattracts,engagesanddelightscustomers.Dependingonwhichproductplanandprofessionalservicesacustomerbuys,theyreceiveone-on-onetrainingandadvicefromon
78、eofouronboarding,inbound,ortechnicalspecialistsbyphoneandwebmeetingandcanpurchaseadditionalgrouptrainingandeducationinonlineorin-personclasses.Ourprofessionalservicesarealsoavailabletocustomerswhoneedadditionalassistanceonaone-timeorongoingbasisforanadditionalfee.Customer Success.Ourcustomershaveacc
79、esstoaCustomerSuccessManager(CSM)orCustomerSuccessTeam(CST)whichareresponsibleforourcustomerslongtermsuccess,retentionandgrowthontheHubSpotplatform.OurCSMsandCSTsaddresstheuniqueneedsandgoalsofourcustomersthroughaseriesofongoinginteractionsandstrategycallsonhowtobestengageanduseourplatform.Support.I
80、nadditiontoassistanceprovidedbyouronlinearticlesandcustomerdiscussionforums,weofferphoneand/oremailandchatbasedsupport,whichisincludedinthecostofasubscriptionforourMarketing,Sales,andServiceHubproducts.PhonesupportisavailablestartingattheProfessionalproductlevelforeachHub.Westrivetomaintainanexcepti
81、onalqualityofcustomerservice.Wecontinuouslymonitorkeycustomerservicemetricssuchasphoneholdtime,ticketresponsetimeandticketresolutionrates,andwemonitorthecustomersatisfactionofourcustomersupportinteractions.WebelieveourcustomersupportisanimportantreasonwhybusinesseschooseourGrowthPlatformandrecommend
82、ittotheircolleagues.Our Total CustomersAsofDecember31,2019,wehad73,483TotalCustomersinmorethan120countries,representingmanyindustries.Nosinglecustomerrepresentedmorethanonepercentofourrevenuein2019,2018,or2017.Our TechnologyOur73,483TotalCustomershavechosenusastheirmarketing,sales,orcustomerservicep
83、latform,whichwearchitectedandbuilttobesecure,highlydistributedandhighlyscalable.Sinceourfounding,wehaveembracedrapid,iterativeproductdevelopmentlifecycles,cloudautomationandopen-sourcetechnologies,includingbigdataplatforms,topowermarketing,salesandserviceprogramsandprovideinsightsnotpreviouslypossib
84、leoravailable.6OurGrowthPlatformisamulti-tenant,singlecode-based,globallyavailablesoftware-as-a-servicedeliveredthroughwebbrowsersormobileapplications.Ourcommitmenttoahighlyavailable,reliable,andscalableplatformforbusinessesofallsizesisaccomplishedthroughtheuseofthesetechnologies.Modern Database Arc
85、hitecture.Weprocessbillionsofdatapointsweeklyacrossvariouschannels,includingsocialmedia,email,SEOandwebsitevisits,andcontinuetodrivenearlyreal-timeanalyticsacrossthesechannels.ThisispossiblebecausewebuiltourdatabasefromthegroundupusingdistributedbigdatatechnologiessuchasHBase,Kafka,andElasticSearcht
86、obothprocessandanalyzethelargeamountsofdatawecollectinourinbounddatabase.Usingmoderndatabasetechnologies,wecanprovideactionableinsightsacrossdisparatedata-setsinamannernoteasilyachievableorcosteffective,atscaleorefficiently,withtraditionaldatabasesorplatformarchitectures.Agility.Ourinfrastructureand
87、developmentandsoftwarereleaseprocessesallowustoupdateourplatformforspecificgroupsofcustomersorourentirecustomerbaseatanytime.Thismeanswecanrapidlyinnovateanddelivernewfunctionalityfrequently,withoutwaitingforquarterlyorannualreleasecycles.Wetypicallydeployupdatestooursoftwareplatformhundredsoftimesa
88、week,enablingustogatherimmediatecustomerfeedbackandimproveourproductquicklyandcontinuously.Cost leverage.BecauseourGrowthPlatformwasbuiltonanalmostexclusivefootprintofopen-sourcesoftwareanddesignedtooperateincloud-baseddata-centers,wehavebenefitedfromlarge-scalepricereductionsbythesecloudcomputingse
89、rviceprovidersastheycontinuetoinnovateandcompeteformarketshare.Asourprocessingvolumecontinuestogrow,wecontinuetoreceivelargervolumediscountsonaper-unitbasisforcostssuchasstorage,bandwidthandcomputingcapacity.Wealsobelievethatourextensiveuseofopen-sourcesoftwarewillprovideadditionalleverageaswescaleo
90、urGrowthPlatformandinfrastructure.Scalability.Byleveragingleadingcloudinfrastructureprovidersalongwithourautomatedtechnologystack,weareabletoscaleworkloadsofvaryingsizesatanytime.Thisallowsustohandlecustomersofallsizesanddemandswithouttraditionaloperationallimitationssuchasnetworkbandwidth,computing
91、cycles,orstoragecapacityaswecanscaleourplatformon-demand.Reliability.Customerdataisdistributedandprocessedacrossmultipledatacenterswithinaregiontoprovideredundancy.WebuiltourGrowthPlatformonadistributedcomputingarchitecturewithreducedsinglepointsoffailureandweoperateacrossdata-centerboundariesdaily.
92、Inadditiontodata-centerlevelredundancy,thisarchitecturesupportsmultiplelivecopiesofeachdatasetalongwithsnapshotcapabilitiesforfaster,point-in-timedatarecoveryinsteadoftraditionalbackupandrestoremethodologies.Security.Weleverageindustrystandardnetworkandperimeterdefensetechnologies,DDoSprotectionsyst
93、ems(includingwebapplicationfirewalls)andenterprisegradeDNSservicesacrossmultiplevendors.Ourdata-centerprovidersoperateandcertifytohighindustrycompliancelevels.Duetothebroadfootprintofourcustomerbase,weregularlytestandevaluateourplatformwithtrustedthird-partyvendorstoensurethesecurityandintegrityofou
94、rservices.Marketing and SalesWebelieveweareagloballeaderinimplementinganinboundexperienceinmarketingandsales.Webelievethatourmarketingandsalesmodelprovidesuswithacompetitiveadvantage,especiallywhentargetingmid-marketbusinesses,becausewecanattractandengagethesebusinessesefficientlyandatscale.Inbound
95、Marketing.Ourmarketingteamattractsnewleadseachmonththroughourindustry-leadingblogandothercontent,freetools,largesocialmediafollowing,highsearchenginerankingsandpersonalizedwebsiteandemailcontent.Inaddition,wearegeneratingleadsfornewandadd-onproductpurchasesthroughcontentandoffersdeliveredthroughourG
96、rowthPlatformtoexistingcustomers.Inbound Direct Sales.OursalesrepresentativesarebasedinourofficesinCambridge,Massachusetts,Dublin,Ireland,Sydney,Australia,Singapore,Tokyo,Japan,Berlin,Germany,Paris,France,andBogota,Columbia,andusephone,email,andwebmeetingstointeractwithprospectsandcustomers.Themajor
97、ityofrevenuegeneratedbyoursalesrepresentativesoriginateswithinboundleadsproducedbyourmarketingefforts.Inaddition,throughourfreemiumproductsandin-productcross-sellofferings,wearestartingtoclosenewbusinesswithlittleornointeractionbyoursalesrepresentatives.Inbound Channel Sales.Inadditiontoourdirectsal
98、esteam,wehavesalesrepresentativesthatmanagerelationshipswithourworldwidenetworkofSolutionsPartnerswhobothuseourplatformfortheirownbusinessesandalso,onacommissionedbasis,refercustomerstous.TheseSolutionsPartnerscollaboratewithusnotonlytoleverageoursoftwareplatformandeducationalresources,butalsotobuil
99、dtheirownbusinessbyofferingnewservicesandshiftingtheirrevenuemixtoincludemoreretainer-basedbusinesswitharecurringrevenuestream.7Culture and EmployeesTransformingthebusinessworldtoembracetheinboundexperiencerequiresatrulyremarkableteam.Fromtheverybeginning,ourcompanywasfoundedonafundamentalbeliefinra
100、dicaltransparency,individualautonomy,andenlightenedempathy.Wearepassionateaboutcreatinganinclusivecompanyculturewhereemployeescandotheirbestwork.OurCultureCodesharesourcorevaluesandbeliefs,includingHEART(Humility,Empathy,Adaptability,Remark-ability,andTransparency),anacronymweusetodescribewhatwebeli
101、evemakesagreatemployee.ByrecruitingpeoplewithHEART,investingintheirpersonalandprofessionalgrowth,andmakinginclusivecultureabusinesspriority,wevebeennamedagreatplacetoworkglobally.HubSpotwasnamedaBestPlacetoWorkbyGlassdoorin2020and2019,oneofBostonBusinessJournalsBestPlacestoWork2019,aBestWorkplacefor
102、WomenandParentsbyGreatPlacetoWork,aswellasthe#5BestWorkplaceinIrelandandthe#4BestWorkplaceinSingaporebyGreatPlacetoWork.WewerealsohonoredinanumberofcategoriesbyComparablysworkplaceawardsin2019includingBestCEOs,BestCompaniesforWomen,BestCompaniesforDiversity,BestOverallCompanyCulture,andaBestCompanyf
103、orEmployeeHappiness.AsofDecember31,2019,wehad3,387full-timeemployees,including1,176full-timeemployeeslocatedoutsidetheUnitedStates.Althoughwehavestatutoryemployeerepresentationobligationsincertaincountries,ourU.S.employeesarenotrepresentedbyalaborunion.Wehavenotexperiencedanyworkstoppages,andweconsi
104、derourrelationswithouremployeestobegood.CompetitionOurmarketisevolving,highlycompetitiveandfragmented,andweexpectcompetitiontoincreaseinthefuture.Webelievetheprincipalcompetitivefactorsinourmarketare:visionforthemarketandproductstrategyandpaceofinnovation;inboundmarketingfocusanddomainexpertise;inte
105、gratedall-in-oneplatform;breadthanddepthofproductfunctionality;easeofuse;scalable,openarchitecture;timetovalueandtotalcostofownership;integrationwiththird-partyapplicationsanddatasources;andnamerecognitionandbrandreputation.Webelievewecompetefavorablywithrespecttoallofthesefactors.Wefaceintensecompe
106、titionfromothersoftwarecompaniesthatdevelopmarketing,salesandservicesoftwareandfrommarketingservicescompaniesthatprovideinteractivemarketingservices.Ourcompetitorsoffervariouspointapplicationsthatprovidecertainfunctionsandfeaturesthatweprovide,including:cloud-basedmarketingautomationproviders;emailm
107、arketingsoftwarevendors;salesforceautomationandCRMsoftwarevendorscustomerserviceplatformvendors;andlarge-scaleenterprisesuites.Inaddition,insteadofusingourGrowthPlatform,someprospectivecustomersmayelecttocombinedisparatepointapplications,suchascontentmanagement,marketingautomation,analytics,socialme
