Commerce.com (CMRC) risk factors, FY2024 10-K

Risks related to the growth and profitability of our business

1. 01We have a history of operating losses, and we may not be able to generate sufficient revenue to achieve profitability on our anticipated timeline or sustain it thereafter
2. 02As our efforts increasingly focus on enterprise accounts, we may face greater sales, marketing, development and support costs, longer sales cycles and more unpredictability in attracting or retaining enterprise accounts
3. 03We have undertaken, and may in the future undertake, restructuring activities that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition
4. 04Our success depends in part on our partner-centric strategy. Our business would be harmed if we fail to maintain or expand partner relationships
5. 05Our ability to forecast our future results of operations is subject to many risks and uncertainties and our operating and financial results could differ materially from our expectations
6. 06be harmed and we may be exposed to material financial penalties and legal liability, which could materially adversely affect our business, results of operations, and financial condition
7. 07If there are interruptions or performance problems associated with our technology or infrastructure, our existing customers may experience service outages, and our new customers may experience delays in using our platform
8. 08Any of the above circumstances or events may harm our reputation, cause customers to terminate their agreements with us, impair our ability to grow our customer base, subject us to financial liabilities under our service level agreements, and otherwise harm our business, results of operations, and financial condition
9. 09If our platform fails to perform properly, and if we fail to develop enhancements to resolve performance issues, we could lose customers, become subject to performance or warranty claims, or incur significant costs
10. 10Our sales cycle with our customers can be long and unpredictable, and our sales efforts require considerable time and expense
11. 11evolving customer demands
12. 12If we fail to maintain or grow our brand recognition, our ability to expand our customer base will be impaired and our financial condition may suffer
13. 13If we fail to offer high quality support, our business and reputation could suffer
14. 14We may evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products, and other assets in the future
15. 15We rely on third-party proprietary and open source software for our platform. Our inability to obtain third-party licenses for such software, or obtain them on favorable terms, or any errors or failures caused by such software could adversely affect our business, results of operations and financial condition
16. 16Our use of open source software could subject us to possible litigation or cause us to subject our platform to unwanted open source license conditions that could negatively impact our sales
17. 17Payment transactions on our ecommerce platform subject us to regulatory requirements, additional fees, and other risks that could be costly and difficult to comply with or that could harm our business
18. 18Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations
19. 19experienced an ownership change, or if we undergo one or more ownership changes as a result of future transactions in our stock, then our ability to utilize NOLs and other pre-change tax attributes could be limited by Sections 382 and 383 of the Code

Risks related to our industry and the economy

1. 20We face intense competition, especially from well-established companies offering solutions and related applications. We may lack sufficient financial or other resources to maintain or improve our competitive position, which may harm our ability to add new customers, retain existing customers, and grow our business
2. 21Our current operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges. We are subject to risks from geopolitical crises, such as the Russian invasion of Ukraine
3. 22adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash; and
4. 23We have previously adjusted our pricing levels and may in the future need to reduce or change our pricing model to remain competitive
5. 24Mobile devices are increasingly being used to conduct commerce, and if our platform does not operate as effectively when accessed through these devices, our customers and their shoppers may not be satisfied with our services, which could harm our business
6. 25Activities of customers, their shoppers, and our partners could damage our brand, subject us to liability and harm our business and financial results
7. 26We provide our ecommerce platform to businesses in highly-regulated industries, which subjects us to a number of challenges and risks
8. 27We may be subject to additional obligations to collect and remit sales tax and other taxes. We may be subject to tax liability for past sales, which could harm our business
9. 28Changes in tax laws or regulations that are applied adversely to us or our customers could increase the cost of our ecommerce platform and adversely impact our business

Risks related to owning our common stock

1. 29The market price of shares of our common stock has been and may continue to be volatile, which could cause the value of your investment to decline
2. 30may be onerous or highly dilutive. Furthermore, our existing indebtedness may limit our ability to incur additional indebtedness on favorable terms or at all
3. 31We have no current plans to pay cash dividends on our common stock; as a result, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it
4. 32If our operating and financial performance in any given period does not meet the guidance that we provide to the public or the expectations of investment analysts, the market price of our common stock may decline
5. 33If securities or industry analysts do not publish research or reports about our business or publish negative reports, the market price of our common stock could decline
6. 34cover us downgrades our common stock or if our reporting results do not meet their expectations, the market price of our common stock could decline
7. 35Holders of our common stock may be subject to further dilution upon issuance of the shares reserved under our 2020 Plan and Employee Stock Purchase Plan
8. 36We may be adversely affected by the effects of inflation
9. 37If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, and changing customer needs or preferences, our platform may become less competitive
10. 38The estimates of market opportunity and forecasts of market growth included in this Annual Report on Form 10-K may prove to be inaccurate. Even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all
11. 39If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction or adequately address competitive challenges
12. 40We anticipate that our operations will continue to increase in complexity as we grow, which will create management challenges
13. 41We depend on our senior management team and the loss of one or more key employees or an inability to attract and retain highly skilled employees could adversely affect our business
14. 42Losing key members of our management or operations teams could hinder our ability to attract and retain the necessary talent for continued operations and growth
15. 43If we are unable to maintain our corporate culture as we grow, we could lose the innovation, teamwork, passion and focus on execution that we believe contribute to our success, and our business may be harmed
16. 44Unfavorable conditions in our industry or the global economy, or reductions in IT spending, could limit our ability to grow our business and negatively affect our results of operations
17. 45Natural catastrophic events and man-made problems such as power disruptions, computer viruses, global pandemics, data security breaches and terrorism may disrupt our business
18. 46Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection, and other losses
19. 47Our international operations may subject us to potential adverse tax consequences
20. 48We are subject to governmental export and import controls that could impair our ability to compete in international markets and subject us to liability if we violate the controls
21. 49We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results
22. 50We are subject to anti-corruption, anti-bribery, anti-money laundering, and similar laws. Non-compliance with such laws can subject us to criminal and/or civil liability and harm our business
23. 51While we have policies and procedures to address compliance with such laws, our employees and agents could violate our policies and applicable law, for which we may be ultimately held responsible. As we increase our international sales and business or acquire other companies, our risks under these laws may increase
24. 52Changes in subjective assumptions, estimates and judgments by management related to complex accounting matters or changes in accounting principles generally accepted in the United States, could significantly affect our financial condition and results of operations
25. 53We may be unable to raise the funds necessary to repurchase the Convertible Notes for cash following a fundamental change, or to pay any cash amounts due upon conversion, and our future indebtedness may limit our ability to repurchase the Convertible Notes or pay cash upon their conversion
26. 54Provisions in the indenture governing the Convertible Notes could delay or prevent an otherwise beneficial takeover of us
27. 55The accounting method for reflecting the Convertible Notes on our balance sheet, accruing interest expense for the notes and reflecting the underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition
28. 56The interest rate on the $150.0 million aggregate principal amount of the 2028 Convertible Notes outstanding as of
29. 57If we do not generate sufficient cash flow from operations to satisfy our debt servicing obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our indebtedness, selling assets or seeking to raise additional capital
30. 58issue certain preferred stock or similar equity securities
31. 59unable to compete effectively or to take advantage of new business opportunities
32. 60Provisions in our organizational documents and certain rules imposed by regulatory authorities may delay or prevent our acquisition by a third party
33. 61The provision of our amended and restated certificate of incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers