1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K Annual Report pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934For the fiscal year ended December 31,2019OR Transition report pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934Commissi
2、on 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 No.)123 Mission Street,27th FloorSan Francisco,CA 94105(Address of principal executive
3、 offices)(415)399-2580(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon stock,par value$0.001 per shareMRINThe Nasdaq Global MarketSecurities registered pursu
4、ant to section 12(g)of the Act:Not applicableIndicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YesNoIndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)ofAct.YesNoIndicatebycheckmarkwhethertheregistrant(1)hasfi
5、ledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheRegistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesNoIndicatebycheckmarkwhethertheregistranthassubmittedelectro
6、nicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-T(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheRegistrantwasrequiredtosubmitsuchfiles).YesNoIndicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-accel
7、eratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler,”“smallerreportingcompany,”and“emerginggrowthcompany”inRule12b-2oftheExchangeAct.Largeacceleratedfiler Acceleratedfiler Non-acceleratedfiler Smallerreportingcompany Emerginggro
8、wthcompany Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oft
9、heAct).YesNoBasedontheclosingpriceoftheregistrantsCommonStockonTheNasdaqGlobalMarketof$2.46onthelastbusinessdayoftheregistrantsmostrecentlycompletedsecondfiscalquarter,whichwasJune30,2019,theaggregatemarketvalueofitssharesheldbynon-affiliateswasapproximately$15.3million.SharesoftheregistrantsCommonS
10、tockheldbyeachexecutiveofficeranddirectorwereexcludedinthatsuchpersonsmaybedeemedtobeaffiliates.Thisdeterminationofaffiliatestatusisnotnecessarilyaconclusivedeterminationforotherpurposes.AsofMarch13,2020,therewereapproximately6,830,000sharesoftheregistrantsCommonStockoutstanding.MARIN SOFTWARE INCOR
11、PORATEDFORM 10-KFor the Fiscal Year Ended December 31,2019TABLE OF CONTENTS PagePART I.4Item1.Business4Item1A.RiskFactors8Item1B.UnresolvedStaffComments26Item2.Properties26Item3.LegalProceedings26Item4.MineSafetyDisclosures26PART II.27Item5.MarketforRegistrantsCommonEquity,RelatedStockholderMattersa
12、ndIssuerPurchasesofEquitySecurities27Item6.SelectedConsolidatedFinancialData28Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations30Item7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk44Item8.FinancialStatementsandSupplementaryData45Item9.ChangesinandDisagreementsw
13、ithAccountantsonAccountingandFinancialDisclosure45Item9A.ControlsandProcedures45Item9B.OtherInformation46PART III.47Item10.Directors,ExecutiveOfficersandCorporateGovernance47Item11.ExecutiveCompensation49Item12.SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters57Item
14、13.CertainRelationshipsandRelatedTransactions,andDirectorIndependence60Item14.PrincipalAccountantFeesandServices61PART IV.62Item15.ExhibitsandFinancialStatementSchedules62Item16.Form10-KSummary64Signatures 892SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThisAnnualReportonForm10-K,includingthe“Ma
15、nagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,”containsforward-lookingstatementsregardingfutureeventsandourfutureresults,including,amongotherthings,statementsregardingourbusiness,thecapabilitiesofourtechnologyplatformandupgradestotheplatform,productcapabilitiesandtheirbene
16、fitsforourcustomers,andexpectationsastoourfuturefinancialoperatingresultsandfinancialcondition,thataresubjecttothesafeharborscreatedundertheSecuritiesActof1933,asamended,andtheSecuritiesExchangeActof1934,asamended.AllstatementscontainedinthisAnnualReportonForm10-Kotherthanstatementsofhistoricalfact,
17、includingstatementsregardingourfutureresultsofoperationsandfinancialposition,ourbusinessstrategyandplans,andourobjectivesforfutureoperations,areforward-lookingstatementswithinthemeaningofthePrivateSecuritiesLitigationReformActof1995.Thewords“believe,”“may,”“potentially,”“will,”“estimate,”“continue,”
18、“anticipate,”“intend,”“could,”“should,”“would,”“project,”“plan,”“predict,”“expect,”“seek,”“likely,”andsimilarexpressionsareintendedtoidentifyforward-lookingstatements.Wehavebasedtheseforward-lookingstatementslargelyonourcurrentexpectations,estimatesandprojectionsaboutfutureeventsandtrendsthatwebelie
19、vemayaffectourfinancialcondition,resultsofoperations,businessstrategy,short-termandlong-termbusinessoperationsandobjectives,andfinancialneeds.ThesestatementsreflectourbeliefsandcertainassumptionsbaseduponinformationavailabletousatthetimewefilethisAnnualReportonForm10-Korthetimeofthedocumentsincorpor
20、atedbyreference.Suchforward-lookingstatementsareonlypredictions,whichmaydiffermateriallyfromactualresultsorfutureevents.Althoughwebelievethatourexpectations,estimatesandprojectionsreflectedintheforward-lookingstatementsarereasonable,wecannotbesurethattheywillbeachieved.Theseforward-lookingstatements
21、aresubjecttoanumberofrisks,uncertaintiesandassumptions,includingthosedescribedinthe“RiskFactors”section.Moreover,weoperateinaverycompetitiveandrapidlychangingenvironment.Newrisksemergefromtimetotime,includingtheriskofadverseeconomiceffectsoftheCOVID-19pandemic.Itisnotpossibleforourmanagementtopredic
22、tallrisks,norcanweassesstheimpactofallfactorsonourbusinessortheextenttowhichanyfactor,orcombinationoffactors,maycauseactualresultstodiffermateriallyfromthosecontainedinanyforward-lookingstatementswemaymake.Inlightoftheserisks,uncertaintiesandassumptions,thefutureeventsandtrendsdiscussedinthisreportm
23、aynotoccurandactualresultscoulddiffermateriallyandadverselyfromthoseanticipatedorimpliedintheforward-lookingstatements.Weundertakenoobligationtoreviseorpubliclyreleasetheresultsofanyrevisiontotheseforward-lookingstatements,exceptasrequiredbylaw.Giventheserisksanduncertainties,readersarecautionednott
24、oplaceunduerelianceonsuchforward-lookingstatements.Asusedinthisreport,theterms“Marin,”“Registrant,”“we,”“us,”“our,”andthe“Company”meanMarinSoftwareIncorporatedanditssubsidiariesunlessthecontextindicatesotherwise.Referencesto“fiscal2019”and“fiscal2018”refertotheyearendedDecember31,2019andtheyearended
25、December31,2018,respectively.3PART IITEM 1.BUSINESSWearealeadingproviderofdigitalmarketingsoftwareforsearch,socialandeCommerceadvertisingchannels,offeredasaunifiedsoftware-as-a-service,orSaaS,advertisingmanagementplatformforperformance-drivenadvertisersandagencies.Ourplatformisananalytics,workflowan
26、doptimizationsolutionformarketingprofessionals,allowingthemtoeffectivelymanagetheirdigitaladvertisingspend.Wemarketandselloursolutionstoadvertisersdirectlyandthroughleadingadvertisingagencies,andourcustomerscollectivelymanagebillionsofdollarsinadvertisingspendonourplatformgloballyacrossawiderangeofi
27、ndustries.Webelievethismakesusoneofthelargestprovidersofindependentadvertisingcloudsolutions.Oursoftwaresolutionisdesignedtohelpourcustomers:measuretheeffectivenessoftheiradvertisingcampaignsthroughourproprietaryreportingandanalyticscapabilities;manageandexecutecampaignsthroughourintuitiveuserinterf
28、aceandunderlyingtechnologythatstreamlinesandautomateskeyfunctions,suchasadvertisementcreationandbidding,acrossmultiplepublishersandchannels;andoptimizecampaignsacrossmultiplepublishersandchannelsbasedonmarketandbusinessdatatoachievedesiredrevenueoutcomesusingourpredictivebidmanagementtechnology.Adve
29、rtisersuseourplatformtocreate,targetandconvertpreciseaudiencesbasedonrecentbuyingsignalsfromuserssearch,socialandeCommerceinteractions.OurplatformisintegratedwithleadingpublisherssuchasAmazon,Baidu,Bing,Facebook,Google,Instagram,Pinterest,Twitter,VerizonMedia,Yahoo!JapanandYandex.Additionally,wehave
30、integrationswithmorethan50leadingwebanalyticsandadvertisement-servingsolutionsandkeyenterpriseapplications,enablingourcustomerstomoreaccuratelymeasurethereturnoninvestmentoftheirmarketingprograms.Oursoftwareplatformservesasanintegrationpointforadvertisingperformance,salesandrevenuedata,allowingadver
31、tiserstoconnectthedotsbetweenadvertisingspendandrevenueoutcomes.Throughanintuitiveinterface,weenableourcustomerstosimultaneouslyrunlarge-scaledigitaladvertisingcampaignsacrossmultiplepublishersandchannels,makingiteasyformarketerstocreate,publish,modifyandoptimizecampaigns.Ourpredictivebidmanagementa
32、ndoptimizationtechnologyalsoallowsadvertiserstoforecastoutcomesandoptimizecampaignsacrossmultiplepublishersandchannelstoachievetheirbusinessgoals.Ouroptimizationtechnologycanhelpadvertisersincreaseadvertisementspendonthosecampaigns,publishersandchannelsthatareperformingwellwhilereducinginvestmentint
33、hosethatarenot.Thiscategoryofsolutions,whichwerefertoascross-channelbidandcampaignoptimization,helpsbusinessesintelligentlyandefficientlymeasure,manage,andoptimizetheirdigitaladvertisingspendtoachievedesiredbusinessresults.HeadquarteredinSanFrancisco,wewereincorporatedintheStateofDelawarein2006.Them
34、ailingaddressofourheadquartersis123MissionStreet,27thFloor,SanFrancisco,California94105andourtelephonenumberatthatlocationis(415)399-2580.Offered SolutionsOurcloud-basedplatformhelpsourcustomerstomeasure,manageandoptimizetheirdigitalmarketingcampaignstoimproveperformanceoftheironlineadvertisingcampa
35、igns,realizeefficienciesandtimesavings,andmakebetterbusinessdecisions.Weoffersolutionsfordirectadvertisersofallsizesandtheagenciesthatrepresentthem,includingenterprise,mid-marketorsmallbusinesses.WeofferSaaSsolutionsandmanagedservicesforsearch,socialandeCommerce.Search,Social and eCommerceOurcurrent
36、productlineupconsistsofMarinOneandourtwolegacyproducts,MarinSearchandMarinSocial.WewillcontinuetomigratecustomerstoMarinOneoverthecourseof2020.MarinOne.Ournext-generationplatformthatbringssearch,socialandeCommerceadvertisingintoasingle-platform.MarinOnehelpsadvertisersmaximizeacustomerjourneythatspa
37、nsGoogle,FacebookandAmazonbycombiningthepowerofMarinSearchandMarinSocialwithnewchannelslikeAmazon,AppleSearchAdsandYouTube.Marin Search.Ouroriginalproductforlargeadvertisersandagencies,Marin Searchisdesignedtoprovidesearchadvertiserswiththepower,scaleandflexibilityrequiredtomanagelarge-scaleadvertis
38、ingcampaigns.Marin Social.HelpsadvertisersmanagetheirFacebook,InstagramandTwitteradvertisingspendatscale.4Ourplatformsarecomprisedofthefollowingmodules:Optimization.OurOptimizationmodulehelpsadvertisersmanagebidsacrosspublisherstomeetrevenuegoalsandidentifyopportunitiesforcampaignimprovements,whichw
39、ebelievecanimprovefinancialperformanceandefficiencies.Forecastingcapabilitieshelppredictcampaignperformance,whichsimplifiesthebudgetingprocessformarketingdepartments.Reporting and Analytics.OurReporting and Analyticsmoduleenablesadvertiserstoreportresultsatabusinesslevelandanalyzecross-channelperfor
40、mancetrends,whichwebelievecanleadtoimprovedvisibilityandgeneratesignificanttimesavings.Campaign Management.OurCampaign Managementmoduleprovidesthedigitaladvertiserwithaunifiedinterfacetocreate,manageandoptimizecampaignsacrossabroadrangeofpublishers,creatinggreaterefficienciesandincreasingflexibility
41、.Ourgoalistocomplementandenhancethetoolsofferedbythesepublisherstoprovidedigitaladvertiserstheabilitytoeasilymanagetheircampaignsonaglobalscale.Connect.OurConnectmoduleenablesadvertiserstoautomateandstreamlinethecaptureofrevenue,costandaudiencedatafromarangeofsourcessuchasadvertisementservers,analyt
42、icssystems,CRMplatforms,publishersandthird-partydatabases.Throughintegrationsacrossmultipledatasources,ourConnectmodulecanhelpadvertisershaveaholisticpictureoftheirdigitaladvertisingcampaigns.Display Perfect AudienceInNovember2019,wecompletedthedivestitureoftheassetsandliabilitiesrelatedtoourPerfect
43、Audiencebusiness,whichfocusedondisplayretargetingadvertisements,toSharpSpring,Inc.anunrelatedthirdpartyfornetproceedsof$4.3million,asfurtherdescribedinNote7oftheaccompanyingconsolidatedfinancialstatements.Technology&Supporting PlatformWedesignedourcloud-basedplatformtosupportlargeglobaladvertisers.T
44、hemajorityofoursoftwareiswritteninJava.Ourhardwareconsistsofindustry-standardserversandnetworkinfrastructure.OurstandardoperatingsystemisLinux.Oursoftwareplatformischaracter-set,language,currency,andtime-zoneindependent.Ourtechnologyplatformhasthefollowingkeybenefits:Scalability.Ourplatformisdesigne
45、dtohandlebillionsofadvertisingunitsacrossthousandsofadvertisers,whiledeliveringaresponsivebrowsingandeditingexperience.Ifthenumberofadvertisersandresultingcomputingandstoragerequirementschanges,wecanaddorremovehardwaretoourplatformtoaccommodatethedemand.Availability.Ourcustomersarehighlydependentont
46、heavailabilityofourplatform,whichisdesignedtobeavailable24x7,365daysayear.Weoperateourownhardwareandusethird-partydatacentersthatofferserverredundancy,back-upcommunicationsandpowerandphysicalsecurity.Security.Ourplatformmanagesalargequantityofcustomerdata.Weemploytechnologies,policiesandproceduresto
47、protectcustomerdata.Ourprimarythird-partydatacenterhasSSAENo.18,Type2SOC1,SOC2andSOC3attestationsandisISO27001certified.Wearecontinuouslyupgradingoursoftwareplatforminamannerthatwebelievewillcost-effectivelyextendthescalability,speed,resiliencyandavailabilityofourservicesandfacilitateourabilitytoadd
48、newfeaturestoourproducts.Strategic AgreementsWehaveenteredintolong-termstrategicagreementswithcertainleadingsearchpublishers.Underthesestrategicagreements,wereceiveconsiderationbasedonapercentageofthesearchadvertisingspendthatourcustomersmanageonourplatform.InDecember2018,weenteredintosuchanagreemen
49、twithGoogle,underwhichwereceiverevenuesharepaymentsbasedonourcustomerssearchadvertisingspendonGoogleandcertainothereligiblesearchengines.Inexchange,wewillreinvestapercentageoftheserevenuesharepaymentstodriveourtechnologyplatforminnovation.ThisagreementwentintoeffectonOctober1,2018,andisscheduledtote
50、rminateonSeptember30,2021,althoughGooglemayterminatetheagreementincertaincircumstances.ThisagreementandtherelatedrevenuerecognitionconsiderationsaredescribedmorefullyinNote3oftheaccompanyingconsolidatedfinancialstatements.CustomersWemarketandsellourtechnologysolutionstoadvertisersdirectlyandthrougha
51、dvertisingagenciesthatuseourplatformonbehalfoftheircustomers.Advertisersthatweservethroughourrelationshipswithagenciesgenerallyrepresentedapproximatelyone-5thirdtoone-quarterofouroverallrevenues.Wealsogeneraterevenuesfromleadingpublishersthroughourlong-termstrategicagreements.CompetitionThedigitalad
52、vertisingcloudmarketishighlycompetitive,fragmented,andsubjecttochangesinbothtechnologyandcustomerbehavior.Wefacesignificantcompetitiontodayandexpectcompetitiontointensifyinthefuture.Tomaintainandimproveourcompetitiveposition,wemustkeeppacewiththeevolvingneedsofourcustomersandcontinuetodevelopandintr
53、oducenewmodules,featuresandservicesinatimelyandefficientmanner.Wecurrentlycompetewithlarge,well-establishedcompanies,suchasAdobeSystemsIncorporated,Facebook,Inc.,GoogleInc.(throughitswhollyownedsubsidiaryDoubleClick)andKenshooLtd.Wealsocompetewithin-houseproprietarytools,toolsfrompublishersandcustom
54、solutions,includingspreadsheets.Webelievetheprincipalcompetitivefactorsinourmarketincludethefollowing:solutionquality,breadth,stability,flexibilityandfunctionality;tangibleplatformbenefits;levelofcustomersatisfactionandourabilitytorespondtocustomerneedsrapidly;breadthandqualityofadvertiserandagencyr
55、elationships;abilitytoinnovateanddevelopneworimprovedproductsandfeatureswhilemaintainingplatformspeedandstability;abilitytorespondtochangesinpublishersapplicationprogramminginterfaces;brandawarenessandreputation;andsizeofcustomerbase.Apartfromcross-channelplatformcompetitors,wealsocompetewithchannel
56、solutionsinthesocialadvertisingmarket.Competitorsinthesocialadvertisingmarketincludecompaniessuchas4CInsights,Inc.,Nanigans,Inc.,S(throughitswhollyownedsubsidiaryS)andSmartly.ioInc.Ourabilitytoremaincompetitivewilllargelydependonourongoingperformanceintheareasofthequality,functionalityandbreadthofou
57、rsolutionandtheavailabilityandknowledgeabilityofourcustomersupport.Sales and MarketingWeselloursolutionsdirectlytoadvertisersandagenciesinawiderangeofindustriesthroughourglobalsalesteam.Oursalescyclecanvarysubstantiallybyadvertiserandagency,butcantakebetweenthreeandninemonths.Wehave14accountdirector
58、sorganizedbygeographyandmarketsegments.Thesameaccountdirectorsareresponsibleforlong-termcustomersatisfactionandretention,renewal,supportanddrivinganincreaseinthevolumeofmediamanagedbycustomersonourplatform.Ourmarketingteamisfocusedondrivingawarenessanddemandgenerationacrossmajormarkets.Thisteamprovi
59、desthoughtleadershipintheformofwhitepapers,benchmarkingreports,bylines,presentingatindustryconferencesandspeakingtothepress.Inaddition,theyareresponsibleforthecreationoffieldenablementassetssuchascasestudies,blogpostsandcorporateandproductcollateral.Research and DevelopmentOurresearchanddevelopmentt
60、eamisresponsibleforthedesign,development,andmaintenanceofourplatform.Ourresearchanddevelopmentprocessemphasizesfrequent,iterativeandincrementaldevelopmentcycles.Withinourresearchanddevelopmentorganizations,wehaveseveralprojectteamsthatfocusonplatformandfeaturedevelopmentforouradvertisingcloudsolutio
61、ns.Eachoftheseprojectteamsincludesengineers,qualityengineersandproductmanagers,asneeded,responsiblefortheinitialandongoingdevelopmentfortheirprojects.Government RegulationWearesubjecttoanumberoflawsandregulationsthataffectcompaniesconductingbusinessintheadvertisingandSaaSindustriesandontheInternet,m
62、anyofwhicharestillevolvingandcouldbeinterpretedinwaysthatcouldharmourbusiness.ThemannerinwhichexistinglawsandregulationswillbeappliedtotheSaaSandadvertisingindustriesandtheInternetingeneralandhowtheywillrelatetoourbusinessinparticular,areoftenunclear.Forexample,weoftencannotbecertainhowexistinglawsw
63、illapplyintheeCommerceandonlinecontext,includingwithrespecttosuchtopicsasprivacy,advertising,pricing,taxation,contentregulation,qualityofproductsandservicesandintellectualpropertyownershipandinfringement.6NumerouslawsandregulatoryschemeshavebeenadoptedatthenationalandstatelevelintheUnitedStates,andi
64、nsomecasesinternationally,thathaveadirectimpactonourbusinessandoperations.Forexample,onJanuary1,2020,theCaliforniaConsumerPrivacyActwentintoeffect,providingconsumerstherighttoknowwhatpersonaldatacompaniescollect,howitisused,andtherighttoaccess,deleteandoptofsaleoftheirpersonalinformationtothirdparti
65、es.Additionally,inMay2019,theEuropeanUnionsGeneralDataProtectionRegulation,orGDPR,governingdataprivacyreplacedtheDataProtectionDirectiveandestablishednewrequirementsapplicabletothehandlingofpersonaldataandimposespenaltiesfornon-complianceofuptothegreaterof20,000,000or4%ofworldwiderevenue.EmployeesAs
66、ofDecember31,2019,wehadatotalof229full-timeandpart-timeemployees.Intellectual PropertyOurintellectualpropertyrightsareakeycomponentofoursuccess.Werelyonacombinationofpatent,trademark,copyright,unfaircompetitionandtradesecretlaws,aswellasconfidentialityproceduresandcontractualrestrictions,toestablish
67、,maintainandprotectourproprietaryrights.AsofDecember31,2019,wehadfourissuedpatentsandtwopatentapplicationspendingintheUnitedStates.Weownandusetrademarksonorinconnectionwithourproductsandservices,includingtworegisteredtrademarksintheUnitedStates,Canada,theEuropeanUnion,Australia,China,JapanandRussia;
68、oneregisteredmarkinSouthKoreaandSingapore;andunregisteredcommonlawmarksandpendingtrademarkapplicationsintheUnitedStates,CanadaandtheEuropeanUnion.WehavealsoregisterednumerousInternetdomainnames.Available InformationThemailingaddressofourheadquartersis123MissionStreet,27thFloor,SanFrancisco,Californi
69、a94105andourtelephonenumberatthatlocationis(415)399-2580.O.ThroughalinkontheInvestorCentersectionofourwebsite,wemakeavailablethefollowingfilingsassoonasreasonablypracticableaftertheyareelectronicallyfiledwithorfurnishedtotheSecuritiesandExchangeCommission,ortheSEC:ourAnnualReportonForm10-K,Quarterly
70、ReportsonForm10-Q,CurrentReportsonForm8-K,andanyamendmentstothosereportsfiledorfurnishedpursuanttoSection13(a)or15(d)oftheSecuritiesExchangeActof1934,asamended.Allsuchfilingsarefreeofcharge.TheinformationpostedtoourwebsiteisnotincorporatedintothisAnnualReportonForm10-K.Thepublicmayreadandcopyanymate
71、rialsthatwefilewiththeSECatitswebsiteatwww.sec.gov.Thecontentsofthewebsitesreferredtoabovearenotincorporatedintothisfiling.Further,ourreferencestotheURLsforthesewebsitesareintendedtobeinactivetextualreferencesonly.7ITEM 1A.RISK FACTORSOur operations and financial results are subject to various risks
72、 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 BusinessWe have a history of losses and we may not achieve or sustain profitability in the
73、future.Wehaveincurredsignificantlossesineachfiscalyearsinceourincorporationin2006.Weexperiencednetlossesof$12.4millionand$41.2millionfor2019and2018,respectively.AsofDecember31,2019,wehadanaccumulateddeficitof$277.1million.Thelossesandaccumulateddeficitwereduelargelytothesubstantialinvestmentswemadet
74、ogrowourbusinessandacquirecustomers.Ourcostofrevenuesandoperatingexpensescouldincreaseinthefutureduetoinvestmentstogrowourbusiness,acquirecustomersanddevelopourplatformandnewfunctionality.Theseeffortsmayprovemoreexpensivethanwecurrentlyanticipate,andwemaynotsucceedinincreasingourrevenuessufficiently
75、tooffsetthesehigherexpenses.Manyofoureffortstogeneraterevenuesfromourbusinessarenewandunproven,andanyfailuretoincreaseourrevenuesorgeneraterevenuesfromnewsolutionsortomaintainorincreaserevenuesfromexistingproductsandcustomerscouldpreventusfromattainingorincreasingprofitability.Ourrevenueshavedecreas
76、edinrecentperiods,decliningfrom$58.6millionin2018to$49.0millionin2019.Wedonotexpecttobeprofitablein2020onthebasisofgenerallyacceptedaccountingprinciplesintheUnitedStates,orGAAP,andwecannotbecertainthatwewillbeabletoattainprofitabilityonaquarterlyorannualbasis,orifwedo,thatwewillsustainprofitability.
77、We expect to continue to incur losses and experience negative cash flows,and we will need to reduce operating expenses,sell additional securities,sell assets orborrow additional funds to continue as a going concern.Wecurrentlyoperateatalossandweanticipatethatwewillcontinuetohaveoperatinglossesinthen
78、earterm.Ourbusinesshasnotgeneratedenoughcashflowtofundoursalesandmarketingactivities,researchanddevelopmentinitiativesandotherbusinessactivities.Weanticipatethatincreasingourmarketshareforourcurrentservicesthroughsalesandmarketingefforts,continuingdevelopmentofnewplatformfeaturesanddeliveringefficie
79、ntservicetocustomerswillrequireadditionalcapitalandexpenditures.Ifwecontinuetoburncashwithoutacorrespondingincreasetorevenue,wewillneedtoreduceoperatingexpensesthroughsuccessfulcost-cuttingmeasuresorseektoselladditionalsecurities,selladditionalassets,orborrowadditionalfundstocontinueasagoingconcern.
80、Thereisnoguaranteethatwewillbeabletosuccessfullyreduceouroperatingexpensesthroughsuccessfulcost-cuttingmeasures.Further,thereisnoguaranteethatwewillbeabletoissueadditionalsecuritiesorsellassetsinfutureperiodsorborrowadditionalfundsoncommerciallyreasonableterms,oratall,inordertomeetourcashneeds.Ourab
81、ilitytoraiseadditionalfinancingissubjecttoanumberofuncertainties,including,butnotlimitedto,themarketdemandforourstock,ourfinancialperformanceandoutlook,themarketdemandforproductsandservices,negativeeconomicdevelopments,theeconomiceffectsoftheCOVID-19pandemicandadversemarketconditions.Accordingly,wep
82、lantoreduceourexpensesin2020byapproximately30%,whichwillbeachievedthroughoperatingandothercostsavings,includingareductioninpersonnelcosts.Ourabilitytocontinueasagoingconcernisdependentuponourabilitytosuccessfullyimplementtheplansdescribedabove.We may require additional capital to support business gr
83、owth,and this capital might not be available on acceptable terms,if at all.Weintendtocontinuetomakeinvestmentstosupportourbusinessgrowthandmayrequireadditionalfundstorespondtobusinesschallenges,includingtheneedtodevelopnewfeaturesorenhanceourexistingplatform,continuethedeploymentofMarinOne,improveou
84、roperatinginfrastructureoracquirecomplementarybusinessesandtechnologies.Accordingly,wemayneedtoengageinequityordebtfinancingstosecureadditionalfunds.Ifweraiseadditionalfundsthroughfurtherissuancesofequityorconvertibledebtsecurities,suchasthroughourequitydistributionagreementwithJMPSecuritiesLLC,orJM
85、PSecurities,whichprovidesforthepotentialissuanceandsaleofcommonstockwithanaggregateofferingpriceofupto$13.0millionthroughan“at-the-market”offering,ourexistingstockholderscouldsuffersignificantdilution,andanynewequitysecuritiesweissuecouldhaverights,preferencesandprivilegessuperiortothoseofholdersofo
86、urcommonstock.FortheyearendedDecember31,2019,wesold658thousandsharesofourcommonstockundertheequitydistributionagreement,andreceivedproceedsof$1.6million,netofofferingcostsof$0.2million,ataweighted-averagesalespriceof$2.82pershare.Anydebtfinancingsecuredbyusinthefuturecouldinvolverestrictivecovenants
87、relatingtoourcapitalraisingactivitiesandotherfinancialandoperationalmatters,whichmaymakeitmoredifficultforustoobtainadditionalcapitalandtopursuebusinessopportunities,includingpotentialacquisitions.Inaddition,wemaynotbeabletoobtainadditionalfinancingontermsfavorabletous,ifatall.Ifweareunabletoobtaina
88、dequatefinancingorfinancingontermssatisfactorytous,whenwerequireit,ourabilitytocontinuetosupportourbusinessgrowthandtorespondtobusinesschallengescouldbesignificantlyimpaired.8We operate in a rapidly developing and changing industry,which makes it difficult to evaluate our current business and future
89、 prospects.Wehaveencounteredandwillcontinuetoencounterrisksanddifficultiesfrequentlyexperiencedbycompaniesinrapidlydevelopingandchangingindustries,includingchallengesinforecastingaccuracy,hiringandretainingqualifiedemployees,determiningappropriateinvestmentsofourlimitedresources,marketacceptanceofou
90、rexistingandfuturesolutions,effectivelyintegratingacquiredproducts,competitionfromestablishedcompanieswithgreaterfinancialandtechnicalresources,acquiringandretainingcustomers,managingcustomerdeployments,makingimprovementstoourexistingproductsanddevelopingnewsolutions.Ourcurrentoperationsinfrastructu
91、remayrequirechangesinorderforustoachieveprofitabilityandscaleouroperationsefficiently.Forexample,wemayneedtoautomateportionsofoursolutiontodecreaseourcosts,ensureourmarketinginfrastructureisdesignedtodrivehighlyqualifiedleadscosteffectivelyandimplementchangesinoursalesmodeltoimprovethepredictability
92、ofoursalesandreduceoursalescycle.Inaddition,fromtimetotime,wemayneedtomakeadditionalinvestmentsinproductdevelopmenttoaddressmarketdemands,whichmayincreaseouroverallexpensesandreduceourabilitytoachieveprofitability.Ifwefailtoimplementthesechangesinatimelymannerorareunabletoimplementthemduetofactorsbe
93、yondourcontrol,ourbusinessmaysuffer,ourrevenuemaydeclineandwemaynotbeabletoachievegrowthorprofitability.Wecannotbeassuredthatwewillbesuccessfulinaddressingtheseandotherchallengeswemayfaceinthefuture.Our usage-based pricing model makes it difficult to forecast revenues from our current customers and
94、future prospects.Weprimarilyhaveausage-basedpricingmodelinwhichmostofourfeesarecalculatedasapercentageofcustomersadvertisingspendmanagedonourplatform.Thispricingmodelmakesitdifficulttoaccuratelyforecastrevenuesbecauseourcustomersadvertisingspendmanagedbyourplatformmayvaryfrommonthtomonthbasedontheva
95、rietyofindustriesinwhichouradvertisersoperate,theseasonalityofthoseindustriesandfluctuationsinourcustomersadvertisingbudgetsorotherfactors.Themarketfordigitaladvertisingmaybeadverselyaffectedbyadversemarketconditions,includingtheeconomiceffectsoftheCOVID-19pandemic,whichmayleadadvertiserstoreducethe
96、amountoftheirdigitaladvertisingspend.Oursubscriptioncontractswithourdirectadvertisercustomersgenerallycontainaminimummonthlyplatformfee,whichisgenerallygreaterthanone-halfofourestimatedmonthlyrevenuesfromthecustomeratthetimethecontractissigned,and,asaresult,theminimummonthlyplatformfeemaynotbeagoodi
97、ndicatorofourrevenuesfromthatcustomer.Inaddition,advertisersthatuseourplatformthroughouragencycustomerstypicallydonothaveaminimummonthlyspendamountoraminimumtermduringwhichtheymustuseourplatform,andasaresult,ourabilitytoforecastrevenuesfromtheseadvertisersisdifficult.Ifweincorrectlyforecastrevenuesf
98、ortheseadvertisersandtheamountofrevenueislessthanprojectionsweprovidetoinvestors,thepriceofourcommonstockcoulddeclinesubstantially.Additionally,ifweoverestimateusage,wemayincuradditionalexpensesinaddinginfrastructure,withoutacommensurateincreaseinrevenues,whichwouldharmourgrossmarginsandotheroperati
99、ngresults.We must develop and introduce enhancements and new features that achieve market acceptance or that keep pace with technological developments to remaincompetitive in our evolving industry.Weoperateinadynamicmarketcharacterizedbyrapidlychangingtechnologiesandindustryandlegalstandards.Theintr
100、oductionofnewadvertisingplatformsolutionsbyourcompetitors,themarketacceptanceofsolutionsbasedonneworalternativetechnologies,ortheemergenceofnewindustrystandardscouldrenderourplatformobsolete.Ourabilitytocompetesuccessfully,attractnewcustomersandincreaserevenuesfromexistingcustomersdependsinlargepart
101、onourabilitytoenhanceandimproveourexistingcross-channel,cross-device,enterprisemarketingsoftwareplatformandtocontinuallyintroduceoracquirenewfeaturesthatareindemandbythemarketweserve.Wealsomustupdateoursoftwaretoreflectchangesinpublishersapplicationprogramminginterfaces,orAPIs,andtermsofuse.Weareint
102、heprocessofdeployingournewplatform,MarinOne,andthesuccessofthisprojectoranyotherenhancementornewsolutiondependsonseveralfactors,includingtimelycompletion,adequatequalitytesting,effectivemigrationofexistingcustomerswithminimaldisruptionandappropriateintroductionandmarketacceptance.Anynewplatformorfea
103、turethatwedeveloporacquiremaynotbeintroducedinatimelymanner,maycontaindefects,maybemorecostlytocompetethanweanticipateormaynotachievethebroadmarketacceptancenecessarytogeneratesignificantrevenues.Ifweareunabletocompletetheupgradetooursoftwareplatforminfrastructureeffectivelyorinatimelymanner,ortoant
104、icipateortimelyandsuccessfullydeveloporacquirenewofferingsorfeaturesorenhanceourexistingplatformtomeetcustomerrequirements,ourbusinessandoperatingresultswillbeadverselyaffected.If the market for digital advertising slows or declines,our business,growth prospects,and financial condition would be adve
105、rsely affected.Thefuturegrowthofourbusinesscouldbeconstrainedbythelevelofacceptanceandexpansionofemergingcloud-basedadvertisingchannels,aswellasthecontinueduseandgrowthofexistingchannels,suchassearchandsocialadvertising.Evenifthesechannelsbecomewidelyadopted,advertisersandagenciesmaynotmakesignifica
106、ntinvestmentsinsolutionssuchasoursthathelpthemmanagetheirdigitaladvertisingspendacrosspublisherplatformsandadvertisingchannels.Itisdifficulttopredictcustomeradoptionrates,customerdemandforourplatform,thefuturegrowthrateandsizeoftheadvertisingcloudsolutionsmarketortheentryofcompetitivesolutions.Thema
107、rketfordigitaladvertisingmaybeadverselyaffectedbyadversemarketconditions,includingtheeconomiceffectsoftheCOVID-19pandemic,whichmayleadadvertiserstoreducetheamountoftheirdigitaladvertisingspend.9Thecontinuedexpansionofthemarketforadvertisingcloudsolutionsdependsonanumberoffactors,includingthecontinue
108、dgrowthofthecloud-basedadvertisingmarket,thegrowthofsocialandmobileasadvertisingchannelsandthecost,performanceandperceivedvalueassociatedwithadvertisingcloudsolutions,aswellastheabilityofcloudcomputingcompaniestoaddresssecurityandprivacyconcerns.Further,thecloudcomputingmarketislessdevelopedinmanyju
109、risdictionsoutsidetheUnitedStates.Ifweorothercloudcomputingprovidersexperiencesecurityincidents,lossofcustomerdata,disruptionsindeliveryorotherproblems,themarketforcloudcomputingasawhole,includingourapplications,maybenegativelyaffected.If we are unable to maintain our relationships with,and access t
110、o,publishers,advertising exchange platforms and other platforms that aggregate the supply ofadvertising inventory,our business will suffer.Wecurrentlydependonrelationshipswithvariouspublishers,includingAmazon,Apple,Baidu,Bing,Facebook,Google,Instagram,Pinterest,Twitter,VerizonMediaandYahoo!Japan.Our
111、subscriptionservicesinterfacewiththesepublishersplatformsthroughAPIs,suchastheGoogleAPIorFacebookAPI.WearesubjecttotherespectiveplatformsstandardAPItermsandconditions,whichgoverntheuseanddistributionofdatafromtheseplatforms.OurbusinesssignificantlydependsonhavingaccesstotheseAPIs,particularlytheGoog
112、leAPI,whichthesubstantialmajorityofourcustomersuse,oncommerciallyreasonabletermsandourbusinesswouldbeharmedifanyofthesepublishers,advertisingexchangesoraggregatorsofadvertisinginventorydiscontinuesorlimitsaccesstotheirplatforms,modifiestheirtermsofuseorotherpoliciesorplaceadditionalrestrictionsonusa
113、sAPIusers,orchargesAPIlicensefeesforAPIaccess.Moreover,someofthesepublishers,suchasGoogle,marketcompetitivesolutionsfortheirplatforms.BecausetheadvertisinginventorysupplierscontroltheirAPIs,theymaydevelopcompetitiveofferingsthatarenotsubjecttothelimitsimposedonusthroughtheAPItermsandconditions.Curre
114、ntly,restrictionsintheseAPIagreementslimitourabilitytoimplementcertainfunctionality,requireustoimplementfunctionalityinaparticularmannerorrequireustoimplementcertainrequiredminimumfunctionality,causingustodevotedevelopmentresourcestoimplementcertainfunctionalitythatwewouldnototherwiseincludeinoursub
115、scriptionservicesandtoincurcostsforpersonneltoprovideservicestoimplementfunctionalitythatweareprohibitedfromautomating.Publishers,advertisingexchangesandadvertisinginventoryaggregatorsupdatetheirAPItermsofusefromtimetotimeandnewversionsofthesetermscouldimposeadditionalrestrictionsonus.Inaddition,pub
116、lishers,advertisingexchangesandadvertisinginventoryaggregatorscontinuallyupdatetheirAPIsandmayupdateormodifyfunctionality,whichrequiresustomodifyoursoftwaretoaccommodatethesechangesandtodevotetechnicalresourcesandpersonneltotheseeffortswhichcouldotherwisebeusedtofocusonotherpriorities.Anyoftheseoutc
117、omescouldcausedemandforourproductstodecrease,ourresearchanddevelopmentcoststoincrease,andourresultsofoperationsandfinancialconditiontobeharmed.Wehavealsoenteredintolong-termstrategicagreementswithcertainleadingsearchpublishers.Underthesestrategicagreements,wereceiveconsiderationbasedonapercentageoft
118、hesearchadvertisingspendthatourcustomersmanageonourplatform.Themajorityofourstrategicagreementrevenueisconcentratedinonerevenueshareagreement,executedwithGoogleinDecember2018,withaneffectivedateofOctober1,2018(the“GoogleRevenueShareAgreement”).UndertheGoogleRevenueShareAgreement,wereceivebothfixedan
119、dvariablerevenuesharepaymentsbasedonapercentageofthesearchadvertisingspendthatismanagedthroughourplatform.FortheyearsendedDecember31,2019and2018,werecognizedrevenuesof$12.2millionand$2.9million,respectively,fromtheGoogleRevenueShareAgreement.TheGoogleRevenueShareAgreementhasathree-yeartermandissched
120、uledtoterminateonSeptember30,2021,althoughGooglemayterminatetheGoogleRevenueShareAgreementearlyincertaincircumstances.OurresultsofoperationswouldbeadverselyaffectediftheGoogleRevenueShareAgreementisterminated,eitheruponitsscheduledterminationorotherwise,oradverselymodified.Our growth depends in part
121、 on the success of our relationships with advertising agencies and our strategic relationships with third parties.Ourfuturegrowthwilldepend,inpart,onourabilitytoenterintosuccessfulrelationshipswithadvertisingagencies.Identifyingagenciesandnegotiatinganddocumentingrelationshipswiththemrequiressignifi
122、canttimeandresources.Theserelationshipsmaynotresultinadditionalcustomersorenableustogeneratesignificantrevenues.Ourcontractsfortheserelationshipsaretypicallynon-exclusiveanddonotprohibittheagencyfromworkingwithourcompetitorsorfromofferingcompetingservices.Frequently,theseagenciesdoinfactworkwithourc