108、diamanagement,ticketing,andconversationalbots.Weexpectthatwewilldevelopandintroduce,oracquire,applicationsservingcustomer-facingandotherfrontofficefunctions.8Intellectual PropertyOurabilitytoprotectourintellectualproperty,includingourtechnology,willbeanimportantfactorinthesuccessandcontinuedgrowthof
109、ourbusiness.Weprotectourintellectualpropertythroughtradesecretslaw,copyrights,trademarks,patents,andcontracts.Someofourtechnologyreliesuponthird-partylicensedintellectualproperty.WehavenoissuedU.S.patentsandelevenU.S.patentapplicationspending;twoareprovisionalandninearenon-provisional.Weintendtopurs
110、ueandarepursuingadditionalpatentprotectiontotheextentwebelieveitwouldbebeneficialandcost-effective.Inadditiontotheforegoing,wehaveestablishedbusinessproceduresdesignedtomaintaintheconfidentialityofourproprietaryinformation,includingtheuseofconfidentialityagreementsandassignmentofinventionsagreements
111、withemployees,independentcontractors,consultants,andcompanieswithwhichweconductbusiness.Despiteoureffortstoprotectourintellectualproperty,unauthorizedpartiesmaystillcopyorotherwiseobtainanduseourtechnology.Inaddition,weintendtocontinuetoexpandourinternationaloperations,andeffectiveintellectualproper
112、ty,copyright,trademarkandtradesecretprotectionmaynotbeavailableormaybelimitedinforeigncountries.Anysignificantimpairmentofourintellectualpropertyrightscouldharmourbusinessorourabilitytocompete.Financial Information About SegmentsWeoperateasoneoperatingsegment.Operatingsegmentsaredefinedascomponentso
113、fanenterpriseforwhichseparatefinancialinformationisregularlyevaluatedbythechiefoperatingdecisionmakersorCODMs,whichareourchiefexecutiveofficerandchiefoperatingofficer,indecidinghowtoallocateresourcesandassessperformance.TheCODMsevaluateourfinancialinformationandresourcesandassesstheperformanceofthes
114、eresourcesonaconsolidatedbasis.Sinceweoperateinoneoperatingsegment,allrequiredfinancialsegmentinformationcanbefoundintheconsolidatedfinancialstatements.SeeFootnote8withintheconsolidatedfinancialstatementsforinformationbygeographicarea.Available InformationOurwebsiteislocatedathttp:/,andourinvestorre
115、lationswebsiteislocatedathttps:/ 1A.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-K and in our other public filings before making an investment decision.Ou
116、r business,prospects,financial condition,or operating resultscould 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 such risks and uncertaintiesactually occurs,our business,financial condition or operating results could
117、differ materially from the plans,projections and other forward-looking statements includedin the section titled“Managements Discussion and Analysis of Financial Condition and Results of Operations”and elsewhere in this report and in our other publicfilings.The trading price of our common stock could
118、 decline due to any of these risks,and,as a result,you may lose all or part of your investment.Risks Related to Our Business and StrategyWe have a history of losses and may not achieve profitability in the future.Wegeneratednetlossesof$53.7millionin2019,$63.8millionin2018,and$39.7millionin2017.AsofD
119、ecember31,2019,wehadanaccumulateddeficitof$398.1million.Wewillneedtogenerateandsustainincreasedrevenuelevelsinfutureperiodstobecomeprofitable,and,evenifwedo,wemaynotbeabletomaintainorincreaseourlevelofprofitability.Weintendtocontinuetoexpendsignificantfundstogrowourmarketing,salesandcustomerserviceo
120、perations,developandenhanceourGrowthPlatform,scaleourdatacenterinfrastructureandservicescapabilitiesandexpandintonewmarkets.Oureffortstogrowourbusinessmaybemorecostlythanweexpect,andwemaynotbeabletoincreaseourrevenueenoughtooffsetourhigheroperatingexpenses.Wemayincursignificantlossesinthefutureforan
121、umberofreasons,includingtheotherrisksdescribedinthisAnnualReportonForm10-K,andunforeseenexpenses,difficulties,complicationsanddelaysandotherunknownevents.Ifweareunabletoachieveandsustainprofitability,themarketpriceofourcommonstockmaysignificantlydecrease.We are dependent upon customer renewals,the a
122、ddition of new customers,increased revenue from existing customers and the continued growth of the market for aGrowth Platform.Wederive,andexpecttocontinuetoderive,asubstantialportionofourrevenuefromthesaleofsubscriptionstoourGrowthPlatform.Themarketforinboundmarketing,salesandcustomerserviceproduct
123、sisstillevolving,andcompetitivedynamicsmaycausepricinglevelstochangeasthemarketmaturesandasexistingandnewmarketparticipantsintroducenewtypesofpointapplicationsanddifferentapproachestoenablebusinessestoaddresstheirrespectiveneeds.Asaresult,wemaybeforcedtoreducethepriceswechargeforourplatformandmaybeu
124、nabletorenewexistingcustomeragreementsorenterintonewcustomeragreementsatthesamepricesanduponthesametermsthatwehavehistorically.Inaddition,ourgrowthstrategyinvolvesascalablepricingmodel(includingfreemiumversionsofourproducts)intendedtoprovideuswithanopportunitytoincreasethevalueofourcustomerrelations
125、hipsovertimeasweexpandtheiruseofourplatform,selltootherpartsoftheirorganizations,cross-selloursalesproductstoexistingmarketingproductcustomersandviceversathroughtouchlessorlowtouchinproductpurchases,andupselladditionalofferingsandfeatures.Ifourcross-sellingeffortsareunsuccessfulorifourexistingcustom
126、ersdonotexpandtheiruseofourplatformoradoptadditionalofferingsandfeatures,ouroperatingresultsmaysuffer.Our subscription renewal rates may decrease,and any decrease could harm our future revenue and operating results.Ourcustomershavenoobligationtorenewtheirsubscriptionsforourplatformaftertheexpiration
127、oftheirsubscriptionperiods,substantiallyallofwhichareoneyearorless.Inaddition,ourcustomersmayseektorenewforlowersubscriptiontiers,forfewercontactsorseats,orforshortercontractlengths.Also,customersmaychoosenottorenewtheirsubscriptionsforavarietyofreasons.Ourrenewalratesmaydeclineorfluctuateasaresulto
128、fanumberoffactors,includinglimitedcustomerresources,pricingchanges,thepricesofservicesofferedbyourcompetitors,adoptionandutilizationofourplatformandadd-onapplicationsbyourcustomers,adoptionofournewproducts,customersatisfactionwithourplatform,mergersandacquisitionsaffectingourcustomerbase,reductionsi
129、nourcustomersspendinglevelsordeclinesincustomeractivityasaresultofeconomicdownturnsoruncertaintyinfinancialmarkets.Ifourcustomersdonotrenewtheirsubscriptionsforourplatformordecreasetheamounttheyspendwithus,ourrevenuewilldeclineandourbusinesswillsuffer.Inaddition,asubscriptionmodelcreatescertainrisks
130、relatedtothetimingofrevenuerecognitionandpotentialreductionsincashflows.Aportionofthesubscription-basedrevenuewereporteachquarterresultsfromtherecognitionofdeferredrevenuerelatingtosubscriptionagreementsenteredintoduringpreviousquarters.Adeclineinneworrenewedsubscriptionsinanyperiodmaynotbeimmediate
131、lyreflectedinourreportedfinancialresultsforthatperiod,butmayresultinadeclineinourrevenueinfuturequarters.Ifweweretoexperiencesignificantdownturnsinsubscriptionsalesandrenewalrates,ourreportedfinancialresultsmightnotreflectsuchdownturnsuntilfutureperiods.10We face significant competition from both es
132、tablished and new companies offering marketing,sales and customer service software and other related applications,aswell as internally developed software,which may harm our ability to add new customers,retain existing customers and grow our business.Themarketing,salesandcustomerservicesoftwaremarket
133、isevolving,highlycompetitiveandsignificantlyfragmented.Withtheintroductionofnewtechnologiesandthepotentialentryofnewcompetitorsintothemarket,weexpectcompetitiontopersistandintensifyinthefuture,whichcouldharmourabilitytoincreasesales,maintainorincreaserenewalsandmaintainourprices.Wefaceintensecompeti
134、tionfromothersoftwarecompaniesthatdevelopmarketing,salesandcustomerservicesoftwareandfrommarketingservicescompaniesthatprovideinteractivemarketingservices.CompetitioncouldsignificantlyimpedeourabilitytosellsubscriptionstoourGrowthPlatformontermsfavorabletous.Ourcurrentandpotentialcompetitorsmaydevel
135、opandmarketnewtechnologiesthatrenderourexistingorfutureproductslesscompetitive,orobsolete.Inaddition,ifthesecompetitorsdevelopproductswithsimilarorsuperiorfunctionalitytoourplatform,wemayneedtodecreasethepricesoracceptlessfavorabletermsforourplatformsubscriptionsinordertoremaincompetitive.Ifweareuna
136、bletomaintainourpricingduetocompetitivepressures,ourmarginswillbereducedandouroperatingresultswillbenegativelyaffected.Ourcompetitorsinclude:cloud-basedmarketingautomationproviders;emailmarketingsoftwarevendors;salesforceautomationandCRMsoftwarevendors;large-scaleenterprisesuites;customerservicesoft
137、wareproviders;andcontentmanagementsystems.Inaddition,insteadofusingourplatform,someprospectivecustomersmayelecttocombinedisparatepointapplications,suchascontentmanagement,marketingautomation,CRM,analyticsandsocialmediamanagement.Weexpectthatnewcompetitors,suchasenterprisesoftwarevendorsthathavetradi
138、tionallyfocusedonenterpriseresourceplanningorotherapplicationssupportingbackofficefunctions,willdevelopandintroduceapplicationsservingcustomer-facingandotherfrontofficefunctions.Thisdevelopmentcouldhaveanadverseeffectonourbusiness,operatingresultsandfinancialcondition.Inaddition,salesforceautomation
139、andCRMvendorscouldacquireordevelopapplicationsthatcompetewithourmarketingsoftwareofferings.Someofthesecompanieshaveacquiredsocialmediamarketingandothermarketingsoftwareproviderstointegratewiththeirbroaderofferings.Ourcurrentandpotentialcompetitorsmayhavesignificantlymorefinancial,technical,marketing
140、andotherresourcesthanwehave,beabletodevotegreaterresourcestothedevelopment,promotion,saleandsupportoftheirproductsandservices,mayhavemoreextensivecustomerbasesandbroadercustomerrelationshipsthanwehave,andmayhavelongeroperatinghistoriesandgreaternamerecognitionthanwehave.Asaresult,thesecompetitorsmay
141、respondfastertonewtechnologiesandundertakemoreextensivemarketingcampaignsfortheirproducts.Inafewcases,thesevendorsmayalsobeabletooffermarketing,salesandcustomerservicesoftwareatlittleornoadditionalcostbybundlingitwiththeirexistingsuiteofapplications.Totheextentanyofourcompetitorshasexistingrelations
142、hipswithpotentialcustomersforeithermarketingsoftwareorotherapplications,thosecustomersmaybeunwillingtopurchaseourplatformbecauseoftheirexistingrelationshipswithourcompetitor.Ifweareunabletocompetewithsuchcompanies,thedemandforourGrowthPlatformcouldsubstantiallydecline.Inaddition,ifoneormoreofourcomp
143、etitorsweretomergeorpartnerwithanotherofourcompetitors,ourabilitytocompeteeffectivelycouldbeadverselyaffected.Ourcompetitorsmayalsoestablishorstrengthencooperativerelationshipswithourcurrentorfuturestrategicdistributionandtechnologypartnersorotherpartieswithwhomwehaverelationships,therebylimitingour
144、abilitytopromoteandimplementourplatform.Wemaynotbeabletocompetesuccessfullyagainstcurrentorfuturecompetitors,andcompetitivepressuresmayharmourbusiness,operatingresultsandfinancialcondition.We have experienced rapid growth and organizational change in recent periods and expect continued future growth
145、.If we fail to manage our growth effectively,wemay be unable to execute our business plan,maintain high levels of service or address competitive challenges adequately.Ourheadcountandoperationshavegrownsubstantially.Forexample,wehad3,387full-timeemployeesasofDecember31,2019,ascomparedwith2,638asofDec
146、ember31,2018andwehaveopened8internationalofficessince2013.Wealsoplantoopenadditionalinternationalofficesinthefuture.Thisgrowthhasplaced,andwillcontinuetoplace,asignificantstrainonourmanagement,administrative,operationalandfinancialinfrastructure.Weanticipatefurthergrowthwillberequiredtoaddressincrea
147、sesinourproductofferingsandcontinuedexpansion.Oursuccesswilldependinpartuponourabilitytorecruit,hire,train,manageandintegrateasignificantnumberofqualifiedmanagers,technicalpersonnelandemployeesinspecializedroleswithinourcompany,includingintechnology,salesandmarketing.Ifournewemployeesperformpoorly,o
148、rifweareunsuccessfulinrecruiting,hiring,training,managingandintegratingthesenewemployees,orretainingtheseorourexistingemployees,ourbusinessmaysuffer.11Inaddition,tomanagetheexpectedcontinuedgrowthofourheadcount,operationsandgeographicexpansion,wewillneedtocontinuetoimproveourinformationtechnologyinf
149、rastructure,operational,financialandmanagementsystemsandprocedures.Ouranticipatedadditionalheadcountandcapitalinvestmentswillincreaseourcosts,whichwillmakeitmoredifficultforustoaddressanyfuturerevenueshortfallsbyreducingexpensesintheshortterm.Ifwefailtosuccessfullymanageourgrowth,wewillbeunabletosuc
150、cessfullyexecuteourbusinessplan,whichcouldhaveanegativeimpactonourbusiness,resultsofoperationsorfinancialcondition.Failure to effectively develop and expand our marketing,sales and customer service capabilities could harm our ability to increase our customer base and achievebroader market acceptance
151、 of our platform.ToincreaseTotalCustomersandachievebroadermarketacceptanceofourGrowthPlatform,wewillneedtoexpandourmarketing,salesandcustomerserviceoperations,includingoursalesforceandthird-partychannelpartners.Wewillcontinuetodedicatesignificantresourcestoinboundsalesandmarketingprograms.Theeffecti
152、venessofourinboundsalesandmarketingandthird-partychannelpartnershasvariedovertimeandmayvaryinthefutureanddependsonourabilitytomaintainandimproveourGrowthPlatform.Alloftheseeffortswillrequireustoinvestsignificantfinancialandotherresources.Ourbusinesswillbeseriouslyharmedifoureffortsdonotgenerateacorr
153、espondinglysignificantincreaseinrevenue.Wemaynotachieveanticipatedrevenuegrowthfromexpandingoursalesforceifweareunabletohire,developandretaintalentedsalespersonnel,ifournewsalespersonnelareunabletoachievedesiredproductivitylevelsinareasonableperiodoftimeorifoursalesandmarketingprogramsarenoteffectiv
154、e.The rate of growth of our business depends on the continued participation and level of service of our Solutions Partners.WerelyonourSolutionsPartnerstoprovidecertainservicestoourcustomers,aswellaspursuesalesofourGrowthPlatformtocustomers.TotheextentwedonotattractnewSolutionsPartners,orexistingorne
155、wSolutionsPartnersdonotreferagrowingnumberofcustomerstous,ourrevenueandoperatingresultswouldbeharmed.Inaddition,ifourSolutionsPartnersdonotcontinuetoprovideservicestoourcustomers,wewouldberequiredtoprovidesuchservicesourselveseitherbyexpandingourinternalteamorengagingotherthird-partyproviders,whichw
156、ouldincreaseouroperatingcosts.If we cannot maintain our company culture as we grow,we could lose the innovation,teamwork,passion and focus on execution that we believe contribute to oursuccess and our business may be harmed.Webelievethatacriticalcomponenttooursuccesshasbeenourcompanyculture,whichisb
157、asedontransparencyandpersonalautonomy.Wehaveinvestedsubstantialtimeandresourcesinbuildingourteamwithinthiscompanyculture.Anyfailuretopreserveourculturecouldnegativelyaffectourabilitytoretainandrecruitpersonnelandtoeffectivelyfocusonandpursueourcorporateobjectives.Aswegrowasandcontinuetodeveloptheinf
158、rastructureofapubliccompany,wemayfinditdifficulttomaintaintheseimportantaspectsofourcompanyculture.Ifwefailtomaintainourcompanyculture,ourbusinessmaybeadverselyimpacted.If we fail to maintain our inbound thought leadership position,our business may suffer.Webelievethatmaintainingourthoughtleadership
159、positionininboundmarketing,salesandservicesisanimportantelementinattractingnewcustomers.Wedevotesignificantresourcestodevelopandmaintainourthoughtleadershipposition,withafocusonidentifyingandinterpretingemergingtrendsintheinboundexperience,shapingandguidingindustrydialogandcreatingandsharingthebesti
160、nboundpractices.Ouractivitiesrelatedtodevelopingandmaintainingourthoughtleadershipmaynotyieldincreasedrevenue,andeveniftheydo,anyincreasedrevenuemaynotoffsettheexpensesweincurredinsucheffort.Werelyuponthecontinuedservicesofourmanagementandemployeeswithdomainexpertisewithinboundmarketing,salesandserv
161、ices,andthelossofanykeyemployeesinthisareacouldharmourcompetitivepositionandreputation.Ifwefailtosuccessfullygrowandmaintainourthoughtleadershipposition,wemaynotattractenoughnewcustomersorretainourexistingcustomers,andourbusinesscouldsuffer.If we fail to further enhance our brand and maintain our ex
162、isting strong brand awareness,our ability to expand our customer base will be impaired and ourfinancial condition may suffer.WebelievethatourdevelopmentoftheHubSpotbrandiscriticaltoachievingwidespreadawarenessofourexistingandfutureinboundexperiencesolutions,and,asaresult,isimportanttoattractingnewcu
163、stomersandmaintainingexistingcustomers.Inthepast,oureffortstobuildourbrandhaveinvolvedsignificantexpenses,andwebelievethatthisinvestmenthasresultedinstrongbrandrecognitionintheB2Bmarket.Successfulpromotionandmaintenanceofourbrandswilldependlargelyontheeffectivenessofourmarketingeffortsandonourabilit
164、ytoprovideareliableandusefulGrowthPlatformatcompetitiveprices.Brandpromotionactivitiesmaynotyieldincreasedrevenue,andeveniftheydo,anyincreasedrevenuemaynotoffsettheexpensesweincurredinbuildingourbrand.Ifwefailtosuccessfullypromoteandmaintainourbrand,ourbusinesscouldsuffer.12If we fail to adapt and r
165、espond effectively to rapidly changing technology,evolving industry standards and changing customer needs or requirements,our GrowthPlatform may become less competitive.OurfuturesuccessdependsonourabilitytoadaptandinnovateourGrowthPlatform.Toattractnewcustomersandincreaserevenuefromexistingcustomers
166、,weneedtocontinuetoenhanceandimproveourofferingstomeetcustomerneedsatpricesthatourcustomersarewillingtopay.Sucheffortswillrequireaddingnewfunctionalityandrespondingtotechnologicaladvancements,whichwillincreaseourresearchanddevelopmentcosts.Ifweareunabletodevelopnewapplicationsthataddressourcustomers
167、needs,ortoenhanceandimproveourplatforminatimelymanner,wemaynotbeabletomaintainorincreasemarketacceptanceofourplatform.Ourabilitytogrowisalsosubjecttotheriskoffuturedisruptivetechnologies.AccessanduseofourGrowthPlatformisprovidedviathecloud,which,itself,wasdisruptivetothepreviousenterprisesoftwaremod
168、el.Ifnewtechnologiesemergethatareabletodeliverinboundmarketingsoftwareandrelatedapplicationsatlowerprices,moreefficiently,moreconvenientlyormoresecurely,suchtechnologiescouldadverselyaffectourabilitytocompete.We rely on our management team and other key employees,and the loss of one or more key empl
