Bandwidth (BAND) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Our future growth and the success of our expansion plans depend on a number of factors that are beyond our control
2. 02Our growth and financial health are impacted by a number of risks, including uncertain capital markets, political and economic instability in a number of regions, recessionary fears, high rates of inflation and higher interest rates
3. 03Nearly all of our operating cash is maintained in deposit accounts with various financial institutions and is not insured by the FDIC
4. 04The market in which we participate is highly competitive, and if we do not compete effectively, our business, results of operations and financial condition could be adversely affected
5. 05provide redundancy in their ability to deliver their own product offerings. Moreover, as we expand the scope of our services, we may face additional competition
6. 06If we are unable to attract new customers in a cost-effective manner, then our business results of operations and financial condition would be adversely affected
7. 07The market for some of our services is new and unproven, may decline or experience limited growth and is dependent in part on enterprises and developers continuing to adopt our platform and use our services
8. 08geopolitical developments, global pandemics, adverse regulatory developments or other causes. If our market does not experience significant growth or demand for our services and platform decreases, then our business, results of operations and financial condition could be adversely affected
9. 09If we are unable to increase the revenue that we derive from enterprises, our business, results of operations and financial condition may be adversely affected
10. 10If we do not develop enhancements to our services and introduce new services or features that achieve marketplace acceptance and preference, our business, results of operations and financial condition could be adversely affected
11. 11Use of AI in our business, and its use by others, may present challenges with properly managing its use including potential reputational harm, competitive harm, and legal liability, or otherwise adversely affect our operations
12. 12As we continue to expand our services geographically and otherwise, we may experience difficulties in maintaining our corporate culture, operational infrastructure and management, and our business, results of operations and financial condition could be adversely affected
13. 13Our pricing and billing systems are complex, and errors could adversely affect our results of operations
14. 14We must continue to develop effective business support systems to implement customer orders and to provide and bill our customers for services
15. 15If we are not able to maintain and enhance our brand and increase market awareness of our company and services, then our business, results of operations and financial condition may be adversely affected
16. 16Any failure to deliver and maintain high-quality customer support may adversely affect our relationships with our customers and prospective customers, and could adversely affect our reputation, business, results of operations and financial condition
17. 17We operate internationally, which exposes us to significant risks
18. 18In response to the military conflict between Russia and Ukraine, the U.S., U.K., EU and others imposed significant additional sanctions and export controls against Russia and certain Russian individuals and entities, and we terminated our service offerings in Russia and Belarus
19. 19A significant portion of our revenue is concentrated among a limited number of customers. If we lost one or more of our top ten customers, or, if one or more of these major customers significantly decreased orders for our services, our business would be materially and adversely affected
20. 20We are currently subject to litigation related to taxes and charges associated with our provision of 911 services, which could divert management’s attention and adversely affect our results of operations
21. 21We are also subject to litigation in the ordinary course of business, and uninsured judgments or a rise in insurance premiums may adversely affect our results of operations
22. 22The communications industry faces significant regulatory uncertainties and the resolution of these uncertainties could harm our business, results of operations and financial condition
23. 23The effects of either increased or decreased regulation of IP-based services are unknown
24. 24intercarrier compensation, emergency services, interconnection, illegal robocalling, extraterritorial use of telephone numbers, cybersecurity, AI and other areas, in general or particular to our industry, may increase uncertainty and costs and restrict operations or decrease revenue
25. 25Our business is subject to complex and evolving laws and regulations, commercial standards, contractual obligations and other requirements related to information collection
26. 26Our business could suffer if we cannot obtain or retain numbering resources or are significantly limited with how numbers may be distributed to customers
27. 27We may be exposed to liabilities under anti-corruption, export control and economic sanction regulations, and similar laws and regulations, and any determination that we violated any of these laws or regulations could have a material adverse effect on our business
28. 28Intellectual property and proprietary rights of others could prevent us from using necessary technology to provide our services or subject us to expensive intellectual property litigation
29. 29Our use of open source software could negatively affect our ability to sell our services and subject us to possible litigation
30. 30Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses
31. 31If we fail to protect our internally developed systems, technology and software and our patents and trademarks, we may become involved in costly litigation or our business or brand may be harmed
32. 32We may be liable for the information that content owners or distributors distribute over our network
33. 33Third parties may fraudulently obtain access to customer accounts and other personal information, use our services to commit fraud or steal our services, which could damage our reputation, limit our growth or cause us to incur additional expenses
34. 34If our customers or their end users do not accept the differences between our service and traditional telephone service, they may choose to remain with their current telephone service provider or may choose to return to service provided by traditional network service providers
35. 35We may lose customers if we experience failures of our system or communications platform that significantly disrupt the availability and quality of the services that we provide. Such failures may also cause interruptions to service delivery and the completion of other corporate functions
36. 36Defects or errors in our services could diminish demand for our services, harm our business and results of operations and subject us to liability
37. 37If our emergency services do not function properly, we may be exposed to significant liability from our users
38. 38Any disruption to or termination of arrangements with key suppliers could cause delay and additional costs and could harm our relationships with current and prospective customers
39. 39Our customer churn rate may increase
40. 40The market prices for certain of our services have decreased in the past and may decrease in the future, resulting in lower revenue than we anticipate
41. 41The need to obtain additional IP circuits from other providers increases our costs. In addition, the need to interconnect our network to networks that are controlled by others could increase our costs and adversely impact our business
42. 42We depend largely on the continued services of our senior management and other key employees, the loss of any of whom could adversely affect our business, results of operations and financial condition
43. 43If we are unable to hire, retain and motivate qualified personnel, our business will suffer
44. 44We could be subject to additional tax liabilities for historic and future sales, use and similar taxes, which could adversely affect our results of operations
45. 45these jurisdictions challenge our assumptions and analysis, our actual exposure could differ materially from our current estimates
46. 46Our global operations and legal entity structure subject us to potentially adverse income tax consequences
47. 47Our ability to use our net operating loss and tax credit carryforwards to offset future taxable income may be subject to certain limitations
48. 48If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected
49. 49If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
50. 50If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings
51. 51We face exposure to foreign currency exchange rate fluctuations, and such fluctuations could adversely affect our business, results of operations and financial condition
52. 52Earthquakes, hurricanes, fires, floods, pandemics, power outages, terrorist attacks, acts of war, civilian unrest and other significant events could disrupt our business and ability to serve our clients
53. 53We may acquire or invest in companies, which may divert our management’s attention and result in debt or dilution to our stockholders. We may not be able to efficiently and effectively integrate acquired operations, and thus may not fully realize the anticipated benefits from such acquisitions

Risks Related to the Convertible Notes

1. 54Servicing our debt requires a significant amount of cash, and our business may not generate sufficient cash flow to repay our indebtedness
2. 55We may incur substantially more debt or take other actions which would intensify the risks discussed above
3. 56The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results
4. 57The Capped Calls may affect the value of the Convertible Notes and our Class A common stock
5. 58We have been advised that, in connection with establishing their initial hedges of the Capped Calls, the option counterparties or their respective affiliates entered into various derivative transactions with respect to our Class A common stock concurrently with or shortly after the pricing of the Convertible Notes
6. 59We are subject to counterparty risk with respect to the Capped Calls

Risks Related to Ownership of Our Class A Common Stock

1. 60The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment
2. 61The market price of our Class A common stock could decline as a result of substantial sales of our Class A common stock, particularly sales by our directors, executive officers and significant stockholders, or the perception in the market that holders of a large number of shares intend to sell their shares
3. 62We cannot predict the impact our capital structure may have on our stock price
4. 63We are effectively controlled by David A. Morken, our Co-Founder and Chief Executive Officer, whose interests may differ from other stockholders
5. 64If securities or industry analysts cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our Class A common stock adversely, the trading price of our Class A common stock and trading volume could decline
6. 65Anti-takeover provisions contained in our second amended and restated certificate of incorporation and third amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt
7. 66These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management
8. 67Our second amended and restated certificate of incorporation and our third amended and restated bylaws include super-majority voting provisions that will limit your ability to influence corporate matters
9. 68We may need additional capital in the future and such capital may be limited or unavailable. Failure to raise capital when needed could prevent us from growing in accordance with our plans
10. 69We do not intend to pay dividends for the foreseeable future
11. 70If a large number of shares of our Class A common stock is sold in the public market, the sales could reduce the trading price of our Class A common stock and impede our ability to raise future capital