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What changed in Sprinklr, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sprinklr, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+444 added−542 removedSource: 10-K (2024-03-29) vs 10-K (2023-04-03)

Top changes in Sprinklr, Inc.'s 2024 10-K

444 paragraphs added · 542 removed · 291 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

63 edited+51 added−23 removed48 unchanged
Biggest changeOur Unified-CXM Platform provides the following common features and capabilities, which are shared across all products: • Sandbox – Sprinklr Sandbox offers an isolated test environment that mimics your live production environment, allowing you to practice with precision, create without consequences, and change with confidence. • Integrations – Sprinklr marketplace integrations include 90+ out-of-the-box connectors with CRMs, CDPs, DAMs, Data Visualization, and with other enterprise platforms like Microsoft, Salesforce, Adobe, Google, Oracle, SAP, and ServiceNow. • APIs – Sprinklr provides a robust list of Restful web service application programming interfaces (“APIs”) to integrate data and execute processes with any external system.
Biggest changeSprinklr AI+ brings generative AI to customer experience designed with governance, security and data privacy in mind. • Sandbox – Sprinklr Sandbox offers an isolated test environment that mimics your live production environment, allowing you to practice with precision, create without consequences, and change with confidence. • Integrations – Sprinklr marketplace integrations include 80+ out-of-the-box connectors with CRMs, CDPs, DAMs, and Data Visualization and with other enterprise platforms like Microsoft, Salesforce, Adobe, Google, Oracle, SAP and ServiceNow. • APIs – Sprinklr provides a robust list of Restful web service application programming interfaces (“APIs”) to integrate data and execute processes with external systems. • Active Data Retention – Customers have the ability to store Sprinklr’s platform data to stay on top of regulatory requirements, use historical data to address key operational needs and optimize campaigns based on past performance. • Display – Display transforms data and content into high-impact, insights-driven experiences through an interactive digital signage solution for retail, DooH (digital out-of-home), stadium, broadcast TV and command centers. • Presentations – Our Live Slide™ technology helps customers quickly create slides of live, real-time social and business data and content that are easily accessible for all stakeholders, empowering them to tell their story in a visually compelling way. • AI Studio – Create and deploy custom artificial intelligence models, validate predictions of existing models and retrain them accordingly.
Key use cases for Sprinklr Social include: • Turning social into a revenue driver by capitalizing on conversations on modern messaging channels to increase sales and seamless commerce. • Getting more from social media managers by using AI to understand where and when to engage, and by automating publishing consistently across all channels. • Protecting brand reputation by limiting the risk of off-brand engagement with a global regulatory compliance framework for approvals, governance rules and moderation processes.
Key use cases for Sprinklr Social include: • Turning social into a revenue driver by capitalizing on conversations on modern messaging channels to increase sales and seamless commerce. • Getting more from social media managers by using AI to understand where and when to engage and automating publishing consistently across all channels. • Protecting brand reputation by limiting the risk of off-brand engagement with a global regulatory compliance framework for approvals, governance rules and moderation processes.
Our interactive Wellbeing platform offers captivating opportunities to participate in a range of healthy eating, mental, financial and physical challenges — all on the way to each of us becoming our healthiest self. 14 • Giving Back: Our employees around the world have a deep and passionate sense of community and give back in extraordinary ways.
Our interactive Wellbeing platform offers captivating opportunities to participate in a range of healthy eating, mental, financial and physical challenges — all on the way to each of us becoming our healthiest self. • Giving Back: Our employees around the world have a deep and passionate sense of community and give back in extraordinary ways.
This informal survey serves as an opportunity for continued engagement with our customers, but not a formal measure of our ongoing performance. • The CDAP (Customer Delight Assurance Program) applies when our strategic customers’ CHI falls, or consumption begins to trend downward.
This informal survey serves as an opportunity for continued engagement with our customers, but not a formal measure of our ongoing performance. 12 • The CDAP (Customer Delight Assurance Program) applies when our strategic customers’ CHI falls, or consumption begins to trend downward.
For large enterprises with legacy customer relationship management (“CRM”) systems, massive amounts of unstructured, real-time data that customers expect to inform their experiences are ignored and lost to a narrow set of structured, backward-looking customer information like names and addresses.
For large enterprises with legacy customer relationship management (“CRM”) systems, massive amounts of unstructured, real-time data that customers expect to inform their experiences are ignored and lost to a narrow set of structured, backward-looking customer information like names, addresses and birthdates.
We collaboratively work with our customers to ensure that targets are hit and recommendations are discussed on how to excel, based on best practices and industry expertise. 11 • The CHI (Customer Happiness Index) is a core internal metric for success at Sprinklr.
We collaboratively work with our customers to ensure that targets are hit and recommendations are discussed on how to excel, based on best practices and industry expertise. • The CHI (Customer Happiness Index) is a core internal metric for success at Sprinklr.
For more than a decade, we have helped hundreds of the world’s most valuable and iconic brands rise to the challenge of making their customers happier, while helping them increase revenue, decrease costs, and mitigate brand reputation risks.
For more than a decade, we have helped hundreds of the world’s most valuable and iconic brands rise to the challenge of making their customers happier, while helping them increase revenue and productivity, decrease costs and mitigate brand reputation risks.
For more information regarding the risks relating to intellectual property, see “Risk Factors—Risks Related to Our Intellectual Property.” Regulatory Matters We are subject to a variety of laws, rules and regulations in the United States and internationally, including laws regarding data privacy, protection, security, retention, consumer protection, accessibility, sending and storing of electronic messages (and related traffic data where applicable), intellectual property, human resource services, employment and labor laws, workplace safety, consumer protection laws, anti-bribery and anti-corruption laws, import and export controls, immigration laws, federal securities laws and tax regulations, all of which are continuously evolving and developing.
For more information regarding the risks relating to intellectual property, see “ Risk Factors—Risks Related to Our Intellectual Property .” Regulatory Matters We are subject to a variety of laws, rules and regulations in the United States and internationally, including laws regarding data privacy, protection, security, retention, consumer protection, accessibility, sending and storing of electronic messages (and related traffic data where applicable), intellectual property, human resource services, employment and labor laws, workplace safety, consumer protection laws, anti-bribery and anti-corruption laws, import and export controls, immigration laws, federal securities laws and tax regulations, all of which are continuously evolving and developing.
The four key product suites that align to the needs of enterprises managing the customer journey are: • Sprinklr Insights; • Sprinklr Service; • Sprinklr Marketing; and • Sprinklr Social. The Sprinklr Unified-CXM architecture was built to manage all of these products on a single platform.
The four key product suites that align to the needs of enterprises managing the customer journey are: • Sprinklr Service • Sprinklr Social • Sprinklr Insights • Sprinklr Marketing The Sprinklr Unified-CXM architecture was built to manage all of these products on a single platform.
We rely on trademarks, patents, copyrights, trade secrets, license agreements, intellectual property assignment agreements, confidentiality procedures, non-disclosure agreements and invention assignment agreements to establish and protect our intellectual property and proprietary rights.
We rely on trademarks, patents, copyrights, trade secrets, license agreements, intellectual property assignment agreements, confidentiality procedures, non-disclosure agreements 13 and invention assignment agreements to establish and protect our intellectual property and proprietary rights.
Our current and potential competitors offer or may develop consumer-grade point solutions in the following areas: • experience management solutions, including social media management solutions; • home-grown solutions and tools; • adjacent CXM solutions such as social messaging; • customer service, contact center and support solutions; • traditional marketing, advertising and consulting firms; and • CRM and ERP solutions.
Our current and potential competitors offer or may develop consumer-grade point solutions in the following areas: • experience management solutions, including social media management solutions; • home-grown solutions and tools; • adjacent CXM solutions such as social messaging; • customer service, contact center and support solutions; • traditional marketing, advertising and consulting firms; • Artificial Intelligence point solutions; and • CRM and ERP solutions.
The market in which we participate is new and rapidly evolving, and if we do not compete effectively, our results of operations and financial condition could be harmed. Intellectual Property We believe that our intellectual property rights are valuable and important to our business.
The market and category, Unified-CXM, in which we participate is new and rapidly evolving, and if we do not compete effectively, our results of operations and financial condition could be harmed. Intellectual Property We believe that our intellectual property rights are valuable and important to our business.
During the years ended January 31, 2023 and 2022, we generated 36% and 36%, respectively, of our revenue outside the Americas. We foresee a significant opportunity to further expand the use of our platform in other regions globally. • Broaden and deepen our partner ecosystem.
During the years ended January 31, 2024 and 2023, we generated 41% and 36%, respectively, of our revenue outside the Americas. We foresee a significant opportunity to further expand the use of our platform in other regions globally. • Broaden and deepen our partner ecosystem .
Our platform captures over 500 million conversations and makes over 10 billion AI predictions every day, publishes over 100 million brand messages, including those published over live chat, and handles more than 40 million customer cases every month, while also tracking 40,000 brands and influencers and managing over 3.0 billion profiles across all digital channels.
Our platform captures over 450 million conversations and makes over 10 billion AI predictions every day, publishes over 100 million brand messages, including those published over live chat, and handles more than 50 million customer cases every month, while also tracking over 40,000 brands and influencers and managing over 3 billion profiles across all digital channels.
Key use cases of Sprinklr Marketing include: • Unify marketing and advertising teams on a single platform for all planning and publishing, cross-team collaboration, automation of repetitive tasks and performance management. • Efficiently execute marketing and advertising campaigns at scale with streamlined task management, more control over campaign setup and access to timely, actionable insights.
Key use cases of Sprinklr Marketing include: • Unifying marketing and advertising teams on a single platform for all planning and publishing, cross-team collaboration, automation of repetitive tasks and performance management. • Efficiently executing marketing and advertising campaigns at scale with streamlined task management, more control over campaign setup and access to timely, actionable insights.
Every part of the front office needs to think differently as a result: • Customers volunteer feedback 24/7 on public channels – research can be actionable and real-time. • How you care for customers determines what they say about you – customer service is the new marketing. • Customers trust each other more than brands and want to be recognized as people, not purchasers – marketing is what they say, not what you say, so be personal. • Customers buy based on their experience with a brand – engagement drives sales.
Every customer-facing team needs to think differently as a result: • Customers volunteer feedback 24/7 on public channels – research can be actionable and real-time. • How you care for customers determines what they say about you – customer service is the new marketing. • Customers trust each other more than brands and want to be recognized as people, not purchasers – marketing is what they say, not what you say, so be personal. • Customers buy based on their experience with a brand – engagement drives sales.
This fully automated AI engine provides actionable insights built on deep machine learning that requires no human involvement and is able to make predictions with a high degree of accuracy across a wide range of products offered by our Unified-CXM platform. • Powerful natural language processing and generation: We have developed advanced text analytics capabilities with technology that can look at the context, grammar and co-references of a sentence to associate opinions, thoughts, preferences and feedback with respective brands and products.
This fully automated AI engine provides actionable insights built on deep machine learning that requires no human involvement and is designed to make accurate predictions across a wide range of products offered by our Unified-CXM platform. • Powerful and dynamic natural language processing and generation: We have developed advanced text analytics capabilities with technology that can look at the context, grammar and co-references of a sentence to associate opinions, thoughts, preferences and feedback with respective brands and products.
We value and celebrate our sense of belonging and fervently believe that every employee matters, and should be respected, listened to, and have opportunities to contribute to the magic of Sprinklr. We have taken action to support social justice and deliver training in diversity, inclusion and unconscious bias.
We value and celebrate our sense of belonging and fervently believe that every employee matters, and should be respected, listened to, and have opportunities to contribute to the magic of Sprinklr. We have taken action to support social justice and deliver training in diversity, inclusion and unconscious bias. Our employee resource groups, a.k.a.
Our core differentiators are: • UNIFIED architecture, built to address the proliferation of online channels: We have created a platform that allows organizations to listen to customers and prospects, learn from them, deliver customer service and create more personalized experiences across more than 30 digital channels, including messaging, live chat, text, social media and hundreds of millions of forums, blogs, news and review sites.
Our core differentiators are: • UNIFIED architecture, built to address the proliferation of online channels: We have created a platform that allows organizations to listen to customers and prospects, learn from them, deliver customer service and create more personalized experiences across more than 30 digital channels, including messaging, live chat, text, social media and hundreds of millions of forums, blogs, news and review sites, as well as traditional channels such as voice and email.
Our AI deep machine learning algorithms work via eight distinct and powerful layers, which aggregate all different unstructured data types across more than 30 digital channels and convert them into actionable structured insights. • Industry leading purpose-built Unified-CXM platform to ingest and analyze customer engagement data across all addressable/available channels: Our platform is architected to ingest unstructured and structured data from more than 30 digital channels in real-time, including audio, video and images.
Our AI deep machine learning algorithms work via eight distinct and powerful layers, which aggregate all different unstructured data types across more than 30 digital channels with structured first- and second-party traditional channel data and convert them into actionable structured insights and interactions. • Industry leading purpose-built Unified-CXM platform to ingest and analyze customer engagement data across all addressable/available channels: Our platform is architected to ingest unstructured and structured data from more than 30 digital channels in real-time, including audio, video and images.
Compensation and Benefits We consider a number of measures and objectives in managing our human capital assets, including, among others, employee engagement, development, and training, talent acquisition and retention, employee safety and wellness, diversity and inclusion, and compensation and pay equity.
Compensation and Benefits We consider several measures and objectives in managing our human capital assets, including, among others, employee engagement, development, and training, talent acquisition and retention, employee safety and wellness, diversity and inclusion, and compensation and pay equity.
Our architecture ensures that our customers are always utilizing the latest and most accurate AI models, providing insights to our customers with cutting-edge speed, accuracy, and security. 4 • ADVANCED listening, built for digitally led, real-time and conversational data, yielding actionable insights: Our single codebase platform was designed from the ground up to handle a massive scale of unstructured data.
Our architecture is designed to ensure that our customers are always utilizing the latest and most accurate AI models, providing insights to our customers with speed, accuracy, governance, compliance and security. 4 • ADVANCED listening, built for digitally led, real-time and conversational data, yielding actionable insights: Our single codebase platform was designed from the ground up to handle a massive scale of unstructured data.
We do this with a new category of enterprise software – Unified Customer Experience Management (“Unified-CXM”) – that enables every customer-facing function across the front office, from Customer Service to Marketing, to collaborate across internal silos, communicate across digital channels, and leverage a complete suite of capabilities to deliver better, more human customer experiences at scale – all on one unified, AI-powered platform.
We do this with a new category of enterprise software – Unified Customer Experience Management (“Unified-CXM”) – that enables customer-facing teams, from Customer Service to Marketing, to collaborate across internal silos, communicate across digital channels, and leverage a complete suite of capabilities to deliver better, more customer experiences at scale – all on one unified, AI-powered platform.
Further, our references to website URLs are intended to be inactive textual references only. 15
Further, our references to website URLs are intended to be inactive textual references only. 16
We deploy AI models at three different levels to ensure quick deployment for rapid time to value realization: (1) Global Models: Developed with data across industries and partners; (2) Industry Models: Developed when data of one industry varies significantly from another; and (3) Customized AI Models: Enabling brands to quickly customize AI models to solve their diverse set of use cases.
We deploy AI models at four different levels to ensure quick deployment for rapid time to value realization: (1) Global Models: Developed with data across industries and partners; (2) Industry Models: Developed when data of one industry varies significantly from another; (3) Sub-vertical Models when the data within an industry varies significantly; and (4) Customized AI Models: Enabling brands to quickly customize AI models to solve their diverse set of use cases.
The key differentiators for Unified-CXM offerings include: • product features, quality, functionality and design; • scalable, flexible and open architecture; • supports integrations of any customer system or industry solution; • AI capabilities; • strength of product vision and rapid innovation; • strong ecosystem of third-party integrations; • accessibility across several devices, operating systems and applications; • ease of use; • overall platform experience; • governance, security and privacy; • return on investment and scalable pricing; • corporate reputation and awareness of our brand; • strength of sales and marketing efforts; • proven track record of execution and business value realization at enterprise scale; and • strength of post-sale support and customer success. 12 We believe that we compete favorably with respect to all these factors.
The key differentiators for Unified-CXM offerings include: • product features, quality, functionality and design; • scalable, flexible and open architecture; • supports integrations of any customer system or industry solution; • AI and Generative AI capabilities; • strength of product vision and rapid innovation; • strong ecosystem of third-party integrations; • accessibility across several devices, operating systems and applications; • ease of use; • overall platform experience; • designed with governance, security and privacy in mind; • return on investment and scalable pricing; • corporate reputation and awareness of our brand; • strength of sales and marketing efforts; • proven track record of execution and business value realization at enterprise scale; and • strength of post-sale support and customer success.
