1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-KAnnual Report pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934For the fiscal year ended December 31,2017ORTransition report pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934Commission
2、 File Number:001-35838Marin Software Incorporated(Exact name of registrant as specified in its charter)Delaware20-4647180(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification Number)123 Mission Street,27th FloorSan Francisco,CA 94105(415)399-2580(Address,includin
3、g zip code,and telephone number,including area code,of registrants principal executive offices)Securities registered pursuant to Section 12(b)of the Act:Title of each class Name of each exchange on which registeredCommon stock,par value$0.001 per share New York Stock ExchangeSecurities registered pu
4、rsuant to section 12(g)of the Act:Not applicableIndicatebycheckmarkiftheRegistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YesNoIndicatebycheckmarkiftheRegistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)ofAct.YesNoIndicatebycheckmarkwhethertheRegistrant(1)ha
5、sfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheRegistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesNoIndicatebycheckmarkwhethertheRegistranthassubmittedelec
6、tronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobesubmittedandpostedpursuanttoRule405ofRegulationS-T(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheRegistrantwasrequiredtosubmitandpostsuchfiles).YesNoIndicatebycheckmarkifdisclosureofdeli
7、nquentfilerspursuanttoItem405ofRegulationS-K(229.405ofthischapter)isnotcontainedherein,andwillnotbecontained,tothebestofRegistrantsknowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10-KoranyamendmenttothisForm10-K.IndicatebycheckmarkwhethertheRegistrantisala
8、rgeacceleratedfiler,anacceleratedfiler,anon-acceleratedfilerorasmallerreportingcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler”and“smallerreportingcompany”inRule12b-2oftheExchangeAct.(Checkone):Largeacceleratedfiler Acceleratedfiler Non-acceleratedfiler Smallerreportingcompany E
9、merginggrowthcompany Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.YesNoIndicatebycheckmarkwhethertheRegistrantisashellcompany(asdefine
10、dinRule12b-2oftheAct).YesNoBasedontheclosingpriceoftheRegistrantsCommonStockontheNewYorkStockExchangeof$9.10onthelastbusinessdayoftheRegistrantsmostrecentlycompletedsecondfiscalquarter,whichwasJune30,2017,theaggregatemarketvalueofitssharesheldbynon-affiliateswasapproximately$48million.SharesoftheReg
11、istrantsCommonStockheldbyeachexecutiveofficeranddirectorwereexcludedinthatsuchpersonsmaybedeemedtobeaffiliates.Thisdeterminationofaffiliatestatusisnotnecessarilyaconclusivedeterminationforotherpurposes.AsofFebruary26,2018,therewereapproximately5,734,000sharesoftheRegistrantsCommonStockoutstanding.DO
12、CUMENTS INCORPORATED BY REFERENCEPortionsoftheRegistrantsdefinitiveproxystatementforits2018AnnualMeetingofStockholders(“ProxyStatement”),tobefiledwithin120daysoftheRegistrantsfiscalyearendedDecember31,2017,areincorporatedbyreferenceinPartIIIofthisAnnualReportonForm10-K.Exceptwithrespecttoinformation
13、specificallyincorporatedbyreferenceinthisForm10-K,theProxyStatementisnotdeemedtobefiledaspartofthisAnnualReportonForm10-K.MARIN SOFTWARE INCORPORATEDFORM 10-KFor the Fiscal Year Ended December 31,2017TABLE OF CONTENTS Page PART I.4Item1.Business4Item1A.RiskFactors8Item1B.UnresolvedStaffComments25Ite
14、m2.Properties25Item3.LegalProceedings25Item4.MineSafetyDisclosures25PART II.26Item5.MarketforRegistrantsCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities26Item6.SelectedConsolidatedFinancialData27Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperation
15、s30Item7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk47Item8.FinancialStatementsandSupplementaryData48Item9.ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosure48Item9A.ControlsandProcedures48Item9B.OtherInformation50PART III.51Item10.Directors,ExecutiveOfficersandCorp
16、orateGovernance51Item11.ExecutiveCompensation51Item12.SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters51Item13.CertainRelationshipsandRelatedTransactions,andDirectorIndependence51Item14.PrincipalAccountantFeesandServices51PART IV.52Item15.ExhibitsandFinancialStatem
17、entSchedules52Item16.Form10-KSummary 54Signatures802SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThisAnnualReportonForm10-K,includingthe“ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,”containsforward-lookingstatementsregardingfutureeventsandourfutureresults,including
18、statementsregardingthecapabilitiesofourtechnologyplatformandupgradestotheplatform,productcapabilitiesandtheirbenefitsforourcustomers,andexpectationsastofinancialperformance,thataresubjecttothesafeharborscreatedundertheSecuritiesActof1933,asamended,andtheSecuritiesExchangeActof1934,asamended.Allstate
19、mentscontainedinthisAnnualReportonForm10-Kotherthanstatementsofhistoricalfact,includingstatementsregardingourfutureresultsofoperationsandfinancialposition,ourbusinessstrategyandplans,andourobjectivesforfutureoperations,areforward-lookingstatementswithinthemeaningofthePrivateSecuritiesLitigationRefor
20、mActof1995.Thewords“believe,”“may,”“potentially,”“will,”“estimate,”“continue,”“anticipate,”“intend,”“could,”“should,”“would,”“project,”“plan,”“predict,”“expect,”“seek,”andsimilarexpressionsareintendedtoidentifyforward-lookingstatements.Wehavebasedtheseforward-lookingstatementslargelyonourcurrentexpe
21、ctations,estimatesandprojectionsaboutfutureeventsandtrendsthatwebelievemayaffectourfinancialcondition,resultsofoperations,businessstrategy,short-termandlong-termbusinessoperationsandobjectives,andfinancialneeds.Thesestatementsreflectourbeliefsandcertainassumptionsbaseduponinformationavailabletousatt
22、hetimewefilethisAnnualReportonForm10-Korthetimeofthedocumentsincorporatedbyreference.Suchforward-lookingstatementsareonlypredictions,whichmaydiffermateriallyfromactualresultsorfutureevents.Althoughwebelievethatourexpectations,estimatesandprojectionsreflectedintheforward-lookingstatementsarereasonabl
23、e,wecannotbesurethattheywillbeachieved.Theseforward-lookingstatementsaresubjecttoanumberofrisks,uncertaintiesandassumptions,includingthosedescribedinthe“RiskFactors”section.Moreover,weoperateinaverycompetitiveandrapidlychangingenvironment.Newrisksemergefromtimetotime.Itisnotpossibleforourmanagementt
24、opredictallrisks,norcanweassesstheimpactofallfactorsonourbusinessortheextenttowhichanyfactor,orcombinationoffactors,maycauseactualresultstodiffermateriallyfromthosecontainedinanyforward-lookingstatementswemaymake.Inlightoftheserisks,uncertaintiesandassumptions,thefutureeventsandtrendsdiscussedinthis
25、reportmaynotoccurandactualresultscoulddiffermateriallyandadverselyfromthoseanticipatedorimpliedintheforward-lookingstatements.Weundertakenoobligationtoreviseorpubliclyreleasetheresultsofanyrevisiontotheseforward-lookingstatements,exceptasrequiredbylaw.Giventheserisksanduncertainties,readersarecautio
26、nednottoplaceunduerelianceonsuchforward-lookingstatements.Asusedinthisreport,theterms“Marin,”“Registrant,”“we,”“us,”“our,”and“theCompany”meanMarinSoftwareIncorporatedanditssubsidiariesunlessthecontextindicatesotherwise.3PART IITEM 1.BUSINESSWeprovidealeadingcross-channel,cross-device,enterprisemarke
27、tingsoftwareplatformforsearch,socialanddisplayadvertisingchannels,offeredasasoftware-as-a-service,orSaaS,solutionforadvertisersandagencies.Ourplatformisananalytics,workflowandoptimizationsolutionformarketingprofessionals,allowingthemtoeffectivelymanagetheirdigitaladvertisingspendacrosssearch,sociala
28、nddisplayadvertisingchannels.Oursoftwaresolutionisdesignedtohelpourcustomers:measuretheeffectivenessoftheiradvertisingcampaignsthroughourproprietaryreportingandanalyticscapabilities;manageandexecutecampaignsthroughourintuitiveuserinterfaceandunderlyingtechnologythatstreamlinesandautomateskeyfunction
29、s,suchasadvertisementcreationandbidding,acrossmultiplepublishersandchannels;andoptimizecampaignsacrossmultiplepublishersandchannelsbasedonmarketandbusinessdatatoachievedesiredrevenueoutcomesusingourpredictivebidmanagementtechnology.Advertisersuseourplatformtocreate,targetandconvertpreciseaudiencesba
30、sedonrecentbuyingsignalsfromuserssearch,socialanddisplayinteractions.OurplatformisintegratedwithleadingpublisherssuchasAmazon,Baidu,Bing,Facebook,Google,Instagram,Pinterest,Twitter,Yahoo!Gemini,Yahoo!JapanandYandex.Additionally,wehaveintegrationswithmorethan50leadingwebanalyticsandadvertisement-serv
31、ingsolutionsandkeyenterpriseapplications,enablingourcustomerstomoreaccuratelymeasurethereturnoninvestmentoftheirmarketingprograms.Oursoftwareplatformservesasanintegrationpointforadvertisingperformance,salesandrevenuedata,allowingadvertiserstoconnectthedotsbetweenadvertisingspendandrevenueoutcomes.Th
32、roughanintuitiveinterface,weenableourcustomerstosimultaneouslyrunlarge-scaledigitaladvertisingcampaignsacrossmultiplepublishersandchannels,makingiteasyformarketerstocreate,publish,modifyandoptimizecampaigns.Ourpredictivebidmanagementandoptimizationtechnologyalsoallowsadvertiserstoforecastoutcomesand
33、optimizecampaignsacrossmultiplepublishersandchannelstoachievetheirbusinessgoals.Ouroptimizationtechnologycanhelpadvertisersincreaseadvertisementspendonthosecampaigns,publishersandchannelsthatareperformingwellwhilereducinginvestmentinthosethatarenot.Thiscategoryofsolutions,whichwerefertoascross-chann
34、elbidandcampaignoptimization,helpsbusinessesintelligentlyandefficientlymeasure,manage,andoptimizetheirdigitaladvertisingspendtoachievedesiredbusinessresults.WecompletedouracquisitionsofSocialMoovS.A.S.,orSocialMoov,andNowSpots,Inc.,whichconductedbusinessasPerfectAudience,orPerfectAudience,inFebruary
35、2015andJune2014,respectively,tocomplementourproductofferings.SocialMoovprovidesasoftwareplatformthatoffersadvertisersandagenciessocialadvertisingtoolsdesignedtoincreaseengagementandreturnoninvestment.PerfectAudienceoffersadvertisersaSaaSdemand-sideplatformtopurchasedisplayimpressionsandretargetaudie
36、ncesacrosstheweb,FacebookandTwitter.PerfectAudienceexpandedourcross-channelcapabilitiesbyaddingnewprogrammaticdisplayandsocialadvertisingfunctionalitywhileexpandingouraudienceretargetingtools.TheacquisitionofSocialMoovismorefullydescribedinNote3totheconsolidatedfinancialstatements.HeadquarteredinSan
37、Francisco,wewerefoundedin2006.Themailingaddressofourheadquartersis123MissionStreet,27thFloor,SanFrancisco,California94105andourtelephonenumberatthatlocationis(415)399-2580.Ourcustomerscollectivelymanagebillionsofdollarsinadvertisingspendonourplatform,whichwebelievemakesusoneofthelargestprovidersofin
38、dependentadvertisingcloudsolutions.Offered SolutionsOurcloud-basedplatformhelpsourcustomerstomeasure,manageandoptimizetheirdigitalmarketingcampaignstoimproveperformanceoftheironlineadvertisingcampaigns,realizeefficienciesandtimesavings,andmakebetterbusinessdecisions.Weoffersolutionsfordirectadvertis
39、ersofallsizesandtheagenciesthatrepresentthem,includingenterprise,mid-marketorsmallbusinesses.WeofferSaaSsolutionsandmanagedservicesforsearch,socialanddisplay.4Search and SocialWeoffertwoeditionsofoursearchandsocialplatformthatleveragethesameunderlyingtechnology.Enterprise Edition.Targetinglargeadver
40、tisersandagencies,Marin Enterprise isdesignedtoprovidedigitaladvertiserswiththepower,scaleandflexibilityrequiredtomanagelarge-scaleadvertisingcampaigns.Professional Edition.Targetingmid-marketadvertisersandagencies,Marin Professional isdesignedforrapiddeploymentandofferscustomersacompleteworkflow,an
41、alysisandoptimizationsolutionformanagingdigitaladvertising.Ourplatformiscomprisedofthefollowingmodules:Optimization.OurOptimization modulehelpsadvertisersmanagebidsacrosspublisherstomeetrevenuegoalsandidentifyopportunitiesforcampaignimprovements,whichwebelievecanimprovefinancialperformanceandefficie
42、ncies.Forecastingcapabilitieshelppredictcampaignperformance,whichsimplifiesthebudgetingprocessformarketingdepartments.Reporting and Analytics.OurReporting and Analytics moduleenablesadvertiserstoreportresultsatabusinesslevelandanalyzecross-channelperformancetrends,whichwebelievecanleadtoimprovedvisi
43、bilityandgeneratesignificanttimesavings.Campaign Management.OurCampaign Management moduleprovidesthedigitaladvertiserwithaunifiedinterfacetocreate,manageandoptimizecampaignsacrossabroadrangeofpublishers,creatinggreaterefficienciesandincreasingflexibility.Ourgoalistocomplementandenhancethetoolsoffere
44、dbythesepublisherstoprovidedigitaladvertiserstheabilitytoeasilymanagetheircampaignsonaglobalscale.Connect.OurConnect moduleenablesadvertiserstoautomateandstreamlinethecaptureofrevenue,costandaudiencedatafromarangeofsourcessuchasadvertisementservers,analyticssystems,CRMplatforms,publishersandthirdpar
45、tydatabases.Throughintegrationsacrossmultipledatasources,ourConnect modulecanhelpadvertisershaveaholisticpictureoftheirdigitaladvertisingcampaigns.Display Perfect AudienceTargetingsmallbusinesses,PerfectAudienceisdesignedforrapiddeploymentandofferscustomersaneasy-to-useinterfacetoimplementandoptimiz
