CS Disco (LAW) risk factors, FY2024 10-K

Risks Related to Information Technology and Cybersecurity

1. 01The unavailability of or change in the terms or nature of access to third-party technology could harm our business
2. 02Elements of our product offerings use open source software, which may restrict the functionality of our product offerings or require that we release the source code of certain applications subject to those licenses
3. 03In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive data about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position
4. 04We use artificial intelligence in our products and operations, which may result in operational challenges, legal liability, reputational concerns and competitive risks

Risks Related to Our Growth and Capital Requirements

1. 05Our substantial growth since inception may not be indicative of our future growth. Our historical growth also makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful
2. 06We may not be able to successfully manage our growth and, if we are not able to grow efficiently, our business, financial condition and results of operations could be harmed
3. 07Our limited operating history at our current scale and our history of operating losses make it difficult to evaluate our current business and prospects and may increase the risks associated with your investment
4. 08Our ability to timely raise capital in the future may be limited, or such capital may be unavailable on acceptable terms, if at all
5. 09Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans or otherwise will dilute all other stockholders

Risks Related to Our Business and Industry

1. 10Our business depends on customers increasing their use of our product offerings and any loss of customers or decline in their use of our product offerings could harm our business
2. 11Usage of our product offerings accounts for substantially all of our revenue
3. 12If we are unable to attract new customers and retain existing customers, our business, financial condition and results of operations will be adversely affected
4. 13If our platform fails to perform properly due to defects, interruptions, delays in performance or similar problems and if we fail to resolve any defect, interruption, delay or other problem, we could lose customers, become subject to service performance or warranty claims or incur significant costs
5. 14Incorrect or improper use of our product offerings could result in customer dissatisfaction and harm our business, results of operations, financial condition and growth prospects
6. 15We rely upon third-party providers of cloud-based infrastructure to host our cloud-based platform. Any disruption in the operations of these third-party providers, limitations on capacity, or interference with our use could adversely affect our business, financial condition and results of operations
7. 16We rely on AWS to host our platform, and any disruption of service from AWS or material change to our arrangement with AWS could adversely affect our business
8. 17We expect fluctuations in our financial results, which may cause period-to-period comparisons not to be meaningful
9. 18If we fail to forecast our revenue accurately or manage our expenditures, or if we fail to meet publicly announced guidance, our operating results could be adversely affected, and our stock price could decline
10. 19The market in which we compete is relatively new and subject to rapid technological change, evolving industry standards and regulatory changes, as well as changing customer needs, requirements and preferences
11. 20A limited number of customers represent a substantial portion of our revenue. If we fail to retain these customers, our revenue could decline significantly
12. 21Our revenue growth depends in part on the success of our strategic relationships with law firms and other legal services providers, and if we are unable to establish and maintain successful relationships with them, our business, operating results and financial condition could be adversely affected
13. 22Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our product offerings
14. 23The markets in which we participate are competitive, and if we do not compete effectively, our business will be harmed
15. 24If the estimates and assumptions we have used to calculate the size of our addressable market opportunity are inaccurate, our future growth rate may be limited
16. 25If we fail to develop, maintain and enhance our brand, our ability to expand our customer base will be impaired and our business, results of operations and financial condition may suffer
17. 26We employ a pricing model that subjects us to various challenges, and given our limited history with our pricing model, we may not be able to accurately predict the optimal pricing necessary to attract new customers and retain existing customers
18. 27Our sales cycles with customers can be long and unpredictable and our sales efforts require considerable time and expense
19. 28Given these factors, it is difficult to predict whether and when a customer will switch to our product offerings
20. 29If we cannot continue to build and sustain a productive corporate culture as we grow, our success and our business and competitive position may be harmed
21. 30The success of our business depends on our customers’ continued and unimpeded access to our platform on the internet
22. 31Any failure to offer high-quality support and professional services for our customers may harm our relationships with our customers and, consequently, our business
23. 32We rely on the performance of highly skilled personnel, including our management and other key employees and the loss of one or more of such personnel, or of a significant number of our team members, could harm our business
24. 33The failure to attract and retain additional qualified personnel could prevent us from executing our business strategy
25. 34Future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business and dilute stockholder value
26. 35Our current operations are international in scope and we plan on further geographic expansion, creating a variety of operational challenges
27. 36We are exposed to fluctuations in currency exchange rates

Risks Related to Socioeconomic Factors

1. 37Unfavorable conditions in the global economy, including a global or domestic recession or the fear thereof, could cause reductions in legal spending and harm our business

Risks Related to Our Intellectual Property

1. 38Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results
2. 39Failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brands as well as our competitive advantage
3. 40We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful
4. 41We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property
5. 42Provisions in various agreements to which we are party potentially expose us to substantial liability for intellectual property infringement, data protection and other losses

Risks Related to Litigation, Regulatory Compliance and Governmental Matters

1. 43Any currently ongoing or future litigation against us could be costly and time-consuming to defend
2. 44We operate in a highly regulated industry and either are or may be subject to a wide range of federal, state and local, as well as foreign, laws, rules and regulations and our failure to comply with these laws and regulations may force us to change our operations or harm our business
3. 45We are subject to anti-corruption, anti-bribery, anti-money laundering and similar laws and noncompliance with such laws can subject us to criminal or civil liability and harm our business, financial condition and results of operations
4. 46Sales to government entities and highly regulated organizations are subject to a number of challenges and risks
5. 47We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate such controls

Risks Related to Tax and Accounting Matters

1. 48Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations
2. 49Our international operations may subject us to potential adverse tax consequences
3. 50Our results of operations may be harmed if we are required to collect sales or other related taxes for our subscriptions in jurisdictions where we have not historically done so
4. 51Changes in our effective tax rate or tax liability may harm our business
5. 52Our financial results may be adversely affected by changes in accounting principles applicable to us
6. 53If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected

Risks Related to Being a Public Company

1. 54Our management team has limited experience managing a public company
2. 55If we fail to develop and maintain effective internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired
3. 56We may not be able to successfully manage the growth of our business if we are unable to improve our internal systems, processes and controls
4. 57We are an “emerging growth company” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies make our common stock less attractive to investors

Risks Related to Ownership of Our Common Stock

1. 58Insiders have substantial control over us and will be able to influence corporate matters
2. 59Our stock price may be volatile, and the value of our common stock may decline
3. 60Sales of our common stock in the public market could cause the market price of our common stock to decline
4. 61If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, the market price and trading volume of our common stock could decline
5. 62We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock
6. 63Anti-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. 64Our business and operations could be negatively affected as a result of currently ongoing securities litigation or if we become subject to any stockholder activism