As of January 31, 2023, we had a customer base of 1,428 organizations. We believe that this represents only a small fraction of our total addressable customer base.
As of January 31, 2024, we had a customer base of 1,735 organizations. We believe that this represents only a small fraction of our total addressable customer base.
In addition, approximately 85% of our U.S. employees have chosen to voluntarily disclose their race and/or ethnicity to us, of which approximately 24.0% are racially or ethnically diverse.
In addition, approximately 87.0% of our U.S. employees have chosen to voluntarily disclose their race and/or ethnicity to us, of which approximately 26.1% are racially or ethnically diverse.
In fiscal year 2023, approximately 95% of our U.S. new hires chose to voluntarily disclose their race and/or ethnicity to us, of which approximately 23.0% were racially or ethnically diverse. • Recognition: Our peer recognition program allows all employees to recognize a colleague for living one or more aspects of The Sprinklr Way anytime they see the right behaviors in action.
In fiscal year 2024, approximately 94.4% of our U.S. new hires chose to voluntarily disclose their race and/or ethnicity to us, of which approximately 32.2% were racially or ethnically diverse. 15 • Recognition: Our peer recognition program allows all employees to recognize a colleague for living one or more aspects of The Sprinklr Way anytime they see the right behaviors in action.
Scale the use of high-performing assets to reduce content production costs. • Protect return on marketing investment with improved visibility and speed-to-market, agile course-correction and automated campaign optimization. • Centralize governance for every outbound piece of content and leverage highly configurable user roles and permissions, ensuring all content is authorized and on-brand.
Scaling the use of high-performing assets to reduce content production costs. • Protecting return on marketing investment with improved visibility and speed-to-market, agile course-correction and automated campaign optimization. • Centralizing governance for every outbound piece of content and leveraging highly configurable user roles and permissions, ensuring that all content is authorized and on-brand.
Since our inception, we have expanded our platform from Sprinklr Social to include Sprinklr Insights, Sprinklr Marketing and Sprinklr Service. Given our unified and scalable architecture, we have the ability to build our platform to address new channels in a short period of time. • Grow customer base.
Since our inception, we have expanded our platform from Sprinklr Social to include Sprinklr Insights, Sprinklr Marketing and Sprinklr Service. Given our unified and scalable architecture, we have the ability to quickly add or remove channels in a short period of time. 10 • Grow customer base .
Sprinklr Service Sprinklr Service is a comprehensive, cloud-based, AI-powered Contact Center as a Service (“CCaaS”) platform that enables customer service agents to seamlessly service customers across digital, social and voice channels and empowers the leadership with complete visibility into contact center operations to drive transformation.
Build and refine all AI models with zero coding. Sprinklr Service Sprinklr Service is a comprehensive, cloud-based, AI-powered CCaaS platform that enables customer service agents to seamlessly service customers across digital, social and voice channels and empowers the leadership with complete visibility into contact center operations to drive transformation.
Our effective go-to-market strategy has enabled us to grow rapidly, attracting 1,428 customers as of January 31, 2023, including more than two-thirds of the Fortune 100. As of January 31, 2023, we had 108 customers with subscription revenue equal to or greater than $1.0 million for the trailing 12-month period.
Our go-to-market strategy has enabled us to grow rapidly, attracting 1,735 customers as of January 31, 2024, including more than 60% of the Fortune 100. As of January 31, 2024, we had 126 customers with subscription revenue equal to or greater than $1.0 million for the trailing 12-month period.
This capability automatically learns from previous agent-consumer interactions, sentiment, emotion, intents and conversation intent journeys to suggest highly contextual, fluent, relevant and engaging responses. • Highly sophisticated and configurable AI models: We have developed highly specialized AI models across more than 60 industry verticals and sub-verticals across more than 100 languages.
We also model end-to-end dialogues for improving customer service agent productivity. This capability automatically learns from previous agent-consumer interactions, sentiment, emotion, intents and conversation intent journeys to suggest highly contextual, fluent, relevant and engaging responses. • Highly sophisticated and configurable AI models: We have developed highly specialized AI models across more than 60 industry verticals and sub-verticals across 149 languages.
As of January 31, 2023, we owned 36 issued U.S. patents and 11 pending or provisional U.S. patent applications. These patents and patent applications seek to protect our proprietary inventions relevant to our business.
As of January 31, 2024, we owned 38 issued U.S. patents and 10 pending non-provisional or provisional U.S. patent applications. These patents and patent applications seek to protect our proprietary inventions relevant to our business.
This is why we founded Sprinklr: a software platform purpose-built to help enterprises break down information silos across the customer journey, tap into an ocean of unstructured digital data, and utilize AI to create a persistent, unified view of each customer – at scale.
Sprinklr was founded to solve this problem: a software-as-a-service platform purpose-built to help enterprises break down information and organization silos across the customer journey, tap into unstructured digital data and utilize AI to create a persistent, unified view of each customer – at scale.
Our customers include global enterprises across a broad array of industries and geographies, as well as marketing agencies and government departments along with non-profit and educational institutions. Our customers are located in more than 70 countries and use our platform in more than 100 languages.
Our customers include global enterprises across a broad array of industries and geographies, as well as marketing agencies and government departments along with non-profit and educational institutions. Our customers are located in more than 80 countries, and our AI-powered Unified-CXM platform recognizes over 150 languages.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We believe that our employee relations are good and we have not experienced any work stoppages. Our Culture Building a culture where everyone is happier and can thrive personally and professionally at Sprinklr is the cornerstone of our philosophy.
We believe that our employee relations are good, and we have not experienced any work stoppages. Our Culture Building a culture where everyone is happier and can thrive personally and professionally at Sprinklr is the cornerstone of our philosophy.
Our partner ecosystem extends our geographic coverage, accelerates the usage and adoption of our platform, promotes thought leadership and provides complementary implementation resources. We work with agencies and partners such as Microsoft, Accenture, Deloitte, Salesforce, SAP, ServiceNow, Adobe, Oracle and others in these capacities. • Selectively pursue acquisitions.
Our partner ecosystem extends our geographic coverage, accelerates the usage and adoption of our platform, promotes thought leadership and provides complementary implementation resources. We work with agencies and partners across nine different partner categories including System Integrators (SI), Transformational partners and Resellers which includes partners such as Microsoft, Accenture, Deloitte, Salesforce, SAP, ServiceNow, Adobe, Oracle and others in these capacities.
We do this by providing every customer-facing team with the capabilities they need to serve customers and enabling the entire front office to work together to deliver a more unified customer experience.
We do this by providing customer-facing teams with the capabilities they need to serve customers, share insights and work together to deliver a more unified customer experience.
Our architecture is scalable and flexible to meet the demands of the modern enterprise and can be deployed quickly at scale to ingest massive amounts of data. Our Unified-CXM platform is designed to comply with the standard industry security controls to serve large enterprises and public sector customers.
Our architecture is designed to be scalable and flexible to meet the demands of today’s digital enterprises or organizations and to be deployed quickly—at scale—to ingest massive amounts of data. Our Unified-CXM platform is designed to comply with the industry security controls.
Our AI is used across Sprinklr’s use cases and products, which enables a cohesive customer experience. As AI and machine learning grow across industries, the flywheel approach has become a cornerstone and competitive differentiator at Sprinklr. Our Products With the rise of modern channels, customers are connected and empowered like never before.
As AI and machine learning grow across industries, this flywheel approach has become a cornerstone and competitive differentiator at Sprinklr. Our Product Suites With the rise of modern channels, customers are connected and empowered like never before.
Key Advantages of Our Platform Our architecture, AI, enterprise-grade platform and large repository of public digital data are key competitive differentiators. Our platform utilizes a single codebase architecture purpose-built for managing CXM data, is powered by sophisticated, proprietary AI, and enables a wide range of customer user cases.
Key Advantages of Our Unified-CXM Platform Our unified architecture, AI, enterprise-grade platform and large repository of public digital data are key competitive differentiators. Our platform utilizes a single codebase architecture purpose-built for managing customer experience data and is powered by our own proprietary AI, which is available across all our product suites.
We expect that we will develop and introduce, or acquire, applications serving customer-facing and other front office functions.
We believe that we compete favorably with respect to all these factors. We expect that we will develop and introduce, or acquire, applications serving customer-facing and other front office functions.
A strong culture is a barometer of business success and we have developed a deliberate culture based on our roadmap that we have named “The Sprinklr Way” — our way of working, living and being. All employees are introduced to The Sprinklr Way by our CEO on their first day of orientation, known as our “Splash” session.
A strong culture is a barometer of business success and we have developed a deliberate culture based on our roadmap that we have named “The Sprinklr Way” — our way of working, living and being.
Our unified platform enables broad-based listening, seamless collaboration across the entire customer journey, skills-based workflow, customer-led governance and timely decision-making. • RAPID deployment generates tangible, immediate ROI: Our ability to leverage our highly verticalized pre-built AI models to quickly bring high-value enterprise AI models into production use provides rapid time to value. • SCALABLE enterprise-grade platform: We empower the largest global enterprises to serve their customers 24/7.
Our Unified-CXM platform enables broad-based listening, seamless collaboration across the entire customer journey, skills-based workflow, customer-led governance and timely decision-making. • SCALABLE enterprise-grade platform : We empower the largest global enterprises to serve their customers 24/7.
We have a significant percentage of our development talent based in India and have had a very strong presence in India for the last decade. We believe that this is a competitive advantage for us, as we have access to a strong and deep bench of talent at a significant cost advantage to comparable talent elsewhere in the world.
We believe that this is a competitive advantage for us, as we have access to a strong and deep bench of talent at a significant cost advantage to comparable talent elsewhere in the world. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
“We Care” teams around the world encourage inclusivity and serve as resource groups for our employees. Approximately 31.5% of our employees are women, and women represent approximately 13.5% of our leadership team (vice president and above) and 25.0% of our board of directors.
We Care Teams, around the world encourage inclusivity and serve as safe spaces for our employees to share common experiences. Approximately 30.3% of our employees are women, and women represent approximately 17.1% of our leadership team (vice president and above) and 25.0% of our board of directors.
Our AI engine is differentiated in the following ways: • A massive data ocean of consumer behavior and preferences: Our platform ingests, processes and analyzes consumer data and behavior from one of the largest publicly available datasets, with over 500 million data points accessed and ingested daily.
At any given instance, our AI engine can process millions of unstructured and structured data points ingested from myriads of channels and software applications. 5 Our AI is differentiated in the following ways: • A massive data set of consumer behavior and preferences: Our platform ingests, processes and analyzes consumer data and behavior from one of the largest publicly available datasets (we call this Customer Experience Management (“CXM”) data), with over 450 million data points accessed and ingested daily.
We see significant opportunity to grow within our existing customer base as our customers increase usage of existing products and/or add additional products. Our success and innovation is driven by a world-class management team and extraordinary culture.
We see significant opportunity to grow within our existing customer base as customers increase usage of existing products and/or add additional products across business units and geographies.
The result: centralized and streamlined publishing across channels, greater efficiency and reduced production costs, automated and unified reporting across channels for organic and paid initiatives, AI-powered and rule-based optimization and actionable insights to improve advertising performance in real time.
Sprinklr Marketing Sprinklr Marketing enables brands to streamline their marketing operations across the campaign lifecycle without the need for spreadsheets or disparate systems, while giving brands the ability to differentiate, derive insights and optimize their marketing and advertising strategies at scale. 9 The result: centralized and streamlined planning and publishing across channels, greater efficiency and reduced production costs, automated and unified reporting across channels for organic and paid initiatives, AI-powered and rule-based optimization, and actionable insights to improve advertising performance in real time.
To do so, they must communicate instantly with consumers who move fluidly across dozens of channels and resolve customer pain-points in a personalized way.
As a result, companies must consider every touch point along the customer journey and ensure seamless and consistent customer experiences in person and online. They must communicate instantly with consumers who move fluidly across dozens of channels and resolve customer pain-points in a personalized way.
Our marketing efforts are focused on promoting our brand, generating awareness of our platform, supporting our community of customers and creating sales leads.
Our marketing efforts are focused on promoting our brand, generating awareness of our platform, supporting our community of customers and creating sales leads. We utilize both online and offline marketing initiatives, including our participation in industry and partner conferences, digital marketing, case studies and customer testimonials.
Although all of our product suites are available to customers on our Sprinklr Unified-CXM platform, each can also be purchased individually. 6 Sprinklr Unified-CXM Platform One single, unified platform with 4 product suites: Purpose-built to analyze unstructured customer experience data, built to scale across future and modern channels, and integrates all stages of the customer journey.
Although all of our product suites are available to customers on our Sprinklr Unified-CXM platform, each can also be purchased individually. Sprinklr Unified-CXM Platform One single, unified platform with 4 product suites : Purpose-built to consolidate listening and insights, social media management, campaign lifecycle management, paid advertising and customer service in one unified platform.
We utilize both online and offline marketing initiatives, including our participation in industry and partner conferences, digital marketing, case studies and customer testimonials. 10 We also engage with industry research firms to educate them on our platform and its transformational impact on enterprises and have developed go-to-market partnerships that extend the reach of our platform such as Channels, GSIs and Agencies.
We engage with industry research firms to educate them on our platform and its transformational impact on enterprises and have developed go-to-market partnerships that extend the reach of our platform such as Channels, GSIs and Agencies. We anticipate that we will continue to develop select third-party relationships to help grow our business.
We believe that we are the only CXM vendor that offers a single codebase architecture, designed to provide a seamless, unified experience for our customers.
We believe that we are the only Unified-CXM platform that offers a single codebase architecture, designed to provide a seamless, unified experience for our customers. A single codebase architecture supports our ability to seamlessly integrate channels, unify journeys across functions, and innovate faster in a “build once, deploy across” way.
Our Artificial Intelligence The core of our technology is our proprietary AI engine, which has a highly scalable and flexible architecture purpose-built for large enterprises. We believe that our platform is the first ever purpose-built customer experience AI engine.
Our Artificial Intelligence – Sprinklr AI The core of our technology is our proprietary AI, which is integrated across a highly scalable and flexible architecture and available across all Sprinklr product suites. We believe that our Unified-CXM platform is the first ever purpose-built, AI-powered platform for the enterprise designed to account for the security, compliance and governance measures they require.
Sprinklr AI gets smarter everyday by leveraging virtuous feedback loops enabled for all of our AI solutions. With each feedback that is fed back into Sprinklr algorithms, our AI models learn actively, which in turn leads to more customers adopting the power of Sprinklr’s AI capabilities.
Sprinklr AI gets smarter every day by leveraging virtuous feedback loops. With each piece of feedback, our AI learns actively, which in turn leads to more customers adopting the power of Sprinklr’s AI capabilities. Our AI is used across Sprinklr’s use cases and products, which enables a cohesive customer experience.
As the experiences of consumers today are shaped by each interaction they have with a brand, brand reputation is significantly impacted by the far-reaching influence of consumers on public platforms. As a result, companies compete primarily on the basis of customer experience.
Consumers’ experiences today are shaped by each interaction they have with a brand, which includes physical, in-person engagements, as well as digital engagements through online customer support, websites or social media. And, given the expansive digital landscape for businesses today, brand reputation is significantly impacted by the far-reaching influence of consumers on public, digital platforms.
The same components are reused between multiple training, and inference pipelines, enabling our data scientists to build and deploy new use-cases rapidly. 5 • High accuracy of predicting consumer behavior and preferences: Our AI engine is built on top of highly sophisticated and customizable machine learning algorithms that result in more than 10 billion predictions per day.
This unified AI architecture enables brands to have a single understanding of their customers, in line with how customers should have a single experience with their brand. • High accuracy of predicting consumer behavior and preferences: Our AI engine is built on top of highly sophisticated and customizable machine learning algorithms that result in more than 10 billion predictions per day.
We have been granted a Federal Risk and Authorizations Management Program (“FedRAMP”) Authority to Operate (“ATO”) to sell our solutions to United States federal agencies.
We have been granted a Federal Risk and Authorizations Management Program (“FedRAMP”) Authority to Operate (“ATO”) to operate our solutions for United States federal agencies. Sprinklr has been widely recognized by industry analyst firms including Gartner, Forrester, Omdia, Ventana, IDC and Everest in a multitude of customer experience and SaaS technology markets.
We believe that we have a significant first-mover advantage, helping us establish and maintain a global leadership position in Enterprise Unified-CXM AI. • COMPLETE, built for modern organizations with the full consumer lifecycle in mind: We offer a broad range of digital use cases across the front office.