46、ecampaignsacrossallmajornetworksandacrossdevices.Technology&Supporting PlatformWedesignedourcloud-basedplatformtosupportlargeglobaladvertisers.ThemajorityofoursoftwareiswritteninJava.Ourhardwareconsistsofindustry-standardserversandnetworkinfrastructure.OurstandardoperatingsystemisLinux.Oursoftwarepl
47、atformischaracter-set,language,currency,andtime-zoneindependent.Ourtechnologyplatformhasthefollowingkeybenefits:Scalability.Ourplatformisdesignedtohandlebillionsofadvertisingunitsacrossthousandsofadvertisers,whiledeliveringaresponsivebrowsingandeditingexperience.Ifthenumberofadvertisersandresultingc
48、omputingandstoragerequirementschanges,wecanaddorremovehardwaretoourplatformtoaccommodatethedemand.Availability.Ourcustomersarehighlydependentontheavailabilityofourplatform,whichisdesignedtobeavailable24x7,365daysayear.Weoperateourownhardwareandusethird-partydatacentersthatofferserverredundancy,back-
49、upcommunicationsandpowerandphysicalsecurity.Security.Ourplatformmanagesalargequantityofcustomerdata.Weemploytechnologies,policiesandprocedurestoprotectcustomerdata.Ourprimarythird-partydatacenterhasSOC1attestations.Weareintheprocessofupgradingoursoftwareplatform,whichwebelievewillcost-effectivelyext
50、endthescalability,speed,resiliencyandavailabilityofourservicesandfacilitateourabilitytoaddnewfeaturestoourproducts.CustomersWemarketandselloursolutionstoadvertisersdirectlyandthroughadvertisingagenciesthatuseourplatformonbehalfoftheircustomers.Advertisersthatweservethroughourrelationshipswithagencie
51、shavehistoricallyrepresentedbetweenapproximatelyone-thirdtoone-halfouroverallrevenues.Therewerenocustomersthataccountedforgreaterthan10%ofourrevenues,netin2017,2016or2015.5CompetitionThedigitaladvertisingcloudmarketishighlycompetitive,fragmented,andsubjecttochangesinbothtechnologyandcustomerbehavior
52、.Wefacesignificantcompetitiontodayandexpectcompetitiontointensifyinthefuture.Tomaintainandimproveourcompetitiveposition,wemustkeeppacewiththeevolvingneedsofourcustomersandcontinuetodevelopandintroducenewmodules,featuresandservicesinatimelyandefficientmanner.Wecurrentlycompetewithlarge,well-establish
53、edcompanies,suchasAdobeSystemsIncorporated,Facebook,Inc.andGoogleInc.(throughitswhollyownedsubsidiaryDoubleClick),andprivately-heldcompanies,suchasKenshooLtd.Wealsocompetewithin-houseproprietarytools,toolsfrompublishersandcustomsolutions,includingspreadsheets.Webelievetheprincipalcompetitivefactorsi
54、nourmarketincludethefollowing:solutionquality,breadth,stability,flexibilityandfunctionality;tangibleplatformbenefits;levelofcustomersatisfactionandourabilitytorespondtocustomerneedsrapidly;breadthandqualityofadvertiserandagencyrelationships;abilitytoinnovateanddevelopneworimprovedproductsandfeatures
55、whilemaintainingplatformspeedandstability;abilitytorespondtochangesinpublishersAPIs;brandawarenessandreputation;andsizeofcustomerbase.Apartfromcross-channelplatformcompetitors,wealsocompetewithchannelsolutionsinthedisplayandsocialadvertisingmarkets.Competitorsinthedisplayadvertisingmarketincludepubl
56、iccompaniessuchasCriteoS.A.andSizmek,Inc.,aswellasprivatelyheldcompaniessuchasAdRollInc.andMediaMath,Inc.,whileinthesocialadvertisingmarketwecompetewithpubliccompaniessuchasS(throughitswhollyownedsubsidiaryS)andprivately-heldcompaniessuchasNanigans,Inc.,Smartly.ioInc.and4CInsights,Inc.Ourabilitytore
57、maincompetitivewilllargelydependonourongoingperformanceintheareasofthequality,functionalityandbreadthofoursolutionandtheavailabilityandknowledgeabilityofourcustomersupport.Sales and MarketingWeselloursolutionsdirectlytoadvertisersandtoagenciesinawiderangeofindustriesthroughourglobalsalesteam.Oursale
58、scyclecanvarysubstantiallybyadvertiserandagency,butcantakeuptoninemonths.Wehaveanumberofaccountexecutivesalesteamsorganizedbygeographyandmarketsegments.Wealsohavecustomersuccessprofessionalswhoareresponsibleforlong-termcustomersatisfactionandretention,renewal,supportanddrivinganincreaseinthevolumeof
59、mediamanagedbycustomersonourplatform.Ourmarketingteamisfocusedondrivingawarenessanddemandgenerationacrossmajormarkets.Thisteamprovidesthoughtleadershipintheformofwhitepapers,benchmarkingreports,bylines,presentingatindustryconferencesandspeakingtothepress.Inaddition,theyareresponsibleforthecreationof
60、fieldenablementassetssuchascasestudies,blogpostsandcorporateandproductcollateral.Research and DevelopmentOurresearchanddevelopmentteamisresponsibleforthedesign,development,andmaintenanceofourplatform.Ourresearchanddevelopmentprocessemphasizesfrequent,iterativeandincrementaldevelopmentcycles.Withinou
61、rresearchanddevelopmentorganizations,wehaveseveralprojectteamsthatfocusonplatformandfeaturedevelopmentforouradvertisingcloudsolutions.Eachoftheseprojectteamsincludesengineers,qualityengineersandproductmanagers,asneeded,responsiblefortheinitialandongoingdevelopmentfortheirprojects.Totalresearchanddev
62、elopmentexpensewas$26.6million,$27.8millionand$33.3millionandfortheyearsendedDecember31,2017,2016and2015,respectively.EmployeesAsofDecember31,2017,wehadatotalof433regularfull-timeemployees,including177employeeslocatedoutsidetheUnitedStates.Althoughwehavestatutoryemployeerepresentationobligationsince
63、rtaincountries,ourU.S.employeesarenotrepresentedbyalaborunion.Wehavenotexperiencedanyworkstoppages,andweconsiderourrelationswithouremployeestobegood.6InJanuary2018,weinitiatedarestructuringplandesignedtoreduceoperatingexpensesandtoaddressourdeclineinrevenues,andtobetteralignoureffortstoreturntogrowt
64、h.Aspartofthisrestructuringplanandthroughordinaryattritionnearthedateofthisrestructuringplan,ourheadcountwasreducedby54employeessubsequenttoDecember31,2017.ThisrestructuringplanismorefullydescribedinNote17oftheaccompanyingconsolidatedfinancialstatements.Intellectual PropertyOurintellectualpropertyri
65、ghtsareakeycomponentofoursuccess.Werelyonacombinationofpatent,trademark,copyright,unfaircompetitionandtradesecretlaws,aswellasconfidentialityproceduresandcontractualrestrictions,toestablish,maintainandprotectourproprietaryrights.AsofDecember31,2017,wehadthreeissuedpatentsandsevenpatentapplicationspe
66、ndingintheUnitedStates.Weownandusetrademarksonorinconnectionwithourproductsandservices,includingtworegisteredtrademarksintheUnitedStates,theEuropeanUnion,Australia,ChinaandJapan,oneregisteredmarkinCanadaandRussia,andunregisteredcommonlawmarksandpendingtrademarkapplicationsintheUnitedStates,Canada,Ch
67、ina,Russia,SouthKorea,andSingapore.WehavealsoregisterednumerousInternetdomainnames.Available InformationThemailingaddressofourheadquartersis123MissionStreet,27thFloor,SanFrancisco,California94105andourtelephonenumberatthatlocationis(415)399-2580.O.ThroughalinkontheInvestorCentersectionofourwebsite,w
68、emakeavailablethefollowingfilingsassoonasreasonablypracticableaftertheyareelectronicallyfiledwithorfurnishedtotheSecuritiesandExchangeCommission(“SEC”):ourAnnualReportonForm10-K,QuarterlyReportsonForm10-Q,CurrentReportsonForm8-K,andanyamendmentstothosereportsfiledorfurnishedpursuanttoSection13(a)or1
69、5(d)oftheSecuritiesExchangeActof1934,asamended.Allsuchfilingsarefreeofcharge.TheinformationpostedtoourwebsiteisnotincorporatedintothisAnnualReportonForm10-K.ThepublicmayreadandcopyanymaterialsthatwefilewiththeSECattheSECsPublicReferenceRoomat100FStreet,NE,Washington,DC20549.Thepublicmayobtaininforma
70、tionontheoperationofthePublicReferenceRoombycallingtheSECat1-800-SEC-0330.TheSECalsomaintainsanInternetsitethatcontainsreports,proxyandinformationstatements,andotherinformationregardingissuersthatfileelectronicallywiththeSECatwww.sec.gov.7ITEM 1A.RI SK FACTORSOur operations and financial results are
71、 subject to various risks and uncertainties,including those described below,which could adversely affect ourbusiness,results of operations,cash flows,financial conditions and the trading price of our common stock.Risks Related to Our BusinessWehaveahistoryoflossesandwemaynotachieveorsustainprofitabi
72、lityinthefuture.Wehaveincurredsignificantlossesineachfiscalyearsinceourincorporationin2006.Weexperiencednetlossesof$31.5millionand$16.5millionduring2017and2016,respectively.AsofDecember31,2017,wehadanaccumulateddeficitof$227.7million.Thelossesandaccumulateddeficitwereduetothesubstantialinvestmentswe
73、madetogrowourbusinessandacquirecustomers.Ourcostofrevenuesandoperatingexpensescouldincreaseinthefutureduetoinvestmentstogrowourbusiness,acquirecustomersanddevelopourplatformandnewfunctionality.Theseeffortsmayprovemoreexpensivethanwecurrentlyanticipate,andwemaynotsucceedinincreasingourrevenuessuffici
74、entlytooffsetthesehigherexpenses.Manyofoureffortstogeneraterevenuesfromourbusinessarenewandunproven,andanyfailuretoincreaseourrevenuesorgeneraterevenuesfromnewsolutionsortomaintainorincreaserevenuesfromexistingproductsandcustomerscouldpreventusfromattainingorincreasingprofitability.Furthermore,tothe
75、extentwearesuccessfulinincreasingourcustomerbase,wealsocouldincurincreasedlossesbecausecostsassociatedwithenteringintocustomercontractsaregenerallyincurredupfront,whilecustomersarebilledoverthetermofthecontractgenerallythroughourusage-basedpricingmodel.Wedonotexpecttobeprofitablein2018onthebasisofge
76、nerallyacceptedaccountingprinciplesintheUnitedStates,orGAAP,andwecannotbecertainthatwewillbeabletoattainprofitabilityonaquarterlyorannualbasis,orifwedo,thatwewillsustainprofitability.Weexpecttocontinuetoincurlossesandexperiencenegativecashflow,andmayneedtoselladditionalsecurities,borrowadditionalfun
77、dsorreduceoperatingexpensestocontinueasagoingconcern.Wecurrentlyoperateatalossandweanticipatethatwewillcontinuetohaveoperatinglossesinthenearterm.Ourbusinesshasnotgeneratedenoughcashflowtofundoursalesandmarketingactivities,researchanddevelopmentinitiatives,andotherbusinessactivities.Weanticipatethat
78、increasingourmarketshareforourcurrentservicesthroughsalesandmarketingefforts,continuingdevelopmentofnewplatformfeaturesanddeliveringefficientservicetocustomerswillrequireadditionalcapitalandexpenditures.Ifwecontinuetoburncashwithoutacorrespondingincreasetorevenue,wewillneedtoselladditionalsecurities
79、orborrowadditionalfundsorreduceoperatingexpensesthroughsuccessfulcost-cuttingmeasurestocontinueasagoingconcern.Thereisnoguaranteethatwewillbeabletoissueadditionalsecuritiesinfutureperiodsorborrowadditionalfundsoncommerciallyreasonableterms,oratall,inordertomeetourcashneeds.Further,thereisnoguarantee
80、thatwewillbeabletosuccessfullyreduceouroperatingexpensesthroughsuccessfulcost-cuttingmeasures.Ourabilitytocontinueasagoingconcernmaybeadverselyaffectedifweareunabletoraiseadditionalcashorreduceouroperatingexpenses.Wemightrequireadditionalcapitaltosupportbusinessgrowth,andthiscapitalmightnotbeavailab
81、leonacceptableterms,ifatall.Weintendtocontinuetomakeinvestmentstosupportourbusinessgrowthandmayrequireadditionalfundstorespondtobusinesschallenges,includingtheneedtodevelopnewfeaturesorenhanceourexistingplatform,improveouroperatinginfrastructureoracquirecomplementarybusinessesandtechnologies.Accordi
82、ngly,wemayneedtoengageinequityordebtfinancingstosecureadditionalfunds.Ifweraiseadditionalfundsthroughfurtherissuancesofequityorconvertibledebtsecurities,ourexistingstockholderscouldsuffersignificantdilution,andanynewequitysecuritiesweissuecouldhaverights,preferencesandprivilegessuperiortothoseofhold
83、ersofourcommonstock.Anydebtfinancingsecuredbyusinthefuturecouldinvolverestrictivecovenantsrelatingtoourcapitalraisingactivitiesandotherfinancialandoperationalmatters,whichmaymakeitmoredifficultforustoobtainadditionalcapitalandtopursuebusinessopportunities,includingpotentialacquisitions.Inaddition,we
84、maynotbeabletoobtainadditionalfinancingontermsfavorabletous,ifatall.Ifweareunabletoobtainadequatefinancingorfinancingontermssatisfactorytous,whenwerequireit,ourabilitytocontinuetosupportourbusinessgrowthandtorespondtobusinesschallengescouldbesignificantlyimpaired.Weoperateinarapidlydevelopingandchan
85、gingindustry,whichmakesitdifficulttoevaluateourcurrentbusinessandfutureprospects.Wehaveencounteredandwillcontinuetoencounterrisksanddifficultiesfrequentlyexperiencedbycompaniesinrapidlydevelopingandchangingindustries,includingchallengesinforecastingaccuracy,hiringandretainingqualifiedemployees,deter
86、miningappropriateinvestmentsofourlimitedresources,marketacceptanceofourexistingandfuturesolutions,effectivelyintegratingacquiredproducts,competitionfromestablishedcompanieswithgreaterfinancialandtechnicalresources,acquiringandretainingcustomers,managingcustomerdeployments,makingimprovementstoourexis
87、tingproductsanddevelopingnewsolutions.8Ourcurrentoperationsinfrastructuremayrequirechangesinorderforustoachieveprofitabilityandscaleouroperationsefficiently.Forexample,wemayneedtoautomateportionsofoursolutiontodecreaseourcosts,ensureourmarketinginfrastructureisdesignedtodrivehighlyqualifiedleadscost
88、effectivelyandimplementchangesinoursalesmodeltoimprovethepredictabilityofoursalesandreduceoursalescycle.Inaddition,fromtimetotime,wemayneedtomakeadditionalinvestmentsinproductdevelopmenttoaddressmarketdemands,whichmayincreaseouroverallexpensesandreduceourabilitytoachieveprofitability.Ifwefailtoimple
89、mentthesechangesinatimelymannerorareunabletoimplementthemduetofactorsbeyondourcontrol,ourbusinessmaysuffer,ourrevenuemaydeclineandwemaynotbeabletoachievegrowthorprofitability.Wecannotbeassuredthatwewillbesuccessfulinaddressingtheseandotherchallengeswemayfaceinthefuture.Ourusage-basedpricingmodelmake
90、sitdifficulttoforecastrevenuesfromourcurrentcustomersandfutureprospects.Weprimarilyhaveausage-basedpricingmodelinwhichmostofourfeesarecalculatedasapercentageofcustomersadvertisingspendmanagedonourplatform.Thispricingmodelmakesitdifficulttoaccuratelyforecastrevenuesbecauseourcustomersadvertisingspend
91、managedbyourplatformmayvaryfrommonthtomonthbasedonthevarietyofindustriesinwhichouradvertisersoperate,theseasonalityofthoseindustriesandfluctuationsinourcustomersadvertisingbudgetsorotherfactors.Oursubscriptioncontractswithourdirectadvertisercustomersgenerallycontainaminimummonthlyplatformfee,whichis
92、generallygreaterthanone-halfofourestimatedmonthlyrevenuesfromthecustomeratthetimethecontractissigned,and,asaresult,theminimummonthlyplatformfeemaynotbeagoodindicatorofourrevenuesfromthatcustomer.Inaddition,advertisersthatuseourplatformthroughouragencycustomerstypicallydonothaveaminimummonthlyspendam
93、ountoraminimumtermduringwhichtheymustuseourplatform,andasaresult,ourabilitytoforecastrevenuesfromtheseadvertisersisdifficult.Ifweincorrectlyforecastrevenuesfortheseadvertisersandtheamountofrevenueislessthanprojectionsweprovidetoinvestors,thepriceofourcommonstockcoulddeclinesubstantially.Additionally
94、,ifweoverestimateusage,wemayincuradditionalexpensesinaddinginfrastructure,withoutacommensurateincreaseinrevenues,whichwouldharmourgrossmarginsandotheroperatingresults.Wemustdevelopandintroduceenhancementsandnewfeaturesthatachievemarketacceptanceorthatkeeppacewithtechnologicaldevelopmentstoremaincomp
95、etitiveinourevolvingindustry.Weoperateinadynamicmarketcharacterizedbyrapidlychangingtechnologiesandindustryandlegalstandards.Theintroductionofnewadvertisingplatformsolutionsbyourcompetitors,themarketacceptanceofsolutionsbasedonneworalternativetechnologies,ortheemergenceofnewindustrystandardscouldren
96、derourplatformobsolete.Ourabilitytocompetesuccessfully,attractnewcustomersandincreaserevenuesfromexistingcustomersdependsinlargepartonourabilitytoenhanceandimproveourexistingcross-channel,cross-device,enterprisemarketingsoftwareplatformandtocontinuallyintroduceoracquirenewfeaturesthatareindemandbyth
97、emarketweserve.WealsomustupdateoursoftwaretoreflectchangesinpublishersAPIsandtermsofuse.Weareintheprocessofasignificantupgradetooursoftwareplatforminfrastructure,andthesuccessofthisprojectoranyotherenhancementornewsolutiondependsonseveralfactors,includingtimelycompletion,adequatequalitytesting,effec
98、tivemigrationofexistingcustomerswithminimaldisruptionandappropriateintroductionandmarketacceptance.Anynewplatformorfeaturethatwedeveloporacquiremaynotbeintroducedinatimelymanner,maycontaindefects,maybemorecostlytocompetethanweanticipateormaynotachievethebroadmarketacceptancenecessarytogeneratesignif
99、icantrevenues.Ifweareunabletocompletetheupgradetooursoftwareplatforminfrastructureeffectivelyorinatimelymanner,ortoanticipateortimelyandsuccessfullydeveloporacquirenewofferingsorfeaturesorenhanceourexistingplatformtomeetcustomerrequirements,ourbusinessandoperatingresultswillbeadverselyaffected.Ifthe
100、marketfordigitaladvertisingslowsordeclines,ourbusiness,growthprospects,andfinancialconditionwouldbeadverselyaffected.Thefuturegrowthofourbusinesscouldbeconstrainedbythelevelofacceptanceandexpansionofemergingcloud-basedadvertisingchannels,aswellasthecontinueduseandgrowthofexistingchannels,suchassearc
101、handdisplayadvertising.Evenifthesechannelsbecomewidelyadopted,advertisersandagenciesmaynotmakesignificantinvestmentsinsolutionssuchasoursthathelpthemmanagetheirdigitaladvertisingspendacrosspublisherplatformsandadvertisingchannels.Itisdifficulttopredictcustomeradoptionrates,customerdemandforourplatfo
102、rm,thefuturegrowthrateandsizeoftheadvertisingcloudsolutionsmarketortheentryofcompetitivesolutions.Thecontinuedexpansionofthemarketforadvertisingcloudsolutionsdependsonanumberoffactors,includingthecontinuedgrowthofthecloud-basedadvertisingmarket,thegrowthofsocialandmobileasadvertisingchannelsandtheco
103、st,performanceandperceivedvalueassociatedwithadvertisingcloudsolutions,aswellastheabilityofcloudcomputingcompaniestoaddresssecurityandprivacyconcerns.Further,thecloudcomputingmarketislessdevelopedinmanyjurisdictionsoutsidetheUnitedStates.Ifweorothercloudcomputingprovidersexperiencesecurityincidents,
104、lossofcustomerdata,disruptionsindeliveryorotherproblems,themarketforcloudcomputingasawhole,includingourapplications,maybenegativelyaffected.9Ifweareunabletomaintainourrelationshipswith,andaccessto,publishers,advertisingexchangeplatformsandotherplatformsthataggregatethesupplyofadvertisinginventory,ou
105、rbusinesswillsuffer.Wecurrentlydependonrelationshipswithvariouspublishers,includingAmazon,Baidu,Bing,Facebook,Google,Instagram,Pinterest,Twitter,Yahoo!andYahoo!Japan,aswellasadvertisingexchangeplatformsandaggregatorsofadvertisinginventory,includingGooglesDoubleClickAdExchange,Yahoo!Gemini,FacebooksE
106、xchange,MicrosoftsAdExchange,TwittersMoPub,OpenX,TheRubiconProject,PubMaticandAppNexus.OursubscriptionservicesinterfacewiththesepublishersplatformsthroughAPIs,suchastheGoogleAdWordsAPIorFacebookAPI.WearesubjecttotherespectiveplatformsstandardAPItermsandconditions,whichgoverntheuseanddistributionofda
107、tafromtheseplatforms.OurbusinesssignificantlydependsonhavingaccesstotheseAPIs,particularlytheGoogleAdWordsAPI,whichthesubstantialmajorityofourcustomersuse,oncommerciallyreasonabletermsandourbusinesswouldbeharmedifanyofthesepublishers,advertisingexchangesoraggregatorsofadvertisinginventorydiscontinue
108、sorlimitsaccesstotheirplatforms,modifiestheirtermsofuseorotherpoliciesorplaceadditionalrestrictionsonusasAPIusers,orchargesAPIlicensefeesforAPIaccess.Moreover,someofthesepublishers,suchasGoogle,marketcompetitivesolutionsfortheirplatforms.BecausetheadvertisinginventorysupplierscontroltheirAPIs,theyma
109、ydevelopcompetitiveofferingsthatarenotsubjecttothelimitsimposedonusthroughtheAPItermsandconditions.Currently,restrictionsintheseAPIagreementslimitourabilitytoimplementcertainfunctionality,requireustoimplementfunctionalityinaparticularmannerorrequireustoimplementcertainrequiredminimumfunctionality,ca
110、usingustodevotedevelopmentresourcestoimplementcertainfunctionalitythatwewouldnototherwiseincludeinoursubscriptionservicesandtoincurcostsforpersonneltoprovideservicestoimplementfunctionalitythatweareprohibitedfromautomating.Publishers,advertisingexchangesandadvertisinginventoryaggregatorsupdatetheirA
111、PItermsofusefromtimetotimeandnewversionsofthesetermscouldimposeadditionalrestrictionsonus.Inaddition,publishers,advertisingexchangesandadvertisinginventoryaggregatorscontinuallyupdatetheirAPIsandmayupdateormodifyfunctionality,whichrequiresustomodifyoursoftwaretoaccommodatethesechangesandtodevotetech
112、nicalresourcesandpersonneltotheseeffortswhichcouldotherwisebeusedtofocusonotherpriorities.Anyoftheseoutcomescouldcausedemandforourproductstodecrease,ourresearchanddevelopmentcoststoincrease,andourresultsofoperationsandfinancialconditiontobeharmed.Ourgrowthdependsinpartonthesuccessofourrelationshipsw
113、ithadvertisingagencies.Ourfuturegrowthwilldepend,inpart,onourabilitytoenterintosuccessfulrelationshipswithadvertisingagencies.Identifyingagenciesandnegotiatinganddocumentingrelationshipswiththemrequiressignificanttimeandresources.Theserelationshipsmaynotresultinadditionalcustomersorenableustogenerat
114、esignificantrevenues.Ourcontractsfortheserelationshipsaretypicallynon-exclusiveanddonotprohibittheagencyfromworkingwithourcompetitorsorfromofferingcompetingservices.Frequently,theseagenciesdoinfactworkwithourcompetitorsandcompetewithus.Inaddition,weoftenworkwith,orseektoworkwith,high-profilebrandsdi
115、rectly.Thismaynotbepossiblewhere,forexample,thosebrandsobtainadvertisingservicesexclusivelyorprimarilyfromadvertisingagencies.Wegenerallybillagenciesfortheircustomersuseofourplatform,butinmostcasestheagencyscustomerhasnodirectcontractualcommitmenttomakepaymenttous.Furthermore,someoftheseagencycontra
116、ctsincludeprovisionswherebytheagencyisnotliableformakingpaymenttousforoursubscriptionservicesiftheagencydoesnotreceiveacorrespondingpaymentfromitsclientonwhosebehalfthesubscriptionserviceswererendered.Theseprovisionsmayresultinlongercollectionsperiodsorourinabilitytocollectpaymentforsomeofoursubscri
117、ptionservices.Ifweareunsuccessfulinestablishingormaintainingourrelationshipswiththeseagenciesoncommerciallyreasonableterms,oriftheserelationshipsarenotprofitableforus,ourabilitytocompeteinthemarketplaceortogrowourrevenuescouldbeimpairedandouroperatingresultswouldsuffer.Wemaynotbeabletocompetesuccess
118、fullyagainstcurrentandfuturecompetitors.Theoverallmarketforadvertisingcloudsolutionsisrapidlyevolving,highlycompetitive,complex,fragmented,andsubjecttochangingtechnologyandshiftingcustomerneeds.Wefacesignificantcompetitioninthismarketandweexpectcompetitiontointensifyinthefuture.Wecurrentlycompetewit
119、hlarge,well-establishedcompanies,suchasAdobeSystemsIncorporatedandGoogleInc.(throughitswhollyownedsubsidiaryDoubleClick),andprivately-heldcompanies,suchasKenshooLtd.Wealsocompetewithchannel-specificofferings,in-houseproprietarytools,toolsfrompublishersandcustomsolutions,includingspreadsheets.Increas
120、edcompetitionmayresultinreducedpricingforoursolutions,longersalescyclesoradecreaseofourmarketshare,anyofwhichcouldnegativelyaffectourrevenuesandfutureoperatingresultsandourabilitytogrowourbusiness.Anumberofcompetitivefactorscouldcauseustolosepotentialsalesortoselloursolutionsatlowerpricesoratreduced
121、margins,including,amongothers:publishersgenerallyoffertheirtoolsforfree,oratareducedprice,astheirprimarycompensationisviathesaleofadvertisingontheirownorsyndicatedwebsites;10someofourcompetitors,suchasAdobeandGoogle,havegreaterfinancial,marketingandtechnicalresourcesthanwedo,allowingthemtoleverageal
122、argerinstalledcustomerbase,adoptmoreaggressivepricingpolicies,anddevotegreaterresourcestothedevelopment,promotionandsaleoftheirproductsandservicesthanwecan;channel-specificcompetitors,suchasAdRollInc.,CriteoS.A.,MediaMathInc.,Nanigans,Inc.,RocketFuelInc.andS(throughitswhollyownedsubsidiaryS),maydevo
123、tegreaterresourcestothedevelopment,promotionandsaleoftheirchannel-specificproductsandservicesthanwecan;companiesmayenterourmarketbyexpandingtheirplatformsoracquiringacompetitor;andpotentialcustomersmaychoosetodeveloporcontinuetouseinternalsolutionsratherthanpayingforoursolutionsormaychoosetouseacomp
124、etitorssolutionthathasdifferentoradditionaltechnicalcapabilities.Wecannotassureyouthatwewillbeabletocompetesuccessfullyagainstcurrentandfuturecompetitors.Ifwecannotcompetesuccessfully,ourbusiness,resultsofoperationsandfinancialconditioncouldbenegativelyimpacted.Ourbusinessdependsonourcustomerscontin
125、uedwillingnesstomanageadvertisingspendonourplatform.Inorderforustoimproveouroperatingresults,itisimportantthatourcustomerscontinuetomanagetheiradvertisingspendonourplatform,increasetheirusageandalsopurchaseadditionalsolutionsfromus.Inthecaseofourdirectadvertisercustomers,weofferoursolutionsprimarily
126、throughsubscriptioncontractsandgenerallybillcustomersovertherelatedsubscriptionperiod,whichisgenerallyoneyearorlonger.Duringthetermoftheircontracts,ourdirectadvertisercustomersgenerallyhavenoobligationtomaintainorincreasetheiradvertisingspendonourplatformbeyondaspecifiedminimummonthlyplatformfee,whi
127、chistypicallysetatthetimethecontractissignedandisgenerallygreaterthanhalfofthemonthlyamountweanticipatethecustomerwillspend.Ourdirectadvertisercustomersgenerallyhavenorenewalobligationaftertheinitialorthen-currentrenewalsubscriptionperiodexpires,andevenifcustomersrenewcontracts,theymaydecreasethelev
128、eloftheirdigitaladvertisingspendmanagedthroughourplatform,resultinginlowerrevenuesfromthatcustomer.Advertisersthatweservethroughourarrangementswithouradvertisingagenciesgenerallydonothaveanycontractualcommitmenttouseourplatform.Ourcustomersusagemaydeclineorfluctuateasaresultofanumberoffactors,includ
129、ing,butnotlimitedto,theirsatisfactionwithourplatformandourcustomersupport,thefrequencyandseverityofoutages,thepricingofour,orcompeting,solutions,theeffectsofglobaleconomicconditionsandreductionsinspendinglevelsorchangesinourcustomersstrategiesregardingdigitaladvertising.Wemaynotbeabletoaccuratelypre
130、dictfutureusagetrends.Ifourcustomersrenewonlessfavorabletermsorreducetheiradvertisingspendonourplatform,ourrevenuesmaygrowmoreslowlythanexpectedordecline.Weincurupfrontcostsassociatedwithonboardingadvertiserstoourplatformandmaynotrecoupourinvestmentifwedonotmaintaintheadvertiserrelationshipovertime.
