Sprinklr (CXM) risk factors, FY2025 10-K

Other

1. 01Summary of Selected Risk Factors Associated with Our Business

Risks Related to Our Growth

1. 02Our recent growth may not be indicative of our future growth. Our growth also makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful
2. 03We have incurred significant net losses in the past and we may not be able to generate sufficient revenue to achieve and maintain profitability
3. 04If we fail to effectively manage our growth and organizational change, our business and results of operations could be harmed

Risks Related to Our Business and Industry

1. 05Our actual operating results may differ significantly from any guidance provided
2. 06Our results of operations and financial metrics may be difficult to predict. As a result, we may fail to meet or exceed the expectations of investors or securities analysts, which could cause our stock price to decline
3. 07Any failure of our Unified-CXM platform to satisfy customer demands, achieve increased market acceptance or adapt to changing market dynamics would adversely affect our business, results of operations, financial condition and growth prospects
4. 08The market for Unified-CXM solutions is rapidly evolving, and if this market develops more slowly than we expect or declines, develops in a way that we do not expect, or if we do not compete effectively, our business could be adversely affected
5. 09Our business depends on our customers renewing their subscriptions and on us expanding our sales to existing customers. Any decline in our customer renewals or expansion would harm our business, results of operations and financial condition
6. 10We recognize revenue over the term of our customers’ contracts. Consequently, increases or decreases in new sales may not be immediately reflected in our results of operations and may be difficult to discern
7. 11The failure to attract and retain qualified talent could prevent us from successfully executing our business strategy
8. 12We rely on third-party data centers and cloud computing providers, and any interruption or delay in service from these facilities could impair the delivery of our Unified-CXM platform and harm our business
9. 13If we are not able to effectively develop platform enhancements, introduce new products or keep pace with technological developments, our business, results of operations and financial condition could be adversely affected
10. 14We use artificial intelligence in our products and operations, which may result in operational challenges, legal liability, reputational concerns and competitive risks
11. 15Our business and growth depend in part on the success of our strategic relationships with third parties, as well as on the continued availability and quality of feedback data from third parties over whom we do not have control
12. 16We invest significantly in research and development, and, to the extent that our research and development investments do not translate into new solutions or material enhancements to our current solutions or we do not use those investments efficiently, our business and results of operations would be harmed
13. 17If we are unable to develop and maintain successful relationships with channel partners, our business, results of operations, and financial condition could be adversely affected
14. 18If we are not able to maintain and enhance our brand, our business, results of operations and financial condition may be adversely affected
15. 19We may acquire or invest in companies, which may divert our management’s attention and result in additional dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions
16. 20Our international sales and operations, including our planned business development activities outside of the United States, subject us to additional risks and challenges that can adversely affect our business, results of operations and financial condition
17. 21We face exposure to foreign currency exchange rate fluctuations, and if foreign currency exchange rates fluctuate substantially in the future, our results of operations and financial condition, which are reported in U.S. dollars, could be adversely affected

Risks Related to Our Intellectual Property

1. 22Our Unified-CXM platform utilizes open source software, which may subject us to litigation, require us to re-engineer our Unified-CXM platform or otherwise divert resources away from our development efforts
2. 23Any failure to obtain, maintain, protect, defend or enforce our intellectual property rights could impair our ability to protect our proprietary technology and our brand and adversely affect our business, financial condition and results of operations
3. 24We may face claims by third parties alleging infringement, misappropriation or other violation of their intellectual property, trade secrets or proprietary rights
4. 25of Oregon’s Uniform Trade Secrets Act, among other claims, and, on March 1, 2022, the court dismissed those claims with prejudice. We and Opal finalized the settlement on March 15, 2022, and it was paid on March 30, 2022
5. 26Indemnity and other provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses

Risks Related to Litigation, Regulatory Compliance and Governmental Matters

1. 27Our business and operations could be negatively affected by any pending or future securities litigation or stockholder activism
2. 28We are subject to governmental export and import controls and economic sanctions laws and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws
3. 29Failure to comply with anti-bribery, anti-corruption and anti-money laundering laws could subject us to penalties and other adverse consequences
4. 30Our business could be adversely affected by changes in laws and regulations related to the Internet or changes in access to the Internet generally
5. 31Our business could be adversely impacted by laws and regulations related to the telecommunications industry

Risks Related to Privacy, Information Technology and Cybersecurity

1. 32Interruptions in availability or suboptimal performance associated with our technology and infrastructure may adversely affect our business, results of operations and financial condition
2. 33reputation, require us to pay significant penalties or fines or subject us to litigation, claims or other disputes, any of which could have an adverse effect on our business, results of operations and financial condition
3. 34result in penalties ranging from $5,000 to $100,000 per month by credit card companies, litigation, damage to our reputation, and revenue losses
4. 35Moreover, we have been certified or assessed to be compliant with certain privacy and security standards or requirements. If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutions to certain customers and could harm our business
5. 36In the ordinary course of our business, we process confidential information. Use of our Unified-CXM platform also involves processing our customers’ information, including personal data regarding their customers, employees or other individuals
6. 37We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims

Risks Related to Tax and Accounting Matters

1. 38Our results of operations may be harmed if we are required to collect sales, value-added, goods and services or other similar taxes for subscriptions to our products and services in jurisdictions in which we have not historically done so
2. 39Our international operations subject us to potentially adverse tax consequences
3. 40Changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates
4. 41Our ability to use our net operating losses and other tax assets to offset future taxable income or tax liability could be subject to certain limitations

Risks Related to Being a Public Company, Ownership of Our Class A Common Stock and Other General Risks

1. 42Our stock price may be volatile, and the value of our Class A common stock may decline
2. 43The dual class structure of our common stock as contained in our amended and restated certificate of incorporation has the effect of concentrating voting control with our executive officers and directors and their affiliates, limiting your ability to influence corporate matters
3. 44Our directors, executive officers and their respective affiliates are able to exert significant control over us, which limits your ability to influence the outcome of important transactions, including a change of control
4. 45If 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
5. 46Unstable market and economic conditions and catastrophic events may have serious adverse consequences on our business, financial condition and share price
6. 47Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the market price of our Class A common stock
7. 48provision will not apply to any causes of action arising under the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction