Content analysis
?Positive | ||
Negative | ||
Uncertain | ||
Constraining | ||
Legalese | ||
Litigous | ||
Readability |
H.S. junior Avg
|
Financial report summary
?Competition
Salesforce • ServiceNow • HubSpot • Zendesk • Atlassian Corporation - Ordinary Shares • SolarWindsRisks
- We have a history of losses, and we may not be able to achieve profitability or, if achieved, sustain profitability.
- We have experienced significant growth in recent periods and our recent growth rates may not be indicative of our future growth.
- We have a limited operating history at our current scale, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
- Macroeconomic uncertainties, including inflationary pressures, supply chain disruptions, labor shortages, significant volatility in global markets, and recession risks, have in the past adversely affected and may continue to adversely affect our business, future results of operations, and financial condition, the effects of which remain uncertain.
- Our quarterly results have and may continue to fluctuate significantly and may not meet our expectations or those of investors or securities analysts.
- Sales efforts to large customers involve risks that may not be present or that are present to a lesser extent with respect to sales to smaller organizations.
- If we are unable to attract new customers, convert customers using our trial versions into paying customers, and expand usage of our products within or across organizations, our revenue growth would be harmed.
- Our ability to attract new customers and increase revenue from existing customers depends on our ability to develop new features, integrations, capabilities, and enhancements, and to partner with third parties to design complementary products.
- We use generative artificial intelligence, including in certain of our products and services, which may result in operational challenges, legal liability and reputational concerns that could adversely affect our business and results of operations.
- We operate in a highly competitive industry, and competition presents an ongoing threat to the success of our business.
- We track certain key business metrics, which are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and materially adversely affect our stock price, business, results of operations, and financial condition.
- We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our profitability.
- We recognize revenue over the term of our customer contracts. Consequently, downturns or upturns in new sales may not be immediately reflected in our operating results and may be difficult to discern.
- Our business depends substantially on our customers renewing their subscriptions and purchasing additional subscriptions from us. Any decline in our customer retention would harm our future operating results.
- Failure to effectively develop and expand our direct sales capabilities would harm our ability to expand usage of our products within our customer base and achieve broader market acceptance of our products.
- If we are unable to develop and maintain successful relationships with channel partners, our business, operating results, and financial condition could be adversely affected.
- If our information technology, systems, or those of third parties upon which we rely, or our data are or were to be compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse consequences.
- If we fail to manage our technical operations infrastructure, or experience service outages, interruptions, or delays in the deployment of our products, our results of operations may be harmed.
- If we are unable to ensure that our products interoperate with a variety of software applications that are developed by others, including our integration partners, we may become less competitive and our business, results of operations, and financial condition may be harmed.
- We rely on traditional web search engines to direct traffic to our website. If our website fails to rank prominently in unpaid search results, traffic to our website could decline and our business would be adversely affected.
- We rely on third parties maintaining open digital marketplaces to distribute our mobile applications for our Freshdesk, Freshchat, Freshcaller, Freshservice, and Freshsales products. If such third parties interfere with the distribution of our mobile applications, our business would be adversely affected.
- Real or perceived errors, failures, vulnerabilities, or bugs in our products would harm our business, results of operations, and financial condition.
- If we experience excessive fraudulent activity, we could incur substantial costs and lose the right to accept credit cards for payment, which could cause our customer base to decline significantly.
- We employ a pricing model that subjects us to various challenges that could make it difficult for us to derive sufficient value from our customers particularly because we do not have the history with our subscription or pricing models that we need to accurately predict optimal pricing necessary to attract and retain customers.
- We derive, and expect to continue to derive, substantially all of our revenue from a limited number of products.
- Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our base of customers may be impaired, and our business and results of operations will be harmed.
- If we fail to offer high-quality customer support, our business and reputation will suffer.
- We are subject to stringent and evolving US and foreign laws, regulations, industry standards, policies, rules, contractual obligations, and other obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation (including class action claims) and mass arbitration demands; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse business consequences.
- We face exposure to foreign currency exchange rate fluctuations.
- A substantial portion of our business and operations are located in India, and we are subject to regulatory, economic, social, and policy uncertainties in India.
- We are subject to various labor laws, regulations, and standards in India. Non-compliance with and changes in such laws may adversely affect our business, results of operations, and financial condition.
- Wage increases in India may diminish our competitive advantage against companies located in the United States and European Union and may reduce our profit margins.
- Government regulation on e-commerce and foreign investment, including investment in e-commerce in India, is evolving, and unfavorable changes to, or failure by us to comply with, these evolving regulations could adversely affect our business, financial condition, and results of operations.
- Changes in the taxation system in India could adversely affect our business.
- Our ability to receive dividends and other payouts from our Indian subsidiary is subject to Indian legal restrictions and withholding tax.
- Our international operations and sales to customers outside the United States expose us to risks inherent in international operations and sales.
- We are subject to anti-corruption, anti-bribery, and similar laws, and our failure to comply with these laws could subject us to criminal penalties or significant fines and harm our business and reputation.
- We are subject to various export control, import, and trade and economic sanction laws and regulations that could impair our ability to compete in international markets and subject us to liability for noncompliance.
- Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our products and could harm our business.
- Restrictive changes to immigration laws may hamper our growth.
- We may become subject to intellectual property rights claims and other litigation that are expensive to support, and if resolved adversely, could have a material adverse effect on us.
- If we are unable to protect our intellectual property rights both in the United States and abroad, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected.
- Our failure to obtain or maintain the right to use certain of our intellectual property would negatively affect our business.
- Our use of “open source” and third-party software could impose unanticipated conditions or restrictions on our ability to commercialize our products and could subject us to possible litigation.
- Our use of generative artificial intelligence tools may pose particular risks to our proprietary software and systems and subject us to legal liability.
- Our business, results of operations, and financial condition may be harmed if we are required to collect sales or other related taxes for subscriptions to our products in jurisdictions where we have not historically done so.
- Our ability to utilize our net operating loss carryforwards and certain other tax attributes to offset taxable income or taxes may be limited.
- Our international operations may subject us to potential adverse tax consequences.
- The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our stock prior to our initial public offering, including our executive officers, employees, and directors and their affiliates, and limiting your ability to influence corporate matters, which could adversely affect the trading price of our Class A common stock.
- Additional stock issuances could result in significant dilution to our stockholders.
- The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment.
- Substantial future sales of shares of our Class A common stock by existing holders in the public market could cause the market price of our Class A common stock to decline.
- Our Class A common stock market price and trading volume could decline if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business.
- We incur and will continue to incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies in the United States, which may harm our business.
- If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
- Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
- A failure to maintain an effective system of disclosure controls and internal control over financial reporting, could adversely affect our ability to produce timely and accurate financial statements or comply with applicable regulations.
- We are currently planning and designing information systems enhancements, and problems with the design or implementation of these enhancements could interfere with our business and operations.
- We have in the past and may in the future engage in merger and acquisition activities, which would require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our business, results of operations, and financial condition.
- Increased government scrutiny of the technology industry could negatively affect our business.
- We may need additional capital, and we cannot be sure that additional financing will be available.
- Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
- Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management or hinder efforts to acquire a controlling interest in us, and the market price of our Class A common stock may be lower as a result.
- We do not intend to pay dividends for the foreseeable future.
- Failure to effectively and efficiently address ESG matters could adversely impact us.
- Catastrophic events, including climate change, natural disasters and other events beyond our control, may disrupt our business.
Management Discussion
- Revenue increased by $98.4 million, or 20%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. Of the total increase in revenue, approximately $62.2 million was attributable to revenue from existing customers as of December 31, 2023, net of contraction and churn, and approximately $36.2 million was attributable to revenue from new customers acquired during the year ended December 31, 2023, net of contraction and churn. Our net dollar retention rate of 108% for the year ended December 31, 2023 reflects the expansion within existing customers and the sale of additional products to these customers.
- Cost of revenue increased by $7.6 million, or 8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This increase was primarily due to increases of $4.0 million in third-party hosting costs, $3.4 million in software license fees, $1.9 million in amortization of internally capitalized software, partially offset by decreases of $1.0 million in amortization of developed technology and $0.8 million in professional fees including legal costs. Our gross margin increased to 83% from 81% as we increased revenue and realized benefits from economies of scale and due to ongoing initiatives to improve our cost structure.
- The increases in our operating expenses in the year ended December 31, 2023 compared to the year ended December 31, 2022 were primarily driven by increases in personnel-related costs due to compensation adjustments and stock-based compensation expense.