131、Ouroperatingresultsmaybenegativelyaffectedifweareunabletorecoupourupfrontcostsforonboardingnewadvertiserstoourplatform.Upfrontcostswhenaddingnewadvertisersgenerallyincludesalescommissionsforoursalesforce,expensesassociatedwithenteringcustomerdataintoourplatformandotherimplementation-relatedcosts.Bec
132、auseourcustomers,includingdirectadvertisersandagencies,arebilledoverthetermofthecontract,ifnewcustomerssigncontractswithshortinitialsubscriptionperiodsanddonotrenewtheirsubscriptions,orotherwisedonotcontinuetouseourplatformtoalevelthatgeneratesrevenuesinexcessofourupfrontexpenses,ouroperatingresults
133、couldbenegativelyimpacted.Incasesinwhichtheimplementationprocessisparticularlycomplex,therevenuesresultingfromthecustomerunderourcontractmaynotcovertheupfrontinvestment,thereforeifasignificantnumberofthesecustomersdonotrenewtheircontracts,itcouldnegativelyaffectouroperatingresults.Becausewegenerally
134、billourcustomersoverthetermofthecontract,neartermdeclineinneworrenewedsubscriptionsmaynotbereflectedimmediatelyinouroperatingresults.Mostofourrevenuesineachquarterarederivedfromcontractsenteredintowithourcustomersduringpreviousquarters.Consequently,adeclineinneworrenewedsubscriptionsinanyonequarterm
135、aynotbefullyreflectedinourrevenuesforthatquarter.Suchdeclines,however,wouldnegativelyaffectourrevenuesinfutureperiodsandtheeffectofsignificantdownturnsinsalesandmarketacceptanceofoursolutions,andpotentialchangesinourrateofrenewalsorrenewalterms,maynotbefullyreflectedinourresultsofoperationsuntilfutu
136、reperiods.Inaddition,wemaybeunabletoadjustourcoststructurerapidly,oratall,totakeaccountofreducedrevenues.Oursubscriptionmodelalsomakesitdifficultforustorapidlyincreaseourtotalrevenuesthroughadditionalsalesinanyperiod,asrevenuesfromnewcustomersmustbeearnedovertheapplicablesubscriptiontermbasedontheva
137、lueoftheirmonthlyadvertisingspend.11Wehavebeendependentonourcustomersuseofsearchadvertising.Anydecreaseintheuseofsearchadvertisingorourinabilitytofurtherpenetratesocialanddisplayadvertisingchannelswouldharmourbusiness,growthprospects,operatingresultsandfinancialcondition.Historically,ourcustomershav
138、eprimarilyusedoursolutionsformanagingtheirsearchadvertising,includingmobilesearchadvertising,andthesubstantialmajorityofourrevenueisderivedfromadvertisersthatuseourplatformtomanagetheirsearchadvertising.Weexpectthatsearchadvertisingwillcontinuetobetheprimarychannelusedbyourcustomersfortheforeseeable
139、future.Shouldourcustomersloseconfidenceinthevalueoreffectivenessofsearchadvertising,orifsearchadvertisinggrowthmoderatesordeclines,thedemandforoursolutionsmaydecline,anditmaynegativelyimpactourrevenues.Inaddition,ourfailuretoachievemarketacceptanceofoursolutionforthemanagementofsocialanddisplayadver
140、tisingspendwouldharmourgrowthprospects,operatingresultsandfinancialcondition.Oursalescyclecanbelongandunpredictableandrequireconsiderabletimeandexpense,whichmaycauseouroperatingresultstofluctuate.Thesalescycleforoursolutions,frominitialcontactwithapotentialleadtocontractexecutionandimplementation,va
141、rieswidelybycustomer,butcantakeuptoninemonths.Someofourcustomersundertakeasignificantevaluationprocessthatfrequentlyinvolvesnotonlyoursolutionsbutalsothoseofourcompetitors,whichhasinthepastresultedinextendedsalescycles.Oursaleseffortsinvolveeducatingourcustomersabouttheuse,technicalcapabilitiesandbe
142、nefitsofourplatform.Inaddition,undercertaincircumstances,wesometimesofferaninitialterm,typicallyofafewmonthsinduration,tonewcustomerswhomayterminatetheirsubscriptionatanytimeduringthisinitialperiodbeforethefixedtermcontractcommences.Wehavenoassurancethatthesubstantialtimeandmoneyspentonoursaleseffor
143、tswillproduceanysales.Ifoursaleseffortsresultinanewcustomersubscription,thecustomermayterminateitssubscriptionduringtheinitialperiod,afterwehaveincurredtheexpensesassociatedwithenteringthecustomersdatainourplatformandrelatedtrainingandsupport.Ifsalesexpectedfromacustomerarenotrealizedinthetimeperiod
144、expectedornotrealizedatall,orifacustomerterminatesduringtheinitialperiod,ourbusiness,operatingresultsandfinancialconditioncouldbeadverselyaffected.Ourabilitytogeneraterevenuedependsonourcollectionofsignificantamountsofdatafromvarioussources.OurabilitytooptimizethedeliveryofInternetadvertisementsforo
145、urcustomersdependsonourabilitytosuccessfullyleveragedata,includingdatathatwecollectfromourcustomersaswellasdataprovidedbypublishersandfromthirdparties.Usingcookiesandsimilartrackingtechnologies,wecollectinformationabouttheinteractionofuserswithouradvertisersandpublisherswebsites.Ourabilitytosuccessf
146、ullyleveragesuchdataisdependentuponourcontinuedabilitytoaccessandutilizesuchdata.Ourabilitytoaccessandusesuchdatacouldberestrictedbyanumberoffactors,includingconsumerchoice,restrictionsimposedbyadvertisersandpublishers,changesintechnology,andnewdevelopmentsinlaws,regulations,andindustrystandards.Ifc
147、onsumerresistancetothecollectionandsharingofthedatausedtodelivertargetedadvertising,increasedvisibilityofconsent/DoNotTrackmechanismsasaresultofindustryregulatoryand/orlegaldevelopments,and/orthedevelopmentanddeploymentofnewtechnologiesresultinamaterialimpactonourabilitytocollectdata,thiswillmateria
148、llyimpairtheresultsofouroperations.Materialdefectsorerrorsinoursoftwareplatformcouldharmourreputation,resultinsignificantcoststousandimpairourabilitytoselloursubscriptionservices.Thesoftwareapplicationsunderlyingoursubscriptionservicesareinherentlycomplexandmaycontainmaterialdefectsorerrors,whichmay
149、causedisruptionsinavailability,misallocationofadvertisingspendorotherperformanceproblems.Anysucherrors,defects,disruptionsinserviceorotherperformanceproblemswithoursoftwareplatform,includingthoseresultingfromnewversionsorupdates,couldnegativelyimpactourcustomersbusinessesorthesuccessoftheiradvertisi
150、ngcampaignsandcauseharmtoourreputation.Ifwehaveanyerrors,defects,disruptionsinserviceorotherperformanceproblemswithoursoftwareplatform,customerscouldelectnottoreneworreducetheirusageordelayorwithholdpaymenttous,whichcouldresultinanincreaseinourprovisionfordoubtfulaccountsoranincreaseinthelengthofcol
151、lectioncyclesforaccountsreceivable.Errors,defects,disruptionsinserviceorotherperformanceproblemscouldalsoresultincustomersmakingwarrantyorotherclaimsagainstus,ourgivingcreditstoourcustomerstowardfutureadvertisingspendorcostlylitigation.Asaresult,materialdefectsorerrorsinourplatformcouldhaveamaterial
152、adverseimpactonourbusinessandfinancialperformance.Thecostsincurredincorrectinganymaterialdefectsorerrorsinoursoftwareplatformmaybesubstantialandcouldadverselyaffectouroperatingresults.Afterthereleaseofnewversionsofoursoftware,defectsorerrorsmaybeidentifiedfromtimetotimebyourinternalteamandbyourcusto
153、mers.Weimplementbugfixesandupgradesaspartofourregularlyscheduledsystemmaintenance.Ifwedonotcompletethismaintenanceaccordingtoscheduleorifcustomersareotherwisedissatisfiedwiththefrequencyand/or12durationofourmaintenanceservices,customerscouldelectnottorenew,ordelayorwithholdpaymenttous,orcauseustoiss
154、uecredits,makerefundsorpaypenalties.Weprimarilyderiveourrevenuesfromasinglesoftwareplatformandanyfactoradverselyaffectingsubscriptionstoourplatformcouldharmourbusinessandoperatingresults.Weprimarilyderiveourrevenuesfromsalesofasinglesoftwareplatform.Assuch,anyfactoradverselyaffectingsubscriptionstoo
155、urplatform,includingproductreleasecycles,marketacceptance,productcompetition,performanceandreliability,reputation,pricecompetition,andeconomicandmarketconditions,couldharmourbusinessandoperatingresults.Ifmobileconnecteddevices,theiroperatingsystemsorcontentdistributionchannels,includingthosecontroll
156、edbyourcompetitors,developinwaysthatpreventouradvertisingcampaignsfrombeingdeliveredtotheirusers,ourabilitytogrowourbusinesswillbeimpaired.Oursuccessinthemobilechanneldependsupontheabilityofourtechnologyplatformtointegratewithmobileinventorysuppliersandprovideadvertisingformostmobileconnecteddevices
157、,aswellasthemajoroperatingsystemsthatrunonthemandtheapplicationsthataredownloadedontothem.Thedesignofmobiledevicesandoperatingsystemsiscontrolledbythirdpartieswithwhomwedonothaveanyformalrelationships.Thesepartiesfrequentlyintroducenewdevices,andfromtimetotimetheymayintroducenewoperatingsystemsormod
158、ifyexistingones.Networkcarriersmayalsoimpacttheabilitytoaccessspecifiedcontentonmobiledevices.Ifoursolutionwereunabletoworkonthesedevicesoroperatingsystems,eitherbecauseoftechnologicalconstraintsorbecauseanoperatingsystemorappdeveloper,devicemakerorcarrierwishedtoimpairourabilitytopurchaseinventorya
159、ndprovideadvertisements,ourabilitytogeneraterevenuecouldbesignificantlyharmed.Weprimarilyusethird-partydatacenterstodeliverourservices.Anydisruptionofserviceatthesefacilitiescouldharmourbusiness.Whileweutilizetwothird-partydatacenters,wemanageasignificantportionofourservicesandservesubstantiallyallo
160、fourcustomersfromonlyasinglethird-partydatacenterfacility.Whilewecontroltheactualcomputer,networkandstoragesystemsuponwhichourplatformruns,anddeploythemtothedatacenterfacility,wedonotcontroltheoperationofthefacility.Theownerofthefacilityhasnoobligationtorenewtheagreementwithusoncommerciallyreasonabl
161、eterms,oratall.Ifweareunabletorenewtheagreementoncommerciallyreasonableterms,wemayberequiredtotransfertoanewfacilityorfacilities,andwemayincursignificantcostsandpossibleserviceinterruptioninconnectionwithdoingso.Thefacilityisvulnerabletodamageorserviceinterruptionresultingfromhumanerror,intentionalb
162、adacts,earthquakes,hurricanes,floods,fires,war,terroristattacks,powerlosses,hardwarefailures,systemsfailures,telecommunicationsfailuresandsimilarevents.Moreover,whilewehaveadisasterrecoveryplaninplace,wedonotmaintaina“hotfailover”instanceofoursoftwareplatformpermittingustoimmediatelyswitchoverinthee
163、ventofdamageorserviceinterruptionatourdatacenter.Theoccurrenceofanaturaldisasteroranactofterrorism,anyoutagesorvandalismorothermisconduct,oradecisiontoclosethefacilitywithoutadequatenoticeorotherunanticipatedproblemscouldresultinlengthyinterruptionsinourservices.Anychangesinservicelevelsatthefacilit
164、yoranyerrors,defects,disruptionsorotherperformanceproblemsatorrelatedtothefacilitythataffectourservicescouldharmourreputationandmaydamageourcustomersbusinesses.Forinstance,inDecember2017,researchersidentifiedsignificantCPUarchitecturevulnerabilitiescommonlyknownas“Spectre”and“Meltdown”thathaverequir
165、edsoftwareupdatesandpatchestomitigatesuchvulnerabilitiesandsuchupdatesandpatchesmayrequireseverstobeofflineandpotentiallyslowtheirperformance.Interruptionsinourservicesmightreduceourrevenues,subjectustopotentialliability,orresultinreducedusageofourplatform.Inaddition,someofourcustomercontractsrequir
166、eustoissuecreditsfordowntimeinexcessofcertainlevelsandinsomeinstancesgiveourcustomerstheabilitytoterminatetheirsubscriptions.Wealsodependonthird-partyInternet-hostingprovidersandcontinuousanduninterruptedaccesstotheInternetthroughthird-partybandwidthproviderstooperateourbusiness.Ifwelosetheserviceso
167、foneormoreofourInternet-hostingorbandwidthprovidersforanyreasonoriftheirservicesaredisrupted,forexampleduetovirusesor“denial-of-service”orotherattacksontheirsystems,orduetohumanerror,intentionalbadacts,powerloss,hardwarefailures,telecommunicationsfailures,fires,wars,terroristattacks,floods,earthquak
168、es,hurricanes,tornadoesorsimilarevents,wecouldexperiencedisruptioninourabilitytoofferoursolutionsorwecouldberequiredtoretaintheservicesofreplacementproviders,whichcouldincreaseouroperatingcostsandharmourbusinessandreputation.Ifwecannotefficientlyimplementoursolutionsforcustomers,wemaylosecustomers.O
169、urcustomershaveavarietyofdifferentdataformats,enterpriseapplicationsandinfrastructureandourplatformmustsupportourcustomersdataformatsandintegratewithcomplexenterpriseapplicationsandinfrastructures.Ifourplatformdoesnotcurrently13supportacustomersrequireddataformatorappropriatelyintegratewithacustomer
170、sapplicationsandinfrastructure,thenwemaychoosetoconfigureourplatformtodoso,whichwouldincreaseourexpenses.Additionally,wedonotcontrolourcustomersimplementationschedules.Asaresult,aswehaveexperiencedinthepast,ifourcustomersdonotallocateinternalresourcesnecessarytomeettheirimplementationresponsibilitie
171、sorifwefaceunanticipatedimplementationdifficulties,theimplementationmaybedelayed.Further,inthepast,ourimplementationcapacityhasattimesconstrainedourabilitytosuccessfullyimplementoursolutionsforourcustomersinatimelymanner,particularlyduringperiodsofhighdemand.Ifthecustomerimplementationprocessisnotex
172、ecutedsuccessfullyorifexecutionisdelayed,wecouldincursignificantcosts,customerscouldbecomedissatisfiedanddecidenottoincreaseusageofourplatform,nottouseourplatformbeyondaninitialperiodpriortotheirtermcommitmentandrevenuerecognitioncouldbedelayed.Inaddition,competitorswithmoreefficientoperatingmodelsw
173、ithlowerimplementationcostscouldpenetrateourcustomerrelationships.Additionally,largecustomersmayrequestorrequirespecificfeaturesorfunctionsuniquetotheirparticularbusinessprocesses,whichincreaseourupfrontinvestmentinsalesanddeploymenteffortsandtherevenuesresultingfromthecustomersunderourtypicalcontra
174、ctlengthmaynotcovertheupfrontinvestments.Ifprospectivelargecustomersrequirespecificfeaturesorfunctionsthatwedonotoffer,thenthemarketforoursolutionwillbemorelimitedandourbusinesscouldsuffer.Inaddition,supportinglargecustomerscouldrequireustodevotesignificantdevelopmentservicesandsupportpersonnelandst
175、rainourpersonnelresourcesandinfrastructure.Ifweareunabletoaddresstheneedsofthesecustomersinatimelyfashionorfurtherdevelopandenhanceoursolution,thesecustomersmaynotrenewtheirsubscriptions,seektoterminatetheirrelationshipwithus,renewonlessfavorableterms,orreducetheiradvertisingspendonourplatform.Ifany
176、oftheseweretooccur,ourrevenuesmaydeclineandouroperatingresultscouldbeadverselyaffected.Ifweareunabletomaintainorexpandoursalesandmarketingcapabilities,wemaynotbeabletogenerateanticipatedrevenues.Increasingourcustomerbaseandachievingbroadermarketacceptanceofoursoftwareplatformwilldependtoasignificant
177、extentonourabilitytoexpandoursalesandmarketingoperationsandactivities.Wearesubstantiallydependentonoursalesforcetoobtainnewcustomersandourmarketingorganizationtogenerateasufficientpipelineofqualifiedsalesleads.Wemayexpandoursalesteaminordertoincreaserevenuesfromnewandexistingcustomersandtofurtherpen
178、etrateourexistingmarketsandexpandintonewmarkets,butmaynotbeabletoattractandhirequalifiedsalespersonnelquicklyenoughoratall.Oursolutionsrequireasophisticatedsalesforcewithspecificsalesskillsandtechnicalknowledge.Competitionforqualifiedsalespersonnelisintense,andwemaynotbeabletoretainourexistingsalesp
179、ersonnelorattract,integrate,trainorretainsufficienthighlyqualifiedsalespersonnel.Inaddition,weneedtoinvestinleadgenerationactivitiestodevelopourpipelineofqualifiedopportunitiesforoursalesforce,whichcouldincreaseourmarketingexpenses.Ifourleadgenerationactivitiesdonotincreaseourpipelineorifoursalesfor
180、ceisunabletocloseopportunitiesatahighrate,thenwemaynotgenerateanincreaseinrevenues.Anyfailuretoofferhigh-qualitytechnicalsupportservicesmayadverselyaffectourrelationshipswithourcustomersandharmourfinancialresults.Ourcustomersdependonoursupportorganizationtoresolveanytechnicalissuesrelatingtooursolut
181、ions.Inaddition,oursalesprocessishighlydependentonthequalityofoursolutions,ourbusinessreputationandonstrongrecommendationsfromourexistingcustomers.Anyfailuretomaintainhigh-qualitytechnicalsupport,oramarketperceptionthatwedonotmaintainhigh-qualitysupport,couldharmourreputation,adverselyaffectourabili
182、tytoselloursolutionstoexistingandprospectivecustomers,andharmourbusiness,operatingresultsandfinancialcondition.Weoffertechnicalsupportserviceswithoursolutionsandmaybeunabletorespondquicklyenoughtoaccommodateshort-termincreasesincustomerdemandforsupportservices.Wealsomaybeunabletomodifytheformatofour
183、supportservicestocompetewithchangesinsupportservicesprovidedbycompetitors.Itisdifficulttopredictcustomerdemandfortechnicalsupportservicesandifcustomerdemandincreasessignificantly,wemaybeunabletoprovidesatisfactorysupportservicestoourcustomers.Additionally,increasedcustomerdemandfortheseservices,with
184、outcorrespondingrevenues,couldincreasecostsandadverselyaffectouroperatingresults.Ifoursecuritymeasuresarebreachedorunauthorizedaccesstocustomerdataorourdataisotherwiseobtained,oursolutionsmaybeperceivedasnotbeingsecure,customersmayreducetheuseoforstopusingoursolutionsandwemayincursignificantliabilit
185、ies.Intheordinarycourseofourbusiness,wemaintainsensitivedataonournetworks,includingourintellectualpropertyandproprietaryorconfidentialbusinessinformationrelatingtoourbusinessandthatofourcustomersandbusinesspartners.Thesecuremaintenanceofthisinformationiscriticaltoourbusinessandreputation.Webelieveth
186、atcompanieshavebeenincreasinglysubjecttoawidevarietyofsecurityincidents,cyber-attacksandotherattemptstogainunauthorizedaccess.Thesethreatscancomefromavarietyofsources,ranginginsophisticationfromanindividualhackertoastate-sponsoredattack.Cyberthreatsmaybegeneric,ortheymaybecustom-craftedagainstourinf
187、ormationsystems.Overthepastyear,cyber-attackshavebecomemoreprevalentandmuch14hardertodetectanddefendagainst.Ournetworkandstorageapplicationsmaybesubjecttounauthorizedaccessbyhackersorbreachedduetooperatorerror,malfeasanceorothersystemdisruptions.Itisoftendifficulttoanticipateorimmediatelydetectsuchi
188、ncidentsandthedamagecausedbysuchincidents.Thesedatabreachesandanyunauthorizedaccessordisclosureofourinformationorintellectualpropertycouldresultinthelossofinformation,litigation,indemnityobligationsandotherliability.Whilewehavesecuritymeasuresinplace,oursystemsandnetworksaresubjecttoongoingthreatsan
189、dthereforethesesecuritymeasuresmaybebreachedasaresultofthird-partyaction,includingcyber-attacksorotherintentionalmisconductbycomputerhackers,employeeerror,malfeasanceorotherwise.Thiscouldresultinoneormorethirdpartiesobtainingunauthorizedaccesstoourcustomersdataorourdata,includingintellectualproperty
190、andotherconfidentialbusinessinformation.Becausetechniquesusedtoobtainunauthorizedaccessortosabotagesystemschangefrequentlyandgenerallyarenotrecognizeduntillaunchedagainstatarget,wemaybeunabletoanticipatethesetechniquesortoimplementadequatepreventativemeasures.Thirdpartiesmayalsoattempttofraudulently
191、induceemployeesorcustomersintodisclosingsensitiveinformationsuchasusernames,passwordsorotherinformationinordertogainaccesstoourcustomersdataorourdata,includingintellectualpropertyandotherconfidentialbusinessinformation.Ifanactualorperceivedbreachofoursecurityoccurs,themarketperceptionoftheeffectiven
192、essofoursecuritymeasurescouldbeharmed,wecouldlosepotentialsalesandexistingcustomersorwecouldincurotherliabilities,whichcouldadverselyaffectourbusiness.Ourgrowthdependsinpartonthesuccessofourstrategicrelationshipswiththirdparties.Ourfuturegrowthwilldependonourabilitytoenterintoandretainsuccessfulstra
193、tegicrelationshipswiththirdparties.Forexample,weareseekingtoestablishrelationshipswiththirdpartiestodevelopintegrationswithcomplementarytechnologyandcontent.Theserelationshipsmaynotresultinadditionalcustomersorenableustogeneratesignificantrevenues.Identifyingpartnersandnegotiatinganddocumentingrelat
194、ionshipswiththemrequiresignificanttimeandresources.Ourcontractsfortheserelationshipsaretypicallynon-exclusiveanddonotprohibittheotherpartyfromworkingwithourcompetitorsorfromofferingcompetingservices.Ifweareunsuccessfulinestablishingormaintainingourrelationshipswiththesethirdparties,ourabilitytocompe
195、teinthemarketplaceortogrowourrevenuescouldbeimpairedandouroperatingresultswouldsuffer.Asaresultofourcustomersusageofoursoftwareplatform,wewillneedtocontinuallyimproveourhostinginfrastructuretoavoidserviceinterruptionsorslowersystemperformance.Wehaveexperiencedgrowthinthenumberoftransactionsanddatath
196、atourhostinginfrastructuresupports.Weseektomaintainsufficientexcesscapacityinourinfrastructuretomeettheneedsofallofourcustomers.Wealsoseektomaintainexcesscapacitytofacilitatetherapidprovisionofnewcustomerdeploymentsandtheexpansionofexistingcustomerdeployments.Forexample,ifwesecurealargecustomeroragr
197、oupofcustomersthatrequiresignificantamountsofbandwidthorstorage,wemayneedtoincreasebandwidth,storage,powerorotherelementsofourapplicationarchitectureandourinfrastructure,andourexistingsystemsmaynotbeabletoscaleinamannersatisfactorytoourexistingorprospectivecustomers.Theamountofinfrastructureneededto
198、supportourcustomersisbasedonourestimatesofanticipatedusage.Ifweweretoexperienceunforeseenincreasesinusage,wecouldberequiredtoincreaseourinfrastructureinvestmentsresultinginincreasedcostsorreducedgrossmargins,andifwedonotaccuratelypredictourinfrastructurecapacityrequirements,ourcustomerscouldexperien
199、ceserviceoutagesthatmaysubjectustofinancialpenaltiesandliabilitiesandresultincustomerlosses.Ifourhostinginfrastructurecapacityfailstokeeppacewithincreasedsales,customersmayexperienceserviceinterruptionsorslowersystemperformanceasweseektoobtainadditionalcapacity,whichcouldharmourreputationandadversel
200、yaffectourrevenuegrowth.Asuseofoursoftwareplatformgrowsandascustomersuseitformorecomplicatedtasks,wewillneedtodevoteadditionalresourcestoimprovingourapplicationarchitectureandourinfrastructureinordertomaintaintheperformanceofoursoftwareplatform.Wemayneedtoincuradditionalcoststoupgradeorexpandourcomp
201、utersystemsandarchitectureinordertoaccommodateincreaseddemandifoursystemscannothandlecurrentorhighervolumesofusage.Inaddition,increasingoursystemsandinfrastructureinadvanceofnewcustomerswouldcauseustohaveincreasedcostofrevenues,whichcanadverselyaffectourgrossmarginsuntilweincreaserevenuesthatarespre
202、adovertheincreasedcosts.Anyfailuretoprotectourintellectualpropertyrightscouldimpairourabilitytoprotectourproprietarytechnologyandourbrand.Oursuccessandabilitytocompetedependsinpartuponourintellectualproperty.Weprimarilyrelyonacombinationofcopyright,tradesecretandtrademarklaws,aswellasconfidentiality
203、proceduresandcontractualrestrictionswithouremployees,customers,partnersandotherstoestablishandprotectourintellectualpropertyrights.However,thestepswetaketoprotectourintellectualpropertyrightsmaybeinadequateorwemaybeunabletosecureintellectualpropertyprotectionforallofoursolutions.Inparticular,wehavet
204、hreeissuedUnitedStatespatents.Ifweareunabletoprotectourintellectualproperty,ourcompetitorscoulduseourintellectualpropertytomarketproductsandservicessimilartooursandourabilitytocompeteeffectivelywouldbeimpaired.Moreover,othersmayindependentlydeveloptechnologiesthatarecompetitivetooursorinfringeourint
205、ellectualproperty.Theenforcementofourintellectualpropertyrightsdependsonourlegalactionsagainsttheseinfringersbeingsuccessful,butwecannotbesuretheseactionswillbesuccessful,even15whenourrightshavebeeninfringed.Inaddition,defendingourintellectualpropertyrightsmightentailsignificantexpenseanddiversionof
206、managementresources.Anyofourintellectualpropertyrightsmaybechallengedbyothersorinvalidatedthroughadministrativeprocessesorlitigation.Anypatentsissuedinthefuturemaynotprovideuswithcompetitiveadvantagesormaybesuccessfullychallengedbythirdparties.Furthermore,legalstandardsrelatingtothevalidity,enforcea
207、bilityandscopeofprotectionofintellectualpropertyrightsareuncertain.Effectiveprotectionofourintellectualpropertymaynotbeavailabletousineverycountryinwhichoursolutionsareavailable.ThelawsofsomeforeigncountriesmaynotbeasprotectiveofintellectualpropertyrightsasthoseintheUnitedStates,andmechanismsforenfo
208、rcementofintellectualpropertyrightsmaybeinadequate.Accordingly,despiteourefforts,wemaybeunabletopreventthirdpartiesfrominfringinguponormisappropriatingourintellectualproperty.Wemightberequiredtospendsignificantresourcestomonitorandprotectourintellectualpropertyrights,andoureffortstoenforceourintelle
209、ctualpropertyrightsmaybemetwithdefenses,counterclaimsandcountersuitsattackingthevalidityandenforceabilityofourintellectualpropertyrights.Litigationtoprotectandenforceourintellectualpropertyrightscouldbecostly,time-consuminganddistractingtomanagement,whetherornotitisresolvedinourfavor,andcouldultimat
210、elyresultintheimpairmentorlossofportionsofourintellectualproperty.Wecouldincursubstantialcostsasaresultofanyclaimofinfringementofanotherpartysintellectualpropertyrights.Inrecentyears,therehasbeensignificantlitigationintheUnitedStatesinvolvingpatentsandotherintellectualpropertyrights.CompaniesintheIn
211、ternetandtechnologyindustriesareincreasinglybringingandbecomingsubjecttosuitsalleginginfringementofproprietaryrights,particularlypatentrights,andourcompetitorsmayholdpatentsorhavependingpatentapplications,whichcouldberelatedtoourbusiness.Theseriskshavebeenamplifiedbytheincreaseinthirdparties,whichwe
212、refertoasnon-practicingentities,whosesoleprimarybusinessistoassertsuchclaims.Wehavereceivedinthepast,andexpecttoreceiveinthefuture,noticesthatclaimweorourcustomersusingoursolutionshavemisappropriatedormisusedotherpartiesintellectualpropertyrights.Ifwearesuedbyathirdpartythatclaimsthatourtechnologyin
213、fringesitsrights,thelitigationcouldbeexpensiveandcoulddivertourmanagementresources.Wedonotcurrentlyhaveanextensivepatentportfolioofourown,whichmaylimitthedefensesavailabletousinanysuchlitigation.Inaddition,inmostinstances,wehaveagreedtoindemnifyourcustomersagainstcertainclaimsthatoursubscriptionserv
214、icesinfringetheintellectualpropertyrightsofthirdparties.Ourbusinesscouldbeadverselyaffectedbyanysignificantdisputesbetweenusandourcustomersastotheapplicabilityorscopeofourindemnificationobligationstothem.Theresultsofanyintellectualpropertylitigationtowhichwemightbecomeaparty,orforwhichwearerequiredt
215、oprovideindemnification,mayrequireustodooneormoreofthefollowing:ceaseofferingorusingtechnologiesthatincorporatethechallengedintellectualproperty;makesubstantialpaymentsforlegalfees,settlementpaymentsorothercostsordamages;obtainalicense,whichmaynotbeavailableonreasonableterms,tosellorusetherelevantte
216、chnology;orredesigntechnologytoavoidinfringement.Ifwearerequiredtomakesubstantialpaymentsorundertakeanyoftheotheractionsnotedaboveasaresultofanyintellectualpropertyinfringementclaimsagainstusoranyobligationtoindemnifyourcustomersforsuchclaims,suchpaymentsorcostscouldhaveamaterialadverseeffectuponour
217、businessandfinancialresults.Ouruseofopensourcetechnologycouldimposelimitationsonourabilitytocommercializeoursoftwareplatform.Weuseopensourcesoftwareinourplatform.Someopensourcesoftwarelicensesrequireuserswhodistributeopensourcesoftwareaspartoftheirsoftwaretopubliclydiscloseallorpartofthesourcecodeto
218、suchsoftwareand/ormakeavailableanyderivativeworksoftheopensourcecodeonunfavorabletermsoratnocost.ThetermsofvariousopensourcelicenseshavenotbeeninterpretedbytheU.S.courts,andthereisariskthatsuchlicensescouldbeconstruedinamannerthatimposesunanticipatedconditionsorrestrictionsonourabilitytomarketoursof
219、twareplatform.Whilewemonitorouruseofopensourcesoftwareandtrytoensurethatnoneisusedinamannerthatwouldrequireustodiscloseoursourcecodeorthatwouldotherwisebreachthetermsofanopensourceagreement,suchusecouldinadvertentlyoccurandwemayberequiredtoreleaseourproprietarysourcecode,paydamagesforbreachofcontrac
220、t,re-engineerourapplications,discontinuesalesintheeventre-engineeringcannotbeaccomplishedonatimelybasisortakeotherremedialactionthatmaydivertresourcesawayfromourdevelopmentefforts,anyofwhichcouldcauseustobreachcustomercontracts,harmourreputation,resultincustomerlossesorclaims,increaseourcostsorother
221、wiseadverselyaffectourbusinessandoperatingresults.16Becauseourlong-termsuccessdepends,inpart,onourabilitytoexpandoursalestocustomersoutsidetheUnitedStates,ourbusinesswillbesusceptibletorisksassociatedwithinternationaloperations.WecurrentlyhavepersonnelandcustomersinAustralia,China,England,France,Ger
222、many,Ireland,JapanandSingapore,aswellastheUnitedStates.Duetoourinternationalexposure,ourbusinessissusceptibletorisksassociatedwithinternationaloperations.However,wehavealimitedoperatinghistoryoutsidetheUnitedStates,andourabilitytomanageourbusinessandconductouroperationsinternationallyrequiresconside
223、rablemanagementattentionandresourcesandissubjecttoparticularchallengesofsupportingarapidlygrowingbusinessinanenvironmentofdiversecultures,languages,customs,taxlaws,legalsystems,alternatedisputesystemsandregulatorysystems.Therisksandchallengesassociatedwithinternationalexpansioninclude:theneedtosuppo
224、rtandintegratewithlocalpublishersandpartners;continuedlocalizationofourplatform,includingtranslationintoforeignlanguagesandassociatedexpenses;competitionwithcompaniesthathavegreaterexperienceinthelocalmarketsthanwedoorwhohavepre-existingrelationshipswithpotentialcustomersinthosemarkets;compliancewit
225、hmultiple,potentiallyconflictingandchanginggovernmentallawsandregulations,includingemployment,tax,privacyanddataprotectionlawsandregulations;compliancewithanti-briberylaws,includingcompliancewiththeForeignCorruptPracticesAct;difficultiesininvoicingandcollectinginforeigncurrenciesandassociatedforeign
226、currencyexposure;difficultiesinstaffingandmanagingforeignoperationsandtheincreasedtravel,infrastructureandlegalcompliancecostsassociatedwithinternationaloperations;differentorlesserprotectionofourintellectualpropertyrights;difficultiesinenforcingcontractsandcollectingaccountsreceivable,longerpayment
227、cyclesandothercollectiondifficulties;restrictionsonrepatriationofearnings;andregionaleconomicandpoliticalconditions.Wehavelimitedexperienceinmarketing,sellingandsupportingoursubscriptionservicesinternationally,whichincreasestheriskthatanypotentialfutureexpansioneffortsthatwemayundertakewillnotbesucc
228、essful.Fluctuationsintheexchangerateofforeigncurrenciescouldresultincurrencytransactionslosses.WecurrentlyhaveforeignsalesdenominatedinAustralianDollars,BritishPoundSterling,ChineseYuan,Euros,JapaneseYenandSingaporeDollars.Inaddition,weincuraportionofouroperatingexpensesinthecurrenciesofthecountries
229、wherewehaveoffices.Wefaceexposuretoadversemovementsincurrencyexchangerates,whichmaycauseourrevenuesandoperatingresultstodiffermateriallyfromexpectations.IftheU.S.Dollarstrengthensrelativetoforeigncurrenciesasitdidduring2015and2016,ournon-U.S.revenueswouldbeadverselyaffected.Conversely,adeclineintheU
230、.S.Dollarrelativetoforeigncurrencieswouldincreaseournon-U.S.revenueswhentranslatedintoU.S.Dollars.Ouroperatingresultscouldbenegativelyimpacteddependingontheamountofexpensedenominatedinforeigncurrencies.Asexchangeratesvary,revenues,costofrevenues,operatingexpensesandotheroperatingresults,whentranslat
231、ed,maydiffermateriallyfromexpectations.Inaddition,ourrevenuesandoperatingresultsaresubjecttofluctuationifourmixofU.S.andforeigncurrency-denominatedtransactionsorexpenseschangesinthefuturebecausewedonotcurrentlyhedgeourforeigncurrencyexposure.Evenifweweretoimplementhedgingstrategiestomitigateforeignc
232、urrencyrisk,thesestrategiesmightnoteliminateourexposuretoforeignexchangeratefluctuationsandwouldinvolvecostsandrisksoftheirown,suchasongoingmanagementtimeandexpertise,externalcoststoimplementthestrategiesandpotentialaccountingimplications.Unfavorableconditionsinthemarketfordigitaladvertisingortheglo
233、baleconomyorreductionsindigitaladvertisingspendcouldlimitourabilitytogrowourbusinessandnegativelyaffectouroperatingresults.Revenuegrowthandpotentialprofitabilityofourbusinessdependsondigitaladvertisingspendbyadvertisersinthemarketsweserve.Ouroperatingresultsmayvarybasedonchangesinthemarketfordigital
234、advertisingortheglobaleconomy.Totheextentthatweakeconomicconditionscauseourcustomersandpotentialcustomerstofreezeorreducetheiradvertisingbudgets,particularlydigitaladvertising,demandforoursolutionmaybenegativelyaffected.17Historically,economicdownturnshaveresultedinoverallreductionsinadvertisingspen
235、d.Ifeconomicconditionsdeteriorateortheriseofgeopoliticalinstabilityandmilitaryhostilitiescauseseconomicuncertainty,ourcustomersandpotentialcustomersmayelecttodecreasetheiradvertisingbudgetsordeferorreconsidersoftwareandservicepurchases,whichwouldlimitourabilitytogrowourbusinessandnegativelyaffectour
236、operatingresults.Wehaveexperiencedturnoverinourseniormanagement,andthelossofkeypersonneloranabilitytoattract,retainandmotivatequalifiedpersonnelmayresultinoperationalinefficienciesthatcouldnegativelyaffectourbusiness.Oursuccessdependsuponthecontinuedserviceofourtalentedmanagement,operationalandkeyte
237、chnicalemployees,aswellasourabilitytocontinuetoattractadditionalhighlyqualifiedtalent.Overthelasttwoyears,wehaveexperiencedturnoverinourseniormanagement.Thislackofmanagementcontinuityandturnoveramongstouremployeesthatwehaveexperiencedrecentlycouldresultinoperationalandadministrativeinefficienciesand
238、addedcosts,whichcouldadverselyimpactourresultsofoperations,stockpriceandcustomerrelationships,andcouldmakerecruitingforfuturemanagementpositionsmoredifficult.Inaddition,wemustsuccessfullyintegrateanynewseniormanagementandothernewpersonnelwithinourorganizationinordertoachieveouroperatingobjectives,an
239、dchangesinotherkeypositionsmaytemporarilyaffectourfinancialperformanceandresultsofoperationsasnewemployeesbecomefamiliarwithourbusiness.Wedonotmaintainkeypersonlifeinsurancepoliciesonanyofouremployees.Eachofourexecutiveofficers,keytechnicalpersonnelandotheremployeescouldterminatehisorherrelationship
240、withusatanytime.Ourbusinessalsorequiresskilledtechnical,salesandotherpersonnel,whoareinhighdemandandareoftensubjecttocompetingoffers.Asweexpandintoadditionalgeographicmarkets,wewillrequirepersonnelwithexpertiseinthesenewareas.CompetitionforqualifiedemployeesisintenseinourindustryandparticularlyinSan
241、Francisco,California.Aninabilitytoretain,attract,relocateandmotivateemployeesrequiredforourbusiness,includingtheplannedexpansionofourbusiness,coulddelayorpreventtheachievementofourbusinessobjectivesandcouldmateriallyharmourbusinessandourcustomerrelationships.Managingaglobalorganizationhasplaced,andm
242、aycontinuetoplace,significantdemandsonourmanagementandinfrastructure.Ifwefailtomanageouroperationseffectively,wemaybeunabletoexecuteourbusinessplan,maintainhighlevelsofserviceoraddresscompetitivechallengesadequately.Managingaglobalandgeographicallydispersedworkforceandoperationhasrequiredsubstantial
243、managementeffort,theallocationofvaluablemanagementresourcesandsignificantadditionalinvestmentinourinfrastructure.Wewillberequiredtocontinuetoimproveouroperational,financialandmanagementcontrolsandoperationsreportingprocedures,andwemaynotbeabletodosoeffectively.Moreover,wemayfromtimetotimedecidetound
244、ertakecostsavingsinitiatives,suchasadditionalrestructurings,disposingof,and/orotherwisediscontinuingcertainproducts,inanefforttofocusourresourcesonkeystrategicinitiativesandstreamlineourbusiness.Further,supportingourcustomersandoperations,anddrivingfuturegrowth,wemustcontinuallyimproveandmaintainour
245、technology,systemsandnetworkinfrastructure.Assuch,wemaybeunabletomanageourexpenseseffectivelyinthefuture,whichmaynegativelyimpactourgrossmarginsoroperatingexpensesinanyparticularquarter.Ifwefailtomanageouranticipatedgrowthorchangeinamannerthatdoesnotpreservethekeyaspectsofourcorporateculture,thequal
246、ityofoursolutionsmaysuffer,whichcouldnegativelyaffectourbrandandreputationandharmourabilitytoretainandattractcustomers.Domesticandforeigngovernmentregulationandenforcementofdatapracticesanddatatrackingtechnologiesisexpansive,notclearlydefinedandrapidlyevolving.Suchregulationcoulddirectlyrestrictport
247、ionsofourbusinessorindirectlyaffectourbusinessbyconstrainingourcustomersuseofourplatformorlimitingthegrowthofourmarkets.Federal,state,municipaland/orforeigngovernmentsandagencieshaveadoptedandcouldinthefutureadopt,modify,applyorenforcelaws,policies,andregulationscoveringuserprivacy,datasecurity,tech
248、nologiessuchascookiesthatareusedtocollect,storeand/orprocessdata,thetaxationofproductsandservices,unfairanddeceptivepractices,and/orthecollection,use,processing,transfer,storageand/ordisclosureofdataassociatedwithauniqueindividual.Thecategoriesofdataregulatedundertheselawsvarywidelyandareoftenill-de
249、finedandsubjecttonewapplicationsorinterpretationbyregulators.Oursubscriptionservicesenableourcustomerstodisplaydigitaladvertisementstotargetedpopulationsegments,aswellascollect,manageandstoredataregardingthemeasurementandvaluationoftheirdigitaladvertisingandmarketingcampaigns,whichmayincludedatathat
250、isdirectlyorindirectlyobtainedorderivedthroughtheactivitiesofonlineormobilevisitors.Theuncertaintyandinconsistencyamongtheselaws,coupledwithalackofguidanceastohowtheselawswillbeappliedtocurrentandemergingInternetandmobileanalyticstechnologies,createsariskthatregulators,lawmakersorotherthirdparties,s
251、uchaspotentialplaintiffs,mayassertclaims,pursueinvestigationsoraudits,orengageincivilorcriminalenforcement.Theseactionscouldlimitthemarketforoursubscriptionservicesorimposeburdensomerequirementsonourservicesand/orcustomersuseofourservices,therebyrenderingourbusinessunprofitable.Somefeaturesofoursubs
252、criptionservicesusecookies,whichtriggerthedataprotectionrequirementsofcertainforeignjurisdictions,suchastheEUGeneralDataProtectionRegulationandtheEUePrivacyDirective.Inaddition,ourservicescollectdata18aboutvisitorsinteractionswithouradvertiserclientsthatmaybesubjecttoregulationundercurrentorfuturela
