Harte Hanks (HHS) risk factors, FY2025 10-K

Risks Related to our Business and How we Operate

1. 01Most of our client engagements are cancellable on short notice
2. 02A large portion of our revenue is generated from a limited number of clients. The loss of a client or significant work from one or more of our clients has adversely affected our business and could in the future adversely affect our business41% rewritten
3. 03Our industry is subject to intense competition and dynamic changes in business model, which in turn could cause our operations to suffer
4. 04Current and future competitors may have significantly greater financial and other resources than we do, and they may sell competing services at lower prices or at lower profit margins, resulting in pressures on our prices and margins
5. 05We must maintain technological competitiveness, continually improve our processes, and develop and introduce new services in a timely and cost-effective manner
6. 06Our success depends on our ability to consistently and effectively deliver our services to our clients
7. 07We may experience in the future, reduced demand for our products and services due to the financial condition and marketing budgets of our clients and other factors that may impact the industry verticals that we serve
8. 08We must effectively manage our costs to be successful. If we do not achieve our cost management objectives, our financial results could be adversely affected60% rewritten
9. 09Consumer perceptions regarding the privacy and security of their data may prevent or impair our ability to offer our products and services
10. 10If our facilities are damaged, or if we are unable to access and use our facilities, our business and results of operations will be adversely affected
11. 11If our new leaders are unsuccessful, or if we continue to lose key management and are unable to attract and retain the talent required for our business, our operating results could suffer28% rewritten
12. 12Interest rate increases could affect our results of operations, cash flows and financial position
13. 13Inflation could adversely affect our financial condition and results of operations33% rewritten
14. 14We are subject to risks associated with operations outside the United States

Risks Related to Cybersecurity and Technology

1. 15Privacy, information security and other regulatory requirements may prevent or impair our ability to offer our products and services
2. 16We are subject to and affected by numerous laws, regulations, and industry standards that regulate direct marketing activities, including those that address privacy, data protection, processing personal information, information security, and marketing communications66% rewritten
3. 17Uncertainty around, and disruption from, new and emerging technologies, including the adoption and utilization of AI, may result in risks and challenges that could impact our business
4. 18Significant system disruptions, loss of data center capacity or interruption of telecommunication links could adversely affect our business and results of operations
5. 19We have experienced cybersecurity incidents in the past, and if we do not prevent security breaches and other interruptions to our infrastructure, we may be exposed to lawsuits, lose customers, suffer harm to our reputation, and incur additional costs
6. 20Our reputation and business results may be adversely impacted if we, or subcontractors upon whom we rely, do not effectively protect sensitive personal information of our clients and our clients’ customers
7. 21We could fail to adequately protect our intellectual property rights and may face claims for intellectual property infringement80% rewritten
8. 22Breaches of security, or the perception that e-commerce is not secure, could severely harm our business and reputation
9. 23Data suppliers could withdraw data that we rely on for our products and services

Risks Related to our Capital Structure and Common Stock

1. 24The covenants in the Credit Facility limit the Company’s operating and financial flexibility

Risks related to our pension benefit plans may adversely impact our results of operations and cash flows

1. 25Our operations are located on leasehold property, and our inability to renew our leases on commercially acceptable terms or at all may adversely affect our results of operations
2. 26We are a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investorsNew
3. 27Fluctuations in our revenue and operating results and other factors may impact the volatility of our stock price
4. 28Our certificate of incorporation and bylaws contain anti-takeover protections that may discourage or prevent strategic transactions, including a takeover of our company, even if such a transaction would be beneficial to our stockholders