Upwork (UPWK) risk factors, FY2024 10-K

Risks Related to our Business Operations, Execution, and Growth

1. 01Our growth depends on our ability to attract and retain a community of talent and clients, and the failure to maintain or grow our community of customers and their activity on our platform in a cost-effective manner or at all could adversely impact our business, operating results, and financial condition
2. 02The size of our community of customers, both talent and clients, is critical to our success. Our ability to achieve significant future revenue growth depends, in large part, upon our ability to attract and retain customers
3. 03We have experienced growth in recent periods and expect to invest in our growth in the future. If we are unable to maintain similar levels of growth, our business, operating results, and financial condition could be adversely affected
4. 04We continue to evolve our business strategy, offerings and pricing model, and changes that we make can adversely affect our business and make it difficult to evaluate our future prospects
5. 05If we are unable to maintain our banking and payment partner relationships on favorable terms, or at all, our business could be adversely affected
6. 06In addition, we may be forced to cease doing business with certain partners if payment laws, regulations, or rules change or are interpreted to make it difficult or impossible for us to comply
7. 07Our business depends in part on the success of our strategic relationships with third parties and their continued performance
8. 08We face payment and fraud risks that could adversely impact our business
9. 09Customers circumvent our work marketplace, which adversely impacts our business
10. 10We are subject to disputes with or between customers of our work marketplace
11. 11We face risks related to our international community of customers, which could increase as we seek to expand our international footprint
12. 12Acquisitions, investments, and other strategic transactions could result in operating difficulties and harm our business

Risks Related to Our Industry, Offerings, and Services

1. 13If the market for independent talent and the services they offer does not grow, our business, operating results, and financial condition could be adversely affected
2. 14If we are not able to develop and release new offerings and services or successful enhancements to our existing offerings and services, our business could be adversely affected
3. 15We face intense competition and could lose market share to our competitors, which could adversely affect our business, operating results, and financial condition
4. 16In addition, well-established internet companies, such as Google, LinkedIn, and Amazon, social media platforms, such as Meta, and businesses that operate driving, delivery, and other commoditized marketplaces, such as Uber Technologies, have entered or may decide to enter our market segment
5. 17If internet search engines’ methodologies or other channels that we utilize to direct traffic to our website are modified to our disadvantage, or our search result page rankings decline for other reasons, our customer growth could decline
6. 18If we fail to maintain and enhance our brand and reputation, our business and financial condition may be adversely affected
7. 19Business or system errors, defects, or disruptions could diminish demand, adversely impact our business, operating results, and financial condition, and subject us to liability
8. 20Our ability to attract and retain customers depends in part on the quality of our customer support, and any failure to offer high-quality support could adversely impact our business, operating results, and financial condition
9. 21Our customer growth and engagement on mobile devices depend upon third parties maintaining open application marketplaces and effective operation with mobile operating systems, networks, and standards that we do not control

Risks Related to Legal and Regulatory Matters

1. 22Our business is subject to extensive government regulation and oversight. Any failure to comply with the extensive, complex, overlapping, and frequently changing laws and regulations, both in the United States and internationally, could adversely impact our business, operating results, and financial condition
2. 23Our clients are generally responsible for properly classifying the talent they engage through our work marketplace. Some clients opt to classify talent as employees for certain work, while talent in many other cases are classified as independent contractors
3. 24Privacy and Data Protection
4. 25Anti-Corruption, Anti-Money Laundering, and Sanctions
5. 26We are vulnerable to intellectual property infringement claims and challenges to our intellectual property rights brought against us by third parties
6. 27Failure to protect our intellectual property could adversely affect our business
7. 28intellectual property is vulnerable to unauthorized access through employee or third-party error or actions, theft, cybersecurity incidents, private or public economic espionage, and other security breaches and incidents
8. 29The use of open source software could restrict our ability to market or operate our work marketplace and could negatively affect our business
9. 30Litigation could have a material adverse impact on our operating results and financial condition
10. 31If we are deemed to be an investment company under the Investment Company Act of 1940, our results of operations could be harmed

Risks Related to Finance, Accounting, and Tax Matters

1. 32We have a history of net losses, may increase our operating expenses in the future, and may not be able to sustain profitability
2. 33Our operating results and performance metrics may fluctuate from period to period, which makes our future results difficult to predict
3. 34inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business
4. 35If 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 laws and regulations could be impaired
5. 36The applicability of sales, use, and other tax laws or regulations on our business could subject us or our customers to additional tax liability and related interest and penalties, and adversely impact our business
6. 37Our ability to use our net operating loss carryforwards and certain other tax attributes is limited
7. 38We may require additional capital to fund our business and support our growth, and any inability to generate or obtain such capital may adversely affect our business, operating results, and financial condition

Risks Related to Ownership of Our Common Stock

1. 39The stock price of our common stock has been and may continue to be volatile, and you could lose all or part of your investment
2. 40We do not intend to pay dividends for the foreseeable future

Risks Related to Our Convertible Senior Notes

1. 41Our indebtedness could limit the cash flow available for our operations and expose us to risks that could adversely affect our business, operating results, and financial condition
2. 42The capped call transactions may affect the value of our common stock

General Risks

1. 43Adverse or changing economic conditions may negatively impact our business