Cerence (CRNC) risk factors, FY2024 10-K

Risks Relating to Our Business

1. 01The market in which we operate is highly competitive and rapidly changing and we may be unable to compete successfully
2. 02Adverse conditions in the automotive industry or the global economy more generally could have adverse effects on our results of operations
3. 03Our process optimization and cost-reduction efforts may not be successful
4. 04Pandemics or disease outbreaks, such as COVID-19, have disrupted, and may continue to disrupt, our business, which could adversely affect our financial performance
5. 05Our strategy to increase cloud connected services may adversely affect our near-term revenue growth and results of operations
6. 06Pricing pressures from our customers may adversely affect our business
7. 07We invest effort and money seeking OEMs’ validation of our technology, and there can be no assurance that we will win or be able to renew service contracts, which could adversely affect our future business, results of operations and financial condition
8. 08Our business could be materially and adversely affected if we lost any of our largest customers
9. 09Our operating results may fluctuate significantly from period to period, and this may cause our stock price to decline
10. 10general economic trends as they affect the customer bases into which we sell
11. 11We may not be successful with the adoption of new products
12. 12The transition in our Chief Executive Officer and other senior management positions will be critical to our success, and our business could be negatively impacted if we do not successfully manage these transitions
13. 13If we are unable to attract and retain management and other key personnel, our business could be harmed
14. 14We depend on skilled employees and could be impacted by a shortage of critical skills
15. 15Some of our employees are represented by workers councils or unions or are subject to local laws that are less favorable to employers than the laws of the U.S
16. 16Cybersecurity and data privacy incidents or breaches may damage client relations and inhibit our growth
17. 17other consequences of which we are not currently aware of but will discover through the remediation process
18. 18burden increase our overall risk exposure. There may be further divergence in the future, including with regard to administrative burdens
19. 19A significant portion of our revenues are derived, and a significant portion of our research and development activities are based, outside the United States. Our results could be harmed by economic, political, and regulatory risks associated with these international regions and foreign currency fluctuations
20. 20Our business in China is subject to aggressive competition and is sensitive to economic, market and political conditions
21. 21Interruptions or delays in our services or services from data center hosting facilities or public clouds could impair the delivery of our services and harm our business
22. 22If our goodwill or other intangible assets become impaired, our operating results could be negatively impacted
23. 23During the fiscal years ended September 30, 2024 and 2022, we recorded goodwill impairment charges of $609.2 million and $213.7 million, respectively, within the Consolidated Statement of Operations. For the fiscal year September 30, 2023, we did not have goodwill impairment

Risks Relating to our Intellectual Property and Technology

1. 24Third parties have claimed and may claim in the future that we are infringing their intellectual property, and we could be exposed to significant litigation or licensing expenses or be prevented from selling our products if such claims are successful
2. 25Unauthorized use of our proprietary technology and intellectual property could adversely affect our business and results of operations
3. 26Our software products may have bugs, which could result in delayed or lost revenue, expensive correction, liability to our customers and claims against us
4. 27We may be unable to respond quickly enough to changes in technology and technological risks and to develop our intellectual property into commercially viable products
5. 28We utilize certain key technologies, content and services from, and integrate certain of our solutions with, third parties and may be unable to replace those technologies, content and services if they become obsolete, unavailable or incompatible with our solutions

Risks Relating to Our Securities and Indebtedness

1. 29The terms of the Senior Credit Facilities restrict our current and future operations, particularly our ability to incur debt that we may need to fund initiatives in response to changes in our business, the industry in which we operate, the economy and governmental regulations
2. 30significantly change the nature of our business
3. 31We may evaluate whether to pay cash dividends on our common stock in the future, and the terms of our Senior Credit Facilities limit our ability to pay dividends on our common stock
4. 32make an acquisition of our company less attractive or more difficult
5. 33The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and results of operations and the value of our common stock
6. 34The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results
7. 35Certain provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws and Delaware law may discourage takeovers
8. 36limit our ability to enter into certain business combination transactions
9. 37Tax matters may cause significant variability in our financial results and may impact our overall financial condition
10. 38changes to assessments of uncertain tax positions
11. 39The commercial and credit environment, may adversely affect our access to, and the cost of, capital
12. 40Our stock price may fluctuate significantly
13. 41Low trading volume for our stock would amplify the effect of the above factors on our stock price volatility
14. 42Your percentage ownership in Cerence may be diluted in the future
15. 43If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired and investors’ views of us could be harmed