169、oyees could harm our business.Oursuccessandfuturegrowthdependuponthecontinuedservicesofourmanagementteam,includingourco-founders,BrianHalliganandDharmeshShah,andotherkeyemployeesintheareasofresearchanddevelopment,marketing,sales,servicesandgeneralandadministrativefunctions.Fromtimetotime,theremaybec
170、hangesinourmanagementteamresultingfromthehiringordepartureofexecutives,whichcoulddisruptourbusiness.Wealsoaredependentonthecontinuedserviceofourexistingsoftwareengineersandinformationtechnologypersonnelbecauseofthecomplexityofourplatform,technologiesandinfrastructure.Wemayterminateanyemployeesemploy
171、mentatanytime,withorwithoutcause,andanyemployeemayresignatanytime,withorwithoutcause.Wedonothaveemploymentagreementswithanyofourkeypersonnel.Thelossofoneormoreofourkeyemployeescouldharmourbusiness.The failure to attract and retain additional qualified personnel could prevent us from executing our bu
172、siness strategy.Toexecuteourbusinessstrategy,wemustattractandretainhighlyqualifiedpersonnel.Inparticular,wecompetewithmanyothercompaniesforsoftwaredeveloperswithhighlevelsofexperienceindesigning,developingandmanagingcloud-basedsoftware,aswellasforskilledinformationtechnology,marketing,salesandoperat
173、ionsprofessionals,andwemaynotbesuccessfulinattractingandretainingtheprofessionalsweneed.Also,inboundsales,marketingandservicesdomainexpertsareveryimportanttooursuccessandaredifficulttoreplace.Wehavefromtimetotimeinthepastexperienced,andweexpecttocontinuetoexperienceinthefuture,difficultyinhiringandd
174、ifficultyinretaininghighlyskilledemployeeswithappropriatequalifications.Inparticular,wehaveexperiencedacompetitivehiringenvironmentintheGreaterBostonarea,whereweareheadquartered.Manyofthecompanieswithwhichwecompeteforexperiencedpersonnelhavegreaterresourcesthanwedo.Inaddition,inmakingemploymentdecis
175、ions,particularlyinthesoftwareindustry,jobcandidatesoftenconsiderthevalueofthestockoptionsorotherequityincentivestheyaretoreceiveinconnectionwiththeiremployment.Ifthepriceofourstockdeclines,orexperiencessignificantvolatility,ourabilitytoattractorretainkeyemployeeswillbeadverselyaffected.Ifwefailtoat
176、tractnewpersonnelorfailtoretainandmotivateourcurrentpersonnel,ourgrowthprospectscouldbeseverelyharmed.If we fail to offer high-quality customer support,our business and reputation may suffer.High-qualityeducation,trainingandcustomersupportareimportantforthesuccessfulmarketing,saleanduseofourGrowthPl
177、atformandfortherenewalofexistingcustomers.Providingthiseducation,trainingandsupportrequiresthatourpersonnelwhomanageouronlinetrainingresource,HubSpotAcademy,orprovidecustomersupporthavespecificinboundexperiencedomainknowledgeandexpertise,makingitmoredifficultforustohirequalifiedpersonnelandtoscaleup
178、oursupportoperations.Theimportanceofhigh-qualitycustomersupportwillincreaseasweexpandourbusinessandpursuenewcustomers.IfwedonothelpourcustomersusemultipleapplicationswithinourGrowthPlatformandprovideeffectiveongoingsupport,ourabilitytoselladditionalfunctionalityandservicesto,ortoretain,existingcusto
179、mersmaysufferandourreputationwithexistingorpotentialcustomersmaybeharmed.13We may not be able to scale our business quickly enough to meet our customers growing needs and if we are not able to grow efficiently,our operating results couldbe harmed.AsusageofourGrowthPlatformgrowsandascustomersuseourpl
180、atformforadditionalinboundapplications,suchassalesandservices,wewillneedtodevoteadditionalresourcestoimprovingourapplicationarchitecture,integratingwiththird-partysystemsandmaintaininginfrastructureperformance.Inaddition,wewillneedtoappropriatelyscaleourinternalbusinesssystemsandourservicesorganizat
181、ion,includingcustomersupportandprofessionalservices,toserveourgrowingcustomerbase,particularlyasourcustomerdemographicschangeovertime.Anyfailureofordelayintheseeffortscouldcauseimpairedsystemperformanceandreducedcustomersatisfaction.TheseissuescouldreducetheattractivenessofourGrowthPlatformtocustome
182、rs,resultingindecreasedsalestonewcustomers,lowerrenewalratesbyexistingcustomers,theissuanceofservicecredits,orrequestedrefunds,whichcouldimpedeourrevenuegrowthandharmourreputation.Evenifweareabletoupgradeoursystemsandexpandourstaff,anysuchexpansionwillbeexpensiveandcomplex,requiringmanagementstimean
183、dattention.Wecouldalsofaceinefficienciesoroperationalfailuresasaresultofoureffortstoscaleourinfrastructure.Moreover,thereareinherentrisksassociatedwithupgrading,improvingandexpandingourinformationtechnologysystems.Wecannotbesurethattheexpansionandimprovementstoourinfrastructureandsystemswillbefullyo
184、reffectivelyimplementedonatimelybasis,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 research anddevelopment efforts
185、,we may not be able to compete effectively and our business and operating results may be harmed.Toremaincompetitive,wemustcontinuetodevelopnewproductofferings,applications,featuresandenhancementstoourexistingGrowthPlatform.Maintainingadequateresearchanddevelopmentpersonnelandresourcestomeetthedemand
186、softhemarketisessential.Ifweareunabletodevelopourplatforminternallyduetocertainconstraints,suchashighemployeeturnover,lackofmanagementabilityoralackofotherresearchanddevelopmentresources,wemaymissmarketopportunities.Further,manyofourcompetitorsexpendaconsiderablygreateramountoffundsontheirresearchan
187、ddevelopmentprograms,andthosethatdonotmaybeacquiredbylargercompaniesthatwouldallocategreaterresourcestoourcompetitorsresearchanddevelopmentprograms.Ourfailuretomaintainadequateresearchanddevelopmentresourcesortocompeteeffectivelywiththeresearchanddevelopmentprogramsofourcompetitorscouldmateriallyadv
188、erselyaffectourbusiness.Changes in the sizes or types of businesses that purchase our platform or in the applications within our Growth Platform purchased or used by our customers couldnegatively affect our operating results.OurstrategyistosellsubscriptionstoourGrowthPlatformtomid-sizedbusinesses,bu
189、twehavesoldandwillcontinuetoselltoorganizationsrangingfromsmallbusinessestoenterprises.OurgrossmarginscanvarydependingonnumerousfactorsrelatedtotheimplementationanduseofourGrowthPlatform,includingthesophisticationandintensityofourcustomersuseofourplatformandthelevelofprofessionalservicesandsupportre
190、quiredbyacustomer.Salestoenterprisecustomersmayentaillongersalescyclesandmoresignificantsellingefforts.Sellingtosmallbusinessesmayinvolvegreatercreditriskanduncertainty.Iftherearechangesinthemixofbusinessesthatpurchaseourplatformorthemixoftheproductplanspurchasedbyourcustomers,ourgrossmarginscouldde
191、creaseandouroperatingresultscouldbeadverselyaffected.We have in the past completed acquisitions and may acquire or invest in other companies or technologies in the future,which could divert managements attention,fail to meet our expectations,result in additional dilution to our stockholders,increase
192、 expenses,disrupt our operations or harm our operating results.Wehaveinthepastacquired,andwemayinthefutureacquireorinvestin,businesses,productsortechnologiesthatwebelievecouldcomplementorexpandourplatform,enhanceourtechnicalcapabilitiesorotherwiseoffergrowthopportunities,forexample,theacquisitionofP
193、ieSyncin2019.Wemaynotbeabletofullyrealizetheanticipatedbenefitsoftheseoranyfutureacquisitions.Thepursuitofpotentialacquisitionsmaydiverttheattentionofmanagementandcauseustoincurvariousexpensesrelatedtoidentifying,investigatingandpursuingsuitableacquisitions,whetherornottheyareconsummated.Thereareinh
194、erentrisksinintegratingandmanagingacquisitions.Ifweacquireadditionalbusinesses,wemaynotbeabletoassimilateorintegratetheacquiredpersonnel,operationsandtechnologiessuccessfullyoreffectivelymanagethecombinedbusinessfollowingtheacquisitionandourmanagementmaybedistractedfromoperatingourbusiness.Wealsomay
195、notachievetheanticipatedbenefitsfromtheacquiredbusinessduetoanumberoffactors,including:unanticipatedcostsorliabilitiesassociatedwiththeacquisition;incurrenceofacquisition-relatedcosts,whichwouldberecognizedasacurrentperiodexpense;inabilitytogeneratesufficientrevenuetooffsetacquisitionorinvestmentcos
196、ts;theinabilitytomaintainrelationshipswithcustomersandpartnersoftheacquiredbusiness;thedifficultyofincorporatingacquiredtechnologyandrightsintoourplatformandofmaintainingqualityandsecuritystandardsconsistentwithourbrand;delaysincustomerpurchasesduetouncertaintyrelatedtoanyacquisition;theneedtointegr
197、ateorimplementadditionalcontrols,proceduresandpolicies;challengescausedbydistance,languageandculturaldifferences;harmtoourexistingbusinessrelationshipswithbusinesspartnersandcustomersasaresultoftheacquisition;thepotentiallossofkeyemployees;useofresourcesthatareneededinotherpartsofourbusinessanddiver
198、sionofmanagementandemployeeresources;the14inabilitytorecognizeacquireddeferredrevenueinaccordancewithourrevenuerecognitionpolicies;anduseofsubstantialportionsofouravailablecashortheincurrenceofdebttoconsummatetheacquisition.Acquisitionsalsoincreasetheriskofunforeseenlegalliability,includingforpotent
199、ialviolationsofapplicablelaworindustryrulesandregulations,arisingfrompriororongoingactsoromissionsbytheacquiredbusinesseswhicharenotdiscoveredbyduediligenceduringtheacquisitionprocess.Generally,ifanacquiredbusinessfailstomeetourexpectations,ouroperatingresults,businessandfinancialconditionmaysuffer.
200、Acquisitionscouldalsoresultindilutiveissuancesofequitysecuritiesortheincurrenceofdebt,whichcouldadverselyaffectourbusiness,resultsofoperationsorfinancialcondition.Inaddition,asignificantportionofthepurchasepriceofcompaniesweacquiremaybeallocatedtogoodwillandotherintangibleassets,whichmustbeassessedf
201、orimpairmentatleastannually.Ifouracquisitionsdonotultimatelyyieldexpectedreturns,wemayberequiredtomakechargestoouroperatingresultsbasedonourimpairmentassessmentprocess,whichcouldharmourresultsofoperations.Because our long-term growth strategy involves further expansion of our sales to customers outs
202、ide the United States,our business will be susceptible to risksassociated with international operations.Acomponentofourgrowthstrategyinvolvesthefurtherexpansionofouroperationsandcustomerbaseinternationally.Wehaveopened8internationalofficessince2013.Wealsoplantoopenadditionalofficesinthefuture.Thesei
203、nternationalofficesfocusprimarilyonsales,professionalservicesandsupport.WealsohaveadevelopmentteaminDublin,Ireland.Ourcurrentinternationaloperationsandfutureinitiativeswillinvolveavarietyofrisks,including:difficultiesinmaintainingourcompanyculturewithadispersedanddistantworkforce;morestringentregula
204、tionsrelatingtodatasecurityandtheunauthorizeduseof,oraccessto,commercialandpersonalinformation,particularlyintheEuropeanUnion;unexpectedchangesinregulatoryrequirements,taxesortradelaws;differinglaborregulations,especiallyintheEuropeanUnion,wherelaborlawsaregenerallymoreadvantageoustoemployeesascompa
205、redtotheUnitedStates,includingdeemedhourlywageandovertimeregulationsintheselocations;challengesinherentinefficientlymanaginganincreasednumberofemployeesoverlargegeographicdistances,includingtheneedtoimplementappropriatesystems,policies,benefitsandcomplianceprograms;difficultiesinmanagingabusinessinn
206、ewmarketswithdiversecultures,languages,customs,legalsystems,alternativedisputesystemsandregulatorysystems;currencyexchangeratefluctuationsandtheresultingeffectonourrevenueandexpenses,andthecostandriskofenteringintohedgingtransactionsifwechosetodosointhefuture;globaleconomicuncertaintycausedbyglobalp
207、oliticalevents,includingtheUnitedKingdomsexitfromtheEuropeanUnion,onJanuary31,2020,orBrexit,andsimilargeopoliticaldevelopments;limitationsonourabilitytoreinvestearningsfromoperationsinonecountrytofundthecapitalneedsofouroperationsinothercountries;limitedorinsufficientintellectualpropertyprotection;p
208、oliticalinstabilityorterroristactivities;likelihoodofpotentialoractualviolationsofdomesticandinternationalanticorruptionlaws,suchastheU.S.ForeignCorruptPracticesActandtheU.K.BriberyAct,orofU.S.andinternationalexportcontrolandsanctionsregulations,whichlikelihoodmayincreasewithanincreaseofsalesoropera
209、tionsinforeignjurisdictionsandoperationsincertainindustries;andadversetaxburdensandforeignexchangecontrolsthatcouldmakeitdifficulttorepatriateearningsandcash.Ourlimitedexperienceinoperatingourbusinessinternationallyincreasestheriskthatanypotentialfutureexpansioneffortsthatwemayundertakewillnotbesucc
210、essful.Ifweinvestsubstantialtimeandresourcestoexpandourinternationaloperationsandareunabletodososuccessfullyandinatimelymanner,ourbusinessandoperatingresultswillsuffer.WecontinuetoimplementpoliciesandprocedurestofacilitateourcompliancewithU.S.lawsandregulationsapplicabletoorarisingfromourinternation
211、albusiness.Inadequaciesinourpastorcurrentcompliancepracticesmayincreasetheriskofinadvertentviolationsofsuchlawsandregulations,whichcouldleadtofinancialandotherpenaltiesthatcoulddamageourreputationandimposecostsonus.15Interruptions or delays in service from our third-party data center providers could
212、 impair our ability to deliver our platform to our customers,resulting in customerdissatisfaction,damage to our reputation,loss of customers,limited growth and reduction in revenue.Wecurrentlyservethemajorityofourplatformfunctionsfromthird-partydatacenterhostingfacilitiesoperatedbyAmazonWebServicesl
213、ocatedinnorthernVirginiaandGoogleCloudPlatformlocatedinFrankfurt,Germany.Inaddition,weserveancillaryfunctionsforourcustomersfromthird-partydatacenterhostingfacilitiesoperatedbyRackspacelocatedinDallas,Texas,withabackupfacilityinChicago,Illinois.Ouroperationsdepend,inpart,onourthird-partyfacilityprov
214、idersabilitiestoprotectthesefacilitiesagainstdamageorinterruptionfromnaturaldisasters,suchasearthquakesandhurricanes,powerortelecommunicationsfailures,criminalactsandsimilarevents.Intheeventthatanyofourthird-partyfacilitiesarrangementsisterminated,orifthereisalapseofserviceordamagetoafacility,wecoul
215、dexperienceinterruptionsinourplatformaswellasdelaysandadditionalexpensesinarrangingnewfacilitiesandservices.Anydamageto,orfailureof,thesystemsofourthird-partyproviderscouldresultininterruptionstoourplatform.Despiteprecautionstakenatourdatacenters,theoccurrenceofspikesinusagevolume,anaturaldisaster,s
216、uchasearthquakesorhurricane,anactofterrorism,vandalismorsabotage,adecisiontocloseafacilitywithoutadequatenotice,orotherunanticipatedproblemsatafacilitycouldresultinlengthyinterruptionsintheavailabilityofouron-demandsoftware.Evenwithcurrentandplanneddisasterrecoveryarrangements,ourbusinesscouldbeharm
217、ed.Also,intheeventofdamageorinterruption,ourinsurancepoliciesmaynotadequatelycompensateusforanylossesthatwemayincur.Thesefactorsinturncouldfurtherreduceourrevenue,subjectustoliabilityandcauseustoissuecreditsorcausecustomerstofailtorenewtheirsubscriptions,anyofwhichcouldmateriallyadverselyaffectourbu
218、siness.If our Growth Platform has outages or fails due to defects or similar problems,and if we fail to correct any defect or other software problems,we could losecustomers,become subject to service performance or warranty claims or incur significant costs.Ourplatformanditsunderlyinginfrastructurear
219、einherentlycomplexandmaycontainmaterialdefectsorerrors.Wereleasemodifications,updates,bugfixesandotherchangestooursoftwareseveraltimesperday,withouttraditionalhuman-performedqualitycontrolreviewsforeachrelease.Wehavefromtimetotimefounddefectsinoursoftwareandmaydiscoveradditionaldefectsinthefuture.We
220、maynotbeabletodetectandcorrectdefectsorerrorsbeforecustomersbegintouseourplatformoritsapplications.Consequently,weorourcustomersmaydiscoverdefectsorerrorsafterourplatformhasbeenimplemented.Forexample,inMarch2019,wehadaproductoutageduetothefailureofoneoftheinfrastructuresystemsthatsupportsmultiplepar
221、tsofourplatform.Althoughnodatafrompriortotheoutagewaslost,ourcustomersexperienceddisruptionsinusingourplatformduringtheoutage.Defectsorerrorscouldresultinproductoutagesandcouldalsocauseinaccuraciesinthedatawecollectandprocessforourcustomers,oreventheloss,damageorinadvertentreleaseofsuchconfidentiald
222、ata.Weimplementbugfixesandupgradesaspartofourregularsystemmaintenance,whichmayleadtosystemdowntime.Evenifweareabletoimplementthebugfixesandupgradesinatimelymanner,anyhistoryofproductoutages,defectsorinaccuraciesinthedatawecollectforourcustomers,ortheloss,damageorinadvertentreleaseofconfidentialdatac
223、ouldcauseourreputationtobeharmed,andcustomersmayelectnottopurchaseorrenewtheiragreementswithus.Furthermore,theseissuescouldsubjectustoserviceperformancecredits(whetherofferedbyusorrequiredbycontract),warrantyclaimsorincreasedinsurancecosts.Thecostsassociatedwithproductoutages,anymaterialdefectsorerr
224、orsinourplatformorotherperformanceproblemsmaybesubstantialandcouldmateriallyadverselyaffectouroperatingresults.Inaddition,third-partyappsandfeaturesonourGrowthPlatformmaynotmeetthesamequalitystandardsthatweapplytoourowndevelopmenteffortsand,totheextenttheycontainbugs,vulnerabilitiesordefects,theymay
225、createdisruptionsinourcustomersuseofourproducts,leadtodataloss,unauthorizedaccesstocustomerdata,damageourbrandandreputationandaffectthecontinueduseofourproducts,anyofwhichcouldharmourbusiness,resultsofoperationsandfinancialcondition.We are dependent on the continued availability of third-party data
226、hosting and transmission services.Asignificantportionofouroperatingcostisfromourthird-partydatahostingandtransmissionservices.Ifthecostsforsuchservicesincreaseduetovendorconsolidation,regulation,contractrenegotiation,orotherwise,wemaynotbeabletoincreasethefeesforourGrowthPlatformorservicestocoverthe
227、changes.Asaresult,ouroperatingresultsmaybesignificantlyworsethanforecasted.If we do not or cannot maintain the compatibility of our Growth Platform with third-party applications that our customers use in their businesses,our revenue willdecline.Asignificantpercentageofourcustomerschoosetointegrateou
228、rplatformwithcertaincapabilitiesprovidedbythird-partyapplicationprovidersusingapplicationprogramminginterfaces,orAPIs,publishedbytheseproviders.ThefunctionalityandpopularityofourGrowthPlatformdepends,inpart,onourabilitytointegrateourplatformwiththird-partyapplicationsandplatforms,includingCRM,CMS,e-
229、commerce,callcenter,analyticsandsocialmediasitesthatourcustomersuseandfromwhichtheyobtaindata.Third-partyprovidersofapplicationsandAPIsmaychangethefeaturesoftheirapplicationsandplatforms,restrictouraccesstotheirapplicationsandplatforms,oralterthetermsgoverninguseoftheirapplicationsandAPIsandaccessto
230、thoseapplicationsandplatformsinanadversemanner.Suchchangescouldfunctionallylimitorterminateourabilitytousethesethird-partyapplicationsandplatformsinconjunctionwithourplatform,whichcouldnegativelyimpactourofferingsandharmourbusiness.Ifwefailtointegrateourplatformwithnewthird-partyapplicationsandplatf
231、ormsthatourcustomersuseformarketing,salesorservicespurposes,orfailtorenewexistingrelationshipspursuanttowhichwecurrentlyprovidesuchintegration,wemaynotbeabletoofferthefunctionalitythatourcustomersneed,whichwouldnegativelyimpactourabilitytogeneratenewrevenueormaintainexistingrevenueandadverselyimpact
232、ourbusiness.16We rely on data provided by third parties,the loss of which could limit the functionality of our platform and disrupt our business.SelectfunctionalityofourGrowthPlatformdependsonourabilitytodeliverdata,includingsearchengineresultsandsocialmediaupdates,providedbyunaffiliatedthirdparties
233、,suchasFacebook,Google,LinkedInandTwitter.Someofthisdataisprovidedtouspursuanttothird-partydatasharingpoliciesandtermsofuse,underdatasharingagreementsbythird-partyprovidersorbycustomerconsent.Inthefuture,anyofthesethirdpartiescouldchangeitsdatasharingpolicies,includingmakingthemmorerestrictive,oralt
234、eritsalgorithmsthatdeterminetheplacement,display,andaccessibilityofsearchresultsandsocialmediaupdates,anyofwhichcouldresultinthelossof,orsignificantimpairmentto,ourabilitytocollectandprovideusefuldatatoourcustomers.Thesethirdpartiescouldalsointerpretour,orourserviceproviders,datacollectionpoliciesor
235、practicesasbeinginconsistentwiththeirpolicies,whichcouldresultinthelossofourabilitytocollectthisdataforourcustomers.Anysuchchangescouldimpairourabilitytodeliverdatatoourcustomersandcouldadverselyimpactselectfunctionalityofourplatform,impairingthereturnoninvestmentthatourcustomersderivefromusingourso
236、lution,aswellasadverselyaffectingourbusinessandourabilitytogeneraterevenue.Privacy concerns and end users acceptance of Internet behavior tracking may limit the applicability,use and adoption of our Growth Platform.Privacyconcernsmaycauseenduserstoresistprovidingthepersonaldatanecessarytoallowourcus
237、tomerstouseourplatformeffectively.Wehaveimplementedvariousfeaturesintendedtoenableourcustomerstobetterprotectenduserprivacy,butthesemeasuresmaynotalleviateallpotentialprivacyconcernsandthreats.Eventheperceptionofprivacyconcerns,whetherornotvalid,mayinhibitmarketadoptionofourplatform,especiallyincert
238、ainindustriesthatrelyonsensitivepersonalinformation.Privacyadvocacygroupsandthetechnologyandotherindustriesareconsideringvariousnew,additionalordifferentself-regulatorystandardsthatmayplaceadditionalburdensonus.Thecostsofcompliancewith,andotherburdensimposedbythesegroupspoliciesandactionsmaylimitthe
239、useandadoptionofourGrowthPlatformandreduceoveralldemandforit,orleadtosignificantfines,penaltiesorliabilitiesforanynoncomplianceorlossofanysuchaction.We are subject to governmental regulation and other legal obligations,particularly related to privacy,data protection and information security,and our
240、actual orperceived failure to comply with such obligations could harm our business.Compliance with such laws could also impair our efforts to maintain and expand ourcustomer base,and thereby decrease our revenue.Ourhandlingofdataissubjecttoavarietyoflawsandregulations,includingregulationbyvariousgov
241、ernmentagencies,includingtheU.S.FederalTradeCommission,orFTC,andvariousstate,localandforeignagencies.Wecollectpersonallyidentifiableinformationandotherdatafromourcustomersandleads.Wealsohandlepersonallyidentifiableinformationaboutourcustomerscustomers.Weusethisinformationtoprovideservicestoourcustom
242、ers,tosupport,expandandimproveourbusiness.Wemayalsosharecustomerspersonallyidentifiableinformationwiththirdpartiesasauthorizedbythecustomerorasdescribedinourprivacypolicy.TheU.S.federalandvariousstateandforeigngovernmentshaveadoptedorproposedlimitationsonthecollection,distribution,useandstorageofper
243、sonalinformationofindividuals.IntheUnitedStates,theFTCandmanystateattorneysgeneralareapplyingfederalandstateconsumerprotectionlawsasimposingstandardsfortheonlinecollection,useanddisseminationofdata.However,theseobligationsmaybeinterpretedandappliedinamannerthatisinconsistentfromonejurisdictiontoanot
244、herandmayconflictwithotherrequirementsorourpractices.Anyfailureorperceivedfailurebyustocomplywithprivacyorsecuritylaws,policies,legalobligationsorindustrystandardsoranysecurityincidentthatresultsintheunauthorizedreleaseortransferofpersonallyidentifiableinformationorothercustomerdatamayresultingovern
245、mentalenforcementactions,litigation,finesandpenaltiesand/oradversepublicity,andcouldcauseourcustomerstolosetrustinus,whichcouldhaveanadverseeffectonourreputationandbusiness.Lawsandregulationsconcerningprivacy,dataprotectionandinformationsecurityareevolving,andchangestosuchlawsandregulationscouldrequ
246、ireustochangefeaturesofourplatformorrestrictourcustomersabilitytocollectanduseemailaddresses,pageviewingdataandpersonalinformation,whichmayreducedemandforourplatform.Ourfailuretocomplywithfederal,stateandinternationaldataprivacylawsandregulationscouldharmourabilitytosuccessfullyoperateourbusinessand
247、pursueourbusinessgoals.Forexample,CaliforniarecentlyenactedtheCaliforniaConsumerPrivacyAct,orCCPA,thatwill,amongotherthings,requirecoveredcompaniestoprovidenewdisclosurestoCaliforniaconsumersandaffordsuchconsumersnewabilitiestoopt-outofcertainsalesofpersonalinformation.TheCCPArecentlywasamended,andi
248、tispossiblethatitwillbeamendedagainbeforeitgoesintoeffect.WecannotyetpredicttheimpactoftheCCPAonourbusinessoroperations,butitmayrequireustomodifyourdataprocessingpracticesandpoliciesandtoincursubstantialcostsandexpensesinanefforttocomply.Inaddition,severalforeigncountriesandgovernmentalbodies,includ
249、ingtheEuropeanUnionandCanada,haveregulationsdealingwiththecollectionanduseofpersonalinformationobtainedfromtheirresidents,whichareoftenmorerestrictivethanthoseintheUnitedStates.Lawsandregulationsinthesejurisdictionsapplybroadlytothecollection,use,storage,disclosureandsecurityofpersonalinformationtha
250、tidentifiesormaybeusedtoidentifyanindividual.Inrelevantpart,theselawsandregulationsmayaffectourabilitytoengageinleadgenerationactivitiesbyimposingheightenedrequirements,suchasaffirmativeopt-insorconsentpriortosendingcommercialcorrespondenceorengaginginelectronictrackingactivities.Forexample,arecentr
251、ulingoftheEuropeanCourtofJusticeinCaseC-673/17providesthatapre-checkedopt-inisinsufficienttoconstituteavalidactiveconsumerconsenttocookiestorage.17WithintheEuropeanUnion,legislatorshaveadoptedtheGeneralDataProtectionRegulation,orGDPR,andwhichbecameeffectiveinMay2018whichmayimposeadditionalobligation
252、sandriskuponourbusinessandwhichmayincreasesubstantiallythepenaltiestowhichwecouldbesubjectintheeventofanynon-compliance.Inaddition,Brexitcouldalsoleadtofurtherlegislativeandregulatorychanges,dependingonthefinaltermsofBrexitandtheagreementsorarrangementsnegotiatedwiththeEuropeanUnion.Itremainsunclear
253、howtheUnitedKingdomdataprotectionlawsorregulationswilldevelopinthemediumtolongertermandhowdatatransferstoandfromtheUnitedKingdomwillberegulated.WemayincursubstantialexpenseincomplyingwiththenewobligationstobeimposedbytheGDPRandwemayberequiredtomakesignificantchangesinourbusinessoperations,allofwhich
254、mayadverselyaffectourrevenuesandourbusinessoverall.OnMay23,2016,theEuropeanParliamentadoptedaresolutionandonJuly8,2016theEuropeanMemberStaterepresentativesapprovedthefinalversionoftheEU-USPrivacyShieldasasuccessortotheSafeHarborframework.AsofAugust1,2016,interestedcompanieshavebeenpermittedtoregiste
255、rfortheprogram.WearecurrentlycertifiedtotheEU-USPrivacyShield.TherecontinuetobeconcernsaboutwhethertheEU-USPrivacyShieldwillfaceadditionalchallenges.UntiltheremaininglegaluncertaintiesregardingthefutureoftheEU-USPrivacyShieldaresettled,wewillcontinuetofaceuncertaintyastowhetheroureffortstocomplywith
256、ourobligationsunderEuropeanprivacylawswillbesufficient.IfweareinvestigatedbyaEuropeandataprotectionauthority,wemayfacefinesandotherpenalties.AnysuchinvestigationorchargesbyEuropeandataprotectionauthoritiescouldhaveanegativeeffectonourexistingbusinessandonourabilitytoattractandretainnewcustomers.Wema
257、yalsoexperiencehesitancy,reluctance,orrefusalbyEuropeanormulti-nationalcustomerstocontinuetouseourservicesduetothepotentialriskexposuretosuchcustomersintheeventtheEU-USPrivacyShieldisinvalidated.Suchcustomersmayviewanyalternativeapproachestocomplianceasbeingtoocostly,tooburdensome,toolegallyuncertai
258、norotherwiseobjectionableandthereforedecidenottodobusinesswithus.Forexample,someofourcustomersorpotentialcustomersintheEUmayrequiretheirvendorstohostallpersonaldatawithintheEUandmaydecidetodobusinesswithoneofourcompetitorswhohostspersonaldatawithintheEUinsteadofdoingbusinesswithus.Inaddition,ifourpr
259、ivacyordatasecuritymeasuresfailtocomplywithcurrentorfuturelawsandregulations,wemaybesubjecttoclaims,legalproceedingsorotheractionsbyindividualsorgovernmentalauthoritiesbasedonprivacyordataprotectionregulationsandourcommitmentstocustomersorothers,aswellasnegativepublicityandapotentiallossofbusiness.M
260、oreover,iffuturelawsandregulationslimitoursubscribersabilitytouseandsharepersonalinformationorourabilitytostore,processandsharepersonalinformation,demandforoursolutionscoulddecrease,ourcostscouldincrease,andourbusiness,resultsofoperationsandfinancialconditioncouldbeharmed.If our or our customers sec
261、urity measures are compromised or unauthorized access to data of our customers or their customers is otherwise obtained,our GrowthPlatform may be perceived as not being secure,our customers may be harmed and may curtail or cease their use of our platform,our reputation may be damagedand we may incur
262、 significant liabilities.Ouroperationsinvolvethestorageandtransmissionofdataofourcustomersandtheircustomers,includingpersonallyidentifiableinformation.Ourstorageistypicallythesolesourceofrecordforportionsofourcustomersbusinessesandenduserdata,suchasinitialcontactinformationandonlineinteractions.Secu
263、rityincidentscouldresultinunauthorizedaccessto,lossoforunauthorizeddisclosureofthisinformation,litigation,indemnityobligationsandotherpossibleliabilities,aswellasnegativepublicity,whichcoulddamageourreputation,impairoursalesandharmourcustomersandourbusiness.Cyber-attacksandothermaliciousInternet-bas
264、edactivitycontinuetoincreasegenerally,andcloud-basedplatformprovidersofmarketingserviceshavebeentargeted.Ifoursecuritymeasuresarecompromisedasaresultofthird-partyaction,employeeorcustomererror,malfeasance,stolenorfraudulentlyobtainedlog-incredentialsorotherwise,ourreputationcouldbedamaged,ourbusines
265、smaybeharmedandwecouldincursignificantliability.Ifthirdpartieswithwhomwework,suchasvendorsordevelopers,violateapplicablelaws,oursecuritypoliciesorouracceptableusepolicy,suchviolationsmayalsoputourcustomersinformationatriskandcouldinturnhaveanadverseeffectonourbusiness.Inaddition,ifthesecuritymeasure
266、sofourcustomersarecompromised,evenwithoutanyactualcompromiseofourownsystems,wemayfacenegativepublicityorreputationalharmifourcustomersoranyoneelseincorrectlyattributestheblameforsuchsecuritybreachestousoroursystems.Wemaybeunabletoanticipateorpreventtechniquesusedtoobtainunauthorizedaccessortosabotag
267、esystemsbecausetheychangefrequentlyandgenerallyarenotdetecteduntilafteranincidenthasoccurred.Asweincreaseourcustomerbaseandourbrandbecomesmorewidelyknownandrecognized,wemaybecomemoreofatargetforthirdpartiesseekingtocompromiseoursecuritysystemsorgainunauthorizedaccesstoourcustomersdata.Additionally,w
268、eprovideextensiveaccesstoourdatabase,whichstoresourcustomerdata,toourdevelopmentteamtofacilitateourrapidpaceofproductdevelopment.Ifsuchaccessorourownoperationscausetheloss,damageordestructionofourcustomersbusinessdata,theirsales,leadgeneration,supportandotherbusinessoperationsmaybepermanentlyharmed.
