Five9 (FIVN) risk factors, FY2024 10-K

Risks Related to Our Financial Results

1. 01Our quarterly and annual results may fluctuate significantly, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock
2. 02Because a significant percentage of our revenue is derived from existing customers, downturns or upturns in new sales will not be immediately reflected in our operating results and may be difficult to discern, but may be material over time
3. 03As AI solutions will likely perform an increasing proportion of contact center interactions, if we are unable to replace decreases in subscription revenue from licenses with revenue from the sale of additional AI solutions, our revenue, results of operations and business will be harmed
4. 04Shifts over time or from quarter-to-quarter in the mix of sizes or types of organizations that purchase our solution could affect our gross margins and operating results
5. 05We have a history of losses and we may be unable to achieve or sustain profitability

Risks Related to Our Growth

1. 06Our historical growth may not be indicative of our future growth, and if we grow rapidly, we may fail to manage our growth effectively
2. 07Our growth depends in part on the success of our strategic relationships with third parties and our failure to successfully maintain, grow and manage these relationships could harm our business
3. 08Our historical growth and recent adverse economic conditions make it difficult to evaluate and predict our current business and future prospects

Risks Related to Our Customers

1. 09If we are unable to attract new customers or continue to expand within our installed customer base, our revenue and revenue growth will be harmed
2. 10If our existing customers terminate their subscriptions or reduce their subscriptions and related usage, our revenues and gross margins will be harmed and we will be required to spend more money to grow our customer base
3. 11The loss of one or more of our key customers, or a failure to renew our subscription agreements with one or more of our key customers, could harm our ability to market our solution
4. 12Our customers may fail to comply with the terms of their agreements, necessitating action by us to collect payment, or may terminate their subscriptions for our solution
5. 13Our business could be harmed if our customers are not satisfied with the professional services and technical support provided by us or our partners

Risks Related to the Sale of our Solution

1. 14Failure to adequately retain and expand our direct sales force will impede our growth
2. 15We have established, and are continuing to increase, our network of technology solution distributors and resellers to sell our solution; our failure to effectively develop, manage, and maintain this network could materially harm our revenues
3. 16The markets in which we participate involve a high number of competitors that is continuing to increase, and if we do not compete effectively, our operating results could be harmed
4. 17If we fail to grow our marketing capabilities and develop widespread brand awareness cost effectively, our business may suffer

Risks Related to Our Solution

1. 18If we fail to manage our technical operations infrastructure, our existing customers may experience service outages, our new customers may delay or decide against deployment of our solution, existing customers may decide to move to another vendor, and we could be subject to claims for credits, damages or other actions
2. 19Further development of our AI solutions may not be successful and may result in reputational harm and our future operating results could be materially harmed
3. 20The AI technology and features incorporated into our solution include new and evolving technologies that may present both legal and business risks
4. 21The use of AI by our workforce may present risks to our business
5. 22If our solution fails, or is perceived to fail, to perform properly or if it contains technical defects, our reputation could be harmed, our market share may decline, and we could be subject to product liability claims
6. 23The contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new features and components of our solution in order to maintain and grow our business
7. 24our existing solution or new applications that achieve market acceptance or that keep pace with technological developments, our business would be harmed
8. 25Our ability to continue to enhance our solution is dependent on adequate research and development resources. If we are not able to adequately fund our research and development efforts, we may not be able to compete effectively, and our business and operating results may be harmed
9. 26If we are unable to maintain the compatibility of our software with other solutions and technologies, our business could be harmed
10. 27We are subject to many hazards and operational risks that can disrupt our business, some of which may not be insured or fully covered by insurance

Risks Related to Our International Operations

1. 28We continue to expand our international operations, which exposes us to significant risks
2. 29Sales to customers outside the United States or with international operations and our international sales efforts and operations support expose us to risks inherent in international sales and operations

Other Operational Risks

1. 30Adverse economic conditions may harm our business
2. 31Security breaches, cybersecurity incidents, and improper access to, use of, or disclosure of our data or our customers’ data, or other cyber- attacks on our systems, or those of third parties on which we rely, could result in litigation and regulatory risk, harm our reputation and our business
3. 32If we are unable to attract and retain highly skilled leaders and other employees, our business and results of operations may be adversely affected
4. 33We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs
5. 34If we are unable to maintain and further develop effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decrease
6. 35Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported operating results

Risks Related to Our Intellectual Property

1. 36Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand
2. 37We will likely continue to be subject to third-party intellectual property infringement claims
3. 38Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses
4. 39We employ third-party licensed software, including AI solutions, for use in or with our solution, and the inability to maintain these licenses or errors in the software we license could result in increased costs, or reduced service levels, which could harm our business
5. 40Our solution utilizes open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business

Risks Related to Regulatory and Tax Matters

1. 41Failure to comply with laws and regulations could harm our business and our reputation
2. 42Increased taxes on our service may increase our customers’ cost of using our service and/or increase our costs and reduce our profit margins to the extent the costs are not passed through to our customers, and we may be subject to liabilities for past sales and other taxes, surcharges and fees
3. 43Our ability to maintain compliance with complex rules and technological requirements intended to prevent robocalls and caller ID spoofing poses a significant business risk due to possible blocking of customer voice traffic
4. 44Our ability to offer services outside the United States is subject to different regulatory and taxation requirements, which may be complicated and uncertain
5. 45We are subject to assessments for unpaid USF contributions, as well as interest thereon and civil penalties, due to our prior position that we were not subject to regulation as a USF contributor and as an international carrier
6. 46If we do not comply with FCC rules and regulations, we could be subject to further FCC enforcement actions, fines, loss of licenses and possibly restrictions on our ability to operate or offer certain of our services
7. 47We may not be able to utilize a significant portion of our net operating loss or research tax credit carryforwards, which could harm our profitability and financial condition
8. 48Privacy concerns and domestic or foreign laws and regulations may reduce the demand for our solution, increase our costs and harm our business
9. 49We and many of our customers are subject to the GDPR based upon our processing of personal data collected from EU data subjects, such as our processing of personal data of our customers in the EU and our processing of our EU employees’ personal data
10. 50State privacy laws in the United States apply to certain entities doing business in their states, and we and our qualifying customers were required to comply with applicable requirements as of the effective dates of the applicable state laws or corresponding regulations

Risks Related to Ownership of Our Convertible Senior Notes

1. 51If triggered, the conditional conversion features of the convertible senior notes may adversely affect our financial condition and operating results
2. 52Transactions relating to the convertible senior notes may dilute the ownership interests of our existing stockholders or adversely affect the market price of our common stock; the trading price of our convertible senior notes may be affected by volatility in the price of our common stock
3. 53Our stock price has been volatile, may continue to be volatile and may decline, including due to factors beyond our control
4. 54If securities or industry analysts discontinue publishing research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline
5. 55Substantial future sales of shares of our common stock could cause the market price of our common stock and our convertible senior notes to decline
6. 56Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock
7. 57The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction
8. 58We have never paid cash dividends and do not intend to pay dividends for the foreseeable future