Sprinklr AI+ incorporates generative AI powered by integrations with OpenAI, Google Cloud’s Vertex AI and Microsoft Azure OpenAI Service. • COMPLETE, built for organizations with the full consumer lifecycle in mind : We offer a broad range of digital and traditional use cases across customer-facing teams.
Customers choose from the following Sprinklr Social products: • Social Publishing & Engagement – Plan, publish, and manage brand content across multiple channels from a single platform — then measure and respond to customer engagement efficiently with automated workflows, intuition moderation, and engagement dashboards that can be shared across teams. • Distributed – Empower Distributed teams (Sales, Location Managers, Field Agents) with a lightweight yet powerful branded experience to engage customers on the digital and social channels they prefer. • Advocacy – Empower employees to leverage a multi-purpose library of shareable content, tailored for advocates, that can easily be amplified across employees’ social channels to generate leads and help build pipeline for your brand. 9 • Conversational Commerce – Integrate 1:1 chat-based commerce platform that enables sales teams to offer personalized customer experience and provide access to products and other information that creates direct sales opportunities.
Customers choose from the following Sprinklr Social products: • Social Publishing & Engagement – Enables enterprises to plan, publish and manage brand content across multiple channels with digital asset management, editorial calendaring, UGC management and omnichannel publishing – then measure and 8 respond to customer engagement efficiently with automated workflows, AI-driven moderation & routing and engagement dashboards that can be shared across teams. • Distributed – Empowers Distributed teams (Sales, Location Managers, Field Agents) to drive awareness, scale localized engagement and convert more leads across digital channels — all while ensuring complete brand and legal compliance. • Employee Advocacy – Enables enterprises to use their employees to amplify their brand, improve awareness, generate leads and attract talent — all while ensuring compliance.
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We believe that the scale of our AI predictions, the scope of our digital identity management, and our conversational capabilities are unmatched in the industry. • PURPOSE-BUILT customer experience AI engine for predicting intent: We have spent nearly a decade developing sophisticated machine learning algorithms that combine techniques such as clustering, pattern-match, regressions, prioritization and instance-based triggering amongst others to predict consumer intent in real-time.
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The breadth of our platform also positions us to scale across more customer-facing teams to attract new buyers beyond traditional social media roles, such as the technology buying center, call center operations, and data and insights teams to name a few. Our success and innovation are driven by an experienced global management team and extraordinary culture.
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Our AI engine can process millions of unstructured and structured data points ingested from myriads of channels and software applications. From there, our AI engine analyzes the data to predict sentiments and deliver actionable insights for our customers. Our years of experience, investment, and training our models have resulted in extremely high model accuracy.
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Sprinklr also supports seamless integrations with other industry-leading Generative AI models to offer customers the broadest choice for their personal AI needs.
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We are certified in ISO 27001, maintain annual AICPA SOC 1 and SOC 2 reports and have a security environment that is PCI compliant.
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We believe that the scale of our AI predictions, the scope of our digital identity management, and our conversational capabilities are unmatched in the industry. • PURPOSE-BUILT Sprinklr AI for deriving insights and driving interactions : With over a decade of development, we offer a broad set of AI capabilities from deep learning powered natural-language processing to automated speech recognition, as well as deep AI functionality, such as patented, phrase-level analysis.
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We are the only company that has been recognized as a Leader in Forrester’s Social Suites, Social Listening Platforms, Content Marketing for B2C Marketers, Social Advertising Technology, Social Media Management Solutions and Sales Social Engagement Waves, and Gartner’s Content Marketing Platforms Quadrant.
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Our models are built on customer experience data, each delivered in the native language (149 languages), help our global customers derive insights around brand equity, inform content strategy and allocate resources. These proprietary models also drive customer interactions to understand consumer intent in real-time, triage customer issues and empower customer service agents to improve customer experience.
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We have spent nearly a decade developing sophisticated, deep machine learning algorithms that automate techniques to predict consumer intent and sentiment in real-time. At any given instance, our AI engine can process millions of unstructured and structured data points ingested from myriads of channels and software applications.
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We believe that we have a significant first-mover advantage, helping us establish and maintain a global leadership position in offering enterprise-level AI to meet governance, compliance and security requirements. • CUSTOMER-DRIVEN Sprinklr AI+ for improving productivity : We combine our proprietary Sprinklr AI with generative AI models to drive new levels of productivity across customer-facing functions – we call this Sprinklr AI+.
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We also model end-to-end dialogues for improving customer service agent productivity.
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Sprinklr AI+ allows enterprises to combine unstructured, CX data from 30+ digital channels – including social platforms, messaging platforms and millions of publicly available news, blogs and review sites – with generative AI to create content, improve feedback and assistance, and more quickly identify insights and subsequent actions.
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These new realities guide each of the products that we have built, providing solutions and capabilities that large enterprises can no longer afford to live without: • Sprinklr Insights – listen to and learn from the market, customers, and competitors to act in real-time; • Sprinklr Service – serve customers on the channels they choose, increasing satisfaction, driving loyalty and reducing costs; • Sprinklr Marketing – personalize ads with content that is relevant, authentic, timely and effective; and • Sprinklr Social – engage with and sell to customers on the channels they use most.
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Sprinklr AI+ leverages generative AI in all four Sprinklr product suites to offer AI-powered omnichannel contact center as a service (“CCaaS”), social media management, marketing & advertising, and research tools.
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Developers also can create applications to interact directly with Sprinklr by signing up on the developer portal. • Active Data Retention – Customers have the ability to store Sprinklr’s platform data to meet operational or regulatory compliance needs for Account or Listening data. • Display – Display transforms data and content into insightful, impactful experiences through an interactive digital signage solution for retail, DooH (digital out-of-home), stadium, broadcast TV, and command centers.
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For example, we are certified in International Organization for Standardization (“ISO”) 27001, maintain annual American Institute of CPAs (“AICPA”) System and Organization Controls (“SOC”) 1, SOC 2, and SOC 3 Type II reports and have an environment that is assessed under Payment Card Industry Data Security Standard (“PCI-DSS”) as Service Provider Level 1.
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Display can even be embedded on websites. • Presentations – Our Live Slide™ technology helps customers quickly create slides of live, real-time social and business data and content that are easily accessible for all stakeholders, empowering them to tell your story in a visually compelling way. • AI Studio – Create and deploy custom artificial intelligence models, validate predictions of existing models, and retrain them accordingly.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny decline in our customer renewals or expansion would harm our business, results of operations and financial condition. • If we or our third-party service providers experience a cybersecurity breach or other security incident or unauthorized parties otherwise obtain access to our customers’ data, our data or our Unified-CXM platform, our Unified-CXM platform may be perceived as not being secure, our reputation may be harmed, demand for our Unified-CXM platform may be reduced and we may incur significant liabilities. • The market in which we participate is new and rapidly evolving, and if we do not compete effectively, our results of operations and financial condition could be harmed. • Our business and growth depend in part on the success of our strategic relationships with third parties, as well as on the continued availability and quality of feedback data from third parties over whom we do not have control. • Certain of our results of operations and financial metrics may be difficult to predict. • Unstable market and economic conditions may have serious adverse consequences on our business, financial conditions and share price. • Any failure to obtain, maintain, protect, defend or enforce our intellectual property rights could impair our ability to protect our proprietary technology and our brand and adversely affect our business, financial condition and results of operations. • We are subject to stringent and changing obligations related to data privacy and security.
Biggest changeAny decline in our customer renewals or expansion would harm our business, results of operations and financial condition. • We use artificial intelligence in our products, which may result in operational challenges, legal liability, reputational concerns and competitive risks. • Our business and growth depend in part on the success of our strategic relationships with third parties, as well as on the continued availability and quality of feedback data from third parties over whom we do not have control. • Any failure to obtain, maintain, protect, defend or enforce our intellectual property rights could impair our ability to protect our proprietary technology and our brand and adversely affect our business, financial condition and results of operations. • We are subject to stringent and changing obligations related to data privacy and security.
Such an event also may result in a compromise to our information technology systems or a security incident public disclosures and negative publicity for us and such customer, which may have a negative impact on our ability to achieve our corporate goals and could adversely affect our business, reputation, results of operations and financial condition.
Such an event also may result in a compromise to our information technology systems or a security incident, or public disclosures and negative publicity for us and such customer, which may have a negative impact on our ability to achieve our corporate goals and could adversely affect our business, reputation, results of operations and financial condition.
In addition, under Section 382 of the Internal Revenue Code of 1986 (the “Code”), as amended, if a corporation undergoes an “ownership change,” its ability to use its pre-change net operating loss carryforwards and other tax attributes to offset its post-change taxable income or tax liability may be limited.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change,” its ability to use its pre-change net operating loss carryforwards and other tax attributes to offset its post-change taxable income or tax liability may be limited.
Under current U.S. federal tax laws, net operating losses are generally not permitted to be carried back to prior taxable years. There is also a risk that, due to regulatory changes, such as suspensions of the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.
Under current U.S. federal tax laws, net operating losses generally are not permitted to be carried back to prior taxable years. There is also a risk that, due to regulatory changes, such as suspensions of the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.
Factors that may cause fluctuations in our results of operations include, without limitation, those listed below: • variability in our sales cycle, including as a result of the budgeting cycles and internal purchasing priorities of our customers; • the payment terms and subscription term length associated with sales of our Unified-CXM platform and their effect on our bookings and free cash flow; • the addition or loss of large customers, including through acquisitions or consolidations; • the timing of sales and recognition of revenue, which may vary as a result of changes in accounting rules and interpretations; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; • network outages or actual or perceived security breaches or other incidents; • general economic, market and political conditions; • customer renewal rates; • increases or decreases in the number of elements of our services or pricing changes upon any renewals of customer agreements; • changes in our pricing policies or those of our competitors; • the mix of services sold during a period; • the timing of our recognition of stock-based compensation expense for our equity awards, particularly in cases where awards covering a large number of our shares are tied to a specific event or date; and • the timing and success of introductions of new platform features and services by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or strategic partners.
Factors that may cause fluctuations in our results of operations include, without limitation, those listed below: • variability in our sales cycle, including as a result of the budgeting cycles and internal purchasing priorities of our customers; • the payment terms and subscription term length associated with sales of our Unified-CXM platform and their effect on our bookings and free cash flow; • the addition or loss of large customers, including through acquisitions or consolidations; • the timing of sales and recognition of revenue, which may vary as a result of changes in accounting rules and interpretations; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; 19 • network outages or actual or perceived security breaches or other incidents; • general economic, market and political conditions; • customer renewal rates; • increases or decreases in the number of elements of our services or pricing changes upon any renewals of customer agreements; • changes in our pricing policies or those of our competitors; • the mix of services sold during a period; • the timing of our recognition of stock-based compensation expense for our equity awards, particularly in cases where awards covering a large number of our shares are tied to a specific event or date; and • the timing and success of introductions of new platform features and services by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or strategic partners.
Any impairment of our or our customers’ data or interruptions in the functioning of our Unified-CXM platform, whether due to damage to, or failure of, third-party data centers, cloud computing providers or the cloud computing providers of our customers or unsuccessful data transfers, may reduce our revenue, result in significant fines, cause us to issue credits or pay penalties, subject us to claims for indemnification and other claims, litigation or disputes, result in regulatory investigations or other inquiries, cause our customers to terminate their subscriptions and adversely affect our reputation, renewal rates and our ability to attract new customers.
Any impairment of our or our customers’ data or interruptions in the functioning of our Unified-CXM platform, whether due to damage to, or failure of, third-party data centers, cloud computing providers or the cloud computing providers of our customers or unsuccessful data transfers, may reduce our revenue, result in significant fines, cause us to issue credits or pay penalties, subject us to claims for indemnification and other claims, litigation or 21 disputes, result in regulatory investigations or other inquiries, cause our customers to terminate their subscriptions and adversely affect our reputation, renewal rates and our ability to attract new customers.
In addition, our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • vacancies on our board of directors may be filled only by our board of directors and not by stockholders; • our board of directors is classified into three classes of directors with staggered three-year terms; • our stockholders may only take action at a meeting of stockholders and may not take action by written consent for any matter; • a special meeting of our stockholders may only be called by a majority of our board of directors, the chairperson of our board of directors or our Chief Executive Officer; • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; • our amended and restated certificate of incorporation does not provide for cumulative voting; • our amended and restated certificate of incorporation will allow stockholders to remove directors only for cause; • certain amendments to our amended and restated certificate of incorporation will require the approval of the holders of at least 66 2⁄3% of our then-outstanding common stock; 51 • authorize undesignated preferred stock, the terms of which may be established and shares of which may be issued by our board of directors, without further action by our stockholders; and • certain litigation against us can only be brought in Delaware.
In addition, our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • vacancies on our board of directors may be filled only by our board of directors and not by stockholders; 41 • our board of directors is classified into three classes of directors with staggered three-year terms; • our stockholders may only take action at a meeting of stockholders and may not take action by written consent for any matter; • a special meeting of our stockholders may only be called by a majority of our board of directors, the chairperson of our board of directors or our Chief Executive Officer; • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; • our amended and restated certificate of incorporation does not provide for cumulative voting; • our amended and restated certificate of incorporation will allow stockholders to remove directors only for cause; • certain amendments to our amended and restated certificate of incorporation will require the approval of the holders of at least 66 2⁄3% of our then-outstanding common stock; • authorize undesignated preferred stock, the terms of which may be established and shares of which may be issued by our board of directors, without further action by our stockholders; and • certain litigation against us can only be brought in Delaware.
Wayfair, Inc. et al (“Wayfair”), that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state or “economic nexus.” In response to Wayfair, or for other reasons, states or local governments have adopted and begun to enforce, and other states or local governments may adopt, or begin to enforce, laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions.
Wayfair, Inc. et al (“Wayfair”), that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state or “economic nexus.” In response to Wayfair, or for other reasons, states or local governments have adopted and begun to enforce, and other states or local 37 governments may adopt, or begin to enforce, laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions.
Additionally, our insurance policies may be insufficient to cover a claim made against us by any such customers affected by any errors, defects or other infrastructure problems. In some instances, we may not be able to rectify, remediate or even identify the cause or causes of these performance issues within an acceptable period of time.
Additionally, our insurance policies may be insufficient to cover a claim made against us by any such customers affected by any 32 errors, defects or other infrastructure problems. In some instances, we may not be able to rectify, remediate or even identify the cause or causes of these performance issues within an acceptable period of time.
Use of our Unified-CXM platform also involves processing our customers’ information, including personal data regarding their customers, or employees. Cyberattacks, malicious internet-based activity, and online offline fraud and other similar activities threaten the confidentiality, integrity and availability of our confidential information, are prevalent and continue to increase in frequency, intensity and sophistication.
Use of our Unified-CXM platform also involves processing our customers’ information, including personal data regarding their customers, employees or other individuals. Cyberattacks, malicious internet-based activity, online and offline fraud and other similar activities threaten the confidentiality, integrity and availability of our confidential information, are prevalent and continue to increase in frequency, intensity and sophistication.
However, we may not be able to obtain such a license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments.
However, we may not be able to obtain such a license on commercially reasonable terms or at all. Even if we were able to obtain a 29 license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments.
Furthermore, under the current U.S. federal tax laws, the amount of net operating loss carryforwards from tax years beginning after December 31, 2017 that we are permitted to use in any taxable year beginning after December 31, 2020 is limited to 80% of our taxable income in such year, where taxable income is determined without regard to the net operating loss deduction itself.
Furthermore, under the current U.S. federal tax laws, the amount of net operating loss carryforwards from tax years beginning after December 31, 2017 that we are permitted to use in any taxable year is limited to 80% of our taxable income in such year, where taxable income is determined without regard to the net operating loss deduction itself.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.
Any 40 failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.
In particular, the applicability of sales taxes to our products and services in various jurisdictions is unclear. 45 Furthermore, an increasing number of states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. The Supreme Court of the United States ruled in South Dakota v.
In particular, the applicability of sales taxes to our products and services in various jurisdictions is unclear. Furthermore, an increasing number of states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. The Supreme Court of the United States ruled in South Dakota v.
We may not be able to attract new customers to our Unified-CXM platform for a variety of reasons, including as a result of their use of traditional approaches to customer experience management, their internal timing or budget or the pricing of our Unified-CXM platform compared to products and services offered by our competitors.
We may not be able to attract new customers to our Unified-CXM platform for a variety of reasons, including as a result of their use of traditional approaches to customer experience management, their 18 internal timing or budget or the pricing of our Unified-CXM platform compared to products and services offered by our competitors.
You should consider and read carefully all of the risks and uncertainties described below, together with all of the other information contained in this Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and the related notes.
You should consider and read carefully all of the risks and uncertainties described below, together with all of the other information contained in this Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes.
In some cases, we rely on negotiated agreements with social media networks and other data providers. These negotiated agreements may provide increased access to application programming interfaces (“APIs”) and data that allow us to provide a more comprehensive solution for our customers.
In some cases, we rely on negotiated agreements with social media networks and other data providers. These negotiated agreements may provide increased access to application programming interfaces (“APIs”) and data that allow us to provide 23 a more comprehensive solution for our customers.
Business partners and other third parties with a strong influence on how consumers interact with our products, such as Apple, Google, Meta and Mozilla, may create new privacy controls or restrictions on their products and platforms, limiting the effectiveness of our services.
Business partners and other third parties with a strong influence on how consumers interact with our products, such as Apple, Google, Meta, Microsoft, and Mozilla, may create new privacy controls or restrictions on their products and platforms, limiting the effectiveness of our services.
Additionally, errors in inventorship or ownership can sometimes also impact priority claims, and if we were to lose our ability to claim priority for certain patent filings, intervening art or other events may preclude us from issuing patents.
Additionally, errors in inventorship or ownership can sometimes also impact priority claims, and if 28 we were to lose our ability to claim priority for certain patent filings, intervening art or other events may preclude us from issuing patents.
Similarly, many non-U.S. jurisdictions have considered or adopted laws that impose VAT, digital service, or similar taxes, on companies despite not having a physical presence in the non-U.S. jurisdiction. We collect sales, VAT or similar transaction taxes in a number of jurisdictions.
Similarly, many non-U.S. jurisdictions have considered or adopted laws that impose VAT, digital service, or similar taxes, on companies despite not having a physical presence in the non-U.S. jurisdiction. We collect sales tax, VAT or similar transaction taxes in a number of jurisdictions.
Our domestic and international tax liabilities are subject to various jurisdictional rules regarding the calculation of taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions.
Our domestic and international tax liabilities are subject to rules regarding the calculation of taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions.
Further, our leases and other agreements with data center and cloud computing providers expire at various times, and the owners of our data center facilities and cloud computing providers have no obligation to renew their agreements with us on commercially reasonable terms, or at all.
Further, our leases and other agreements with data centers and cloud computing providers expire at various times, and the owners of our data center facilities and cloud computing providers have no obligation to renew their agreements with us on commercially reasonable terms, or at all.
To the extent that weak economic conditions cause our existing customers or potential customers to reduce their budget for Unified-CXM solutions or to perceive spending on such systems as discretionary, demand for our Unified-CXM platform may be adversely affected.
To the extent that these weak economic conditions cause our existing customers or potential customers to reduce their budget for Unified-CXM solutions or to perceive spending on such systems as discretionary, demand for our Unified-CXM platform may be adversely affected.
We do not have sufficient operating history to know whether our brand promotion activities will ultimately be successful or yield increased revenue, and, if they are not successful, our business may be adversely affected.
We do not have sufficient operating history to know 24 whether our brand promotion activities will ultimately be successful or yield increased revenue, and, if they are not successful, our business may be adversely affected.
Any of the foregoing could adversely affect our business, results of operations and financial condition. 39 In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights.
Any of the foregoing could adversely affect our business, results of operations and financial condition. In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights.
For example, noncompliance with the GDPR carries fines of up to the greater of €20 million or 4% of global annual turnover (and under UK laws, up to the greater of £17.5 million or 4% of global annual turnover) and can result in data processing bans, other administrative penalties and litigation brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests, together with associated damage to our reputation.
For example, noncompliance with the EU GDPR carries fines of up to the greater of €20 million or 4% of global annual turnover (and under the UK GDPR, up to the greater of £17.5 million or 4% of global annual turnover) and can result in data processing bans, other administrative penalties and litigation brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests, together with associated damage to our reputation.
The enactment of such laws has prompted similar legislative developments in other states, which could create the potential for a patchwork of overlapping but different state laws, as certain state laws may be more stringent, broader in scope or offer greater individual rights with respect to personal data than federal, international or other state laws, which may complicate compliance efforts.
The enactment of such laws has prompted similar legislative developments in other states, which could create the potential for a patchwork of overlapping but different state laws, as certain state laws may be more stringent, broader in scope or offer greater individual rights with respect to personal data than federal, foreign or other state laws, which may complicate compliance efforts.
Moreover, these agreements may not provide an adequate remedy for breaches or in the event of unauthorized use or disclosure of our confidential information or technology or infringement of our intellectual property. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret or know-how is difficult, expensive, and time-consuming, and the outcome is unpredictable.
Moreover, these agreements may not provide an adequate remedy for breaches or the unauthorized use or disclosure of our confidential information or technology or infringement of our intellectual property. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret or know-how is difficult, expensive, and time-consuming, and the outcome is unpredictable.
Our international operations also subject us to a variety of additional risks and challenges, including: • increased management, travel, infrastructure and legal compliance costs associated with having operations and developing our business in multiple jurisdictions; • providing our Unified-CXM platform and operating our business across a significant distance, in different languages, among different cultures and time zones, including the potential need to modify our Unified-CXM platform and products to ensure that they are culturally appropriate and relevant in different countries; • compliance with non-U.S. data privacy, protection and security laws, rules and regulations, including data localization requirements, and the risks and costs of non-compliance; • longer payment cycles and difficulties enforcing agreements, collecting accounts receivable or satisfying revenue recognition criteria, especially in emerging markets; • hiring, training, motivating and retaining highly-qualified personnel, while maintaining our unique corporate culture; • increased financial accounting and reporting burdens and complexities; • longer sales cycle and more time required to educate enterprises on the benefits of our Unified-CXM platform outside of the United States; • requirements or preferences for domestic products; • limitations on our ability to sell our Unified-CXM platform and for our solution to be effective in non-U.S. markets that have different cultural norms and related business practices that de-emphasize the importance of positive customer and employee experiences; • differing technical standards, existing or future regulatory and certification requirements and required features and functionality; • political and economic conditions and uncertainty in each country or region in which we operate and general economic and political conditions and uncertainty around the world; • changes in a specific country’s or region’s political or economic conditions, including in the United Kingdom as a result of the United Kingdom exiting the European Union; • compliance with laws and regulations for non-U.S. operations, including anti-bribery laws, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our Unified-CXM platform and develop our business in certain non-U.S. markets, and the risks and costs of non-compliance; • heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact our financial condition and result in restatements of our consolidated financial statements; • heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact our financial condition and result in restatements of our consolidated financial statements; • fluctuations in currency exchange rates and related effects on our results of operations; • difficulties in repatriating or transferring funds from or converting currencies in certain countries; 34 • communication and integration problems related to entering new markets with different languages, cultures and political systems; • new and different sources of competition; • differing labor standards, including restrictions related to, and the increased cost of, terminating employees in some countries; • the need for localized subscription agreements; • the need for localized language support and difficulties associated with delivering support, training and documentation in languages other than English; • increased reliance on channel partners; • reduced protection for intellectual property rights in certain non-U.S. countries and practical difficulties of obtaining, maintaining, protecting and enforcing such rights abroad; and • compliance with the laws of numerous foreign taxing jurisdictions, including withholding tax obligations, and overlapping of different tax regimes.
Our international operations also subject us to a variety of additional risks and challenges, including: • increased management, travel, infrastructure and legal compliance costs associated with having operations and developing our business in multiple jurisdictions; • providing our Unified-CXM platform and operating our business across a significant distance, in different languages, among different cultures and time zones, including the potential need to modify our Unified-CXM platform and products to ensure that they are culturally appropriate and relevant in different countries; • compliance with non-U.S. data privacy, protection and security laws, rules and regulations, including data localization requirements, and the risks and costs of non-compliance; • longer payment cycles and difficulties enforcing agreements, collecting accounts receivable or satisfying revenue recognition criteria, especially in emerging markets; • hiring, training, motivating and retaining highly-qualified personnel, while maintaining our unique corporate culture; • increased financial accounting and reporting burdens and complexities; • longer sales cycle and more time required to educate enterprises on the benefits of our Unified-CXM platform outside of the United States; • requirements or preferences for domestic products; • limitations on our ability to sell our Unified-CXM platform and for our solution to be effective in non-U.S. markets that have different cultural norms and related business practices that de-emphasize the importance of positive customer and employee experiences; • differing technical standards, existing or future regulatory and certification requirements and required features and functionality; • political and economic conditions and uncertainty in each country or region in which we operate and general economic and political conditions and uncertainty around the world; • compliance with laws and regulations for non-U.S. operations, including anti-bribery laws, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our Unified-CXM platform and develop our business in certain non-U.S. markets, and the risks and costs of non-compliance; • heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact our financial condition and result in restatements of our consolidated financial statements; • fluctuations in currency exchange rates and related effects on our results of operations; • difficulties in repatriating or transferring funds from or converting currencies in certain countries; • communication and integration problems related to entering new markets with different languages, cultures and political systems; • new and different sources of competition; • differing labor standards, including restrictions related to, and the increased cost of, terminating employees in some countries; • the need for localized subscription agreements; • the need for localized language support and difficulties associated with delivering support, training and documentation in languages other than English; • increased reliance on channel partners; • reduced protection for intellectual property rights in certain non-U.S. countries and practical difficulties of obtaining, maintaining, protecting and enforcing such rights abroad; and 26 • compliance with the laws of numerous foreign taxing jurisdictions, including withholding tax obligations, and overlapping of different tax regimes.
Such restrictions could increase our exposure to regulatory enforcement action, increase our compliance costs, and adversely affect our business. We rely on data obtained from third-party data suppliers, but the sale of data to third parties has become subject to increased regulatory scrutiny. Therefore, obtaining information from third parties carries risk to us as a data purchaser.
Such restrictions could increase our exposure to regulatory enforcement action, increase our compliance costs, and adversely affect our business. We sometimes rely on data obtained from third-party data suppliers, and the sale of data to third parties has become subject to increased regulatory scrutiny. Therefore, obtaining information from third parties carries risk to us as a data purchaser.
We have experienced ownership changes in the past and may experience ownership changes in the future as a result of subsequent shifts in our stock ownership.
We have experienced ownership changes in the past and may experience ownership changes in the 38 future as a result of subsequent shifts in our stock ownership.
Additionally, if the third parties we work with, such as our vendors or third-party service providers, violate applicable laws, rules or regulations or our policies, such violations also may put our or our customers’ data at risk and could in turn have an adverse effect on our business.
Additionally, if the third parties we work with, including our vendors or third-party service providers, violate applicable laws, rules or regulations or our policies, such violations also may put our or our customers’ data at risk and could in turn have an adverse effect on our business.
Any claims or litigation, regardless of their merit, could cause us to incur significant expenses, pay substantial amounts in costs or damages, ongoing royalty or license fees or other payments, or could prevent us from offering all or aspects of our Unified-CXM platform or using certain technologies, require us to re-engineer all or a portion of our Unified-CXM platform, force us to implement expensive work-arounds or re-designs, distract management from our business or require that we comply with other unfavorable terms.
Any claims or litigation, regardless of their merit, could cause us to incur significant expenses, pay substantial amounts in costs or damages, ongoing royalty or license fees or other payments, or could prevent us from offering all or aspects of our Unified-CXM platform or using certain technologies, require us to re-engineer all or a portion of our Unified-CXM platform, force us to implement expensive workarounds or re-designs, distract management from our business or require that we comply with other unfavorable terms.
We rely upon third-party service providers and technologies to operate critical business systems to process confidential information in a variety of contexts, including, without limitation, third-party providers of cloud-based infrastructure, encryption and authentication technology, employee email, content delivery to customers, and other functions.
We rely upon third parties and third-party technologies to operate critical business systems to process confidential information in a variety of contexts, including, without limitation, third-party providers of cloud-based infrastructure, encryption and authentication technology, employee email, content delivery to customers, and other functions.
A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our Unified-CXM platform and our services. We may expend significant resources or modify our business activities to try to protect against security incidents.
A security incident or other interruption could disrupt our ability (and that of third parties upon which we rely) to provide our Unified-CXM platform and our services. We may expend significant resources or modify our business activities to try to protect against security incidents.
The market for Unified-CXM solutions is new and rapidly evolving, and if this market develops more slowly than we expect or declines, or develops in a way that we do not expect, our business could be adversely affected.
The market for Unified-CXM solutions is new and rapidly evolving, and if this market develops more slowly than we expect or declines, develops in a way that we do not expect, or if we do not compete effectively, our business could be adversely affected.
We are, and expect to continue to be, subject to audit by the IRS and other tax authorities in various domestic and foreign jurisdictions. As a result, we have received, and may in the future receive, assessments in multiple jurisdictions on various tax-related assertions.
We are, and expect to continue to be, subject to audit by the IRS and other tax authorities in various domestic and foreign jurisdictions. As a result, we have received, and may in the future receive, assessments in multiple jurisdictions on various tax-related matters.
Enforcement of these requirements has increased, and a new regulation proposed in the European Union, known as the ePrivacy Regulation, makes these requirements, as well as requirements around tracking technologies, such as cookies, more stringent and increase the penalties for violating them.
Enforcement of these requirements has increased, and a new regulation proposed in the European Union, known as the ePrivacy Regulation, makes these requirements, as well as requirements around tracking technologies, such as cookies, more stringent and increases the penalties for violating them.
Such tax assessments, penalties, and interest, or future requirements may adversely affect our results of operations. Our international operations subject us to potentially adverse tax consequences. We generally conduct our international operations through subsidiaries and are subject to income taxes as well as non-income-based taxes, such as payroll, value-added, goods and services and other local taxes.
Such tax assessments, penalties, and interest, or future requirements may adversely affect our results of operations. Our international operations subject us to potentially adverse tax consequences. We generally conduct our international operations through subsidiaries and are subject to income taxes as well as non-income-based taxes, such as payroll, value-added, goods and services and other local taxes in various jurisdictions.
With obligations relating to data privacy and security imposing new and stringent obligations, and with substantial uncertainty over the interpretation and application of these and other obligations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses in an effort to do so.
With obligations relating to data privacy and security changing and imposing new and stringent obligations, and with some uncertainty over the interpretation and application of these and other obligations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses in an effort to do so.
The market price of our Class A common stock may fluctuate or decline substantially depending on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance, including: • price and volume fluctuations in the overall stock market from time to time; • announcements of new products, solutions or technologies, commercial relationships, acquisitions or other events by us or our competitors; • changes in how enterprises perceive the benefits of our Unified-CXM platform and products; • departures of key personnel; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • fluctuations in the trading volume of our shares or the size of our public float; • sales of large blocks of our common stock; 49 • market manipulation, including coordinated buying or selling activities; • actual or anticipated changes or fluctuations in our results of operations; • whether our results of operations meet the expectations of securities analysts or investors; • changes in actual or future expectations of investors or securities analysts; • actual or perceived significant data breach involving our Unified-CXM platform; • litigation involving us, our industry or both; • governmental or regulatory actions or audits; • regulatory developments in the United States, foreign countries or both; • general economic, political and market conditions and overall fluctuations in the financial markets in the United States and abroad, including as a result of recent bank closures, public health crises or geographical tensions and wars, such as Russia’s ongoing war with Ukraine; and • “flash crashes,” “freeze flashes” or other glitches that disrupt trading on the securities exchange on which we are listed.
The market price of our Class A common stock may fluctuate or decline substantially depending on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance, including: • price and volume fluctuations in the overall stock market from time to time; • announcements of new products, solutions or technologies, commercial relationships, acquisitions or other events by us or our competitors; • changes in how enterprises perceive the benefits of our Unified-CXM platform and products; • departures of key personnel; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • fluctuations in the trading volume of our shares or the size of our public float; • sales of large blocks of our common stock; • market manipulation, including coordinated buying or selling activities; • actual or anticipated changes or fluctuations in our results of operations; • whether our results of operations meet the expectations of securities analysts or investors; • changes in actual or future expectations of investors or securities analysts; • actual or perceived significant data breach involving our Unified-CXM platform; • litigation involving us, our industry or both; • governmental or regulatory actions or audits; • regulatory developments in the United States, foreign countries or both; • general economic, political and market conditions and overall fluctuations in the financial markets in the United States and abroad, including as a result of recent bank closures, public health crises or geographical tensions and wars, such as the Russia-Ukraine war and the Israel-Hamas war (including any escalation or geographical expansion of these conflicts); and • “flash crashes,” “freeze flashes” or other glitches that disrupt trading on the securities exchange on which we are listed.
A key element of our strategy is to invest significantly in our research and development efforts to improve and develop new technologies, features and functionality for our Unified-CXM platform. For each of the years ended January 31, 2023, 2022 and 2021, our research and development expenses were at least 10% of our revenue.
A key element of our strategy is to invest significantly in our research and development efforts to improve and develop new technologies, features and functionality for our Unified-CXM platform. For each of the years ended January 31, 2024 and 2023, our research and development expenses were at least 10% of our revenue.
Any failure or perceived failure by us or our third-party service providers to comply with our data privacy or security obligations to customers or other third parties, or any of our other legal obligations relating to data privacy or security, may result in governmental investigations or inquiries (which have occurred in the past and may occur in the future), enforcement actions, litigation, disputes or other claims, indemnification requests, restrictions on providing our services, claims or public statements against us by privacy advocacy groups or others, adverse press and widespread negative publicity, reputational damage, significant liability or fines and the loss of the trust of our customers, any of which could have a material adverse effect on our business, results of operations and financial condition.
Any failure or perceived failure by us or our third party partners to comply with our data privacy or security obligations to customers or other third parties, or any of our other legal obligations relating to data privacy or security, may result in governmental investigations or inquiries (which have occurred in the past and may occur in the future), enforcement actions, litigation and mass arbitration demands, disputes or other claims, indemnification requests, restrictions on providing our services, claims or public statements against us by privacy advocacy groups or others, adverse press and widespread negative publicity, reputational damage, significant liability or fines and the loss of the trust of our customers, any of which could have a material adverse effect on our business, results of operations and financial condition.
If our agreement with Twitter expires, is not renewed on the same or similar terms or at all, or if it is terminated due to the failure or unwillingness of either party to perform its obligations thereunder, we may not be able to provide the same level of Unified-CXM insights to our customers and our business, results of operations and financial condition may be materially and adversely affected.
If our agreement with X (formerly known as Twitter) expires, is not renewed on the same or similar terms or at all, or if it is terminated due to the failure or unwillingness of either party to perform its obligations thereunder, we may not be able to provide the same level of Unified-CXM insights to our customers and our business, results of operations and financial condition may be materially and adversely affected.
Security incidents and attendant consequences may cause customers to stop using our Unified-CXM platform, deter new customers from using our Unified-CXM platform, and negatively impact our ability to grow and operate our business.
Security incidents and attendant consequences may prevent or cause customers to stop using our Unified-CXM platform, deter new customers from using our Unified-CXM platform, and negatively impact our ability to grow and operate our business.
The costs of compliance with, and other burdens imposed by, laws, rules, regulations and other obligations relating to data privacy and security applicable to the businesses of our customers may adversely affect our customers’ ability and willingness to process information from their employees, customers and partners, which could limit the use, effectiveness and adoption of our Unified-CXM platform and reduce overall demand.
The cost of compliance with, and other burdens imposed by, laws, rules, regulations and other obligations relating to data privacy and security applicable to the businesses of our customers may adversely affect our customers’ ability and willingness to process personal data from their employees, customers and partners, which could limit the use, effectiveness and adoption of our Unified-CXM platform and reduce overall demand.
Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for the following types of actions and proceedings under Delaware statutory or common law: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders; (3) any action arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws or (4) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware), in all cases subject to the court having jurisdiction over indispensable parties named as defendants.
Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for the following types of actions and proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders; (iii) any action arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws or (iv) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware), in all cases subject to the court having jurisdiction over indispensable parties named as defendants.
Should any of these statements prove to be untrue or be perceived as untrue, even though circumstances beyond our reasonable control, we may face litigation, disputes, claims, investigations, inquiries or other proceedings by the U.S.
Should any of these statements prove to be untrue or be perceived as untrue, even though circumstances beyond our reasonable control, we may face litigation, disputes, claims, investigations, inquiries or other proceedings including, without limitation, by the U.S.
UK and European data privacy regulations in relation to electronic communications also require opt-in consent to send marketing emails or other electronic communications or use cookies and the data obtained using cookies and similar technologies for advertising, analytics and certain other purposes – activities on which our products and marketing strategies rely.
UK and EEA data privacy regulations in relation to electronic communications also require opt-in consent to send marketing emails or other electronic communications to individuals or for the use of cookies and the data obtained using cookies and similar technologies for advertising, analytics and certain other purposes – activities on which our products and marketing strategies rely.
We also are continuing to improve our internal control over financial reporting. We have expended, and anticipate that we will continue to expend, significant resources in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting.
We have expended, and anticipate that we will continue to expend, significant resources in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting.
The market for Unified-CXM solutions is new and rapidly evolving, and if this market fails to grow or grows more slowly than we currently anticipate, demand for our Unified-CXM platform could be adversely affected. The CXM market also is subject to rapidly changing user demand and trends.
The market for Unified-CXM solutions is new and rapidly evolving, and if this market fails to grow or grows more slowly than we currently anticipate, demand for our Unified-CXM platform could be adversely affected. The Customer Experience Management (“CXM”) market also is subject to rapidly changing user demand and trends.
Risks Related to Tax and Accounting Matters Our results of operations may be harmed if we are required to collect sales or other related taxes for subscriptions to our products and services in jurisdictions in which we have not historically done so.
Risks Related to Tax and Accounting Matters Our results of operations may be harmed if we are required to collect sales, value-added, goods and services or other similar taxes for subscriptions to our products and services in jurisdictions in which we have not historically done so.
Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
Unstable market and economic conditions and catastrophic events may have serious adverse consequences on our business, financial condition and share price.
Moreover, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems (including our products and services) or the third-party information technology systems that support us and our services.
Moreover, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or in the third parties’ upon which we rely supply chains have not been compromised or that they do not contain exploitable vulnerabilities, defects or bugs that could result in a breach of or disruption to our information technology systems (including our products and services) or the third-party information technology systems that support us and our services.
This concentration of ownership will limit the ability of other stockholders to influence corporate matters and may cause us to make strategic decisions that could involve risk to holders of our Class A common stock or that may not be aligned to the interest of holders of our Class A common stock, including decisions to delay, prevent or discourage acquisition proposals or other offers for our capital stock that you may feel are in your best interest as a stockholder and ultimately could deprive you of an opportunity to receive a premium for your Class A common stock as part of a sale of our company, which in turn might adversely affect the market price of our common stock. 50 We cannot predict the impact that our dual class structure may have on the market price of our Class A common stock.
This concentration of ownership will limit the ability of other stockholders to influence corporate matters and may cause us to make strategic decisions that could involve risk to holders of our Class A common stock or that may not be aligned to the interest of holders of our Class A common stock, including decisions to delay, prevent or discourage acquisition proposals or other offers for our capital stock that you may feel are in your best interest as a stockholder and ultimately could deprive you of an opportunity to receive a premium for your Class A common stock as part of a sale of our company, which in turn might adversely affect the market price of our common stock.
If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions, outside of the origin territory, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the prohibition on further transfers, the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
Should the net neutrality rules be relaxed or eliminated, we could incur greater operating expenses or our customers’ use of our Unified-CXM platform could be adversely affected, either of which could harm our business and results of operations.
Should the net neutrality rules not be reinstated, we could incur greater operating expenses or our customers’ use of our Unified-CXM platform could be adversely affected, either of which could harm our business and results of operations.
For example, recent legislation in the United States, commonly referred to as the Inflation Reduction Act, enacts a minimum tax equal to 15 percent of the adjusted financial statement income of certain large U.S. corporations, for tax years beginning after December 31, 2022, as well as a one percent excise tax on stock repurchases imposed on public corporations making such repurchases after December 31, 2022.
For example, recent legislation in the United States, commonly referred to as the Inflation Reduction Act, enacts a minimum tax equal to 15 percent of the adjusted financial statement income of certain large U.S. corporations, as well as a one percent excise tax on stock repurchases imposed on public corporations making such repurchases.
Any failure to maintain effective disclosure controls and internal control over financial reporting could have an adverse effect on our business, results of operations and financial condition and could cause a decline in the market price of our Class A common stock. 48 We have identified a material weakness in our internal control over financial reporting.
Any failure to maintain effective disclosure controls and internal control over financial reporting could have an adverse effect on our business, results of operations and financial condition and could cause a decline in the market price of our Class A common stock.
In addition, we may face compliance risks and limitations on our ability to use certain data provided by our third-party suppliers if those suppliers have not complied with applicable privacy laws, provided appropriate notice to data subjects, obtained necessary consents, or established a legal basis for the transfer and processing of the data by us.
In addition, we may face compliance risks and limitations on our ability to use certain data provided by our third-party suppliers if those suppliers have not complied with applicable privacy laws, provided appropriate notice to data subjects, obtained necessary consents, or established a legal basis for the transfer and processing of the data by us, or if there are restrictions in their terms of use of which we are not aware.
Depending on how these laws are interpreted, we may have to make changes to our business practices and products to comply with such obligations.
Depending on how these laws are interpreted, we may have to adapt our business practices and products to comply with such obligations.
Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or enterprise requirements. With the introduction of new technologies, the evolution of our Unified-CXM platform and new market entrants, we expect competition to intensify in the future.
The market for Unified-CXM solutions is also highly competitive. Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or enterprise requirements. With the introduction of new technologies, the evolution of our Unified-CXM platform and new market entrants, we expect competition to intensify in the future.
Risks Related to Litigation, Regulatory Compliance and Governmental Matters We are subject to governmental export and import controls and economic sanctions laws and regulations 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.
We are subject to governmental export and import controls and economic sanctions laws and regulations 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.
In particular, Twitter provides us with certain data that supports our Unified-CXM platform pursuant to an agreement that expires on February 28, 2025.
In particular, X (formerly known as Twitter) provides us with certain data that supports our Unified-CXM platform pursuant to an agreement that expires on February 28, 2025.
Bribery Act or other applicable anti-bribery, anti-corruption laws and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, loss of export privileges, severe criminal or civil sanctions or suspension or debarment from U.S. government contracts, substantial diversion of management’s attention, a decline in the market price of our Class A common stock or overall adverse consequences to our reputation and business, all of which may have an adverse effect on our results of operations and financial condition. 41 Our business could be adversely impacted by changes in laws and regulations related to the Internet or changes in access to the Internet generally.
Bribery Act or other applicable anti-bribery, anti-corruption laws and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, loss of export privileges, severe criminal or civil sanctions or suspension or debarment from U.S. government contracts, substantial diversion of management’s attention, a decline 31 in the market price of our Class A common stock or overall adverse consequences to our reputation and business, all of which may have an adverse effect on our results of operations and financial condition.
While we require our third-party service providers who process confidential information on our behalf to meet certain security requirements and give contractual commitments to us regarding their data processing activities, our ability to monitor these third parties’ information security practices is limited, and despite such assurance and commitments, these third parties may not have, or may not continue to have, adequate information security measures in place.
While we require the third parties upon which we rely to process confidential information on our behalf to meet certain security requirements and give contractual commitments to us regarding their data processing activities, our ability to monitor these third parties’ information security practices is limited, and despite such assurance and commitments, these third parties may not have, or may not continue to have, adequate information security measures in place.
If a court were to find the exclusive-forum provision in our charter documents to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations.
If a court were to find the exclusive-forum provision in our charter documents to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations. Item 1B. Unresolved Staff Comments None. 42
We have expended and expect to continue to expend substantial financial and other resources on: • our Unified-CXM platform, including investing in our research and development team, developing or acquiring new products, features and functionality and improving the scalability, availability and security of our Unified-CXM platform; • our technology infrastructure, including expansion of our activities with public cloud service providers, enhancements to our network operations and infrastructure design, and hiring of additional employees for our operations team; • sales and marketing, including expansion of our direct sales organization and marketing efforts; and • additional international expansion in an effort to increase our customer base and sales. 17 These investments may be more costly than we expect and may not result in increased revenue or growth in our business.
We have expended and expect to continue to expend substantial financial and other resources on: • our Unified-CXM platform, including investing in our research and development team, developing or acquiring new products, features and functionality and improving the scalability, availability and security of our Unified-CXM platform; • our technology infrastructure, including expansion of our activities with public cloud service providers, enhancements to our network operations and infrastructure design, and hiring of additional employees for our operations team; • sales and marketing, including expansion of our direct sales organization and marketing efforts; and • additional international expansion in an effort to increase our customer base and sales.
Our stock price could also be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism. Item 1B. Unresolved Staff Comments None.
Our stock price could also be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism.
We have incurred significant net losses in recent years, including net losses of $55.7 million, $111.5 million and $38.6 million for the years ended January 31, 2023, 2022 and 2021, respectively. We had an accumulated deficit of $496.6 million and $441.6 million as of January 31, 2023 and 2022, respectively.
We have incurred significant net losses in recent years, including a net loss of $55.7 million and $111.5 million for the years ended January 31, 2023 and 2022, respectively. We had an accumulated deficit of $474.8 million and $496.6 million as of January 31, 2024 and 2023, respectively.
In addition, pursuant to Section 404 of the Sarbanes Oxley-Act, we are now required to perform system and process evaluation and testing of our internal control over financial reporting to allow our management to furnish a report on, among other things, the effectiveness of our internal control over financial reporting for the fiscal year covered by this Form 10-K, and we are also required, as of the date of this Form 10-K, to have our independent registered public accounting firm issue an opinion on the effectiveness of our internal control over financial reporting on an annual basis.
In addition, pursuant to Section 404 of the Sarbanes Oxley-Act, we are required to perform system and process evaluation and testing of our internal control over financial reporting to allow our management to furnish a report on, among other things, the effectiveness of our internal control over financial reporting, and we are also required to have our independent registered public accounting firm issue an opinion on the effectiveness of our internal control over financial reporting on an annual basis.
As of January 31, 2023, our directors, executive officers and their respective affiliates beneficially owned, in the aggregate, approximately 91.0% of our Class B common stock, and controlled approximately 84.0% of the voting power of our outstanding capital stock.
As of January 31, 2024, our directors, executive officers and their respective affiliates beneficially owned, in the aggregate, approximately 98.0% of our Class B common stock, and controlled approximately 88.8% of the voting power of our outstanding capital stock.
The dual class structure of our common stock as contained in our amended and restated certificate of incorporation has the effect of concentrating voting control with our executive officers and directors and their affiliates, limiting your ability to influence corporate matters.
The dual class structure of our common stock as contained in our amended and restated certificate of incorporation has the effect of concentrating voting control with our executive officers and directors and their affiliates, limiting your ability to influence corporate matters. 39 Our Class B common stock has ten votes per share, and our Class A common stock has one vote per share.
While these new laws share similarities with the CCPA, these laws, as well as other similar state or federal laws and other future changes in laws or regulations relating to data privacy and security, particularly any new or modified laws or regulations that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer or disclosure, are significant, may result in further uncertainty with respect to data privacy and security issues, and will require us to incur additional costs and expenses in an effort to comply.
These laws, as well as other laws or regulations relating to data privacy and security, particularly any new or modified laws or regulations that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer or disclosure, may result in further uncertainty with respect to data privacy and security issues, and will require us to incur additional resource, costs and expenses in an effort to comply.
The publication of our privacy policies and other statements that provide promises and assurances about data privacy and security can subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual practices.
Our privacy policies and other statements regarding data privacy and security can subject us to potential government or legal action if they are found to be deceptive, unfair, or misrepresentative of our actual practices.
In the ordinary course of our business, we may collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (commonly known as processing) proprietary and confidential data, including personal data, intellectual property, and trade secrets, of ours or our customers (collectively, confidential information).
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit and share (which we collectively refer to as “process”) proprietary and confidential data, including personal data, intellectual property, and trade secrets, of ours or our customers (collectively, “confidential information”).
During the year ended January 31, 2023, approximately 36% of our sales were to customers outside of the Americas. As part of our growth strategy, we expect to continue to expand our international operations, which may include opening additional offices in new jurisdictions and providing our Unified-CXM platform in additional languages and on-boarding new customers outside the United States.
As part of our growth strategy, we expect to continue to expand our international operations, which may include opening additional offices in new 25 jurisdictions and providing our Unified-CXM platform in additional languages and on-boarding new customers outside the United States.
Furthermore, because data security and privacy are critical competitive factors in our industry, we make numerous statements in our privacy policies and terms of service, through our certifications to certain industry standards and in our marketing materials providing assurances about the security and privacy practices of our Unified-CXM platform, including detailed descriptions of security measures we employ.
Furthermore, we make numerous statements in our privacy policies and terms of service, through our certifications to certain industry standards and in our marketing materials that describe the security and privacy practices of our Unified-CXM platform, including detailed descriptions of security measures we employ.
Our future success will depend on our ability to adapt and innovate. To attract new customers and increase revenue from our existing customers, we will need to enhance and improve our existing platform and introduce new products, features and functionality.
To attract new customers and increase revenue from our existing customers, we will need to enhance and improve our existing platform and introduce new products, features and functionality.
As of January 31, 2023, we owned 36 U.S. issued patents and 11 pending non-provisional or provisional U.S. patent applications.
As of January 31, 2024, we owned 38 U.S. issued patents and 10 pending non-provisional or provisional U.S. patent applications.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our principal executive offices are located in New York, NY, USA where we lease approximately 32,000 square feet of office space under a lease that expires in December 2023. We have other domestic offices, including Austin and San Francisco, and international offices including Bangalore, Dubai, Gurgaon, London, Paris, Singapore and Tokyo.
Biggest changeItem 2. Properties Our principal executive offices are located in New York, NY, USA where we lease approximately 14,000 square feet of office space under a lease that expires in June 2024. We have other domestic offices, including in Austin and San Francisco, and international offices, including in Brazil, England, France, Germany, India, Japan, Singapore, Spain, and United Arab Emirates.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not aware of any legal proceedings that we believe could have, individually or in the aggregate, a material adverse effect on our business, results of operations, cash flows or financial position. Item 4. Mine Safety Disclosures None. 53 Part II
Biggest changeWe are not aware of any legal proceedings that we believe could have, individually or in the aggregate, a material adverse effect on our business, results of operations, cash flows or financial position. Item 4. Mine Safety Disclosures None. 44 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe above performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of our filings under the Exchange Act, or the Securities Act. 54 Recent Sales of Unregistered Equity Securities None.
Biggest changeThe above performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act or incorporated by reference into any of our filings under the Exchange Act or the Securities Act. 45 Recent Sales of Unregistered Equity Securities None.
Stock Performance Graph The graph below shows the cumulative total return to our stockholders between June 23, 2021 (the first day on which our Class A common stock traded on the New York Stock Exchange) through January 31, 2023 in comparison to the S&P 500 Index and the S&P 500 Information Technology Index.
Stock Performance Graph The graph below shows the cumulative total return to our stockholders between June 23, 2021 (the first day on which our Class A common stock traded on the New York Stock Exchange) through January 31, 2024 in comparison to the S&P 500 Index and the S&P 500 Information Technology Index.
Holders of Record As of January 31, 2023, there were 394 and 632 stockholders of record of our Class A and Class B common stock, respectively. We believe that a substantially greater number of beneficial owners hold shares through brokers, banks and other nominees. Dividend Policy We have never declared or paid cash dividends on our capital stock.
Holders of Record As of January 31, 2024, there were 389 and 472 stockholders of record of our Class A and Class B common stock, respectively. We believe that a substantially greater number of beneficial owners hold shares through brokers, banks and other nominees. Dividend Policy We have never declared or paid cash dividends on our capital stock.
Removed
Use of Proceeds In June 2021, we completed our IPO, in which we issued and sold 18,287,500 shares of our Class A common stock, including 1,662,500 shares pursuant to the exercise in full of the underwriters’ option to purchase additional shares, at a public offering price of $16.00 per share, resulting in net proceeds to us of $276.0 million after deducting underwriting discounts, commissions and other offering expenses.
Added
Issuer Purchases of Equity Securities The following table sets forth information concerning our company’s purchase of its Class A common stock during the three months ended January 31, 2024: Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (in thousands) November 1, 2023 through November 30, 2023 — $ — — $ — December 1, 2023 through December 31, 2023 — $ — — $ — January 1, 2024 through January 31, 2024 2,400 $ 12.31 2,400 $ 70,419 (1) On January 4, 2024, we announced that our board of directors had approved a program to periodically repurchase up to $100 million of our Class A common stock in open market purchases, including through Rule 10b5-1 plans (the “2024 Share Repurchase Program”).
Removed
All of the shares issued and sold in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-256657) (the “Registration Statement”), which was declared effective by the SEC on June 22, 2021.
Added
The 2024 Share Repurchase Program expires December 31, 2024. For additional information related to share repurchases, see Note 11, Stockholders’ Equity , to our Consolidated Financial Statements included in “Part II, Item 8. Financial Statements” of this Form 10-K. (2) Average price paid per share includes direct acquisition costs. Item 6. [Reserved] 46
Removed
There has been no material change in the planned use of proceeds from our IPO from those disclosed in our final prospectus that forms a part of the Registration Statement and was filed with the SEC, pursuant to Rule 424(b)(4) under the Securities Act, on June 24, 2021. Issuer Purchases of Equity Securities None. Item 6. [Reserved] 55

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAs a result, our non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for our consolidated financial statements presented in accordance with GAAP. 64 A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP: Year Ended January 31, (in thousands) 2023 2022 2021 Non-GAAP gross profit: GAAP gross profit $ 454,465 $ 344,843 $ 264,848 Stock-based compensation expense and related charges (1) 3,861 4,355 3,670 Non-GAAP gross profit $ 458,326 $ 349,198 $ 268,518 Gross margin 74 % 70 % 68 % Non-GAAP gross margin 74 % 71 % 69 % Non-GAAP operating (loss) income: GAAP operating loss $ (51,224) $ (99,470) $ (25,577) Stock-based compensation expense and related charges (2) 56,704 51,552 45,069 Litigation settlement (3) — 12,000 — Amortization of acquired intangible assets 475 412 626 Non-GAAP operating (loss) income $ 5,955 $ (35,506) $ 20,118 Operating margin (8) % (20) % (7) % Non-GAAP operating margin 1 % (7) % 5 % Non-GAAP net (loss) income and net (loss) income per share: GAAP net loss: $ (55,742) $ (111,470) $ (38,570) Stock-based compensation expense and related charges (2) 56,704 51,552 45,069 Litigation settlement (3) — 12,000 — Amortization of acquired intangible assets 475 412 626 Non-GAAP net (loss) income $ 1,437 $ (47,506) $ 7,125 Less: amounts allocated to participating securities — — (3,884) Non-GAAP net (loss) income attributable to Class A and Class B common stockholders $ 1,437 $ (47,506) $ 3,241 Weighted-average shares outstanding used in computing net (loss) income per share attributable to Class A and Class B common stockholders, basic and diluted 259,530 195,020 90,378 Non-GAAP net (loss) income per common share attributable to Class A and Class B common stockholders, basic and diluted $ 0.01 $ (0.24) $ 0.04 Free cash flow: Net cash (used in) provided by operating activities $ 26,660 $ (32,922) $ 7,311 Purchases of property and equipment (6,091) (6,148) (2,701) Capitalized internal-use software (10,358) (6,258) (3,783) Free cash flow $ 10,211 $ (45,328) $ 827 Litigation settlement (3) 12,000 — — Adjusted free cash flow $ 22,211 $ (45,328) $ 827 (1) I ncludes $0.1 million and $0.1 million of employer payroll tax related to stock-based compensation expense for the years ended January 31, 2023 and 2022, respectively.
Biggest changeYear Ended January 31, 2024 2023 2022 (in thousands) Per Share-Basic Per Share-Diluted (in thousands) Per Share-Basic Per Share-Diluted (in thousands) Per Share-Basic Per Share-Diluted Non-GAAP net income reconciliation to net income (loss) Net income (loss) $ 51,403 $ 0.19 $ 0.18 $ (55,742) $ (0.21) $ (0.21) $ (111,470) $ (0.57) $ (0.57) Add: Stock-based compensation expense-related charges 57,902 0.22 0.20 56,704 0.22 0.22 51,552 0.26 0.26 Litigation settlement — 0.00 0.00 — 0.00 0.00 12,000 0.07 0.07 Amortization of acquired intangible assets 200 0.00 0.00 475 0.00 0.00 412 0.00 0.00 Total additions, net 58,102 0.22 0.20 57,179 0.22 0.22 63,964 0.33 0.33 Non-GAAP net income (loss) $ 109,505 $ 0.41 $ 0.38 $ 1,437 $ 0.01 $ 0.01 $ (47,506) $ (0.24) $ (0.24) Weighted-average shares outstanding used in computing net income (loss) per share, basic 269,974 259,530 195,020 Weighted average shares outstanding used in computing net income (loss) per share, diluted 287,093 259,530 195,020 55 Year Ended January 31, (in thousands) 2024 2023 2022 Free cash flow: Net cash (used in) provided by operating activities $ 71,465 $ 26,660 $ (32,922) Purchases of property and equipment (8,548) (6,091) (6,148) Capitalized internal-use software (11,777) (10,358) (6,258) Free cash flow $ 51,140 $ 10,211 $ (45,328) Liquidity and Capital Resources Overview As of January 31, 2024, our principal sources of liquidity were $164.0 million of cash and cash equivalents and $498.5 million of highly liquid marketable securities.
We continually examine our options with respect to terms and sources of existing and future short-term and long-term capital resources to enhance our operating results and to ensure that we retain financial flexibility, and may from time to time elect to raise capital through the issuance of additional equity or the incurrence of additional debt.
We continually examine our options with respect to terms and sources of existing and future short-term and long-term capital resources to enhance our operating results and to ensure that we retain financial flexibility, and may from time to time elect to raise capital through the issuance of additional equity or the incurrence of debt.
For the fiscal year 2022, cash used in operating activities was $32.9 million resulting from net loss of $111.5 million offset by net non-cash expenses of $72.2 million and $6.3 million net cash flow provided as a result of changes in operating assets and liabilities.
For the fiscal year 2022, cash used in operating activities was $32.9 million resulting from net loss of $111.5 million offset by non-cash expenses of $72.2 million and $6.3 million net cash flow provided as a result of changes in operating assets and liabilities.
Sales of additional equity could result in dilution to our stockholders. If we raise funds by borrowing from third parties, the terms of those financing arrangements would require us to incur interest expense and may include negative covenants or other restrictions on our business that could impair our operating flexibility.
Sales of additional equity could result in dilution to our stockholders. If we raise funds by borrowing from third parties, the terms of those financing arrangements would 56 require us to incur interest expense and may include negative covenants or other restrictions on our business that could impair our operating flexibility.
We calculate non-GAAP net (loss) income per share by using non-GAAP net (loss) income divided by basic weighted average shares for the period regardless of whether we are in a non-GAAP net (loss) or income position and assuming that all potentially dilutive securities are anti-dilutive.
In periods of net loss, we calculate non-GAAP net income (loss) per share by using non-GAAP net income (loss) divided by basic weighted average shares for the period regardless of whether we are in a non-GAAP net income or (loss) position and assuming that all potentially dilutive securities are anti-dilutive.
(2) I ncludes $1.2 million and $1.4 million of employer payroll tax related to stock-based compensation expense for the years ended January 31, 2023 and 2022, respectively .
(2) I ncludes $2.1 million , $1.2 million and $1.4 million of employer payroll tax related to stock-based compensation expense for the years ended January 31, 2024, 2023 and 2022, respectively .
For the fiscal year 2022, net cash used in investing activities of $15.7 million was related to $267.8 million of purchases of marketable securities, $6.3 million in capitalized internal-use software costs, $6.1 million in capital expenditures, and $3.6 million of cash paid to acquire a privately held company.
For the fiscal year 2022, net cash used in investing activities was $15.7 million and consisted of $267.8 million of purchases of marketable securities, $6.3 million in capitalized internal-use software costs, $6.1 million in capital expenditures, and $3.6 million of cash paid to acquire a privately held company.
Operating Activities For the fiscal year 2023, cash provided by operating activities was $26.7 million resulting from net loss of $55.7 million offset by net non-cash expenses of $75.7 million and $6.7 million net cash flows provided as a result of changes in operating assets and liabilities.
For the fiscal year 2023, cash provided by operating activities was $26.7 million resulting from net loss of $55.7 million offset by net non-cash expenses of $75.7 million and $6.7 million net cash flow provided as a result of changes in operating assets and liabilities.
RPO and cRPO Remaining Performance Obligation (“RPO”) represents contracted revenues that had not yet been recognized, and include deferred revenues and amounts that will be invoiced and recognized in future periods. Current RPO (“cRPO”) represents contracted revenue that has not yet been recognized and includes deferred revenue and amounts that will be invoiced and recognized in the next 12 months.
RPO and cRPO Remaining Performance Obligation (“RPO”) represents contracted revenue that had not yet been recognized and includes deferred revenue and amounts that will be invoiced and recognized in future periods. Current RPO (“cRPO”) represents contracted revenue that has not yet been recognized and includes deferred revenue and amounts that will be invoiced and recognized in the next 12 months.
However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles.
However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by U.S. GAAP and are not prepared under any comprehensive set of accounting rules or principles.
Our Unified-CXM platform utilizes an architecture purpose-built for managing CXM data and is powered by proprietary AI, collaborative workflow, seamless automation, broad-based listening and customer-led governance to help enterprises analyze massive amounts of unstructured and structured data. We generate revenue from the sale of subscriptions to our Unified-CXM platform and related professional services.
Our Unified-CXM platform utilizes an architecture purpose-built for managing Customer Experience Management (“CXM”) data and is powered by proprietary AI, collaborative workflow, seamless automation, broad-based listening and customer-led governance to help enterprises analyze massive amounts of unstructured and structured data. We generate revenue from the sale of subscriptions to our Unified-CXM platform and related professional services.
This section of our Form 10-K discusses our financial condition and results of operations for the fiscal years ended January 31, 2023, 2022 and 2021 and year-to-year comparisons between fiscal 2023 and fiscal 2022.
This section of our Form 10-K discusses our financial condition and results of operations for the fiscal years ended January 31, 2024, 2023, and 2022 and year-to-year comparisons between fiscal 2024 and fiscal 2023.
These changes were partially offset by a $44.8 million increase in accounts receivable due to increased billings, a $24.4 million increase in other non-current assets driven by an increase in capitalized commissions and the $12.0 million litigation settlement paid in March 2022.
These changes were partially offset by (i) a $44.8 million increase in accounts receivable due to increased billings, (ii) a $24.4 million increase in other non-current assets driven by an increase in capitalized commissions, and (iii) the $12.0 million litigation settlement paid in March 2022.
The $6.7 million of net cash flows provided as a result of changes in operating assets and liabilities reflected a $41.5 million increase in deferred revenue resulting primarily from increased billings for subscriptions, a $29.1 million decrease in prepaid expenses and other current assets driven by larger prepaid contracts in the prior fiscal year and a $14.5 million increase in accounts payable largely due to the timing of payments due.
The $6.7 million of net cash flows provided as a result of changes in operating assets and liabilities reflected (i) a $41.5 million increase in deferred revenue resulting primarily from increased billings for subscriptions, (ii) a $29.1 million decrease in prepaid expenses and other current assets driven by larger prepaid contracts in the prior fiscal year, (iii) a $14.5 million increase in accounts payable largely due to the timing of payments due, and (iv) a $6.7 million increase in accrued expenses and other current liabilities.
There were no material changes in the estimates or assumptions used to recognize revenue during the year ended January 31, 2023. 68 Stock-Based Compensation We measure and record the expense related to stock-based awards based upon the fair value at the date of grant.
There were no material changes in the estimates or assumptions used to recognize revenue during the year ended January 31, 2024. 58 Stock-Based Compensation We measure and record the expense related to stock-based awards based upon the fair value at the date of grant.
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.
Year-to-year comparisons between fiscal 2022 and fiscal 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed on April 11, 2022.
Year-to-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Form 10-K for the fiscal year ended January 31, 2023, filed on April 3, 2023.
This calculation is net of upsells, contraction, cancellation or expansion during the period but excludes subscription revenue from new customers. NDE, on a trailing 12-month basis, was 123.9% and 119.8% for the 12-month periods ending January 31, 2023 and 2022, respectively.
This calculation is net of upsells, contraction, cancellation or expansion during the period but excludes subscription revenue from new customers. Our NDE, on a trailing 12-month basis, was 117.7% and 123.9% for the 12-month periods ending January 31, 2024 and 2023, respectively.
For those awards with market conditions, stock-based compensation will be recognized regardless of if the market targets were achieved. However, if the grantee does not continue their employment through the derived service period, all related stock-based compensation for that individual was reversed in the period of termination. There were no performance-based awards granted during fiscal 2023.
For those awards with market conditions, stock-based compensation will be recognized regardless of if the market targets were achieved. However, if the grantee does not continue their employment through the derived service period, all related stock-based compensation for that individual was reversed in the period of termination.
There were no options granted during fiscal 2023. Historical Common Stock Valuations For all periods prior to the IPO, the fair values of our common stock were determined by our board of directors, with input from management and taking into account our most recent valuations from an independent third-party valuation specialist.
Historical Common Stock Valuations For all periods prior to the IPO, the fair values of our common stock were determined by our board of directors, with input from management and taking into account our most recent valuations from an independent third-party valuation specialist.
Actual results could differ materially from those estimates and assumptions. Our significant accounting policies are more fully described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies , in our consolidated financial statements included elsewhere in this Form 10-K.