123、ompetitorsandcompetewithus.Inaddition,weoftenworkwith,orseektoworkwith,high-profilebrandsdirectly.Thismaynotbepossiblewhere,forexample,thosebrandsobtainadvertisingservicesexclusivelyorprimarilyfromadvertisingagencies.Wegenerallybillagenciesfortheircustomersuseofourplatform,butinmostcasestheagencyscu
124、stomerhasnodirectcontractualcommitmenttomakepaymenttous.Furthermore,someoftheseagencycontractsincludeprovisionswherebytheagencyisnotliableformakingpaymenttousforoursubscriptionservicesiftheagencydoesnotreceiveacorrespondingpaymentfromitsclientonwhosebehalfthesubscriptionserviceswererendered.Thesepro
125、visionsmayresultinlongercollectionsperiodsorourinabilitytocollectpaymentforsomeofoursubscriptionservices.Ifweareunsuccessfulinestablishingormaintainingourrelationshipswiththeseagenciesoncommerciallyreasonableterms,oriftheserelationshipsarenotprofitableforus,ourabilitytocompeteinthemarketplaceortogro
126、wourrevenuescouldbeimpairedandouroperatingresultswouldsuffer.Ourfuturegrowthwillalsodepend,inpart,onourabilitytoenterintoandretainsuccessfulstrategicrelationshipswiththirdparties.Forexample,weareseekingtoestablishrelationshipswiththirdpartiestodevelopintegrationswithcomplementary10technologyandconte
127、nt.Theserelationshipsmaynotresultinadditionalcustomersorenableustogeneratesignificantrevenues.Forexample,weenteredintotheGoogleRevenueShareAgreementwherewereceivebothfixedandvariablerevenuesharepaymentsbasedonapercentageofthesearchadvertisingspendthatismanagedthroughourplatform.Identifyingpartnersan
128、dnegotiatinganddocumentingrelationshipswiththemrequiresignificanttimeandresources.Ourcontractsfortheserelationshipsaretypicallynon-exclusiveanddonotprohibittheotherpartyfromworkingwithourcompetitorsorfromofferingcompetingservices.Ifweareunsuccessfulinestablishingormaintainingourrelationshipswiththes
129、ethirdparties,ourabilitytocompeteinthemarketplaceortogrowourrevenuescouldbeimpairedandouroperatingresultswouldsuffer.We may not be able to compete successfully against current and future competitors.Theoverallmarketforadvertisingcloudsolutionsisrapidlyevolving,highlycompetitive,complex,fragmented,an
130、dsubjecttochangingtechnologyandshiftingcustomerneeds.Wefacesignificantcompetitioninthismarketandweexpectcompetitiontointensifyinthefuture.Wecurrentlycompetewithlarge,well-establishedcompanies,suchasAdobeSystemsIncorporatedandGoogleInc.,andprivatelyheldcompanies,suchasKenshooLtd.Wealsocompetewithchan
131、nel-specificofferings,in-houseproprietarytools,toolsfrompublishersandcustomsolutions,includingspreadsheets.Increasedcompetitionmayresultinreducedpricingforoursolutions,longersalescyclesoradecreaseofourmarketshare,anyofwhichcouldnegativelyaffectourrevenuesandfutureoperatingresultsandourabilitytogrowo
132、urbusiness.Anumberofcompetitivefactorscouldcauseustolosepotentialsalesortoselloursolutionsatlowerpricesoratreducedmargins,including,amongothers:publishersgenerallyoffertheirtoolsforfree,oratareducedprice,astheirprimarycompensationisviathesaleofadvertisingontheirownorsyndicatedwebsites;someofourcompe
133、titors,suchasAdobe,FacebookandGoogle,havegreaterfinancial,marketingandtechnicalresourcesthanwedo,allowingthemtoleveragealargerinstalledcustomerbase,adoptmoreaggressivepricingpolicies,anddevotegreaterresourcestothedevelopment,promotionandsaleoftheirproductsandservicesthanwecan;channel-specificcompeti
134、tors,suchasKenshooLtd.,Nanigans,Inc.andS(throughitswhollyownedsubsidiaryS),maydevotegreaterresourcestothedevelopment,promotionandsaleoftheirchannel-specificproductsandservicesthanwecan;companiesmayenterourmarketbyexpandingtheirplatformsoracquiringacompetitor;andpotentialcustomersmaychoosetodevelopor
135、continuetouseinternalsolutionsratherthanpayingforoursolutionsormaychoosetouseacompetitorssolutionthathasdifferentoradditionaltechnicalcapabilities.Wecannotassureyouthatwewillbeabletocompetesuccessfullyagainstcurrentandfuturecompetitors.Ifwecannotcompetesuccessfully,ourbusiness,resultsofoperationsand
136、financialconditioncouldbenegativelyimpacted.Our business depends on our customers continued willingness to manage advertising spend on our platform.Inorderforustoimproveouroperatingresults,itisimportantthatourcustomerscontinuetomanagetheiradvertisingspendonourplatform,increasetheirusageandalsopurcha
137、seadditionalsolutionsfromus.Inthecaseofourdirectadvertisercustomers,weofferoursolutionsprimarilythroughsubscriptioncontractsandgenerallybillcustomersovertherelatedsubscriptionperiod,whichisgenerallyoneyearorlonger.Duringthetermoftheircontracts,ourdirectadvertisercustomersgenerallyhavenoobligationtom
138、aintainorincreasetheiradvertisingspendonourplatformbeyondaspecifiedminimummonthlyplatformfee,whichistypicallysetatthetimethecontractissignedandisgenerallygreaterthanhalfofthemonthlyamountweanticipatethecustomerwillspend.Ourdirectadvertisercustomersgenerallyhavenorenewalobligationaftertheinitialorthe
139、n-currentrenewalsubscriptionperiodexpires,andevenifcustomersrenewcontracts,theymaydecreasetheleveloftheirdigitaladvertisingspendmanagedthroughourplatform,resultinginlowerrevenuesfromthatcustomer.Advertisersthatweservethroughourarrangementswithouradvertisingagenciesgenerallydonothaveanycontractualcom
140、mitmenttouseourplatform.Ourcustomersusagemaydeclineorfluctuateasaresultofanumberoffactors,including,butnotlimitedto,theirsatisfactionwithourplatformandourcustomersupport,thefrequencyandseverityofoutages,thepricingofour,orcompeting,solutions,theeffectsofglobaleconomicconditionsandreductionsinspending
141、levelsorchangesinourcustomersstrategiesregardingdigitaladvertising.Wemaynotbeabletoaccuratelypredictfutureusagetrends.Ifourcustomersrenewonlessfavorabletermsorreducetheiradvertisingspendonourplatform,ourrevenuesmaygrowmoreslowlythanexpectedordecline.We incur upfront costs associated with onboarding
142、advertisers to our platform and may not recoup our investment if we do not maintain the advertiserrelationship over time.Ouroperatingresultsmaybenegativelyaffectedifweareunabletorecoupourupfrontcostsforonboardingnewadvertiserstoourplatform.Upfrontcostswhenaddingnewadvertisersgenerallyincludesalescom
143、missionsforoursalesforce,expensesassociated11withenteringcustomerdataintoourplatformandotherimplementation-relatedcosts.Becauseourcustomers,includingdirectadvertisersandagencies,arebilledoverthetermofthecontract,ifnewcustomerssigncontractswithshortinitialsubscriptionperiodsanddonotrenewtheirsubscrip
144、tions,orotherwisedonotcontinuetouseourplatformtoalevelthatgeneratesrevenuesinexcessofourupfrontexpenses,ouroperatingresultscouldbenegativelyimpacted.Incasesinwhichtheimplementationprocessisparticularlycomplex,therevenuesresultingfromthecustomerunderourcontractmaynotcovertheupfrontinvestment;therefor
145、e,ifasignificantnumberofthesecustomersdonotrenewtheircontracts,itcouldnegativelyaffectouroperatingresults.Inaddition,becausewecapitalizecertainupfrontcoststoobtainandfulfillcontractsunderauthoritativeaccountingguidance,wecouldberequiredtorecordimpairmentexpensefortheseupfrontcoststhatarenotcoveredby
146、theunderlyingrevenues.Because we generally bill our customers over the term of the contract,near term decline in new or renewed subscriptions may not be reflected immediately inour operating results.Mostofourrevenuesineachquarterarederivedfromcontractsenteredintowithourcustomersduringpreviousquarter
147、s.Consequently,adeclineinneworrenewedsubscriptionsinanyonequartermaynotbefullyreflectedinourrevenuesforthatquarter.Suchdeclines,however,wouldnegativelyaffectourrevenuesinfutureperiodsandtheeffectofsignificantdownturnsinsalesandmarketacceptanceofoursolutions,andpotentialchangesinourrateofrenewalsorre
148、newalterms,maynotbefullyreflectedinourresultsofoperationsuntilfutureperiods.Inaddition,wemaybeunabletoadjustourcoststructurerapidly,oratall,totakeaccountofreducedrevenues.Oursubscriptionmodelalsomakesitdifficultforustorapidlyincreaseourtotalrevenuesthroughadditionalsalesinanyperiod,asrevenuesfromnew
149、customersmustbeearnedovertheapplicablesubscriptiontermbasedonthevalueoftheirmonthlyadvertisingspend.We have been dependent on our customers use of search advertising.Any decrease in the use of search advertising or our inability to further penetrate socialand eCommerce advertising channels would har
150、m our business,growth prospects,operating results and financial condition.Historically,ourcustomershaveprimarilyusedoursolutionsformanagingtheirsearchadvertising,includingmobilesearchadvertising,andthesubstantialmajorityofourrevenueisderivedfromadvertisersthatuseourplatformtomanagetheirsearchadverti
151、sing.Weexpectthatsearchadvertisingwillcontinuetobetheprimarychannelusedbyourcustomersfortheforeseeablefuture.Shouldourcustomersloseconfidenceinthevalueoreffectivenessofsearchadvertising,orifsearchadvertisinggrowthmoderatesordeclines,thedemandforoursolutionsmaydecline,anditmaynegativelyimpactourreven
152、ues.Inaddition,ourfailuretoachievemarketacceptanceofoursolutionforthemanagementofsocialandeCommerceadvertisingspendwouldharmourgrowthprospects,operatingresultsandfinancialcondition.Our sales cycle can be long and unpredictable and require considerable time and expense,which may cause our operating r
153、esults to fluctuate.Thesalescycleforoursolutions,frominitialcontactwithapotentialleadtocontractexecutionandimplementation,varieswidelybycustomer,butcantakebetweenthreeandninemonths.Someofourcustomersundertakeasignificantevaluationprocessthatfrequentlyinvolvesnotonlyoursolutionsbutalsothoseofourcompe
154、titors,whichhasinthepastresultedinextendedsalescycles.Oursaleseffortsinvolveeducatingourcustomersabouttheuse,technicalcapabilitiesandbenefitsofourplatform.Inaddition,undercertaincircumstances,wesometimesofferaninitialterm,typicallyofafewmonthsinduration,tonewcustomerswhomayterminatetheirsubscription
155、atanytimeduringthisinitialperiodbeforethefixedtermcontractcommences.Wehavenoassurancethatthesubstantialtimeandmoneyspentonoursaleseffortswillproduceanysales.Ifoursaleseffortsresultinanewcustomersubscription,thecustomermayterminateitssubscriptionduringtheinitialperiod,afterwehaveincurredtheexpensesas
156、sociatedwithenteringthecustomersdatainourplatformandrelatedtrainingandsupport.Ifsalesexpectedfromacustomerarenotrealizedinthetimeperiodexpectedornotrealizedatall,orifacustomerterminatesduringtheinitialperiod,ourbusiness,operatingresultsandfinancialconditioncouldbeadverselyaffected.Our ability to gen
157、erate revenue depends on our collection of significant amounts of data from various sources.OurabilitytooptimizethedeliveryofInternetadvertisementsforourcustomersdependsonourabilitytosuccessfullyleveragedata,includingdatathatwecollectfromourcustomersaswellasdataprovidedbypublishersandfromthirdpartie
158、s.Usingcookiesandsimilartrackingtechnologies,wecollectinformationabouttheinteractionofuserswithouradvertisersandpublisherswebsites.Ourabilitytosuccessfullyleveragesuchdataisdependentuponourcontinuedabilitytoaccessandutilizesuchdata.Ourabilitytoaccessandusesuchdatacouldberestrictedbyanumberoffactors,
159、includingconsumerchoice,restrictionsimposedbyadvertisersandpublishers,changesintechnology,andnewdevelopmentsinlaws,regulations,andindustrystandards.Ifconsumerresistancetothecollectionandsharingofthedatausedtodelivertargetedadvertising,increasedvisibilityofconsent/DoNotTrackmechanismsasaresultofindus
160、tryregulatoryand/orlegaldevelopments,and/orthedevelopmentanddeploymentofnewtechnologiesresultinamaterialimpactonourabilitytocollectdata,thiswillmateriallyimpairtheresultsofouroperations.12Material defects or errors in our software platform could harm our reputation,result in significant costs to us
161、and impair our ability to sell our subscriptionservices.Thesoftwareapplicationsunderlyingoursubscriptionservicesareinherentlycomplexandmaycontainmaterialdefectsorerrors,whichmaycausedisruptionsinavailability,misallocationofadvertisingspendorotherperformanceproblems.Anysucherrors,defects,disruptionsi
162、nserviceorotherperformanceproblemswithoursoftwareplatform,includingthoseresultingfromnewversionsorupdates,couldnegativelyimpactourcustomersbusinessesorthesuccessoftheiradvertisingcampaignsandcauseharmtoourreputation.Ifwehaveanyerrors,defects,disruptionsinserviceorotherperformanceproblemswithoursoftw
163、areplatform,customerscouldelectnottoreneworreducetheirusageordelayorwithholdpaymenttous,whichcouldresultinanincreaseinourprovisionfordoubtfulaccountsoranincreaseinthelengthofcollectioncyclesforaccountsreceivable.Errors,defects,disruptionsinserviceorotherperformanceproblemscouldalsoresultincustomersm
164、akingwarrantyorotherclaimsagainstus,ourgivingcreditstoourcustomerstowardfutureadvertisingspendorcostlylitigation.Asaresult,materialdefectsorerrorsinourplatformcouldhaveamaterialadverseimpactonourbusinessandfinancialperformance.Thecostsincurredincorrectinganymaterialdefectsorerrorsinoursoftwareplatfo
165、rmmaybesubstantialandcouldadverselyaffectouroperatingresults.Afterthereleaseofnewversionsofoursoftware,defectsorerrorsmaybeidentifiedfromtimetotimebyourinternalteamandbyourcustomers.Weimplementbugfixesandupgradesaspartofourregularlyscheduledsystemmaintenance.Ifwedonotcompletethismaintenanceaccording
166、toscheduleorifcustomersareotherwisedissatisfiedwiththefrequencyand/ordurationofourmaintenanceservices,customerscouldelectnottorenew,ordelayorwithholdpaymenttous,orcauseustoissuecredits,makerefundsorpaypenalties.We primarily derive our revenues from a single software platform and any factor adversely
167、 affecting subscriptions to our platform could harm our businessand operating results.Weprimarilyderiveourrevenuesfromsalesofasinglesoftwareplatform.Assuch,anyfactoradverselyaffectingsubscriptionstoourplatform,includingproductreleasecycles,marketacceptance,productcompetition,performanceandreliabilit
168、y,reputation,pricecompetition,andeconomicandmarketconditions,couldharmourbusinessandoperatingresults.If mobile connected devices,their operating systems or content distribution channels,including those controlled by our competitors,develop in ways thatprevent our advertising campaigns from being del
169、ivered to their users,our ability to grow our business will be impaired.Oursuccessinthemobilechanneldependsupontheabilityofourtechnologyplatformtointegratewithmobileinventorysuppliersandprovideadvertisingformostmobileconnecteddevices,aswellasthemajoroperatingsystemsthatrunonthemandtheapplicationstha
170、taredownloadedontothem.Thedesignofmobiledevicesandoperatingsystemsiscontrolledbythirdpartieswithwhomwedonothaveanyformalrelationships.Thesepartiesfrequentlyintroducenewdevices,andfromtimetotimetheymayintroducenewoperatingsystemsormodifyexistingones.Networkcarriersmayalsoimpacttheabilitytoaccessspeci
171、fiedcontentonmobiledevices.Ifoursolutionwereunabletoworkonthesedevicesoroperatingsystems,eitherbecauseoftechnologicalconstraintsorbecauseanoperatingsystemorappdeveloper,devicemakerorcarrierwishedtoimpairourabilitytopurchaseinventoryandprovideadvertisements,ourabilitytogeneraterevenuecouldbesignifica
172、ntlyharmed.If our security measures are breached or unauthorized access to customer data or our data is otherwise obtained,our solutions may be perceived as not beingsecure,customers may reduce the use of or stop using our solutions and we may incur significant liabilities.Intheordinarycourseofourbu
173、siness,wemaintainsensitivedataonournetworks,includingourintellectualpropertyandproprietaryorconfidentialbusinessinformationrelatingtoourbusinessandthatofourcustomersandbusinesspartners.Thesecuremaintenanceofthisinformationiscriticaltoourbusinessandreputation.Webelievethatcompanieshavebeenincreasingl
174、ysubjecttoawidevarietyofsecurityincidents,cyber-attacksandotherattemptstogainunauthorizedaccess.Thesethreatscancomefromavarietyofsources,ranginginsophisticationfromanindividualhackertoastate-sponsoredattack.Cyberthreatsmaybegeneric,ortheymaybecustom-craftedagainstourinformationsystems.Cyber-attacksh
175、avebecomemoreprevalentandmuchhardertodetectanddefendagainst.Ournetworkandstorageapplicationsmaybesubjecttounauthorizedaccessbyhackersorbreachedduetooperatorerror,malfeasanceorothersystemdisruptions.Itisoftendifficulttoanticipateorimmediatelydetectsuchincidentsandthedamagecausedbysuchincidents.Thesed
176、atabreachesandanyunauthorizedaccessordisclosureofourinformationorintellectualpropertycouldresultinthelossofinformation,litigation,indemnityobligationsandotherliability.Whilewehavesecuritymeasuresinplace,oursystemsandnetworksaresubjecttoongoingthreatsandthereforethesesecuritymeasuresmaybebreachedasar
177、esultofthird-partyaction,includingcyber-attacksorotherintentionalmisconductbycomputerhackers,employeeerror,malfeasanceorotherwise.Thiscouldresultinoneormorethirdpartiesobtainingunauthorizedaccesstoourcustomersdataorourdata,includingintellectualpropertyandotherconfidentialbusinessinformation.Becauset
178、echniquesusedtoobtainunauthorizedaccessortosabotagesystemschangefrequentlyandgenerallyarenotrecognizeduntillaunchedagainstatarget,wemaybeunabletoanticipatethesetechniquesortoimplementadequatepreventativemeasures.Thirdpartiesmayalsoattempttofraudulentlyinduceemployeesorcustomersintodisclosingsensitiv
179、einformationsuchasusernames,passwordsorotherinformationinordertogainaccesstoourcustomersdataorourdata,includingintellectualpropertyandotherconfidentialbusinessinformation.Ifanactualorperceived13breachofoursecurityoccurs,themarketperceptionoftheeffectivenessofoursecuritymeasurescouldbeharmed,wecouldl
180、osepotentialsalesandexistingcustomersorwecouldincurotherliabilities,whichcouldadverselyaffectourbusiness.We primarily use third-party data centers to deliver our services.Any disruption of service at these facilities could harm our business.Wemanageasignificantportionofourservicesandservesubstantial
181、lyallofourcustomersfromonlyasinglethird-partydatacenterfacility.Whilewecontroltheactualcomputer,networkandstoragesystemsuponwhichourplatformruns,anddeploythemtothedatacenterfacility,wedonotcontroltheoperationofthefacility.Theownerofthefacilityhasnoobligationtorenewtheagreementwithusoncommerciallyrea
182、sonableterms,oratall.Ifweareunabletorenewtheagreementoncommerciallyreasonableterms,wemayberequiredtotransfertoanewfacilityorfacilities,andwemayincursignificantcostsandpossibleserviceinterruptioninconnectionwithdoingso.Thefacilityisvulnerabletodamageorserviceinterruptionresultingfromhumanerror,intent
183、ionalbadacts,earthquakes,hurricanes,floods,fires,war,terroristattacks,powerlosses,hardwarefailures,systemsfailures,telecommunicationsfailuresandsimilarevents.Moreover,whilewehaveadisasterrecoveryplaninplace,wedonotmaintaina“hotfailover”instanceofoursoftwareplatformpermittingustoimmediatelyswitchover
184、intheeventofdamageorserviceinterruptionatourdatacenter.Theoccurrenceofanaturaldisasteroranactofterrorism,anyoutagesorvandalismorothermisconduct,oradecisiontoclosethefacilitywithoutadequatenoticeorotherunanticipatedproblemscouldresultinlengthyinterruptionsinourservices.Anychangesinservicelevelsatthef
185、acilityoranyerrors,defects,disruptionsorotherperformanceproblemsatorrelatedtothefacilitythataffectourservicescouldharmourreputationandmaydamageourcustomersbusinesses.Interruptionsinourservicesmightreduceourrevenues,subjectustopotentialliability,orresultinreducedusageofourplatform.Inaddition,someofou
186、rcustomercontractsrequireustoissuecreditsfordowntimeinexcessofcertainlevelsandinsomeinstancesgiveourcustomerstheabilitytoterminatetheirsubscriptions.Wealsodependonthird-partyInternet-hostingprovidersandcontinuousanduninterruptedaccesstotheInternetthroughthird-partybandwidthproviderstooperateourbusin
187、ess.IfwelosetheservicesofoneormoreofourInternet-hostingorbandwidthprovidersforanyreasonoriftheirservicesaredisrupted,forexampleduetovirusesor“denial-of-service”orotherattacksontheirsystems,orduetohumanerror,intentionalbadacts,powerloss,hardwarefailures,telecommunicationsfailures,fires,wars,terrorist
188、attacks,floods,earthquakes,hurricanes,tornadoesorsimilarevents,wecouldexperiencedisruptioninourabilitytoofferoursolutionsorwecouldberequiredtoretaintheservicesofreplacementproviders,whichcouldincreaseouroperatingcostsandharmourbusinessandreputation.As a result of our customers usage of our software
189、platform,we will need to continually improve our hosting infrastructure to avoid service interruptions orslower system performance.Wehaveexperiencedgrowthinthenumberoftransactionsanddatathatourhostinginfrastructuresupports.Weseektomaintainsufficientexcesscapacityinourinfrastructuretomeettheneedsofal
190、lofourcustomers.Wealsoseektomaintainexcesscapacitytofacilitatetherapidprovisionofnewcustomerdeploymentsandtheexpansionofexistingcustomerdeployments.Forexample,ifwesecurealargecustomeroragroupofcustomersthatrequiresignificantamountsofbandwidthorstorage,wemayneedtoincreasebandwidth,storage,powerorothe
191、relementsofourapplicationarchitectureandourinfrastructure,andourexistingsystemsmaynotbeabletoscaleinamannersatisfactorytoourexistingorprospectivecustomers.14Theamountofinfrastructureneededtosupportourcustomersisbasedonourestimatesofanticipatedusage.Ifweweretoexperienceunforeseenincreasesinusage,weco
192、uldberequiredtoincreaseourinfrastructureinvestmentsresultinginincreasedcostsorreducedgrossmargins,andifwedonotaccuratelypredictourinfrastructurecapacityrequirements,ourcustomerscouldexperienceserviceoutagesthatmaysubjectustofinancialpenaltiesandliabilitiesandresultincustomerlosses.Ifourhostinginfras
193、tructurecapacityfailstokeeppacewithincreasedsales,customersmayexperienceserviceinterruptionsorslowersystemperformanceasweseektoobtainadditionalcapacity,whichcouldharmourreputationandadverselyaffectourrevenuegrowth.Asuseofoursoftwareplatformgrowsandascustomersuseitformorecomplicatedtasks,wewillneedto
194、devoteadditionalresourcestoimprovingourapplicationarchitectureandourinfrastructureinordertomaintaintheperformanceofoursoftwareplatform.Wemayneedtoincuradditionalcoststoupgradeorexpandourcomputersystemsandarchitectureinordertoaccommodateincreaseddemandifoursystemscannothandlecurrentorhighervolumesofu
195、sage.Inaddition,increasingoursystemsandinfrastructureinadvanceofnewcustomerswouldcauseustohaveincreasedcostofrevenues,whichcanadverselyaffectourgrossmarginsuntilweincreaserevenuesthatarespreadovertheincreasedcosts.If we cannot efficiently implement our solutions for customers,we may lose customers.O
196、urcustomershaveavarietyofdifferentdataformats,enterpriseapplicationsandinfrastructureandourplatformmustsupportourcustomersdataformatsandintegratewithcomplexenterpriseapplicationsandinfrastructures.Ifourplatformdoesnotcurrentlysupportacustomersrequireddataformatorappropriatelyintegratewithacustomersa
197、pplicationsandinfrastructure,thenwemaychoosetoconfigureourplatformtodoso,whichwouldincreaseourexpenses.Additionally,wedonotcontrolourcustomersimplementationschedules.Asaresult,aswehaveexperiencedinthepast,ifourcustomersdonotallocateinternalresourcesnecessarytomeettheirimplementationresponsibilitieso
198、rifwefaceunanticipatedimplementationdifficulties,theimplementationmaybedelayed.Further,inthepast,ourimplementationcapacityhasattimesconstrainedourabilitytosuccessfullyimplementoursolutionsforourcustomersinatimelymanner,particularlyduringperiodsofhighdemand.Ifthecustomerimplementationprocessisnotexec
199、utedsuccessfullyorifexecutionisdelayed,wecouldincursignificantcosts,customerscouldbecomedissatisfiedanddecidenottoincreaseusageofourplatform,nottouseourplatformbeyondaninitialperiodpriortotheirtermcommitmentandrevenuerecognitioncouldbedelayed.Inaddition,competitorswithmoreefficientoperatingmodelswit
200、hlowerimplementationcostscouldpenetrateourcustomerrelationships.Additionally,largecustomersmayrequestorrequirespecificfeaturesorfunctionsuniquetotheirparticularbusinessprocesses,whichincreaseourupfrontinvestmentinsalesanddeploymenteffortsandtherevenuesresultingfromthecustomersunderourtypicalcontract
201、lengthmaynotcovertheupfrontinvestments.Ifprospectivelargecustomersrequirespecificfeaturesorfunctionsthatwedonotoffer,thenthemarketforoursolutionwillbemorelimitedandourbusinesscouldsuffer.Inaddition,supportinglargecustomerscouldrequireustodevotesignificantdevelopmentservicesandsupportpersonnelandstra
202、inourpersonnelresourcesandinfrastructure.Ifweareunabletoaddresstheneedsofthesecustomersinatimelyfashionorfurtherdevelopandenhanceoursolution,thesecustomersmaynotrenewtheirsubscriptions,seektoterminatetheirrelationshipwithus,renewonlessfavorableterms,orreducetheiradvertisingspendonourplatform.Ifanyof
203、theseweretooccur,ourrevenuesmaydeclineandouroperatingresultscouldbeadverselyaffected.If we are unable to maintain or expand our sales and marketing capabilities,we may not be able to generate anticipated revenues.Increasingourcustomerbaseandachievingbroadermarketacceptanceofoursoftwareplatformwillde
204、pendtoanextentonourabilitytomaintainorexpandoursalesandmarketingoperationsandactivities.Wearesubstantiallydependentonoursalesforcetoobtainnewcustomersandourmarketingorganizationtogenerateasufficientpipelineofqualifiedsalesleads.Wemayneedtorestructureorexpandoursalesteaminordertomaintainorincreaserev
205、enuesfromnewandexistingcustomersandtofurtherpenetrateourexistingmarkets.Oursolutionsrequireasophisticatedsalesforcewithspecificsalesskillsandtechnicalknowledge.Competitionforqualifiedsalespersonnelisintense,andwemaynotbeabletoretainourexistingsalespersonnelorattract,integrate,trainorretainsufficient
206、highlyqualifiedsalespersonnel.Inaddition,wemayneedtoinvestinleadgenerationactivitiestodevelopourpipelineofqualifiedopportunitiesforoursalesforce,whichcouldincreaseourmarketingexpenses.Ifourleadgenerationactivitiesdonotincreaseourpipelineorifoursalesforceisunabletocloseopportunitiesatahighrate,thenwe
207、maynotgenerateanincreaseinrevenues.Any failure to offer high-quality technical support services may adversely affect our relationships with our customers and harm our financial results.Ourcustomersdependonoursupportorganizationtoresolveanytechnicalissuesrelatingtooursolutions.Inaddition,oursalesproc
208、essishighlydependentonthequalityofoursolutions,ourbusinessreputationandonstrongrecommendationsfromourexistingcustomers.Anyfailuretomaintainhigh-qualitytechnicalsupport,oramarketperceptionthatwedonotmaintainhigh-qualitysupport,couldharmourreputation,adverselyaffectourabilitytoselloursolutionstoexisti
209、ngandprospectivecustomers,andharmourbusiness,operatingresultsandfinancialcondition.15Weoffertechnicalsupportserviceswithoursolutionsandmaybeunabletorespondquicklyenoughtoaccommodateshort-termincreasesincustomerdemandforsupportservices.Wealsomaybeunabletomodifytheformatofoursupportservicestocompetewi
210、thchangesinsupportservicesprovidedbycompetitors.Itisdifficulttopredictcustomerdemandfortechnicalsupportservicesandifcustomerdemandincreasessignificantly,wemaybeunabletoprovidesatisfactorysupportservicestoourcustomers.Additionally,increasedcustomerdemandfortheseservices,withoutcorrespondingrevenues,c
211、ouldincreasecostsandadverselyaffectouroperatingresults.Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.Oursuccessandabilitytocompetedependsinpartuponourintellectualproperty.Weprimarilyrelyonacombinationofcopyright,t
212、radesecretandtrademarklaws,aswellasconfidentialityproceduresandcontractualrestrictionswithouremployees,customers,partnersandotherstoestablishandprotectourintellectualpropertyrights.However,thestepswetaketoprotectourintellectualpropertyrightsmaybeinadequateorwemaybeunabletosecureintellectualpropertyp
213、rotectionforallofoursolutions.Inparticular,wehavethreeissuedU.S.patents.Ifweareunabletoprotectourintellectualproperty,ourcompetitorscoulduseourintellectualpropertytomarketproductsandservicessimilartooursandourabilitytocompeteeffectivelywouldbeimpaired.Moreover,othersmayindependentlydeveloptechnologi
214、esthatarecompetitivetooursorinfringeourintellectualproperty.Theenforcementofourintellectualpropertyrightsdependsonourlegalactionsagainsttheseinfringersbeingsuccessful,butwecannotbesuretheseactionswillbesuccessful,evenwhenourrightshavebeeninfringed.Inaddition,defendingourintellectualpropertyrightsmig
215、htentailsignificantexpenseanddiversionofmanagementresources.Anyofourintellectualpropertyrightsmaybechallengedbyothersorinvalidatedthroughadministrativeprocessesorlitigation.Anypatentsissuedinthefuturemaynotprovideuswithcompetitiveadvantagesormaybesuccessfullychallengedbythirdparties.Furthermore,lega
216、lstandardsrelatingtothevalidity,enforceabilityandscopeofprotectionofintellectualpropertyrightsareuncertain.Effectiveprotectionofourintellectualpropertymaynotbeavailabletousineverycountryinwhichoursolutionsareavailable.Thelawsofsomeforeigncountriesmaynotbeasprotectiveofintellectualpropertyrightsastho
217、seintheUnitedStates,andmechanismsforenforcementofintellectualpropertyrightsmaybeinadequate.Accordingly,despiteourefforts,wemaybeunabletopreventthirdpartiesfrominfringinguponormisappropriatingourintellectualproperty.Wemightberequiredtospendsignificantresourcestomonitorandprotectourintellectualpropert
218、yrights,andoureffortstoenforceourintellectualpropertyrightsmaybemetwithdefenses,counterclaimsandcountersuitsattackingthevalidityandenforceabilityofourintellectualpropertyrights.Litigationtoprotectandenforceourintellectualpropertyrightscouldbecostly,time-consuminganddistractingtomanagement,whetherorn
219、otitisresolvedinourfavor,andcouldultimatelyresultintheimpairmentorlossofportionsofourintellectualproperty.We could incur substantial costs as a result of any claim of infringement of another partys intellectual property rights.Inrecentyears,therehasbeensignificantlitigationintheUnitedStatesinvolving
220、patentsandotherintellectualpropertyrights.CompaniesintheInternetandtechnologyindustriesareincreasinglybringingandbecomingsubjecttosuitsalleginginfringementofproprietaryrights,particularlypatentrights,andourcompetitorsmayholdpatentsorhavependingpatentapplications,whichcouldberelatedtoourbusiness.Thes
221、eriskshavebeenamplifiedbytheincreaseinthirdparties,whichwerefertoasnon-practicingentities,whosesoleprimarybusinessistoassertsuchclaims.Wehavereceivedinthepast,andexpecttoreceiveinthefuture,noticesthatclaimweorourcustomersusingoursolutionshavemisappropriatedormisusedotherpartiesintellectualpropertyri
222、ghts.Ifwearesuedbyathirdpartythatclaimsthatourtechnologyinfringesitsrights,thelitigationcouldbeexpensiveandcoulddivertourmanagementresources.Wedonotcurrentlyhaveanextensivepatentportfolioofourown,whichmaylimitthedefensesavailabletousinanysuchlitigation.Inaddition,inmostinstances,wehaveagreedtoindemn
223、ifyourcustomersagainstcertainclaimsthatoursubscriptionservicesinfringetheintellectualpropertyrightsofthirdparties.Ourbusinesscouldbeadverselyaffectedbyanysignificantdisputesbetweenusandourcustomersastotheapplicabilityorscopeofourindemnificationobligationstothem.Theresultsofanyintellectualpropertylit
224、igationtowhichwemightbecomeaparty,orforwhichwearerequiredtoprovideindemnification,mayrequireustodooneormoreofthefollowing:ceaseofferingorusingtechnologiesthatincorporatethechallengedintellectualproperty;makesubstantialpaymentsforlegalfees,settlementpaymentsorothercostsordamages;obtainalicense,whichm
225、aynotbeavailableonreasonableterms,tosellorusetherelevanttechnology;orredesigntechnologytoavoidinfringement.Ifwearerequiredtomakesubstantialpaymentsorundertakeanyoftheotheractionsnotedaboveasaresultofanyintellectualpropertyinfringementclaimsagainstusoranyobligationtoindemnifyourcustomersforsuchclaims
226、,suchpaymentsorcostscouldhaveamaterialadverseeffectuponourbusinessandfinancialresults.16Our use of open source technology could impose limitations on our ability to commercialize our software platform.Weuseopensourcesoftwareinourplatform.Someopensourcesoftwarelicensesrequireuserswhodistributeopensou
227、rcesoftwareaspartoftheirsoftwaretopubliclydiscloseallorpartofthesourcecodetosuchsoftwareand/ormakeavailableanyderivativeworksoftheopensourcecodeonunfavorabletermsoratnocost.ThetermsofvariousopensourcelicenseshavenotbeeninterpretedbytheU.S.courts,andthereisariskthatsuchlicensescouldbeconstruedinamann
228、erthatimposesunanticipatedconditionsorrestrictionsonourabilitytomarketoursoftwareplatform.Whilewemonitorouruseofopensourcesoftwareandtrytoensurethatnoneisusedinamannerthatwouldrequireustodiscloseoursourcecodeorthatwouldotherwisebreachthetermsofanopensourceagreement,suchusecouldinadvertentlyoccurandw
229、emayberequiredtoreleaseourproprietarysourcecode,paydamagesforbreachofcontract,re-engineerourapplications,discontinuesalesintheeventre-engineeringcannotbeaccomplishedonatimelybasisortakeotherremedialactionthatmaydivertresourcesawayfromourdevelopmentefforts,anyofwhichcouldcauseustobreachcustomercontra
230、cts,harmourreputation,resultincustomerlossesorclaims,increaseourcostsorotherwiseadverselyaffectourbusinessandoperatingresults.Because our long-term success depends,in part,on our ability to expand our sales to customers outside the United States,our business will be susceptible torisks associated wi
231、th international operations.Wecurrentlyhavepersonneland/orcustomersinChina,England,France,Ireland,JapanandSingapore,aswellastheUnitedStates.Duetoourinternationalexposure,ourbusinessissusceptibletorisksassociatedwithinternationaloperations.However,wehavealimitedoperatinghistoryoutsidetheUnitedStates,
232、andourabilitytomanageourbusinessandconductouroperationsinternationallyrequiresconsiderablemanagementattentionandresourcesandissubjecttoparticularchallengesofsupportingarapidlygrowingbusinessinanenvironmentofdiversecultures,languages,customs,taxlaws,legalsystems,alternatedisputesystemsandregulatorysy
233、stems.Therisksandchallengesassociatedwithinternationalexpansioninclude:theneedtosupportandintegratewithlocalpublishersandpartners;continuedlocalizationofourplatform,includingtranslationintoforeignlanguagesandassociatedexpenses;competitionwithcompaniesthathavegreaterexperienceinthelocalmarketsthanwed
234、oorwhohavepre-existingrelationshipswithpotentialcustomersinthosemarkets;compliancewithmultiple,potentiallyconflictingandchanginggovernmentallawsandregulations,includingemployment,tax,privacyanddataprotectionlawsandregulations;compliancewithanti-briberylaws,includingcompliancewiththeForeignCorruptPra
235、cticesAct;difficultiesininvoicingandcollectinginforeigncurrenciesandassociatedforeigncurrencyexposure;difficultiesinstaffingandmanagingforeignoperationsandtheincreasedtravel,infrastructureandlegalcompliancecostsassociatedwithinternationaloperations;differentorlesserprotectionofourintellectualpropert
236、yrights;difficultiesinenforcingcontractsandcollectingaccountsreceivable,longerpaymentcyclesandothercollectiondifficulties;restrictionsonrepatriationofearnings;andregionaleconomicandpoliticalconditions.Wehavelimitedexperienceinmarketing,sellingandsupportingoursubscriptionservicesinternationally,which
237、increasestheriskthatanypotentialfutureexpansioneffortsthatwemayundertakewillnotbesuccessful.Fluctuations in the exchange rate of foreign currencies could result in currency transactions losses.WecurrentlyhaveforeignsalesdenominatedinAustralianDollars,BritishPoundSterling,ChineseYuan,Euros,JapaneseYe
238、nandSingaporeanDollars.Inaddition,weincuraportionofouroperatingexpensesinthecurrenciesofthecountrieswherewehaveoffices.Wefaceexposuretoadversemovementsincurrencyexchangerates,whichmaycauseourrevenuesandoperatingresultstodiffermateriallyfromexpectations.Inaddition,theannouncementofBrexitandthecontinu
239、eduncertaintyaroundthefullimpactofitandtheexacttradearrangementsuponexithasadverselyimpactedglobalmarkets,includingcurrencies,andresultedinadeclineandvolatilityinthevalueoftheBritishPoundSterlingandtheEuro,ascomparedtotheU.S.Dollarandothercurrencies.Volatilityinexchangeratesandglobalfinancialmarkets
240、isexpectedtocontinueduetoanumberoffactors,includinguncertaintysurroundingBrexittradearrangementsandtherecentpoliticalandeconomicuncertaintyglobally.17IftheU.S.Dollarcontinuestostrengthenrelativetoforeigncurrenciesasithasbeensincethesecondquarterof2018,ournon-U.S.revenueswouldbeadverselyaffected.Conv
241、ersely,adeclineintheU.S.Dollarrelativetoforeigncurrencieswouldincreaseournon-U.S.revenueswhentranslatedintoU.S.Dollars.Ouroperatingresultscouldbenegativelyimpacteddependingontheamountofexpensedenominatedinforeigncurrencies.Asexchangeratesvary,revenues,costofrevenues,operatingexpensesandotheroperatin
242、gresults,whentranslated,maydiffermateriallyfromexpectations.Inaddition,ourrevenuesandoperatingresultsaresubjecttofluctuationifourmixofU.S.andforeigncurrency-denominatedtransactionsorexpenseschangesinthefuturebecausewedonotcurrentlyhedgeourforeigncurrencyexposure.Evenifweweretoimplementhedgingstrateg
243、iestomitigateforeigncurrencyrisk,thesestrategiesmightnoteliminateourexposuretoforeignexchangeratefluctuationsandwouldinvolvecostsandrisksoftheirown,suchasongoingmanagementtimeandexpertise,externalcoststoimplementthestrategiesandpotentialaccountingimplications.Unfavorable conditions in the market for
244、 digital advertising or the global economy or reductions in digital advertising spend could limit our ability to grow ourbusiness and negatively affect our operating results.Revenuegrowthandpotentialprofitabilityofourbusinessdependsondigitaladvertisingspendbyadvertisersinthemarketsweserve.Ouroperati
245、ngresultsmayvarybasedonchangesinthemarketfordigitaladvertisingortheglobaleconomy.Totheextentthatweakeconomicconditionscauseourcustomersandpotentialcustomerstofreezeorreducetheiradvertisingbudgets,particularlydigitaladvertising,demandforoursolutionmaybenegativelyaffected.Historically,economicdownturn
246、shaveresultedinoverallreductionsinadvertisingspend.Ifeconomicconditionsdeteriorateortheriseofgeopoliticalinstabilityandmilitaryhostilities,orglobalhealthemergenciesandpandemicssuchasCOVID-19causeseconomicuncertainty,ourcustomersandpotentialcustomersmayelecttodecreasetheiradvertisingbudgetsordeferorr
247、econsidersoftwareandservicepurchases,whichwouldlimitourabilitytogrowourbusinessandnegativelyaffectouroperatingresults.Our business depends on retaining and attracting qualified personnel,and turnover may result in operational inefficiencies that could negatively affect ourbusiness.Oursuccessdependsu
248、ponthecontinuedserviceofourtalentedmanagement,operationalandkeytechnicalemployees,aswellasourabilitytocontinuetoattractadditionalhighlyqualifiedtalent.Wehaveexperiencedturnover,includinginDecember2019thedepartureofourformerchieffinancialofficerandthepromotionofRobertBertztochieffinancialofficer.Turn
249、overamongstouremployeescouldresultinoperationalandadministrativeinefficienciesandaddedcosts,whichcouldadverselyimpactourresultsofoperations,stockpriceandcustomerrelationships,andcouldmakerecruitingforfuturemanagementandotherpositionsmoredifficult.Inaddition,wemustsuccessfullyintegrateanynewseniorman
250、agementandothernewpersonnelwithinourorganizationinordertoachieveouroperatingobjectives,andchangesinotherkeypositionsmaytemporarilyaffectourfinancialperformanceandresultsofoperationsasnewemployeesbecomefamiliarwithourbusiness.Wedonotmaintainkeypersonlifeinsurancepoliciesonanyofouremployees.Eachofoure
251、xecutiveofficers,keytechnicalpersonnelandotheremployeescouldterminatehisorherrelationshipwithusatanytime.Ourbusinessalsorequiresskilledtechnical,salesandotherpersonnel,whoareinhighdemandandareoftensubjecttocompetingoffers.Ifweexpandintoadditionalgeographicmarkets,wewillrequirepersonnelwithexpertisei
252、nthesenewareas.CompetitionforqualifiedemployeesisintenseinourindustryandparticularlyinSanFrancisco,California.Aninabilitytoretain,attract,relocateandmotivateemployeesrequiredforourbusinesscoulddelayorpreventtheachievementofourbusinessobjectivesandcouldmateriallyharmourbusinessandourcustomerrelations
253、hips.Managing a global organization has placed,and may continue to place,significant demands on our management and infrastructure.If we fail to manage ouroperations effectively,we may be unable to execute our business plan,maintain high levels of service or address competitive challenges adequately.
254、Managingaglobalandgeographicallydispersedworkforceandoperationhasrequiredsubstantialmanagementeffort,theallocationofvaluablemanagementresourcesandsignificantadditionalinvestmentinourinfrastructure.Wewillberequiredtocontinuetoimproveouroperational,financialandmanagementcontrolsandoperationsreportingp
255、rocedures,andwemaynotbeabletodosoeffectively.Moreover,wemayfromtimetotimedecidetoundertakecostsavingsinitiatives,suchasadditionalrestructurings,disposingof,and/orotherwisediscontinuingcertainproducts,inanefforttofocusourresourcesonkeystrategicinitiativesandstreamlineourbusiness.Further,supportingour
256、customersandoperations,anddrivingfuturegrowth,wemustcontinuallyimproveandmaintainourtechnology,systemsandnetworkinfrastructure.Assuch,wemaybeunabletomanageourexpenseseffectivelyinthefuture,whichmaynegativelyimpactourgrossmarginsoroperatingexpensesinanyparticularquarter.Ifwefailtomanageouranticipated
257、growthorchangeinamannerthatdoesnotpreservethekeyaspectsofourcorporateculture,thequalityofoursolutionsmaysuffer,whichcouldnegativelyaffectourbrandandreputationandharmourabilitytoretainandattractcustomers.Domestic and foreign government regulation and enforcement of data practices and data tracking te
258、chnologies is expansive,not clearly defined and rapidlyevolving.Such regulation could directly restrict portions of our business or indirectly affect our business by constraining our customers use of our platform orlimiting the growth of our markets.18Federal,state,municipaland/orforeigngovernmentsa
259、ndagencieshaveadoptedandcouldinthefutureadopt,modify,applyorenforcelaws,policies,andregulationscoveringuserprivacy,datasecurity,technologiessuchascookiesthatareusedtocollect,storeand/orprocessdata,thetaxationofproductsandservices,unfairanddeceptivepractices,and/orthecollection,use,processing,transfe
260、r,storageand/ordisclosureofdataassociatedwithauniqueindividual.Thecategoriesofdataregulatedundertheselawsvarywidelyandareoftenill-definedandsubjecttonewapplicationsorinterpretationbyregulators.Oursubscriptionservicesenableourcustomerstodisplaydigitaladvertisementstotargetedpopulationsegments,aswella
261、scollect,manageandstoredataregardingthemeasurementandvaluationoftheirdigitaladvertisingandmarketingcampaigns,whichmayincludedatathatisdirectlyorindirectlyobtainedorderivedthroughtheactivitiesofonlineormobilevisitors.Theuncertaintyandinconsistencyamongtheselaws,coupledwithalackofguidanceastohowthesel
262、awswillbeappliedtocurrentandemergingInternetandmobileanalyticstechnologies,createsariskthatregulators,lawmakersorotherthirdparties,suchaspotentialplaintiffs,mayassertclaims,pursueinvestigationsoraudits,orengageincivilorcriminalenforcement.Theseactionscouldlimitthemarketforoursubscriptionservicesorim
263、poseburdensomerequirementsonourservicesand/orcustomersuseofourservices,therebyrenderingourbusinessunprofitable.Somefeaturesofoursubscriptionservicesusecookies,whichtriggerthedataprotectionrequirementsofcertainforeignjurisdictions,suchastheEUGeneralDataProtectionRegulation,ortheGDPR,andtheEUePrivacyD
264、irective.Inaddition,ourservicescollectdataaboutvisitorsinteractionswithouradvertiserclientsthatmaybesubjecttoregulationundercurrentorfuturelawsorregulations.Ifourprivacyordatasecuritymeasuresfailtocomplywiththesecurrentorfuturelawsandregulationsinanyofthejurisdictionsinwhichwecollectinformation,wema
265、ybesubjecttolitigation,regulatoryinvestigations,civilorcriminalenforcement,auditsorotherliabilitiesinsuchjurisdictions,orouradvertisersmayterminatetheirrelationshipswithus.Inaddition,foreigncourtjudgmentsorregulatoryactionscouldimpactourabilitytotransfer,processand/orreceivetransnationaldatathatiscr
266、iticaltoouroperations,includingdatarelatingtousers,clients,orpartnersoutsidetheUnitedStates.Suchjudgmentsoractionscouldaffectthemannerinwhichweprovideourservicesoradverselyaffectourfinancialresultsifforeignclientsandpartnersarenotabletolawfullytransferdatatous.Thisareaofthelawiscurrentlyunderintense
267、governmentscrutinyandmanygovernments,includingtheU.S.government,areconsideringavarietyofproposedregulationsthatwouldrestrictorimpacttheconditionsunderwhichdataobtainedfromorthroughtheactivitiesofvisitorscouldbecollected,processedorstored.Inaddition,regulatorssuchastheFederalTradeCommissionandtheCali
268、forniaAttorneyGeneralarecontinuallyproposingnewregulationsandinterpretingandapplyingexistingregulationsinnewways.Forexample,theCaliforniaConsumerPrivacyAct,ortheCCPA,tookeffectJanuary1,2020,whichprovidesnewdataprivacyrightsforconsumersandnewdisclosureandoperationalrequirementsforcompanies.TheCCPAgiv
269、esCaliforniaresidentsexpandedrightstoaccessanddeletetheirpersonalinformation,optoutofcertainpersonalinformationsharing,andreceivedetailedinformationabouthowtheirpersonalinformationisused.TheCCPAprovidesforcivilpenaltiesforviolations,aswellasaprivaterightofactionfordatabreachesthatisexpectedtoincreas
270、edatabreachlitigation.TheburdensimposedbytheGDPRandCCPA,andchangestoexistinglawsornewlawsregulatingthesolicitation,collectionorprocessingofpersonalandconsumerinformation,truth-in-advertisingandconsumerprotectioncouldaffectourcustomersutilizationofdigitaladvertisingandmarketing,potentiallyreducingdem
271、andforoursubscriptionservices,orimposerestrictionsthatmakeitmoredifficultorexpensiveforustoprovideourservices.If legislation dampens the growth in web and mobile usage or access to the Internet,our results of operations could be harmed.Legislationenactedinthefuturecoulddampenthegrowthinwebandmobileu
272、sageanddecreaseitsacceptanceasamediumofcommunicationsandcommerceorresultinincreasedadoptionofnewmodesofcommunicationandcommercethatmaynotbeservicedbyourproducts.Inaddition,governmentagenciesorprivateorganizationsmaybegintoimposetaxes,feesorotherchargesforaccessingtheInternet,whichcouldresultinslower
273、growthoradecreaseineCommerce,useofsocialmediaand/oruseofmobiledevices.Anyoftheseoutcomescouldcausedemandforourplatformtodecrease,ourcoststoincrease,andourresultsofoperationsandfinancialconditiontobeharmed.If our customers fail to abide by applicable privacy laws or to provide adequate notice and/or
274、obtain consent from end users,we could be subject to litigation orenforcement action or reduced demand for our services.Industry self-regulatory standards may be implemented in the future that could affect demand for ourplatform and our ability to access data we use to provide our platform.Ourcustom
275、ersutilizeourservicestosupportandmeasuretheirdirectinteractionswithvisitors,andalthoughweprovidenoticeandchoicemechanismsonourwebsitesforoursubscriptionservices,wealsomustrelyonourcustomerstoimplementandadministernoticeandchoicemechanismsrequiredunderapplicablelaws.Ifweorourcustomersfailtoabidebythe
276、selaws,itcouldresultinlitigationorregulatoryorenforcementactionagainstourcustomersoragainstusdirectly.Inaddition,self-regulatoryorganizations(suchastheDigitalAdvertisingNetworkorNetworkAdvertisingInitiative)towhichourcustomers,partnersandsuppliersmaybelong,mayimposeopt-inoropt-outrequirementsonourcu
277、stomers,whichmayinthefuturerequireourcustomerstoprovidevariousmechanismsforuserstoopt-inoropt-outofthecollectionofanydata,includinganonymousdata,withrespecttosuchuserswebormobileactivities.Theonlineand/ormobileindustriesmayadopttechnicalorindustrystandards,orfederal,state,localorforeignlawsmaybeenac
278、tedthatallowuserstoopt-inoropt-outofdatathatisnecessarytoourbusiness.Inparticular,somegovernmentregulatorsandstandard-settingorganizationshavesuggesteda“DoNotTrack”standardthatallowsuserstoexpressapreference,independentofcookiesettingsintheirbrowser,nottohavewebsitebrowsingrecorded.AllthemajorIntern
279、etbrowsershaveimplementedsomeversionofa“DoNotTrack”setting.Furthermore,publishersmayimplementalternativetrackingtechnologiesthatmakeitmoredifficulttoaccessthedatanecessarytoourbusinessormakeitmoredifficultforustocompetewiththepublishersownadvertisingmanagementsolutions.Ifanyoftheseeventsweretooccuri
280、nthe19future,itcouldhaveamaterialeffectonourabilitytoprovideservicesandforourcustomerstocollectthedatathatisnecessarytouseourservices.Our revenues may be adversely affected if we are required to charge sales taxes in additional jurisdictions or other taxes for our solutions.Wecollectorhaveimposedupo
281、nussalesorothertaxesrelatedtothesolutionswesellincertainstatesandotherjurisdictions.Anincreasingnumberofstateshaveconsideredoradoptedlawsthatattempttoimposetaxcollectionobligationsonout-of-statecompanies.Additionally,theU.S.SupremeCourtrecentlyruledinSouth Dakota v.Wayfair,Inc.et al,orWayfair,thaton
282、linesellerscanberequiredtocollectsalesandusetaxdespitenothavingaphysicalpresenceinthebuyersstate.InresponsetoWayfair,orotherwise,statesorlocalgovernmentsmayadopt,orbegintoenforce,lawsrequiringustocalculate,collect,andremittaxesonsalesintheirjurisdictions.Asuccessfulassertionbyanystate,countryorother
283、jurisdictioninwhichwedobusinessthatweshouldbecollectingsalesorothertaxesonthesaleofourproductsandservicescould,amongotherthings,createsignificantadministrativeburdensforus,resultinsubstantialtaxliabilitiesforpastsales,discourageclientsfrompurchasingsolutionsfromusorotherwisesubstantiallyharmourbusin
284、essandresultsofoperations.We may experience quarterly fluctuations in our operating results due to a number of factors which make our future results difficult to predict and could causeour operating results to fall below expectations or our guidance.Ourquarterlyoperatingresultsmayfluctuateduetoavari
285、etyoffactors,manyofwhichareoutsideofourcontrol.Asaresult,comparingouroperatingresultsonaperiod-to-periodbasismaynotbemeaningful.Youshouldnotrelyonourpastresultsasindicativeofourfutureperformance.Ifourrevenuesoroperatingresultsfallbelowtheexpectationsofinvestorsorsecuritiesanalysts,orbelowanyguidance
286、wemayprovidetothemarket,thepriceofourcommonstockcoulddeclinesubstantially.Inadditiontootherriskfactorslistedinthissection,factorsthatmayaffectourquarterlyoperatingresultsincludethefollowing:thelevelofadvertisingspendmanagedthroughourplatformforaparticularquarter;fluctuationsinthecontractualratesofou
287、rstrategicagreementswithpublishers;customerrenewalrates,andthepricingandusageofourplatforminanyrenewalterm;demandforourplatformandthesizeandtimingofoursales;customersdelayingpurchasingdecisionsinanticipationofnewreleasesbyusorofnewproductsbyourcompetitors;anyterminationoradversechangesintheGoogleRev
288、enueShareAgreement,oranychangesinanycurrentorfuturestrategicagreementswithpublishers;changesinspendingondigitaladvertisingorinformationtechnologyandsoftwarebyourcurrentand/orprospectivecustomers;theimpactofpublichealthepidemicslikeCOVID-19;delaysinprojectstoupgradeourownsoftwareplatforminfrastructur
289、eandanyresultingdelaysinreleasingnewfeatures;networkoutages,platformdowntime,softwarebugsorsecuritybreachesandanyassociatedcredits,warrantyclaimsorotherexpenses;changesinthecompetitivedynamicsofourindustry,includingconsolidationamongcompetitorsorcustomers;marketacceptanceofourcurrentandfuturesolutio
290、ns;budgetingcyclesofourcustomers;ourpotentiallylengthysalescycle;ourabilitytocontrolcosts,includingouroperatingexpenses;theamountandtimingofinfrastructurecostsandoperatingexpensesrelatedtothemaintenanceandexpansionofourbusiness,operationsandinfrastructure;20hiringorseparationofemployeesorrestructuri
291、ngofourteamsorpersonnel;foreigncurrencyexchangeratefluctuations;andgeneraleconomicandpoliticalconditionsinourdomesticandinternationalmarkets.Baseduponallofthefactorsdescribedabove,wehavealimitedabilitytoforecastourfuturerevenues,costsandexpenses,andasaresult,ouroperatingresultsmayfromtimetotimefallb
292、elowourestimatesortheexpectationsofpublicmarketanalystsandinvestors.Future acquisitions or divestitures,strategic investments,partnerships or alliances could be difficult to integrate or complete,divert the attention of keymanagement personnel,disrupt our business,dilute shareholder value and advers
293、ely affect our results of operations and financial condition.Weacquiredanddivestedbusinessesinthepastandmayseektoacquireordivestbusinesses,productsortechnologiesinthefuture.However,wehavelimitedexperienceinacquiringandintegratingbusinesses,productsandtechnologies.Ifweidentifyanappropriateacquisition