253、wsorregulations.Ifourprivacyordatasecuritymeasuresfailtocomplywiththesecurrentorfuturelawsandregulationsinanyofthejurisdictionsinwhichwecollectinformation,wemaybesubjecttolitigation,regulatoryinvestigations,civilorcriminalenforcement,auditsorotherliabilitiesinsuchjurisdictions,orouradvertisersmayter
254、minatetheirrelationshipswithus.Inaddition,foreigncourtjudgmentsorregulatoryactionscouldimpactourabilitytotransfer,processand/orreceivetransnationaldatathatiscriticaltoouroperations,includingdatarelatingtousers,clients,orpartnersoutsidetheUnitedStates.Suchjudgmentsoractionscouldaffectthemannerinwhich
255、weprovideourservicesoradverselyaffectourfinancialresultsifforeignclientsandpartnersarenotabletolawfullytransferdatatous.Thisareaofthelawiscurrentlyunderintensegovernmentscrutinyandmanygovernments,includingtheU.S.government,areconsideringavarietyofproposedregulationsthatwouldrestrictorimpactthecondit
256、ionsunderwhichdataobtainedfromorthroughtheactivitiesofvisitorscouldbecollected,processedorstored.Inaddition,regulatorssuchastheFederalTradeCommissionandtheCaliforniaAttorneyGeneralarecontinuallyproposingnewregulationsandinterpretingandapplyingexistingregulationsinnewways.Changestoexistinglawsornewla
257、wsregulatingthesolicitation,collectionorprocessingofpersonalandconsumerinformation,truth-in-advertisingandconsumerprotectioncouldaffectourcustomersutilizationofdigitaladvertisingandmarketing,potentiallyreducingdemandforoursubscriptionservices,orimposerestrictionsthatmakeitmoredifficultorexpensivefor
258、ustoprovideourservices.IflegislationdampensthegrowthinwebandmobileusageoraccesstotheInternet,ourresultsofoperationscouldbeharmed.Legislationenactedinthefuturecoulddampenthegrowthinwebandmobileusageanddecreaseitsacceptanceasamediumofcommunicationsandcommerceorresultinincreasedadoptionofnewmodesofcomm
259、unicationandcommercethatmaynotbeservicedbyourproducts.Inaddition,governmentagenciesorprivateorganizationsmaybegintoimposetaxes,feesorotherchargesforaccessingtheInternet,whichcouldresultinslowergrowthoradecreaseinecommerce,useofsocialmediaand/oruseofmobiledevices.Anyoftheseoutcomescouldcausedemandfor
260、ourplatformtodecrease,ourcoststoincrease,andourresultsofoperationsandfinancialconditiontobeharmed.Ifourcustomersfailtoabidebyapplicableprivacylawsortoprovideadequatenoticeand/orobtainconsentfromendusers,wecouldbesubjecttolitigationorenforcementactionorreduceddemandforourservices.Industryself-regulat
261、orystandardsmaybeimplementedinthefuturethatcouldaffectdemandforourplatformandourabilitytoaccessdataweusetoprovideourplatform.Ourcustomersutilizeourservicestosupportandmeasuretheirdirectinteractionswithvisitors,andalthoughweprovidenoticeandchoicemechanismsonourwebsitesforoursubscriptionservices,weals
262、omustrelyonourcustomerstoimplementandadministernoticeandchoicemechanismsrequiredunderapplicablelaws.Ifweorourcustomersfailtoabidebytheselaws,itcouldresultinlitigationorregulatoryorenforcementactionagainstourcustomersoragainstusdirectly.Inaddition,self-regulatoryorganizations(suchastheDigitalAdvertis
263、ingNetworkorNetworkAdvertisingInitiative)towhichourcustomers,partnersandsuppliersmaybelong,mayimposeopt-inoropt-outrequirementsonourcustomers,whichmayinthefuturerequireourcustomerstoprovidevariousmechanismsforuserstoopt-inoropt-outofthecollectionofanydata,includinganonymousdata,withrespecttosuchuser
264、swebormobileactivities.Theonlineand/ormobileindustriesmayadopttechnicalorindustrystandards,orfederal,state,localorforeignlawsmaybeenactedthatallowuserstoopt-inoropt-outofdatathatisnecessarytoourbusiness.Inparticular,somegovernmentregulatorsandstandard-settingorganizationshavesuggesteda“DoNotTrack”st
265、andardthatallowsuserstoexpressapreference,independentofcookiesettingsintheirbrowser,nottohavewebsitebrowsingrecorded.AllthemajorInternetbrowsershaveimplementedsomeversionofa“DoNotTrack”setting.Furthermore,publishersmayimplementalternativetrackingtechnologiesthatmakeitmoredifficulttoaccessthedatanece
266、ssarytoourbusinessormakeitmoredifficultforustocompetewiththepublishersownadvertisingmanagementsolutions.Ifanyoftheseeventsweretooccurinthefuture,itcouldhaveamaterialeffectonourabilitytoprovideservicesandforourcustomerstocollectthedatathatisnecessarytouseourservices.Ourrevenuesmaybeadverselyaffectedi
267、fwearerequiredtochargesalestaxesinadditionaljurisdictionsorothertaxesforoursolutions.Wecollectorhaveimposeduponussalesorothertaxesrelatedtothesolutionswesellincertainstatesandotherjurisdictions.Additionalstates,countriesorotherjurisdictionsmayseektoimposesalesorothertaxcollectionobligationsonusinthe
268、future,orstatesorjurisdictionsinwhichwealreadypaytaxmayincreasetheamountoftaxeswearerequiredtopay.Asuccessfulassertionbyanystate,countryorotherjurisdictioninwhichwedobusinessthatweshouldbecollectingsalesorothertaxesonthesaleofourproductsandservicescould,amongotherthings,createsignificantadministrati
269、veburdensforus,resultinsubstantialtaxliabilitiesforpastsales,discourageclientsfrompurchasingsolutionsfromusorotherwisesubstantiallyharmourbusinessandresultsofoperations.19Wemayexperiencequarterlyfluctuationsinouroperatingresultsduetoanumberoffactorswhichmakeourfutureresultsdifficulttopredictandcould
270、causeouroperatingresultstofallbelowexpectationsorourguidance.Ourquarterlyoperatingresultsmayfluctuateduetoavarietyoffactors,manyofwhichareoutsideofourcontrol.Asaresult,comparingouroperatingresultsonaperiod-to-periodbasismaynotbemeaningful.Youshouldnotrelyonourpastresultsasindicativeofourfutureperfor
271、mance.Ifourrevenuesoroperatingresultsfallbelowtheexpectationsofinvestorsorsecuritiesanalysts,orbelowanyguidancewemayprovidetothemarket,thepriceofourcommonstockcoulddeclinesubstantially.Inadditiontootherriskfactorslistedinthissection,factorsthatmayaffectourquarterlyoperatingresultsincludethefollowing
272、:thelevelofadvertisingspendmanagedthroughourplatformforaparticularquarter;customerrenewalrates,andthepricingandusageofourplatforminanyrenewalterm;demandforourplatformandthesizeandtimingofoursales;customersdelayingpurchasingdecisionsinanticipationofnewreleasesbyusorofnewproductsbyourcompetitors;delay
273、sinprojectstoupgradeourownsoftwareplatforminfrastructureandanyresultingdelaysinreleasingnewfeatures;networkoutages,platformdowntime,softwarebugsorsecuritybreachesandanyassociatedcredits,warrantyclaimsorotherexpenses;changesinthecompetitivedynamicsofourindustry,includingconsolidationamongcompetitorso
274、rcustomers;marketacceptanceofourcurrentandfuturesolutions;changesinspendingondigitaladvertisingorinformationtechnologyandsoftwarebyourcurrentand/orprospectivecustomers;budgetingcyclesofourcustomers;ourpotentiallylengthysalescycle;ourabilitytocontrolcosts,includingouroperatingexpenses;theamountandtim
275、ingofinfrastructurecostsandoperatingexpensesrelatedtothemaintenanceandexpansionofourbusiness,operationsandinfrastructure;hiringorseparationofemployees;foreigncurrencyexchangeratefluctuations;andgeneraleconomicandpoliticalconditionsinourdomesticandinternationalmarkets.Baseduponallofthefactorsdescribe
276、dabove,wehavealimitedabilitytoforecastourfuturerevenues,costsandexpenses,andasaresult,ouroperatingresultsmayfromtimetotimefallbelowourestimatesortheexpectationsofpublicmarketanalystsandinvestors.Futureacquisitions,strategicinvestments,partnershipsoralliancescouldbedifficulttointegrate,diverttheatten
277、tionofkeymanagementpersonnel,disruptourbusiness,diluteshareholdervalueandadverselyaffectourresultsofoperationsandfinancialcondition.WeacquiredSocialMoovS.A.S.(“SocialMoov”)inFebruary2015,andNowSpots,Inc.,doingbusinessasPerfectAudience(“PerfectAudience”)inJune2014andmayseektoacquireadditionalbusiness
278、es,productsortechnologiesinthefuture.However,thesearetheonlytwoacquisitionsinthehistoryofourcompanyandwehavelimitedexperienceinacquiringandintegratingbusinesses,productsandtechnologies.Ifweidentifyanappropriateacquisitioncandidate,wemaynotbesuccessfulinnegotiatingthetermsand/orfinancingoftheacquisit
279、ion,andourduediligencemayfailtoidentifyalloftheproblems,liabilitiesorothershortcomingsorchallengesofanacquiredbusiness,productortechnology,includingissuesrelatedtointellectualproperty,productqualityorarchitecture,regulatorycompliancepractices,revenuerecognitionorotheraccountingpracticesoremployeeorc
280、lientissues.20Anyacquisitionorinvestmentmayrequireustousesignificantamountsofcash,issuepotentiallydilutiveequitysecuritiesorincurdebt.Inaddition,acquisitions,includingouracquisitionsofSocialMoovandPerfectAudience,involvenumerousrisks,anyofwhichcouldharmourbusiness,including:regulatoryandcommercialri
281、sksrelatingtoretargetingofonlineadvertisingandsocialadvertising,theprimarybusinessesofPerfectAudienceandSocialMoov,respectively;difficultiesinintegratingtheoperations,technologies,servicesandpersonnelofacquiredbusinesses,especiallyifthosebusinessesoperateoutsideofourcorecompetencyorinforeigncountrie
282、s;culturalchallengesassociatedwithintegratingemployeesfromtheacquiredcompanyintoourorganization;reputationandperceptionrisksassociatedwiththeacquiredproductortechnologybythegeneralpublic;ineffectivenessorincompatibilityofacquiredtechnologiesorservices;potentiallossofkeyemployeesofacquiredbusinesses;
283、inabilitytomaintainthekeybusinessrelationshipsandthereputationsofacquiredbusinesses;diversionofmanagementsattentionfromotherbusinessconcerns;litigationforactivitiesoftheacquiredcompany,includingclaimsfromterminatedemployees,clients,formershareholdersorotherthirdparties;failuretoidentifyalloftheprobl
284、ems,liabilitiesorothershortcomingsorchallengesofanacquiredcompany,technology,orsolution,includingissuesrelatedtointellectualproperty,solutionqualityorarchitecture,regulatorycompliancepractices,revenuerecognitionorotheraccountingpracticesoremployeeorclientissues;inthecaseofforeignacquisitionssuchasSo
285、cialMoov,theneedtointegrateoperationsacrossdifferentculturesandlanguagesandtoaddresstheparticulareconomic,currency,politicalandregulatoryrisksassociatedwithspecificcountries;costsnecessarytoestablishandmaintaineffectiveinternalcontrolsforacquiredbusinesses;failuretosuccessfullyfurtherdeveloptheacqui
286、redtechnologyinordertorecoupourinvestment;andincreasedfixedcosts.Ifweareunabletosuccessfullyintegrateanyfuturebusiness,productortechnologyweacquire,ourbusinessandresultsofoperationsmaysuffer.Inaddition,asignificantportionofthepurchasepriceofcompaniesweacquiremaybeallocatedtoacquiredgoodwillandotheri
287、ntangibleassets,whichmustbeassessedforimpairmentatleastannually.Ifouracquisitionsdonotyieldexpectedreturns,wemayberequiredtotakechargestoouroperatingresultsbasedonthisimpairmentassessmentprocess,whichcouldadverselyaffectourresultsofoperations.Acquisitionscouldalsoresultindilutiveissuancesofequitysec
288、uritiesortheincurrenceofdebt,whichcouldadverselyaffectouroperatingresults.Forinstance,inconnectionwithouracquisitionofSocialMoov,weissuedsharesofourcommonstock.WeidentifiedamaterialweaknessinourinternalcontroloverfinancialreportingintheyearendedDecember31,2016thathassincebeenremediated.Ifweexperienc
289、eadditionalmaterialweaknessesordeficienciesinthefutureorotherwisefailtomaintainaneffectivesystemofinternalcontrols,wemaynotbeabletoaccuratelyortimelyreportourfinancialconditionorresultsofoperations,whichmayadverselyaffectinvestorconfidenceinusand,asaresult,thevalueofourcommonstock.Ourmanagementdeter
290、minedthattherewasamaterialweaknessinourinternalcontroloverfinancialreportingduringtheyearendedDecember31,2016becausewedidnotmaintaineffectivecontrolsoverthepreparationandreviewoftheannualincometaxprovision.Amaterialweaknessisadeficiency,oracombinationofdeficiencies,ininternalcontroloverfinancialrepo
291、rting,suchthatthereisareasonablepossibilitythatamaterialmisstatementoftheregistrantsannualorinterimfinancialstatementswillnotbepreventedordetectedinatimelybasis.AspreviouslydisclosedinourAnnualReportonForm10-KforthefiscalyearendedDecember31,2016,thismaterialweaknessaroseduringthereviewoftheannualinc
292、ometaxprovisioninconnectionwiththepreparationofourconsolidatedfinancialstatementsfortheyearendedDecember31,2016,whereanerrorwasidentifiedthatrelatedtotheaccountingforchangesinuncertaintaxpositionsatoneofoursubsidiariesinFrance.Oncethiserrorwasidentified,anaccountingadjustmentwasrecordedtoourliabilit
293、yforuncertaintaxpositionsandtheprovisionforincometaxes,aswellastherelatedincometaxdisclosures,ontheconsolidatedfinancialstatementsfortheyearendedDecember31,2016.Althoughtheerrorwasidentifiedpriortothecompletionofour2016consolidatedfinancialstatements,managementdeterminedthatadesigndeficiencyexistedi