Actual results could differ materially from those estimates and assumptions. Our significant accounting policies are more fully described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies , to our Consolidated Financial Statements included in “Part II, Item 8. Financial Statements” of this Form 10-K.
Costs of Professional Services Revenue Costs of professional services revenue consists primarily of personnel-related expenses for our professional services personnel, professional fees, software costs, subcontractor costs, travel expenses and allocated overhead expenses, including facilities costs, for our professional services organization. We expect that our costs of professional services revenue will increase in absolute dollars as we expand our customer base.
We expect that costs of subscription revenue will increase in absolute dollars as we expand our customer base and make continued investments in our cloud infrastructure and support organization. 48 Costs of Professional Services Revenue Costs of professional services revenue consists primarily of personnel-related expenses for our professional services personnel, professional fees, software costs, subcontractor costs, travel expenses and allocated overhead expenses, including facilities costs, for our professional services organization.
Our subscriptions typically have a term of one to three years. Historically, we have experienced seasonality in our sales cycle, as a large percentage of our customers make their purchases in the fourth quarter of a given fiscal year and pay us in the first quarter of the subsequent year.
Historically, we have experienced seasonality in our sales cycle, as a large percentage of our customers make their purchases in the fourth quarter of a given fiscal year and pay us in the first quarter of the subsequent year.
Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer and are deferred and amortized on a straight-line basis over the expected period of benefit. We intend to continue to invest in sales and marketing to help drive the growth of our business.
Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer and are deferred and amortized on a straight-line basis over the expected period of benefit. We expect sales and marketing expense to increase in absolute dollars as we continue to drive the growth of our business.
As of January 31, 2023, we had 1,428 customers spanning organizations of a broad range of sizes and industries, including more than two-thirds of the Fortune 100 companies, compared to 1,166 customers as of January 31, 2022.
As of January 31, 2024, we had 1,735 customers spanning organizations of a broad range of sizes and industries, including more than 60% of the Fortune 100 companies, compared to 1,428 customers as of January 31, 2023.
These cash outflows were largely offset by $636.8 million of cash from maturities of marketable securities and $2.8 million of sales of marketable securities.
These cash outflows were largely offset by $268.2 million of sales and maturities of marketable securities.
In the determination of the SSP, we use information that includes contractually stated prices, size of the arrangement, renewal contracts, list prices and internal discounting tables. Based on these results, the estimated SSP is set for each distinct product or service delivered to customers.
In the determination of the SSP, we may use information that includes contractually stated prices, size of the arrangement, list prices and other observable inputs. Based on these results, the estimated SSP is set for each distinct product or service delivered to customers.
Our customers include global enterprises across a broad array of industries and geographies, as well as marketing agencies and government departments along with non-profit and educational institutions. Our customers are located in over 70 countries and use our platform in over 100 languages.
Our customers include global enterprises across a broad array of industries and geographies, as well as marketing agencies and government departments along with non-profit and educational institutions. Our customers are located in over 80 countries, and our AI-powered CXM platform recognizes over 150 languages.
In addition, we believe free cash flow and adjusted free cash flow are also useful non-GAAP financial measures. Free cash flow is defined as net cash provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized internal-use software. Adjusted free cash flow is defined as free cash flow adjusted for litigation settlement costs.
In addition, we believe that free cash flow is also a useful non-GAAP financial measure. Free cash flow is defined as net cash provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized internal-use software.
We define our large customers as customers with greater than or equal to $1.0 million in subscription revenue on a trailing 12-month basis, as of the period presented.
We define our large customers as customers with greater than or equal to $1.0 million in subscription revenue on a trailing 12-month basis, as of the period presented. As of January 31, 2024, we had 126 large customers compared to 108 as of January 31, 2023.
Gross Profit and Gross Margin Gross profit is total revenue less total costs of revenue. Gross margin is gross profit expressed as a percentage of total revenue. We expect that gross profit and gross margin will continue to be affected by various factors, including our pricing, our mix of revenues and the costs required to deliver those revenues.
We expect that gross profit and gross margin will continue to be affected by various factors, including our pricing, our mix of revenues and the costs required to deliver those revenues.
Performance-Based Award Valuations For awards granted that vest upon the achievement of certain performance conditions and market conditions, we estimated the grant date fair value of these units using a Monte Carlo Simulation.
Performance-Based Award Valuations For awards granted that vest upon the achievement of certain performance conditions and market conditions, we estimated the grant date fair value of these units using a Monte Carlo Simulation. The simulation modeled multiple stock price paths in order to estimate the grant date fair value of those with market conditions .
Operating Expense Our operating expense consists of research and development, sales and marketing and general and administrative expense.
Operating Expenses Our operating expenses consist of research and development, sales and marketing and general and administrative expenses.
The $6.3 million of net cash flows provided as a result of changes in operating assets and liabilities reflected a $43.4 million increase in deferred revenue resulting primarily from increased billings for subscriptions and a $25.5 million increase in accrued expenses and other current liabilities, partially offset by a $47.1 million increase in accounts receivable due to increased billings and a $6.8 million increase in other non-current assets.
The $6.3 million of net cash flows used as a result of changes in our operating assets and liabilities reflected a $43.4 million increase in deferred revenue resulting primarily from increased billings for subscriptions and a $25.5 million increase in accrued expenses and other current liabilities, partially offset by a $47.1 million increase in accounts receivable due to increased billings and a $6.8 million increase in other non-current assets. 57 Investing Activities For the fiscal year 2024, net cash used in investing activities was $110.6 million and primarily consisted of $604.6 million of purchases of marketable securities, partially offset by $514.4 million of sales and maturities of marketable securities.
Recent Accounting Pronouncements Refer to Note 2, Basis of Presentation and Summary of Significant Accounting Policies , included elsewhere in this Form 10-K for more information regarding recently issued accounting pronouncements. 69
Recent Accounting Pronouncements Refer to Note 2, Basis of Presentation and Summary of Significant Accounting Policies , to our Consolidated Financial Statements included in “Part II, Item 8. Financial Statements” of this Form 10-K for more information regarding recently issued accounting pronouncements.
Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP.
Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements in conformity with U.S.
As of January 31, 2023, we had 108 large customers compared to 82 as of January 31, 2022. 56 Key Business Metrics We review a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.
Key Business Metrics We review a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.
Material Cash Requirements Our expected material cash requirements comprise of contractually obligated expenditures. We have agreements in place with data and service providers that require us to make certain minimum guaranteed purchase commitments through fiscal year 2026 which totaled $220.9 million as of January 31, 2023.
Material Cash Requirements Our expected material cash requirements consist of contractually obligated expenditures. We have agreements in place with data and service providers that require us to make certain minimum guaranteed purchase commitments through fiscal year 2028, which totaled $131.1 million as of January 31, 2024, of which $69.5 million is due within twelve months.
In fiscal year 2023, our net loss improved as a result of our increased subscription revenue and related billings, as well as the amount of non-cash charges that we incur. Non-cash charges primarily include depreciation and amortization, stock-based compensation, and non-cash lease expense.
In fiscal year 2024, our shift into net income was the result of our increased subscription revenue and related billings and increased interest income from our marketable securities, as well as the amount of non-cash charges that we incur. Non-cash charges primarily include depreciation and amortization, amortization/accretion on marketable securities, stock-based compensation, and non-cash lease expense.
For the fiscal year 2023, net cash provided by financing activities was primarily due to proceeds from the exercise of stock options of $24.7 million as well as $10.2 million from the purchase of common stock through our ESPP.
For the fiscal year 2023, cash provided by financing activities was $35.0 million, which consisted of proceeds from the exercise of stock options of $24.7 million and proceeds from the purchase of stock under our ESPP of $10.2 million.
(3) On February 25, 2022, we and Opal agreed to settle all outstanding claims with respect to Opal’s complaints alleging breach of contract and violation of Oregon’s Uniform Trade Secrets Act, among other claims.
(3) On February 25, 2022, we and Opal agreed to settle all outstanding claims with respect to Opal’s complaints alleging breach of contract and violation of Oregon’s Uniform Trade Secrets Act, among other claims. The settlement amount was recorded as a one-time operating expense charge in fiscal year 2022, which was paid in fiscal year 2023.
For the fiscal year 2022, net cash provided by financing activities of $303.1 million was primarily due to our IPO in which we received total net proceeds of $276.0 million, after deducting underwriting discounts and commissions and other offering expenses.
For the fiscal year 2022, cash provided by financing activities was $303.1 million, which consisted of proceeds from our IPO of $276.0 million, after deducting underwriting discounts and commissions and other offering expenses, proceeds from the exercise of stock options of $20.1 million, and proceeds from the purchase of stock under our ESPP of $7.1 million.
If we are unable to raise additional capital when needed, we would be required to curtail our operating activities and capital expenditures, and our business operating results and financial condition would be adversely affected. 66 Cash Flows The following table shows a summary of our cash flows for the periods indicated: Year Ended January 31, (in thousands) 2023 2022 2021 Net cash provided by (used in) operating activities $ 26,660 $ (32,922) $ 7,311 Net cash used in investing activities $ (193,494) $ (15,650) $ (219,457) Net cash provided by financing activities $ 34,971 $ 303,132 $ 269,784 Our net loss and cash flows provided by (used in) operating activities are influenced significantly by our investments in headcount to support growth and in costs of revenue to deliver our services.
Cash Flows The following table shows a summary of our cash flows for the periods indicated: Year Ended January 31, (in thousands) 2024 2023 2022 Net cash provided by (used in) operating activities $ 71,465 $ 26,660 $ (32,922) Net cash used in investing activities $ (110,570) $ (193,494) $ (15,650) Net cash provided by financing activities $ 24,086 $ 34,971 $ 303,132 Our net income (loss) and cash flows provided by (used in) operating activities are influenced significantly by our investments in headcount to support growth and in costs of revenue to deliver our services.
Our annual estimated effective tax rate differed from the U.S. federal statutory rate primarily due to a full valuation allowance related to our U.S. deferred tax assets, partially offset by U.S. current state taxes and foreign tax rate differential on non-U.S. income. 59 Results of Operations The following table sets forth our consolidated statements of operations data for the periods indicated: Year Ended January 31, (in thousands) 2023 2022 2021 Revenue: Subscription $ 548,649 $ 427,713 $ 339,586 Professional services 69,541 64,681 47,344 Total revenue 618,190 492,394 386,930 Costs of revenue: Costs of subscription (1) 102,276 89,896 77,033 Costs of professional services (1) 61,449 57,655 45,049 Total costs of revenue 163,725 147,551 122,082 Gross profit 454,465 344,843 264,848 Operating expense: Research and development (1) 76,658 60,591 40,280 Sales and marketing (1)(2) 336,719 286,963 185,797 General and administrative (1) 92,312 84,759 64,348 Litigation settlement — 12,000 — Total operating expense 505,689 444,313 290,425 Operating loss (51,224) (99,470) (25,577) Other income (expense), net 3,756 (5,084) (8,616) Loss before provision for income taxes (47,468) (104,554) (34,193) Provision for income taxes 8,274 6,916 3,777 Net loss (55,742) (111,470) (37,970) Deemed dividend in relation to tender offer — — (600) Net loss attributable to Sprinklr common stockholders $ (55,742) $ (111,470) $ (38,570) (1) Includes stock-based compensation, net of amounts capitalized, as follows: Year Ended January 31, (in thousands) 2023 2022 2021 Cost of subscription $ 1,528 $ 1,794 $ 2,012 Cost of professional services 2,249 2,448 1,658 Research and development 10,678 6,417 4,804 Sales and marketing 26,651 19,929 14,976 General and administrative 14,411 19,543 21,619 Stock-based compensation, net of amounts capitalized $ 55,517 $ 50,131 $ 45,069 (2) Includes amortization of acquired intangible assets as follows: Year Ended January 31, (in thousands) 2023 2022 2021 Sales and marketing $ 475 $ 412 $ 626 Amortization of acquired intangible assets $ 475 $ 412 $ 626 60 The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue: Year Ended January 31, 2023 2022 2021 Revenue: Subscription 89 % 87 % 88 % Professional services 11 % 13 % 12 % Total revenue 100 % 100 % 100 % Costs of revenue: Costs of subscription 17 % 18 % 20 % Costs of professional services 10 % 12 % 12 % Total costs of revenue 26 % 30 % 32 % Operating expense: Research and development 12 % 12 % 10 % Sales and marketing 54 % 58 % 48 % General and administrative 15 % 17 % 17 % Litigation settlement 0 % 2 % 0 % Total operating expense 82 % 88 % 75 % Operating loss (8) % (20) % (7) % Other income (expense), net 1 % (1) % (2) % Loss before provision for income taxes (8) % (21) % (9) % Provision for income taxes 1 % 1 % 1 % Net loss (9) % (23) % (10) % Deemed dividend in relation to tender offer 0 % 0 % 0 % Net loss attributable to Sprinklr common stockholders (9) % (23) % (10) % Comparison of Fiscal Years Ended January 31, 2023 and 2022 Revenue Year Ended January 31, (in thousands) 2023 2022 $ Change % Change Subscription $ 548,649 $ 427,713 $ 120,936 28 % Professional services 69,541 64,681 4,860 8 % Total revenue $ 618,190 $ 492,394 $ 125,796 26 % Total revenue increased $125.8 million, or 26%, in fiscal year 2023, compared to fiscal year 2022, and was comprised of an increase in subscription revenue of $120.9 million, or 28%, and an increase in professional services of $4.9 million, or 8%.
Our annual estimated effective tax rate differed from the U.S. federal statutory rate primarily due to a full valuation allowance related to our U.S. deferred tax assets, partially offset by U.S. current state taxes and foreign tax rate differential on non-U.S. income and discrete items relating to releases of valuation allowances in certain foreign jurisdictions. 49 Results of Operations The following table sets forth our consolidated statements of operations data for the periods indicated: Year Ended January 31, (in thousands) 2024 2023 2022 Revenue: Subscription $ 668,541 $ 548,649 $ 427,713 Professional services 63,819 69,541 64,681 Total revenue 732,360 618,190 492,394 Costs of revenue: Costs of subscription (1) 116,032 102,276 89,896 Costs of professional services (1) 63,369 61,449 57,655 Total costs of revenue 179,401 163,725 147,551 Gross profit 552,959 454,465 344,843 Operating expense: Research and development (1) 91,292 76,658 60,591 Sales and marketing (1) 321,849 336,719 286,963 General and administrative (1) 105,873 92,312 84,759 Litigation settlement — — 12,000 Total operating expense 519,014 505,689 444,313 Operating income (loss) 33,945 (51,224) (99,470) Other income (expense), net 26,577 3,756 (5,084) Income (loss) before provision for income taxes 60,522 (47,468) (104,554) Provision for income taxes 9,119 8,274 6,916 Net income (loss) $ 51,403 $ (55,742) $ (111,470) (1) Includes stock-based compensation expense, net of amounts capitalized, as follows: Year Ended January 31, (in thousands) 2024 2023 2022 Costs of subscription $ 1,130 $ 1,528 $ 1,794 Costs of professional services 1,450 2,249 2,448 Research and development 11,566 10,678 6,417 Sales and marketing 24,477 26,651 19,929 General and administrative 17,134 14,411 19,543 Stock-based compensation expense, net of amounts capitalized $ 55,757 $ 55,517 $ 50,131 50 The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue (1) : Year Ended January 31, 2024 2023 2022 Revenue: Subscription 91 % 89 % 87 % Professional services 9 % 11 % 13 % Total revenue 100 % 100 % 100 % Costs of revenue: Costs of subscription 16 % 17 % 18 % Costs of professional services 9 % 10 % 12 % Total costs of revenue 24 % 26 % 30 % Operating expense: Research and development 12 % 12 % 12 % Sales and marketing 44 % 54 % 58 % General and administrative 14 % 15 % 17 % Litigation settlement 0 % 0 % 2 % Total operating expense 71 % 82 % 88 % Operating income (loss) 5 % (8) % (20) % Other income (expense), net 4 % 1 % (1) % Income (loss) before provision for income taxes 8 % (8) % (21) % Provision for income taxes 1 % 1 % 1 % Net income (loss) 7 % (9) % (23) % (1) Totals may not foot due to rounding. 51 Comparison of Fiscal Years Ended January 31, 2024 and 2023 Revenue Year Ended January 31, (in thousands) 2024 2023 $ Change % Change Subscription $ 668,541 $ 548,649 $ 119,892 22 % Professional services 63,819 69,541 (5,722) (8) % Total revenue $ 732,360 $ 618,190 $ 114,170 18 % The increase in subscription revenue was primarily due to (i) an increase in revenue from existing customers driven by the purchase of additional quantities of current subscription solutions and additional add-on solutions within our platform and (ii) an increase in demand for our solutions from new customers.
We expect research and development expenses to increase in absolute dollars as we continue to invest in enhancing and expanding the capabilities of our Unified-CXM platform. 58 Sales and Marketing Expense Sales and marketing expense consists primarily of personnel-related expenses for our sales and marketing organization, professional fees, software costs, advertising, marketing, promotional and brand awareness activities, travel expenses and allocated overhead expense, including facilities costs.
Sales and Marketing Expense Sales and marketing expense consists primarily of personnel-related expenses for our sales and marketing organization, professional fees, software costs, advertising, marketing, promotional and brand awareness activities, travel expenses and allocated overhead expense, including facilities costs.
Subscription revenue consists primarily of fees from customers accessing our proprietary Unified-CXM platform, as well as related support services. Subscription revenue is generally recognized ratably over the related contract term beginning on the commencement date of each contract, which is generally the date our service is made available to customers.
Subscription revenue is generally recognized ratably over the related contract term beginning on the commencement date of each contract, which is generally the date our service is made available to customers. Our subscriptions typically have a term of one to three years.
Macroeconomic Considerations Unfavorable conditions in the economy both in the United States and abroad may negatively affect the growth of our business and our results of operations. For example, macroeconomic events, including the COVID-19 pandemic, rising inflation, the U.S. Federal Reserve raising interest rates and the Russia-Ukraine war, have led to economic uncertainty globally.
The decrease year-over-year was driven by a combination of elevated churn exacerbated by the macroeconomic environment during fiscal 2024. Macroeconomic Considerations Unfavorable conditions in the economy both in the United States and abroad may negatively affect the growth of our business and our results of operations. For example, macroeconomic events, including the COVID-19 pandemic, rising inflation, the U.S.
Investing Activities For the fiscal year 2023, net cash used in investing activities of $193.5 million was related to $816.7 million of purchases of marketable securities, $10.4 million in capitalized internal-use software costs and $6.1 million in capital expenditures.
For the fiscal year 2023, net cash used in investing activities was $193.5 million and primarily consisted of $816.7 million of purchases of marketable securities, partially offset by $639.7 million of sales and maturities of marketable securities.
We believe that free cash flow and adjusted free cash flow are useful indicators of liquidity as they measure our ability to generate cash, or our need to access additional sources of cash, to fund operations and investments.
We believe that free cash flow is a useful indicator of liquidity as it measures our ability to generate cash, or our need to access additional sources of cash, to fund operations and investments. We expect our free cash flow to fluctuate in future periods with changes in our operating expenses and as we continue to invest in our growth.
The increase was related to higher foreign income tax liability on our non-U.S. subsidiaries. 63 Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance: • Non-GAAP gross profit and non-GAAP gross margin • Non-GAAP operating (loss) income and non-GAAP operating margin • Non-GAAP net (loss) income and non-GAAP net (loss) income per share We define these non-GAAP financial measures as the respective GAAP measures, excluding, as applicable, stock-based compensation expense-related charges, charges on litigation settlements and amortization of acquired intangible assets.
GAAP, we believe that the following non-GAAP financial measures associated with our consolidated statement of operations are useful in evaluating our operating performance: • Non-GAAP gross profit and non-GAAP gross margin • Non-GAAP operating income (loss) and non-GAAP operating margin; and • Non-GAAP net income (loss) and non-GAAP net income (loss) per share We define these non-GAAP financial measures as the respective U.S.
For the fiscal year 2021, cash provided by operating activities was $7.3 million resulting from net non-cash expenses of $55.2 million largely offset by net loss of $38.0 million and $9.9 million net cash flow used as a result of changes in operating assets and liabilities.
Operating Activities For the fiscal year 2024, cash provided by operating activities was $71.5 million, which consisted of net income of $51.4 million, adjusted for non-cash expenses of $65.9 million and $45.8 million of net cash flows used as a result of changes in operating assets and liabilities.
We expect that costs of subscription revenue will increase in absolute dollars as we expand our customer base and make continued investments in our cloud infrastructure and support organization.
We expect that our costs of professional services revenue will increase in absolute dollars as we expand our customer base. Gross Profit and Gross Margin Gross profit is total revenue less total costs of revenue. Gross margin is gross profit expressed as a percentage of total revenue.
Research and development expenses are expensed as incurred, except for internal-use software development costs that qualify for capitalization.
Research and development expenses are expensed as incurred, except for internal-use software development costs that qualify for capitalization. We expect research and development expense to increase in absolute dollars as we continue to invest in enhancing and expanding the capabilities of our Unified-CXM platform.
Other Income (Expense), Net Year Ended January 31, (in thousands) 2023 2022 $ Change % Change Other income (expense), net $ 3,756 $ (5,084) $ 8,840 (174) % % of revenue 1 % (1) % Other income of $3.8 million in fiscal year 2023 was primarily attributable to $8.2 million of interest income, net earned on money market and short-term investment accounts, partially offset by $4.7 million in net foreign currency transaction losses.
Other Income (Expense), Net Year Ended January 31, (in thousands) 2024 2023 $ Change % Change Other income, net $ 26,577 $ 3,756 $ 22,821 608 % % of revenue 4 % 1 % The increase in other income, net was primarily attributable to a $22.0 million increase in interest income from our money market and short-term investment accounts as a result of higher interest rates and higher average balances in our money market and short-term investment accounts.
For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, see the section titled “Risk Factors.” 57 Components of Results of Operations Revenue We generate revenue from the sale of subscriptions to our Unified-CXM cloud-based software platform and related professional services.
Components of Results of Operations Revenue We generate revenue from the sale of subscriptions to our Unified-CXM cloud-based software platform and related professional services. Subscription revenue consists primarily of fees from customers accessing our proprietary Unified-CXM platform, as well as related support services.
RPO as of January 31, 2022 has been reduced from $586.4 million previously reported to $569.5 million in order to correct the treatment of an immaterial number of contracts included in the calculation of RPO. Net Dollar Expansion Rate We believe that net dollar expansion rate (“NDE”) is an indicator of the value that our platform delivers to customers.
As of January 31, 2024, our RPO was $966.6 million and our cRPO was $587.0 million. As of January 31, 2023, our RPO was $719.5 million and our cRPO was $485.2 million. 47 Net Dollar Expansion Rate We believe that net dollar expansion rate (“NDE”) is an indicator of the value that our platform delivers to customers.
The $9.9 million of net cash flows used as a result of changes in our operating assets and liabilities reflected a $28.7 million increase in prepaid expenses primarily associated with higher prepayments for data center operations costs and data costs and a $9.8 million increase in accounts receivable due to increased billings, partially offset by a $17.5 million increase in deferred revenue resulting primarily from increased billings for subscriptions and a $12.3 million increase in accrued expenses and other current liabilities.
These decreases to cash flows from operations were partially offset by (i) a $49.8 million increase in deferred revenue resulting primarily from increased billings for subscriptions, (ii) a $8.7 million decrease in prepaid expenses and other current assets driven by larger prepaid contracts in the prior fiscal year, and (iii) a $3.3 million increase in accounts payable largely due to an overall increase in spend and the timing of payments due.
The increase in cost of subscription revenue was due primarily to higher costs related to third-party cloud infrastructure necessary to meet our increased customer demand, which included a combined $10.6 million increase in costs to host our software platform and our data costs.
Costs of Revenue and Gross Margin Year Ended January 31, (in thousands) 2024 2023 $ Change % Change Costs of subscription revenue $ 116,032 $ 102,276 $ 13,756 13 % Costs of professional services revenue 63,369 61,449 1,920 3 % Total costs of revenue $ 179,401 $ 163,725 $ 15,676 10 % Gross margin - subscription 83 % 81 % Gross margin - professional services 1 % 12 % The increase in costs of subscription revenue was primarily due to (i) higher costs related to third-party cloud infrastructure necessary to meet our increased customer demand, which included a $10.3 million increase in our data and hosting costs and (ii) a $3.6 million increase in the amortization of capitalized research and development costs.
The increase in cost of professional services revenue was due primarily to increases in personnel costs of $1.7 million due to increased headcount of professional services employees and a $1.1 million increase in subcontractor costs. Gross margin for subscription increased by 2 percentage points, primarily driven by the year-over-year growth in subscription revenue.
The increase in costs of professional services revenue was partially due to (i) higher personnel-related costs of $2.7 million resulting from an increase in headcount, (ii) increased travel and entertainment expenses of $0.8 million and (iii) an increase in rent and facilities-related costs of $0.7 million. These increases were partially offset by a $2.6 million decline in subcontractor costs.
The increase to research and development personnel costs was partially offset by a $4.1 million increase in research and development costs that were capitalized.
These decreases were partially offset by a $3.4 million increase in costs associated with trade shows and other events.
Historically, during periods of economic uncertainty and downturns, businesses may slow spending on information technology, which may impact our business and our customers’ businesses. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods.
Federal Reserve raising interest rates, recent bank closures, and the Russia-Ukraine and Israel-Hamas wars (including any escalation or geographical expansion of these conflicts), have led to economic uncertainty globally. Historically, during periods of economic uncertainty and downturns, businesses may slow spending on information technology, which may impact our business and our customers’ businesses.
Removed
The aggregate transaction price of RPO expected to be recognized as revenue was $719.5 million and $569.5 million as of January 31, 2023 and 2022, respectively. The transaction price of cRPO to be recognized as revenue in the next 12 months was $485.2 million and $395.0 million as of January 31, 2023 and 2022, respectively.
Added
While we have experienced growing inflationary pressures on the cost of wages, rent, and data, the net result of inflationary impacts and our efforts to mitigate these impacts have not been material to us during the periods included in this report. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods.
Removed
The increase in subscription revenue for the fiscal year 2023, compared to the fiscal year 2022, was due primarily to (i) increased demand for our solutions from new customers and (ii) an increase in revenue from existing customers driven by the purchase of additional quantities of current subscription solutions and additional add-on solutions within our platform.
Added
For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, see the section titled “Risk Factors” included in Part I, Item 1A of this Form 10-K and the Annual Report on Form 10-K for the fiscal year ended January 31, 2023.
Removed
The increase in professional services revenues for the fiscal year 2023, compared to the fiscal year 2022, was primarily due to an increase in implementation and managed services performed during the fiscal year 2023, compared to the fiscal year 2022. 61 Costs of Revenue and Gross Margin Year Ended January 31, (in thousands) 2023 2022 $ Change % Change Costs of subscription revenue $ 102,276 $ 89,896 $ 12,380 14 % Costs of professional services revenue 61,449 57,655 3,794 7 % Total costs of revenue $ 163,725 $ 147,551 $ 16,174 11 % Gross margin - subscription 81 % 79 % Gross margin - professional services 12 % 11 % Total costs of revenue increased $16.2 million, or 11%, in fiscal year 2023, compared to fiscal year 2022, and was comprised of an increase in costs of subscription revenue of $12.4 million, or 14%, and an increase in costs of professional services of $3.8 million, or 7%.
Added
The decrease in professional services revenue was primarily due to decreases in implementation and managed services performed in the year ended January 31, 2024 compared to the prior year period.
Removed
Costs of subscription revenue was $102.3 million for the fiscal year 2023, compared to $89.9 million for the fiscal year 2022.
Added
Gross margin for subscription increased by 2 percentage points, primarily driven by the growth in subscription revenue. Gross margin for professional services decreased by 11 percentage points as we increased our investment in CCaaS service delivery personnel in fiscal 2024 to support future growth in our CCaaS solutions.
Removed
Also contributing to this increase in costs of subscription revenue was an increase of $2.5 million in amortization of capitalized research and development costs. Costs of professional services revenue was $61.4 million for the fiscal year 2023, compared to $57.7 million for the fiscal year 2022.
Added
Research and Development Expense Year Ended January 31, (in thousands) 2024 2023 $ Change % Change Research and development $ 91,292 $ 76,658 $ 14,634 19 % % of revenue 12 % 12 % The increase in research and development expense was primarily due to (i) a $11.3 million increase in research and development personnel-related costs resulting from an increase in headcount of research and development employees as we continue to add to and enhance our product and (ii) a $1.8 million increase in rent and facilities-related costs. 52 Sales and Marketing Expense Year Ended January 31, (in thousands) 2024 2023 $ Change % Change Sales and marketing $ 321,849 $ 336,719 $ (14,870) (4) % % of revenue 44 % 54 % The decrease in sales and marketing expense was primarily due to (i) a $15.1 million decline in personnel costs as a result of lower headcount and (ii) a $1.6 million reduction in recruiting fees .
Removed
Gross margin for professional services remained flat year-over-year as professional services revenue moved in-line with cost of services.
Added
General and Administrative Expense Year Ended January 31, (in thousands) 2024 2023 $ Change % Change General and administrative $ 105,873 $ 92,312 $ 13,561 15 % % of revenue 14 % 15 % The increase in general and administrative expense was primarily due to (i) $5.9 million in bad debt expense, largely related to one customer, as well as an overall increase in accounts receivable, (ii) an increase of $3.9 million associated with personnel-related costs driven by increased stock compensation expense primarily related to new grants during fiscal year 2024 and (iii) an increase of $2.0 million related to consulting and professional fees.
Removed
Research and Development Expense Year Ended January 31, (in thousands) 2023 2022 $ Change % Change Research and development $ 76,658 $ 60,591 $ 16,067 27 % % of revenue 12 % 12 % Research and development expense increased $16.1 million, or 27%, in fiscal year 2023, compared to fiscal year 2022.
Added
Provision for Income Taxes Year Ended January 31, (in thousands) 2024 2023 $ Change % Change Provision for income taxes $ 9,119 $ 8,274 $ 845 10 % % of revenue 1 % 1 % The increase in the tax provision for the year ended January 31, 2024 compared to the year ended January 31, 2023 was primarily related to an increase in foreign tax provisions of approximately $4.0 million relating to higher taxable income in our non-US jurisdictions, offset by a $3.3 million release of the valuation allowance in certain foreign subsidiaries. 53 Non-GAAP Financial Measures In addition to our results determined in accordance with U.S.
Removed
The increase was primarily due to a $18.6 million increase in research and development personnel costs driven by increased headcount of research and development employees as we continue to add to and enhance our product, which included a $6.1 million increase in stock-based compensation.
Added
GAAP measures, excluding, as applicable, stock-based compensation expense-related charges, charges on litigation settlements, and amortization of acquired intangible assets.
Removed
Sales and Marketing Expense Year Ended January 31, (in thousands) 2023 2022 $ Change % Change Sales and marketing $ 336,719 $ 286,963 $ 49,756 17 % % of revenue 54 % 58 % Sales and marketing expense increased $49.8 million, or 17%, in fiscal year 2023, compared to fiscal year 2022.
Added
As a result, our non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for our consolidated financial statements presented in accordance with U.S.
Removed
The increase was primarily due to a $38.1 million increase in personnel costs driven by increased headcount of sales and marketing employees to support growth, which included a $7.2 million increase in benefits, a $6.7 million increase in stock-based compensation and a $4.5 million increase in commissions and bonuses associated with an increase in customer contracts and revenue growth.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+2 added−1 removed3 unchanged
Biggest changeInterest Rate Sensitivity We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. As of January 31, 2023, we had $188.4 million of cash and cash equivalents, which consisted primarily of bank deposits and money market funds and $390.2 million of highly liquid marketable securities.
Biggest changeAs of January 31, 2024, we had $164.0 million of cash and cash equivalents, which consisted primarily of bank deposits and money market funds and $498.5 million of highly liquid marketable securities. Such interest-earning instruments carry a degree of interest rate risk; however, historical fluctuations of our interest income have not been significant.
Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations. 70
Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.
A majority of our agreements have been and we expect will continue to be denominated in U.S. dollars. A hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other currencies would not have had a material effect on operating results for fiscal 2023, 2022 and 2021.
A hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other currencies would not have had a material effect on operating results for fiscal 2024, 2023 and 2022. 59 Interest Rate Sensitivity We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities.
A hypothetical 10% change in interest rates would not have had a material effect on operating results for fiscal 2023, 2022 and 2021. Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations.
We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. A hypothetical 10% change in interest rates would not have had a material effect on operating results for fiscal 2024, 2023 and 2022.
Removed
Such interest-earning instruments carry a degree of interest rate risk; however, historical fluctuations of our interest income have not been significant. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates.
Added
A majority of our agreements have been and we expect will continue to be denominated in U.S. dollars.
Added
Our inability or failure to do so could harm our business, financial condition and results of operations. 60

Other CXM 10-K year-over-year comparisons