294、candidate,wemaynotbesuccessfulinnegotiatingthetermsand/orfinancingoftheacquisition,andourduediligencemayfailtoidentifyalloftheproblems,liabilitiesorothershortcomingsorchallengesofanacquiredbusiness,productortechnology,includingissuesrelatedtointellectualproperty,productqualityorarchitecture,regulato
295、rycompliancepractices,revenuerecognitionorotheraccountingpracticesoremployeeorclientissues.Anyacquisitionorinvestmentmayrequireustousesignificantamountsofcash,issuepotentiallydilutiveequitysecuritiesorincurdebt.Inaddition,acquisitionsinvolvenumerousrisks,anyofwhichcouldharmourbusiness,including:regu
296、latoryandcommercialrisksrelatingtoadvertisingtechnologieswemayacquire;difficultiesinintegratingtheoperations,technologies,servicesandpersonnelofacquiredbusinesses,especiallyifthosebusinessesoperateoutsideofourcorecompetencyorinforeigncountries;culturalchallengesassociatedwithintegratingemployeesfrom
297、theacquiredcompanyintoourorganization;reputationandperceptionrisksassociatedwiththeacquiredproductortechnologybythegeneralpublic;ineffectivenessorincompatibilityofacquiredtechnologiesorservices;potentiallossofkeyemployeesofacquiredbusinesses;inabilitytomaintainthekeybusinessrelationshipsandthereputa
298、tionsofacquiredbusinesses;diversionofmanagementsattentionfromotherbusinessconcerns;litigationforactivitiesoftheacquiredcompany,includingclaimsfromterminatedemployees,clients,formershareholdersorotherthirdparties;failuretoidentifyalloftheproblems,liabilitiesorothershortcomingsorchallengesofanacquired
299、company,technology,orsolution,includingissuesrelatedtointellectualproperty,solutionqualityorarchitecture,regulatorycompliancepractices,revenuerecognitionorotheraccountingpracticesoremployeeorclientissues;inthecaseofforeignacquisitions,theneedtointegrateoperationsacrossdifferentculturesandlanguagesan
300、dtoaddresstheparticulareconomic,currency,politicalandregulatoryrisksassociatedwithspecificcountries;costsnecessarytoestablishandmaintaineffectiveinternalcontrolsforacquiredbusinesses;failuretosuccessfullyfurtherdeveloptheacquiredtechnologyinordertorecoupourinvestment;andincreasedfixedcosts.Ifweareun
301、abletosuccessfullyintegrateanyfuturebusiness,productortechnologyweacquire,ourbusinessandresultsofoperationsmaysuffer.Inaddition,asignificantportionofthepurchasepriceofcompaniesweacquiremaybeallocatedtoacquiredgoodwillandotherintangibleassets,whichmustbeassessedforimpairmentatleastannually.Ifouracqui
302、sitionsdonotyieldexpectedreturns,wemayberequiredtotakechargestoouroperatingresultsbasedonthisimpairmentassessmentprocess,whichcouldadverselyaffectourresultsofoperations.21Acquisitionscouldalsoresultindilutiveissuancesofequitysecuritiesortheincurrenceofdebt,whichcouldadverselyaffectouroperatingresult
303、s.Forinstance,inconnectionwithourprioracquisitions,weissuedsharesofourcommonstock.Wemayconsiderdivestituresofcertainnon-corebusinesses,products,technologiesorotherassetsfromtimetotime.Wemaynotbesuccessfulinidentifyingbuyersforanysuchassetsorinnegotiatingthetermsofanysuchsale.Anysuchsalecoulddisrupto
304、urbusinessandadverselyaffectourresultsofoperations.InNovember2019,wecompletedthedivestitureofassetsandliabilitiesrelatedtoourPerfectAudiencebusinesstoSharpSpring,Inc.,anunrelatedthirdparty,fornetproceedsof$4.3million,asfurtherdescribedinNote7oftheaccompanyingconsolidatedfinancialstatements.If we exp
305、erience material weaknesses or deficiencies in the future or otherwise fail to maintain an effective system of internal controls,we may not be able toaccurately or timely report our financial condition or results of operations,which may adversely affect investor confidence in us and,as a result,the
306、value ofour common stock.Inthepast,wehaveidentifiedamaterialweaknessinourinternalcontroloverfinancialreporting.Whilewehaveremediatedsuchmaterialweakness,therecanbenoassurancethatwewillnotidentifyadditionalcontroldeficienciesormaterialweaknessesinthefuture.Ifweidentifymaterialweaknessesordeficiencies
307、inthefuture,ifweareunabletocomplywiththerequirementsofSection404(b)oftheSarbanes-OxleyAct,orSection404,inatimelymanner,ifweareunabletoassertthatourinternalcontroloverfinancialreportingiseffectiveorifourindependentregisteredpublicaccountingfirmisunabletoexpressanopinionastotheeffectivenessofourintern
308、alcontroloverfinancialreporting,investorsmayloseconfidenceintheaccuracyandcompletenessofourfinancialreportsandthemarketpriceofourcommonstockcouldbenegativelyaffected,andwecouldbecomesubjecttoinvestigationsbythestockexchangeonwhichoursecuritiesarelisted,theSEC,orotherregulatoryauthorities,whichcouldr
309、equireadditionalfinancialandmanagementresources.We are a smaller reporting company and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make ourcommon stock less attractive to investors.Weareasmallerreportingcompanyandasaresultwecanprovidesim
310、plifiedexecutivecompensationdisclosuresinourfilings;areexemptfromtheprovisionsofSection404requiringthatindependentregisteredpublicaccountingfirmsprovideanattestationreportontheeffectivenessofinternalcontroloverfinancialreporting;andwehavecertainotherdecreaseddisclosureobligationsintheirSECfilings,in
311、cluding,amongotherthings,onlybeingrequiredtoprovidetwoyearsofauditedfinancialstatementsinannualreports.DecreaseddisclosuresinourSECfilingsduetoourstatusasasmallerreportingcompanymaymakeitharderforinvestorstoanalyzeourresultsofoperationsandfinancialprospects.Wecannotpredictifinvestorswillfindourcommo
312、nstocklessattractivebecausewewillrelyontheexemptionsavailabletosmallerreportingcompanies.Ifsomeinvestorsfindourcommonstocklessattractiveasaresult,theremaybealessactivetradingmarketforourcommonstockandourstockpricemaybemorevolatile.We may not be able to utilize a significant portion of our net operat
313、ing loss or research tax credit carryforwards,which could adversely affect our profitability.AsofDecember31,2019,wehadfederalandstatenetoperatinglosscarryforwardsduetopriorperiodlosses,whichifnotutilizedwillbegintoexpirein2027and2022forfederalandstatepurposes,respectively.Ourfederalnetoperatinglossg
314、eneratedin2018canbecarriedforwardindefinitely.Wealsohavefederalresearchtaxcreditcarryforwards,whichifnotutilizedwillbegintoexpirein2026.Thesenetoperatinglossandresearchtaxcreditcarryforwardscouldexpireunusedandbeunavailabletooffsetfutureincometaxliabilities,whichcouldadverselyaffectourprofitability.
315、Inaddition,underSection382oftheInternalRevenueCodeof1986,asamended,ortheCode,ourabilitytoutilizenetoperatinglosscarryforwardsorothertaxattributes,suchasresearchtaxcredits,inanytaxableyearmaybelimitedifweexperiencean“ownershipchange.”ASection382“ownershipchange”generallyoccursifoneormorestockholderso
316、rgroupsofstockholderswhoownatleast5%ofourstockincreasetheirownershipbymorethan50percentagepointsovertheirlowestownershippercentagewithinarollingthree-yearperiod.Similarrulesmayapplyunderstatetaxlaws.Futureissuancesofourstockcouldcausean“ownershipchange.”Itispossiblethatanyfutureownershipchangecouldh
317、aveamaterialeffectontheuseofournetoperatinglosscarryforwardsorothertaxattributes,whichcouldadverselyaffectourprofitability.Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.GenerallyacceptedaccountingprinciplesintheUn
318、itedStatesaresubjecttointerpretationbytheFinancialAccountingStandardsBoard,theSEC,andvariousbodiesformedtopromulgateandinterpretappropriateaccountingprinciples.Achangeintheseprinciplesorinterpretationscouldhaveasignificanteffectonourreportedfinancialresults,andcouldaffectthereportingoftransactionsco
319、mpletedbeforetheannouncementofachange.22We may be required to record a significant charge to earnings if our amortizable long-lived and intangible assets become impaired.WearerequiredunderGAAPtoreviewouramortizablelong-livedandintangibleassetsforimpairmentwheneventsorchangesincircumstancesindicateth
320、ecarryingvaluemaynotberecoverable.Conditionsthatwouldnecessitateanimpairmentassessmentincludeasignificantdeclineintheobservablemarketvalueofanasset,asignificantchangeintheextentormannerinwhichanassetisused,oranyothersignificantadversechangethatwouldindicatethatthecarryingamountofanassetorgroupofasse
321、tsmaynotberecoverable.Theeventsandcircumstancesweconsiderincludethebusinessclimate,legalfactors,operatingperformanceindicatorsandcompetition.Inthefuturewemayberequiredtorecordasignificantchargetoearningsinourconsolidatedfinancialstatementsfortheperiodinwhichanyimpairmentofouramortizablelong-livedand
322、intangibleassetsisdetermined.Thiscouldadverselyimpactourresultsofoperationsandharmourbusiness.Wepreviouslyrecordedagoodwillbalanceasaresultofacquisitionsinprioryears.InNovember2019,weperformedanimpairmentassessmentofgoodwillinconjunctionwiththedivestitureoftheassetsandliabilitiesofourPerfectAudience
323、businesstoSharpSpring,Inc.,anunrelatedthirdparty.Weperformedthisassessmentutilizingthesimplifiedmethod,anditresultedinanimpairmentofgoodwillof$1.9millionatthattime,reducingthegoodwillbalancetozero.Additionally,weperformedaninterimgoodwillimpairmenttestinthethirdquarterof2018duetoadeclineinthemarketc
324、apitalizationofourcommonstock,whichresultedinachargefortheimpairmentof$14.7millionfortheyearendedDecember31,2018.RefertoNote2andNote6oftheaccompanyingconsolidatedfinancialstatementsforfurtherdetailsontherelatedgoodwillimpairmenttests.Risks Related to the Ownership of Our Common StockIf we cannot mee
325、t the continued listing requirements of The Nasdaq Global Market,The Nasdaq Global Market may de-list our common stock,which wouldhave an adverse effect on the trading volume,liquidity and market price of our common stock.OurcommonstockislistedonTheNasdaqGlobalMarket,orNasdaq.Althoughwecurrentlymeet
326、Nasdaqslistingstandards,whichgenerallyrequirethatwemeetcertainrequirementsrelatingtostockholdersequity,marketcapitalization,stockprice,theaggregatemarketvalueofpubliclyheldshares,anddistributionrequirements,wecannotassureyouthatwewillbeabletocontinuetomeetNasdaqslistingrequirements.OneofNasdaqslisti
327、ngrequirementsisthatoursharesmaintainaminimumbidpriceofatleast$1.00.Ifacompanyssharestradefor30consecutivebusinessdaysbelowthe$1.00minimumclosingbidpricerequirement,Nasdaqwillsendadeficiencynoticetothecompany,advisingthatithasbeenaffordeda“complianceperiod”of180calendardaystoregaincompliancewiththea
328、pplicablerequirements.AsofMarch13,2020,theclosingpriceofourcommonstockonNasdaqwas$1.13.IfwefailtosatisfyNasdaqscontinuedlistingrequirements,Nasdaqmaytakestepstode-listourcommonstock.IfNasdaqdelistsoursecuritiesfortradingontheNasdaq,wecouldfacesignificantadverseconsequences,including:alimitedavailabi
329、lityofmarketquotationsforourcommonstock;reducedliquiditywithrespecttoourcommonstock;reducedtradingvolumeinandmarketpriceofourcommonstock;alimitedamountofnewsandanalystcoverageforourcompany;andadecreasedabilitytoissueadditionalsecuritiesorobtainadditionalfinancinginthefuture.Suchade-listingwouldlikel
330、yhaveanadverseeffectonthepriceofourcommonstockandwouldimpairyourabilitytosellorpurchaseourcommonstockwhenyouwishtodoso.Intheeventofade-listing,wemaytakeactionstorestoreourcompliancewithNasdaqslistingrequirements,butwecanprovidenoassurancethatanysuchactiontakenbyuswouldallowourcommonstocktobecomelist
331、edagain,stabilizethemarketpriceorimprovetheliquidityortradingvolumeofourcommonstock,preventourcommoncapitalizationandstockholdersequityfromdroppingbelowtheNasdaqminimumrequirements,orpreventotherfuturenon-compliancewithNasdaqscontinuedlistingrequirements.23The market price of our common stock has be
332、en,and is likely to continue to be,subject to wide fluctuations and could subject us to litigation.Sinceourinitialpublicoffering,theclosingsalespriceofourcommonstockontheNewYorkStockExchange(fromMarch22,2013throughJune19,2018)andTheNasdaqGlobalMarket(fromJune20,2018toDecember31,2019)hasbeenvolatile.
333、FromJanuary1,2018throughDecember31,2019,theclosingsalespriceofourcommonstockontheNewYorkStockExchange(fromJanuary1,2018throughJune19,2018),andTheNasdaqGlobalMarket(fromJune20,2018toDecember31,2019)rangedfrom$1.27to$11.20pershare.Factorsaffectingthemarketpriceofourcommonstockinclude:variationsin,orforward-lookingguidanceregarding,ourrevenues,grossmargin,operatingresults,freecashflow,losspershare,re
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