269、Asaresult,ourcustomersmaybringclaimsagainstusforlostprofitsandotherdamages.Manygovernmentshaveenactedlawsrequiringcompaniestonotifyindividualsofdatasecurityincidentsorunauthorizedtransfersinvolvingcertaintypesofpersonaldata.Inaddition,someofourcustomerscontractuallyrequirenotificationofanydatasecuri
270、tycompromise.Securitycompromisesexperiencedbyourcompetitors,byourcustomersorbyusmayleadtopublicdisclosures,whichmayleadtowidespreadnegativepublicity.Anysecuritycompromiseinourindustry,whetheractualorperceived,couldharmourreputation,erodecustomerconfidenceintheeffectivenessofoursecuritymeasures,negat
271、ivelyimpactourabilitytoattractnewcustomers,causeexistingcustomerstoelectnottorenewtheirsubscriptionsorsubjectustothird-partylawsuits,regulatoryfinesorotheractionorliability,whichcouldmateriallyandadverselyaffectourbusinessandoperatingresults.18Therecanbenoassurancethatanylimitationsofliabilityprovis
272、ionsinourcontractsforasecuritybreachwouldbeenforceableoradequateorwouldotherwiseprotectusfromanysuchliabilitiesordamageswithrespecttoanyparticularclaim.Wealsocannotbesurethatourexistinggeneralliabilityinsurancecoverageandcoverageforerrorsoromissionswillcontinuetobeavailableonacceptabletermsorwillbea
273、vailableinsufficientamountstocoveroneormorelargeclaims,orthattheinsurerwillnotdenycoverageastoanyfutureclaim.Thesuccessfulassertionofoneormorelargeclaimsagainstusthatexceedavailableinsurancecoverage,ortheoccurrenceofchangesinourinsurancepolicies,includingpremiumincreasesortheimpositionoflargededucti
274、bleorco-insurancerequirements,couldhaveamaterialadverseeffectonourbusiness,financialconditionandoperatingresults.Risks Related to Intellectual PropertyOur business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others.Thesoftwareindustryis
275、characterizedbytheexistenceofalargenumberofpatents,copyrights,trademarks,tradesecretsandotherintellectualandproprietaryrights.Companiesinthesoftwareindustry,includingthoseinmarketingsoftware,areoftenrequiredtodefendagainstlitigationclaimsbasedonallegationsofinfringementorotherviolationsofintellectua
276、lpropertyrights.Manyofourcompetitorsandotherindustryparticipantshavebeenissuedpatentsand/orhavefiledpatentapplicationsandmayassertpatentorotherintellectualpropertyrightswithintheindustry.Moreover,inrecentyears,individualsandgroupsthatarenon-practicingentities,commonlyreferredtoas“patenttrolls,”havep
277、urchasedpatentsandotherintellectualpropertyassetsforthepurposeofmakingclaimsofinfringementinordertoextractsettlements.Fromtimetotime,wemayreceivethreateninglettersornoticesormaybethesubjectofclaimsthatourservicesand/orplatformandunderlyingtechnologyinfringeorviolatetheintellectualpropertyrightsofoth
278、ers.Respondingtosuchclaims,regardlessoftheirmerit,canbetimeconsuming,costlytodefendinlitigation,divertmanagementsattentionandresources,damageourreputationandbrandandcauseustoincursignificantexpenses.Ourtechnologiesmaynotbeabletowithstandanythird-partyclaimsorrightsagainsttheiruse.Claimsofintellectua
279、lpropertyinfringementmightrequireustoredesignourapplication,delayreleases,enterintocostlysettlementorlicenseagreementsorpaycostlydamageawards,orfaceatemporaryorpermanentinjunctionprohibitingusfrommarketingorsellingourplatform.Ifwecannotordonotlicensetheinfringedtechnologyonreasonabletermsoratall,ors
280、ubstitutesimilartechnologyfromanothersource,ourrevenueandoperatingresultscouldbeadverselyimpacted.Additionally,ourcustomersmaynotpurchaseourGrowthPlatformiftheyareconcernedthattheymayinfringethird-partyintellectualpropertyrights.Theoccurrenceofanyoftheseeventsmayhaveamaterialadverseeffectonourbusine
281、ss.Inoursubscriptionagreementswithourcustomers,wegenerallydonotagreetoindemnifyourcustomersagainstanylossesorcostsincurredinconnectionwithclaimsbyathirdpartyallegingthatacustomersuseofourservicesorplatforminfringestheintellectualpropertyrightsofthethirdparty.Therecanbenoassurance,however,thatcustome
282、rswillnotassertacommonlawindemnityclaimorthatanyexistinglimitationsofliabilityprovisionsinourcontractswouldbeenforceableoradequate,orwouldotherwiseprotectusfromanysuchliabilitiesordamageswithrespecttoanyparticularclaim.Ourcustomerswhoareaccusedofintellectualpropertyinfringementmayinthefutureseekinde
283、mnificationfromusundercommonlaworotherlegaltheories.Ifsuchclaimsaresuccessful,orifwearerequiredtoindemnifyordefendourcustomersfromtheseorotherclaims,thesematterscouldbedisruptivetoourbusinessandmanagementandhaveamaterialadverseeffectonourbusiness,operatingresultsandfinancialcondition.If we fail to a
284、dequately protect our proprietary rights,in the United States and abroad,our competitive position could be impaired and we may lose valuable assets,experience reduced revenue and incur costly litigation to protect our rights.Oursuccessisdependent,inpart,uponprotectingourproprietarytechnology.Werelyo
285、nacombinationofcopyrights,trademarks,servicemarks,tradesecretlawsandcontractualrestrictionstoestablishandprotectourproprietaryrightsinourproductsandservices.However,thestepswetaketoprotectourintellectualpropertymaybeinadequate.Wewillnotbeabletoprotectourintellectualpropertyifweareunabletoenforceourr
286、ightsorifwedonotdetectunauthorizeduseofourintellectualproperty.Anyofourtrademarksorotherintellectualpropertyrightsmaybechallengedbyothersorinvalidatedthroughadministrativeprocessorlitigation.Furthermore,legalstandardsrelatingtothevalidity,enforceabilityandscopeofprotectionofintellectualpropertyright
287、sareuncertain.Despiteourprecautions,itmaybepossibleforunauthorizedthirdpartiestocopyourtechnologyanduseinformationthatweregardasproprietarytocreateproductsandservicesthatcompetewithours.Somelicenseprovisionsprotectingagainstunauthorizeduse,copying,transferanddisclosureofourofferingsmaybeunenforceabl
288、eunderthelawsofcertainjurisdictionsandforeigncountries.Inaddition,thelawsofsomecountriesdonotprotectproprietaryrightstothesameextentasthelawsoftheUnitedStates.Totheextentweexpandourinternationalactivities,ourexposuretounauthorizedcopyinganduseofourtechnologyandproprietaryinformationmayincrease.Weent
289、erintoconfidentialityandinventionassignmentagreementswithouremployeesandconsultantsandenterintoconfidentialityagreementswiththepartieswithwhomwehavestrategicrelationshipsandbusinessalliances.Noassurancecanbegiventhattheseagreementswillbeeffectiveincontrollingaccesstoanddistributionofourproductsandpr
290、oprietaryinformation.Further,theseagreementsmaynotpreventourcompetitorsfromindependentlydevelopingtechnologiesthataresubstantiallyequivalentorsuperiortoourplatformandofferings.19Wemayberequiredtospendsignificantresourcestomonitorandprotectourintellectualpropertyrights.Litigationmaybenecessaryinthefu
291、turetoenforceourintellectualpropertyrightsandtoprotectourtradesecrets.Suchlitigationcouldbecostly,timeconsuminganddistractingtomanagementandcouldresultintheimpairmentorlossofportionsofourintellectualproperty.Furthermore,oureffortstoenforceourintellectualpropertyrightsmaybemetwithdefenses,counterclai
292、msandcountersuitsattackingthevalidityandenforceabilityofourintellectualpropertyrights.Ourinabilitytoprotectourproprietarytechnologyagainstunauthorizedcopyingoruse,aswellasanycostlylitigation,coulddelayfurthersalesortheimplementationofourplatformandofferings,impairthefunctionalityofourplatformandoffe
293、rings,delayintroductionsofnewfeaturesorenhancements,resultinoursubstitutinginferiorormorecostlytechnologiesintoourplatformandofferings,orinjureourreputation.Our use of“open source”software could negatively affect our ability to offer our platform and subject us to possible litigation.Asubstantialpor
294、tionofourcloud-basedplatformincorporatesso-called“opensource”software,andwemayincorporateadditionalopensourcesoftwareinthefuture.Opensourcesoftwareisgenerallyfreelyaccessible,usableandmodifiable.Certainopensourcelicensesmay,incertaincircumstances,requireustoofferthecomponentsofourplatformthatincorpo
295、ratetheopensourcesoftwarefornocost,thatwemakeavailablesourcecodeformodificationsorderivativeworkswecreatebasedupon,incorporatingorusingtheopensourcesoftwareandthatwelicensesuchmodificationsorderivativeworksunderthetermsoftheparticularopensourcelicense.Ifanauthororotherthirdpartythatdistributesopenso
296、urcesoftwareweuseweretoallegethatwehadnotcompliedwiththeconditionsofoneormoreoftheselicenses,wecouldberequiredtoincursignificantlegalexpensesdefendingagainstsuchallegationsandcouldbesubjecttosignificantdamages,includingbeingenjoinedfromtheofferingofthecomponentsofourplatformthatcontainedtheopensourc
297、esoftwareandbeingrequiredtocomplywiththeforegoingconditions,whichcoulddisruptourabilitytooffertheaffectedsoftware.Wecouldalsobesubjecttosuitsbypartiesclaimingownershipofwhatwebelievetobeopensourcesoftware.Litigationcouldbecostlyforustodefend,haveanegativeeffectonouroperatingresultsandfinancialcondit
298、ionandrequireustodevoteadditionalresearchanddevelopmentresourcestochangeourproducts.Risks Related to Government Regulation and Taxation 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 on our
299、servers.Asaproviderofacloud-basedinboundmarketing,salesandcustomerservicesoftwareplatform,wemaybesubjecttopotentialliabilityfortheactivitiesofourcustomersonorinconnectionwiththedatatheystoreonourservers.Althoughourcustomertermsofuseprohibitillegaluseofourservicesbyourcustomersandpermitustotakedownwe
300、bsitesortakeotherappropriateactionsforillegaluse,customersmaynonethelessengageinprohibitedactivitiesoruploadorstorecontentwithusinviolationofapplicablelaworthecustomersownpolicies,whichcouldsubjectustoliabilityorharmourreputation.Furthermore,customersmayupload,store,orusecontentonourGrowthPlatformth
301、atmayviolateourpolicyonacceptableusewhichprohibitscontentthatisthreatening,abusive,harassing,deceptive,false,misleading,vulgar,obscene,orindecent.Whilesuchcontentmaynotbeillegal,useofourGrowthPlatformforsuchcontentcouldharmourreputationresultinginalossofbusiness.SeveralU.S.federalstatutesmayapplytou
