Hubspot (HUBS) risk factors, FY2024 10-K

Risks Related to Our Business and Strategy

1. 01We are dependent upon customer renewals, the addition of new customers, increased revenue from existing customers and the continued growth of the market for a customer platform
2. 02Our subscription renewal rates may decrease, and any decrease could harm our future revenue and operating results
3. 03We face significant competition from both established and new companies in the software market in which we operate, which may harm our ability to add new customers, retain existing customers and grow our business
4. 04We face intense competition from other software companies in the market we operate that provide interactive marketing services. Competition could significantly impede our ability to sell subscriptions to our customer platform on terms favorable to us
5. 05content management systems
6. 06Failure to effectively develop and expand our customer platform capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform
7. 07The rate of growth of our business depends on the continued participation and level of service of our Solutions Partners
8. 08If we fail to maintain our thought leadership position, our business may suffer
9. 09If we fail to further enhance our brand and maintain our existing strong brand awareness, our ability to expand our customer base will be impaired and our financial condition may suffer
10. 10If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our customer platform may become less competitive
11. 11If we fail to offer high-quality customer support, our business and reputation may suffer
12. 12We may not be able to scale our business quickly enough to meet our customers’ growing needs and if we are not able to grow efficiently, our operating results could be harmed
13. 13Changes in the sizes or types of businesses that purchase our platform or in the applications within our customer platform purchased or used by our customers could negatively affect our operating results
14. 14We are subject to risks associated with our strategic investments, including partial or complete loss of invested capital. Significant changes in the fair value of this portfolio, including changes in the valuation of our investments in privately held companies, could negatively impact our financial results
15. 15Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible to risks associated with international operations
16. 16adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash
17. 17Social and ethical issues relating to the use of new and evolving technologies, such as AI, in our offerings may result in reputational harm and liability

Risks Related to Employee Matters

1. 18If we cannot maintain our company culture as we experience changes in our workforce, we could lose the innovation, teamwork, passion and focus on execution that we believe contribute to our success and our business may be harmed
2. 19We rely on our management team and other key employees, and the loss of one or more key employees could harm our business
3. 20The failure to attract and retain additional qualified personnel could prevent us from executing our business strategy

Risks Related to Global Economic Conditions

1. 21We are exposed to fluctuations in currency exchange rates that could adversely affect our financial results
2. 22Weakened global economic conditions may harm our industry, business and results of operations
3. 23Economic uncertainty may lead to decreased demand for our products and services and otherwise harm our business and results of operations

Risks Related to Our Technical Operations Infrastructure and Dependence on Third Parties

1. 24Interruptions or delays in service from our third-party data center providers could impair our ability to deliver our platform to our customers, resulting in customer dissatisfaction, damage to our reputation, loss of customers, limited growth and reduction in revenue
2. 25If our customer platform has outages or fails due to defects or similar problems, and if we fail to correct any defect or other software problems, we could lose customers, become subject to service performance or warranty claims or incur significant costs
3. 26We are dependent on the continued availability of third-party data hosting and transmission services
4. 27If we do not or cannot maintain the compatibility of our customer platform with third-party applications that our customers use in their businesses, our revenue will decline
5. 28We rely on data provided by third parties, the loss of which could limit the functionality of our platform and disrupt our business
6. 29Privacy concerns and end users’ acceptance of Internet behavior tracking may limit the applicability, use and adoption of our customer platform

Risks Related to Intellectual Property

1. 30Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others
2. 31If we fail to adequately protect our proprietary rights, in the United States and abroad, our competitive position could be impaired and we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights
3. 32Our use of “open source” software could negatively affect our ability to offer our platform and subject us to possible litigation

Risks Related to Government Regulation

1. 33with such laws could also impair our efforts to maintain and expand our customer base and business lines, and thereby decrease our revenue
2. 34We could face liability, or our reputation might be harmed, as a result of the activities of our customers, the content of their websites or the data they store on our servers
3. 35management’s time and attention. Finally, other existing bodies of law, including the criminal laws of various states, may be deemed to apply or new statutes or regulations may be adopted in the future, any of which could expose us to further liability and increase our costs of doing business
4. 36The standards that private entities use to regulate the use of email have in the past interfered with, and may in the future interfere with, the effectiveness of our customer platform and our ability to conduct business
5. 37Existing federal, state and foreign laws regulate Internet tracking software, the senders of commercial emails and text messages, website owners and other activities, and could impact the use of our customer platform and potentially subject us to regulatory enforcement or private litigation
6. 38contractual terms to satisfy customer and regulatory requirements, or could cause the demand for and sales of our customer platform to decrease and adversely impact our financial results
7. 39We are subject to governmental export controls and economic sanctions laws 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

Risks Related to Taxation

1. 40We may be subject to additional obligations to collect and remit sales tax and other taxes, and we may be subject to tax liability for past sales, which could harm our business
2. 41Changes in tax laws or regulations that are applied adversely to us or our customers could increase the costs of our customer platform and adversely impact our business
3. 42We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions
4. 43We may not be able to utilize a significant portion of our net operating loss carryforwards, which could adversely affect our profitability

Risks Related to Our Operating Results and Financial Condition

1. 44We have a history of losses and may not achieve or if achieved, sustain profitability in the future
2. 45From time to time, we may invest funds in social impact investment funds, and may receive no return on our investment or lose our entire investment
3. 46We may experience quarterly fluctuations in our operating results due to a number of factors, which makes our future results difficult to predict and could cause our operating results to fall below expectations or our guidance
4. 47general economic and political conditions in our domestic and international markets
5. 48If we do not accurately predict subscription renewal rates or otherwise fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our operating results could be adversely affected
6. 49Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial condition and results of operations

Risks Related to Our Notes

1. 50limit our ability to borrow additional amounts to fund acquisitions, for working capital and for other general corporate purposes
2. 51The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results
3. 52We are subject to counterparty risk with respect to the Capped Call Options

Risks Related to Our Common Stock

1. 53Our stock price may be volatile and you may be unable to sell your shares at or above the price you purchased them
2. 54other events or factors, including changes in general economic, industry and market conditions and trends, international disputes, wars, and political stability
3. 55If 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
4. 56Anti-takeover provisions in our charter documents and Delaware law may delay or prevent an acquisition of our company
5. 57In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us in certain circumstances

General Risks

1. 58Failure to comply with laws and regulations could harm our business
2. 59Adverse litigation results could affect our business
3. 60Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing
4. 61Catastrophic events could disrupt our business and adversely affect our financial condition and results of operations
5. 62Climate change may have a long-term impact on our business