PagerDuty (PD) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01We have a history of operating losses and may not achieve or sustain profitability in the future
2. 02Our prior growth may not be indicative of our future growth, and, we may not be able to manage any additional growth effectively. Our growth also makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful
3. 03We operate in an emerging and evolving market, which may develop more slowly or differently than we expect. If our market does not grow as we expect, or if we cannot expand our platform to meet the demands of this market, our revenue may fail to grow or even decline, and we may incur additional operating losses
4. 04If we are unable to attract new customers, our revenue growth will be adversely affected
5. 05We have undertaken, and may undertake from time to time in the future, certain restructuring efforts to drive more efficient growth and advance our scaling initiatives. We may not realize, in full or in part, the anticipated benefits and savings from such restructuring efforts
6. 06If we are unable to retain our current customers or sell additional functionality and services to them, our revenue growth will be adversely affected
7. 07We derive a significant majority of our revenue from a single product
8. 08The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed
9. 09The nature of our business exposes us to inherent liability risks
10. 10We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors with respect to our operating results, our stock price and the value of your investment could decline
11. 11Because we recognize revenue from the vast majority of our subscriptions over the term of the relevant agreement, downturns or upturns in sales are not immediately reflected in full in our operating results
12. 12Seasonality may cause fluctuations in our sales and operating results
13. 13If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements, or preferences, our products may become less competitive
14. 14If we fail to 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
15. 15Failure 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 products
16. 16If we are unable to enhance and improve our platform or develop new functionality or use cases, our revenue may not grow
17. 17If our products fail to perform properly due to defects or similar problems, and if we fail to develop enhancements to resolve any defect or other problems, we could lose customers, become subject to service performance or warranty claims, or incur other significant costs
18. 18As we continue to pursue sales to new and existing enterprise customers, our sales cycle, forecasting processes, and deployment processes may become more unpredictable and require greater time and expense
19. 19Unfavorable conditions in our industry or the global economy, or reductions in information technology spending, could limit our ability to grow our business and negatively affect our results of operations
20. 20Issues relating to the responsible use of our technologies, including AI in our offerings, may result in reputational and/or financial harm and liability
21. 21If we cannot maintain our company culture as we grow, our success and our business may be harmed
22. 22If we lose key members of our management team or are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed
23. 23The failure to attract and retain additional qualified personnel and any restrictions on the movement of personnel could prevent us from executing our business strategy and growth plans
24. 24The estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all
25. 25As our platform operates in a multi-tenant environment, there is a risk that sensitive customer data could be improperly accessed, disclosed, or leaked to unauthorized parties due to security vulnerabilities, configuration errors, or other operational factors
26. 26In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information 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
27. 27We rely upon free trials of our products and other inbound lead-generation strategies to drive our sales and revenue. If these strategies fail to continue to generate sales opportunities or trial users do not convert into paying customers, our business and results of operations would be harmed
28. 28Interruptions or delays in performance of our service could result in customer dissatisfaction, damage to our reputation, loss of customers, limited growth, and reduction in revenue
29. 29If we do not or cannot maintain the compatibility of our platform with third-party applications that our customers use in their businesses, our revenue and growth prospects will decline
30. 30The success of our business depends on our customers’ continued and unimpeded internet access
31. 31If we fail to offer high-quality support, our business and reputation could suffer
32. 32We 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
33. 33Our current operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges
34. 34Our international operations may subject us to potential adverse tax consequences
35. 35We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results
36. 36Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations
37. 37Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition, or results of operations
38. 38If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected
39. 39We may not be able to successfully manage the growth of our business if we are unable to continue improving our internal systems, processes, and controls
40. 40We could incur substantial costs in protecting or defending our proprietary rights, and any failure to adequately protect such rights could impair our competitive position and result in the loss of valuable intellectual property rights, reduced revenue and costly litigation
41. 41Any litigation or claims against us could be costly and time-consuming to defend
42. 42We have in the past, and may in the future be, subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business
43. 43We use open-source software in our products, which could subject us to litigation or other actions
44. 44Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data, and other losses
45. 45We are subject to anti-corruption, anti-bribery, anti-money laundering, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business
46. 46Failure to comply with governmental laws and regulations could harm our business
47. 47Increased government scrutiny of the technology industry could negatively affect our business
48. 48Our sales to government entities and highly regulated organizations are subject to a number of challenges and risks
49. 49We are subject to government regulation, including export, import and economic sanctions laws and regulations, that may impair our ability to compete in international markets or subject us to liability if we fail to comply
50. 50Also, in addition to the United States, various countries regulate the import and export of certain encryption products and technology in ways that could limit our ability to distribute our products or could limit our end-customers’ ability to implement our products in those international markets
51. 51The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and results of operations
52. 52Transactions relating to our Notes may affect the value of our common stock
53. 53In connection with establishing their initial hedges of the Capped Calls, the Option Counterparties or their respective affiliates entered into various derivative transactions with respect to our common stock and/or purchased shares of our common stock concurrently with or shortly after the pricing of the Notes
54. 54We are subject to counterparty risk with respect to the Capped Calls
55. 55We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all
56. 56We have acquired, and may in the future acquire, other businesses, which could require significant management attention, disrupt our business, or dilute stockholder value

Risks Related to Ownership of Our Common Stock

1. 57Our stock price may be volatile, and the value of our common stock may decline
2. 58Future sales of our common stock in the public market could cause the market price of our common stock to decline
3. 59Our stock price and trading volume is heavily influenced by the way analysts and investors interpret our financial information and other disclosures
4. 60We 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
5. 61Anti-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

General Risks

1. 62We are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common stock
2. 63Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States