302、swithrespecttovariouscustomeractivities:TheDigitalMillenniumCopyrightActof1998,orDMCA,providesrecourseforownersofcopyrightedmaterialwhobelievethattheirrightsunderU.S.copyrightlawhavebeeninfringedontheInternet.UndertheDMCA,basedonourcurrentbusinessactivityasanInternetserviceproviderthatdoesnotownorco
303、ntrolwebsitecontentpostedbyourcustomers,wegenerallyarenotliableforinfringingcontentpostedbyourcustomersorotherthirdparties,providedthatwefollowtheproceduresforhandlingcopyrightinfringementclaimssetforthintheDMCA.Generally,ifwereceiveapropernoticefrom,oronbehalf,ofacopyrightowneralleginginfringemento
304、fcopyrightedmateriallocatedonwebsiteswehost,andwefailtoexpeditiouslyremoveordisableaccesstotheallegedlyinfringingmaterialorotherwisefailtomeettherequirementsofthesafeharborprovidedbytheDMCA,thecopyrightownermayseektoimposeliabilityonus.TechnicalmistakesincomplyingwiththedetailedDMCAtake-downprocedur
305、escouldsubjectustoliabilityforcopyrightinfringement.TheCommunicationsDecencyActof1996,orCDA,generallyprotectsonlineserviceproviders,suchasus,fromliabilityforcertainactivitiesoftheircustomers,suchasthepostingofdefamatoryorobscenecontent,unlesstheonlineserviceproviderisparticipatingintheunlawfulconduc
306、t.UndertheCDA,wearegenerallynotresponsibleforthecustomer-createdcontenthostedonourservers.Consequently,wedonotmonitorhostedwebsitesorprescreenthecontentplacedbyourcustomersontheirsites.However,theCDAdoesnotapplyinforeignjurisdictionsandwemaynonethelessbebroughtintodisputesbetweenourcustomersandthird
307、partieswhichwouldrequireustodevotemanagementtimeandresourcestoresolvesuchmattersandanypublicityfromsuchmatterscouldalsohaveanadverseeffectonourreputationandthereforeourbusiness.20InadditiontotheCDA,theSecuringtheProtectionofourEnduringandEstablishedConstitutionalHeritageAct,ortheSPEECHAct,providesas
308、tatutoryexceptiontotheenforcementbyaU.S.courtofaforeignjudgmentfordefamationundercertaincircumstances.Generally,theexceptionappliesifthedefamationlawappliedintheforeigncourtdidnotprovideatleastasmuchprotectionforfreedomofspeechandpressaswouldbeprovidedbytheFirstAmendmentoftheU.S.Constitutionorbythec
309、onstitutionandlawofthestateinwhichtheU.S.courtislocated,orifnofindingofdefamationwouldbesupportedundertheFirstAmendmentoftheU.S.ConstitutionorundertheconstitutionandlawofthestateinwhichtheU.S.courtislocated.AlthoughtheSPEECHActmayprotectusfromtheenforcementofforeignjudgmentsintheUnitedStates,itdoesn
310、otaffecttheenforceabilityofthejudgmentintheforeigncountrythatissuedthejudgment.Givenourinternationalpresence,wemaytherefore,nonetheless,havetodefendagainstorcomplywithanyforeignjudgmentsmadeagainstus,whichcouldtakeupsubstantialmanagementtimeandresourcesanddamageourreputation.Althoughthesestatutesand
311、caselawintheUnitedStateshavegenerallyshieldedusfromliabilityforcustomeractivitiestodate,courtrulingsinpendingorfuturelitigationmaynarrowthescopeofprotectionaffordedusundertheselaws.Inaddition,lawsgoverningtheseactivitiesareunsettledinmanyinternationaljurisdictions,ormayprovedifficultorimpossibleforu
312、stocomplywithinsomeinternationaljurisdictions.Also,notwithstandingtheexculpatorylanguageofthesebodiesoflaw,wemaybecomeinvolvedincomplaintsandlawsuitswhich,evenifultimatelyresolvedinourfavor,addcosttoourdoingbusinessandmaydivertmanagementstimeandattention.Finally,otherexistingbodiesoflaw,includingthe
313、criminallawsofvariousstates,maybedeemedtoapplyornewstatutesorregulationsmaybeadoptedinthefuture,anyofwhichcouldexposeustofurtherliabilityandincreaseourcostsofdoingbusiness.We may be subject to additional obligations to collect and remit sales tax and other taxes,and we may be subject to tax liabilit
314、y for past sales,which could harm ourbusiness.State,localandforeignjurisdictionshavedifferingrulesandregulationsgoverningsales,use,valueaddedandothertaxes,andtheserulesandregulationsaresubjecttovaryinginterpretationsthatmaychangeovertime.Inparticular,theapplicabilityofsuchtaxestoourGrowthPlatforminv
315、ariousjurisdictionsisunclear.Further,thesejurisdictionsrulesregardingtaxnexusarecomplexandvarysignificantly.Asaresult,wecouldfacethepossibilityoftaxassessmentsandaudits,andourliabilityforthesetaxesandassociatedpenaltiescouldexceedouroriginalestimates.Asuccessfulassertionthatweshouldbecollectingaddit
316、ionalsales,use,valueaddedorothertaxesinthosejurisdictionswherewehavenothistoricallydonesoanddonotaccrueforsuchtaxescouldresultinsubstantialtaxliabilitiesandrelatedpenaltiesforpastsales,discouragecustomersfrompurchasingourapplicationorotherwiseharmourbusinessandoperatingresults.Changes in tax laws or
317、 regulations that are applied adversely to us or our customers could increase the costs of our Growth Platform and adversely impact ourbusiness.Newincome,sales,useorothertaxlaws,statutes,rules,regulationsorordinancescouldbeenactedatanytime.Anynewtaxescouldadverselyaffectourdomesticandinternationalbu
318、sinessoperations,andourbusinessandfinancialperformance.Further,existingtaxlaws,statutes,rules,regulationsorordinancescouldbeinterpreted,changed,modifiedorappliedadverselytous.Theseeventscouldrequireusorourcustomerstopayadditionaltaxamountsonaprospectiveorretroactivebasis,aswellasrequireusorourcustom
319、erstopayfinesand/orpenaltiesandinterestforpastamountsdeemedtobedue.Ifweraiseourpricestooffsetthecostsofthesechanges,existingandpotentialfuturecustomersmayelectnottocontinueorpurchaseourGrowthPlatforminthefuture.Additionally,new,changed,modifiedornewlyinterpretedorappliedtaxlawscouldincreaseourcustom
320、ersandourcompliance,operatingandothercosts,aswellasthecostsofourplatform.Anyoralloftheseeventscouldadverselyimpactourbusinessandfinancialperformance.We are a multinational organization faced with increasingly complex tax issues in many jurisdictions,and we could be obligated to pay additional taxes
321、in variousjurisdictions.Asamultinationalorganization,wemaybesubjecttotaxationinseveraljurisdictionsaroundtheworldwithincreasinglycomplextaxlaws,theapplicationofwhichcanbeuncertain.Theamountoftaxeswepayinthesejurisdictionscouldincreasesubstantiallyasaresultofchangesintheapplicabletaxprinciples,includ
322、ingincreasedtaxrates,newtaxlawsorrevisedinterpretationsofexistingtaxlawsandprecedents,whichcouldhaveamaterialadverseeffectonourliquidityandoperatingresults.Changesintaxlaws,suchastaxreformintheUnitedStatesorchangesintaxlawsresultingfromtheOrganizationforEconomicCo-operationandDevelopmentsmulti-juris
323、dictionalplanofactiontoaddress“baseerosionandprofitshifting,”couldimpactoureffectivetaxrate.Inaddition,theauthoritiesinthesejurisdictionscouldreviewourtaxreturnsandimposeadditionaltax,interestandpenalties,andtheauthoritiescouldclaimthatvariouswithholdingrequirementsapplytousoroursubsidiariesorassert
324、thatbenefitsoftaxtreatiesarenotavailabletousoroursubsidiaries,anyofwhichcouldhaveamaterialimpactonusandtheresultsofouroperations.21Failure to comply with laws and regulations could harm our business.Ourbusinessissubjecttoregulationbyvariousfederal,state,localandforeigngovernmentalagencies,includinga
325、genciesresponsibleformonitoringandenforcingemploymentandlaborlaws,workplacesafety,environmentallaws,consumerprotectionlaws,anti-briberylaws,import/exportcontrols,federalsecuritieslawsandtaxlawsandregulations.Incertainjurisdictions,theseregulatoryrequirementsmaybemorestringentthanthoseintheUnitedStat
326、es.Noncompliancewithapplicableregulationsorrequirementscouldsubjectustoinvestigations,sanctions,mandatoryrecalls,enforcementactions,disgorgementofprofits,fines,damages,civilandcriminalpenaltiesorinjunctions.We may not be able to utilize a significant portion of our net operating loss carryforwards,w
327、hich could adversely affect our profitability.AsofDecember31,2019,wehadfederalandstatenetoperatinglosscarryforwardsduetopriorperiodlosses,which,ifnotutilized,willbegintoexpirein2027forfederalpurposesandbegintoexpirein2023forstatepurposes.Thesenetoperatinglosscarryforwardscouldexpireunusedandbeunavai
328、labletooffsetfutureincometaxliabilities,whichcouldadverselyaffectourprofitability.Inaddition,underSection382oftheInternalRevenueCodeof1986,asamended,whichwerefertoastheCode,ourabilitytoutilizenetoperatinglosscarryforwardsorothertaxattributes,suchasresearchtaxcredits,inanytaxableyearmaybefurtherlimit
329、edifweexperienceanownershipchange.ASection382ownershipchangegenerallyoccursifoneormorestockholdersorgroupsofstockholderswhoownatleast5%ofourstockincreasetheirownershipbymorethan50percentagepointsovertheirlowestownershippercentagewithinarollingthree-yearperiod.Similarrulesmayapplyunderstatetaxlaws.Fu
330、tureissuancesofourstockcouldcauseanownershipchange.Itispossiblethatanownershipchangeinconnectionwithafutureoffering,oranyfutureownershipchange,couldhaveamaterialeffectontheuseofournetoperatinglosscarryforwardsorothertaxattributes,whichcouldadverselyaffectourprofitability.Netoperatinglosscarryforward
331、sincurredforperiodsbeginningonorafterJanuary1,2018wouldnotexpireunusedasaresultoftheselimitationsbecausetheycanbecarriedforwardindefinitely.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
332、ourGrowth Platform and our ability to conduct business.Ourcustomersrelyonemailtocommunicatewiththeirexistingorprospectivecustomers.Variousprivateentitiesattempttoregulatetheuseofemailforcommercialsolicitation.Theseentitiesoftenadvocatestandardsofconductorpracticethatsignificantlyexceedcurrentlegalre
333、quirementsandclassifycertainemailsolicitationsthatcomplywithcurrentlegalrequirementsasspam.Someoftheseentitiesmaintain“blacklists”ofcompaniesandindividuals,andthewebsites,internetserviceprovidersandinternetprotocoladdressesassociatedwiththoseentitiesorindividualsthatdonotadheretothosestandardsofconductorpracticesforcommercialemailsolicitationsthattheblacklistingentitybelievesareappropriate.Ifacomp
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