294、nacontrolintendedtoproperlyaccountforandpresenttheaccountingforincometaxesinaccordancewithGAAP.21AsfurtherdescribedinPartI,Item4“ControlsandProcedures,”wedevelopedadetailedplantoaddressthematerialweakness,andweresuccessfulinremediatingitintheyearendedDecember31,2017.However,therecanbenoassurancethat
295、wewillnotidentifyadditionalcontroldeficienciesormaterialweaknessesinthefuture.Inaddition,ifweidentifynewmaterialweaknessesinthefuture,ifweareunabletocomplywiththerequirementsofSection404(b)oftheSarbanes-OxleyAct(“Section404”)inatimelymanner,ifweareunabletoassertthatourinternalcontroloverfinancialrep
296、ortingiseffectiveorifourindependentregisteredpublicaccountingfirmisunabletoexpressanopinionastotheeffectivenessofourinternalcontroloverfinancialreporting,investorsmayloseconfidenceintheaccuracyandcompletenessofourfinancialreportsandthemarketpriceofourcommonstockcouldbenegativelyaffected,andwecouldbe
297、comesubjecttoinvestigationsbythestockexchangeonwhichoursecuritiesarelisted,theSEC,orotherregulatoryauthorities,whichcouldrequireadditionalfinancialandmanagementresources.Wearebothasmallerreportingcompanyandanemerginggrowthcompany,andwecannotbecertainifthereduceddisclosurerequirementsapplicabletosmal
298、lerreportingcompaniesandemerginggrowthcompanieswillmakeourcommonstocklessattractivetoinvestors.Foraslongaswecontinuetobebothasmallerreportingcompanyandanemerginggrowthcompany,weintendtotakeadvantageofcertainexemptionsfromvariousreportingrequirementsthatareapplicabletootherpubliccompaniesincluding,bu
299、tnotlimitedto,theexemptionfromtherequirementofareportonourinternalcontroloverfinancialreportingbyourindependentregisteredpublicaccountingfirm,reduceddisclosureobligationsregardingexecutivecompensationinourperiodicreportsandproxystatements,andexemptionsfromtherequirementsofholdinganon-bindingadvisory
300、voteonexecutivecompensationandstockholderapprovalofanygoldenparachutepaymentsnotpreviouslyapproved.Wecannotpredictifinvestorswillfindourcommonstocklessattractivebecausewewillrelyontheseexemptions.Ifsomeinvestorsfindourcommonstocklessattractiveasaresult,theremaybealessactivetradingmarketforourcommons
301、tockandourstockpricemaybemorevolatile.Wewillremainanemerginggrowthcompanyuntiltheearliestof(1)theendofthefiscalyearinwhichthemarketvalueofourcommonstockthatisheldbynon-affiliatesexceeds$700millionasofJune30,(2)theendofthefiscalyearinwhichwehavetotalannualgrossrevenuesof$1.07billionormoreduringsuchfi
302、scalyear,(3)thedateonwhichweissuemorethan$1.07billioninnon-convertibledebtinathree-yearperiodor(4)December31,2018.Evenifweexitemerginggrowthcompanystatus,manyoftheexemptionsavailableforemerginggrowthcompaniesarealsoavailabletosmallerreportingcompanieslikeusthathavelessthan$75millionofworldwidecommon
303、equityheldbynon-affiliates.Intheeventthatwearestillconsideredasmallerreportingcompany,atsuchtimeweceasebeinganemerginggrowthcompany,thedisclosurewewillberequiredtoprovideinourSECfilingswillincrease,butwillstillbelessthanitwouldbeifwewerenotconsideredeitheranemerginggrowthcompanyorasmallerreportingco
304、mpany.Specifically,similartoemerginggrowthcompanies,smallerreportingcompaniesareabletoprovidesimplifiedexecutivecompensationdisclosuresintheirfilings;areexemptfromtheprovisionsofSection404requiringthatindependentregisteredpublicaccountingfirmsprovideanattestationreportontheeffectivenessofinternalcon
305、troloverfinancialreporting;andhavecertainotherdecreaseddisclosureobligationsintheirSECfilings,including,amongotherthings,onlybeingrequiredtoprovidetwoyearsofauditedfinancialstatementsinannualreports.DecreaseddisclosuresinourSECfilingsduetoourstatusasanemerginggrowthcompanyorsmallerreportingcompanyma
306、ymakeitharderforinvestorstoanalyzeourresultsofoperationsandfinancialprospects.Wemaynotbeabletoutilizeasignificantportionofournetoperatinglossorresearchtaxcreditcarryforwards,whichcouldadverselyaffectourprofitability.AsofDecember31,2017,wehadfederalandstatenetoperatinglosscarryforwardsduetopriorperio
307、dlosses,whichifnotutilizedwillbegintoexpirein2026and2022forfederalandstatepurposes,respectively.Wealsohavefederalresearchtaxcreditcarryforwards,whichifnotutilizedwillbegintoexpirein2026.Thesenetoperatinglossandresearchtaxcreditcarryforwardscouldexpireunusedandbeunavailabletooffsetfutureincometaxliab
308、ilities,whichcouldadverselyaffectourprofitability.Inaddition,underSection382oftheInternalRevenueCodeof1986,asamended(the“Code”),ourabilitytoutilizenetoperatinglosscarryforwardsorothertaxattributes,suchasresearchtaxcredits,inanytaxableyearmaybelimitedifweexperiencean“ownershipchange.”ASection382“owne
309、rshipchange”generallyoccursifoneormorestockholdersorgroupsofstockholderswhoownatleast5%ofourstockincreasetheirownershipbymorethan50percentagepointsovertheirlowestownershippercentagewithinarollingthree-yearperiod.Similarrulesmayapplyunderstatetaxlaws.Futureissuancesofourstockcouldcausean“ownershipcha
310、nge.”Itispossiblethatanyfutureownershipchangecouldhaveamaterialeffectontheuseofournetoperatinglosscarryforwardsorothertaxattributes,whichcouldadverselyaffectourprofitability.22Additionally,onDecember22,2017,theTaxCutsandJobsAct(“TCJA”)wasenactedandisgenerallyeffectivefortaxableyearsbeginningafterDec
311、ember31,2017.TheTCJAiscomplexandincludessignificantamendmentstotheCode,includingamendmentsthatsignificantlychangethevalueofourdeferredtaxassetsrelatedtonetoperatinglosses,andimposeamandatoryone-timetaxontheaccumulatedearningsofcertainofourforeignsubsidiaries.Theapplicationofaccountingguidanceforsuch
312、itemsiscurrentlyuncertain,ascompliancewiththeTCJAandtheaccountingforsuchprovisionsrequirestheaccumulationofinformationnotpreviouslyrequiredorregularlyproduced.Asaresult,wehaveprovidedprovisionalestimatesoftheeffectoftheTCJAonouraccompanyingconsolidatedfinancialstatements.Asadditionalregulatoryguidan
313、ceisissuedbytheapplicabletaxingauthorities,asaccountingtreatmentisclarified,asweperformadditionalanalysisontheapplicationofthelawandaswerefineestimatesincalculatingitseffect,ourfinalanalysis,whichwillberecordedintheperiodcompleted,maybedifferentfromourcurrentprovisionalamounts,whichcouldmateriallyaf
314、fectourdeferredtaxes,taxobligationsandaccountingforincometaxes.OurreportedfinancialresultsmaybeadverselyaffectedbychangesinaccountingprinciplesgenerallyacceptedintheUnitedStates.GenerallyacceptedaccountingprinciplesintheUnitedStatesaresubjecttointerpretationbytheFinancialAccountingStandardsBoard,the
315、SEC,andvariousbodiesformedtopromulgateandinterpretappropriateaccountingprinciples.Achangeintheseprinciplesorinterpretationscouldhaveasignificanteffectonourreportedfinancialresults,andcouldaffectthereportingoftransactionscompletedbeforetheannouncementofachange.Wemayberequiredtorecordasignificantcharg
316、etoearningsifourgoodwilloramortizableintangibleassetsbecomefurtherimpaired.WearerequiredunderGAAPtoreviewouramortizableintangibleassetsforimpairmentwheneventsorchangesincircumstancesindicatethecarryingvaluemaynotberecoverable.Goodwillisrequiredtobetestedforimpairmentatleastannually.Conditionsthatwou
317、ldnecessitateanimpairmentassessmentincludeasignificantdeclineintheobservablemarketvalueofanasset,asignificantchangeintheextentormannerinwhichanassetisused,oranyothersignificantadversechangethatwouldindicatethatthecarryingamountofanassetorgroupofassetsmaynotberecoverable.Theeventsandcircumstancesweco
318、nsiderincludethebusinessclimate,legalfactors,operatingperformanceindicatorsandcompetition.Inthefuturewemayberequiredtorecordasignificantchargetoearningsinourconsolidatedfinancialstatementsduringtheperiodinwhichanyimpairmentofourgoodwilloramortizableintangibleassetsisdetermined.Thiscouldadverselyimpa
319、ctourresultsofoperationsandharmourbusiness.Inthefirsthalfof2017,themarketcapitalizationofourpubliclytradedcommonstocksustainedadeclinetotheextentthatitfellbelowthebookvalueofournetassets.Weconsiderthestockpriceandanyestimatedcontrolpremiumalongwithotheroperatingconditions,suchasrevenuedecline,asposs
320、iblefactorsaffectingtheassessmentofthefairvalueofourreportingunitforthepurposesofperforminganygoodwilltest.Ultimately,basedonthegoodwillimpairmenttestperformedinthethreemonthsendedJune30,2017,weidentifiedandrecordedimpairmentexpenseintheamountof$2.8millionforthatperiod.Nogoodwillimpairmentwasidentif
321、iedinanysubsequentperiodasofDecember31,2017.However,asadditionalfacts,circumstancesorassumptionschangeinthefuture,wemayberequiredtorecordadditionalimpairmentchargestoreducethecarryingvalueofourgoodwill,intangibleassetsandotherlong-termassets.Risks Related to the Ownership of Our Common StockThetradi
322、ngpricesofthesecuritiesoftechnologycompanieshavebeenhighlyvolatile.Accordingly,themarketpriceofourcommonstockhasbeen,andislikelytocontinuetobe,subjecttowidefluctuationsandcouldsubjectustolitigation.Sinceourinitialpublicoffering,theclosingsalespriceofourcommonstockontheNewYorkStockExchangehasbeenvola
323、tile.Factorsaffectingthemarketpriceofourcommonstockinclude:variationsin,orforwardlookingguidanceregarding,ourrevenues,grossmargin,operatingresults,freecashflow,losspershare,revenueretentionrates,annualizedadvertisingspendonourplatform,adjustedEBITDAandhowtheseresultscomparetoanalystandinvestorexpect
324、ations;announcementsoftechnologicalinnovations,newproductsorservices,strategicalliances,acquisitionsorsignificantagreementsbyusorbyourcompetitors;disruptionsinourcloud-basedoperationsorservicesordisruptionsofotherprominentcloud-basedoperationsorservices;theeconomyasawhole,marketconditionsinourindust
325、ry,andtheindustriesofourcustomers;andanyotherfactorsdiscussedherein.23Inaddition,thestockmarketingeneralhasexperiencedsubstantialpriceandvolumevolatilitythatisoftenseeminglyunrelatedtotheoperatingresultsofanyparticularcompanies.Moreover,ifthemarketfortechnologystocks,especiallysoftwareandcloudcomput
326、ing-relatedstocks,orthestockmarketingeneralexperiencesuneveninvestorconfidence,themarketpriceofourcommonstockcoulddeclineforreasonsunrelatedtoourbusiness,operatingresultsorfinancialcondition.Themarketpriceforourstockmightalsodeclineinreactiontoeventsthataffectothercompanieswithin,oroutside,ourindust
327、ry,eveniftheseeventsdonotdirectlyaffectus.Somecompaniesthathaveexperiencedvolatilityinthetradingpriceoftheirstockhavebeensubjectofsecuritieslitigation.Ifwearethesubjectofsuchlitigation,itcouldresultinsubstantialcostsandadiversionofmanagementsattentionandresources.FromJanuary1,2015throughDecember31,2
328、017,theclosingsalespriceofourcommonstockontheNewYorkStockExchangerangedfrom$7.00to$59.92pershare(retroactivelyadjustingfortheone-for-sevenreversestocksplit,whichbecameeffectiveonOctober5,2017).Becauseourstockpricehasbeenvolatile,investinginourcommonstockisrisky.Wedonotintendtopaydividendsforthefores
329、eeablefuture.Wehaveneverdeclarednorpaidcashdividendsonourcapitalstock.Wecurrentlyintendtoretainanyfutureearningstofinancetheoperationandexpansionofourbusiness,andwedonotexpecttodeclareorpayanydividendsintheforeseeablefuture.Consequently,stockholdersmustrelyonsalesoftheircommonstockafterpriceapprecia
330、tion,whichmayneveroccur,astheonlywaytorealizeanyfuturegainsontheirinvestment.Iftherearesubstantialsalesofsharesofourcommonstock,thepriceofourcommonstockcoulddecline.Salesofasubstantialnumberofsharesofourcommonstockinthepublicmarket,ortheperceptionthatthesesalesmightoccurcoulddepressthemarketpriceofo
331、urcommonstockandmaymakeitmoredifficultforyoutosellyourcommonstockatatimeandpricethatyoudeemappropriate.Weareunabletopredicttheeffectthatsalesmayhaveontheprevailingmarketpriceofourcommonstock.Anysalesofsecuritiesbyexistingstockholderscouldadverselyaffectthetradingpriceofourcommonstock.Delawarelawandp
332、rovisionsinourrestatedcertificateofincorporationandrestatedbylawscouldmakeamerger,tenderoffer,orproxycontestdifficult,therebydepressingthetradingpriceofourcommonstock.OurstatusasaDelawarecorporationandtheanti-takeoverprovisionsoftheDelawareGeneralCorporationLawmaydiscourage,delay,orpreventachangeinc
333、ontrolbyprohibitingusfromengaginginabusinesscombinationwithaninterestedstockholderforaperiodofthreeyearsafterthepersonbecomesaninterestedstockholder,evenifachangeofcontrolwouldbebeneficialtoourexistingstockholders.Inaddition,ourrestatedcertificateofincorporationandrestatedbylawscontainprovisionsthatmaymaketheacquisitionofourCompanymoredifficult,includingthefollowing:ourboardofdirectorsareclassifie
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