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What changed in LIVEPERSON INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of LIVEPERSON INC's 2024 and 2025 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 2025 report.

+267 added−276 removedSource: 10-K (2026-03-16) vs 10-K (2025-03-14)

Top changes in LIVEPERSON INC's 2025 10-K

267 paragraphs added · 276 removed · 221 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe have current and potential competitors in many different industries, including: 5 • technology or service providers offering or powering competing digital engagement, contact center, communications, or customer relationship management solutions such as eGain, Genesys, Nuance, Oracle, Salesforce.com, and Twilio; • service providers that offer basic messaging products or services with limited functionality free of charge or at significantly reduced entry level prices; • social media, social listening, messaging, AI, bots, e-commerce, and/or data and data analytics companies, such as Facebook, Google, and WeChat, which may leverage their existing or future capabilities and consumer relationships to offer competing business-to-business solutions; and • customers that develop and manage their messaging solutions in-house.
Biggest changeWe have current and potential competitors in many different industries, including: • technology or service providers offering or powering competing digital engagement, contact center, communications, or customer relationship management solutions such as eGain, Genesys, Oracle, Salesforce.com, and Twilio; • AI-native companies and emerging startups that leverage generative AI and LLMs as the core foundation of their architecture, offering highly specialized, autonomous, or automated solutions that may bypass traditional business process workflows or displace established user interfaces; • service providers that offer basic messaging products or services with limited functionality free of charge or at significantly reduced entry level prices; • social media, social listening, messaging, AI, bots, e-commerce, and/or data and data analytics companies, such as Facebook, Google, and WeChat, which may leverage their existing or future capabilities and consumer relationships to offer competing business-to-business solutions; and • customers that develop and manage their messaging solutions in-house.
We leverage thought leadership and related events to showcase our strength in messaging and AI, and highlight existing reference customers who share their successes on our platform and how they achieved positive ROIs. Increasingly, we are working with large third-party system integrators, technology providers and business process outsourcers to supplement our direct sales effort. Small business and small mid-market.
We leverage thought leadership and related events to showcase our strength in messaging and AI, and highlight existing reference customers who share their successes on our platform and how they achieved positive ROIs. Increasingly, we are working with large third-party system integrators, technology providers and business process outsourcers to supplement our direct sales effort. 4 Small business and small mid-market.
We target small business and small mid-market customers with a mix of direct, online self-service, and third-party partner channels. Our customer acquisition strategy centers on leveraging customer word-of- 4 mouth, our leading brand name, online marketing and partnerships. We also leverage marketing programs and partner resources to promote increased usage and product adoption within these customers. Customer Support.
We target small business and small mid-market customers with a mix of direct, online self-service, and third-party partner channels. Our customer acquisition strategy centers on leveraging customer word-of-mouth, our leading brand name, online marketing and partnerships. We also leverage marketing programs and partner resources to promote increased usage and product adoption within these customers. Customer Support.
By integrating customer engagement channels, LivePerson’s proprietary AI, and third-party bots and AI, the LivePerson Platform offers brands a comprehensive approach to scaling automations across all customer conversations.
By integrating customer engagement channels, LivePerson’s proprietary AI, and third-party bots and AI, the LivePerson Platform offers brands a comprehensive approach to scaling automations across customer conversations.
Since 1998, we have enabled meaningful connections between consumers and our customers through our platform and currently power more than one billion conversational interactions each month. These digital and artificial intelligence (“AI”)-powered conversations decrease costs and increase revenue for our brands, resulting in more convenient, personalized and content-rich journeys across the entire consumer lifecycle, and across consumer channels.
Since 1998, we have enabled meaningful connections between consumers and our customers through our platform and currently power nearly one billion conversational interactions each month. These digital and artificial intelligence (“AI”)-powered conversations decrease costs and increase revenue for our brands, resulting in more convenient, personalized and content-rich journeys across the entire consumer lifecycle, and across consumer channels.
The Company completed an initial public offering in April 2000 and is currently traded on The Nasdaq Global Select Market and the Tel Aviv Stock Exchange (“TASE”).
The Company completed an initial public offering in April 2000 and is currently traded on The Nasdaq Global Select Market (“Nasdaq”) and the Tel Aviv Stock Exchange (“TASE”).
For 2024, our key human capital management efforts focused on the following: We place a high priority on attracting, recruiting, developing and retaining diverse global talent. As a company, we are focused on benefits and programs that support our employees across the entire employee lifecycle, from recruitment and onboarding, to well-being, learning and development.
For 2025, our key human capital management efforts focused on the following: We place a high priority on attracting, recruiting, developing and retaining diverse global talent. As a company, we are focused on benefits and programs that support our employees across the entire employee lifecycle, from recruitment and onboarding, to well-being, learning and development.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. 7
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
Agents become highly efficient, are able to leverage the AI engine (including generative AI capabilities) to surface relevant content, define next-best actions and take over repetitive transactional work so that the agent can focus on relationship building.
Agents become highly efficient, as they are able to leverage the AI engine (including generative AI capabilities) to surface relevant content, define next-best actions and take over repetitive transactional work so that the agent can focus on relationship building.
We believe this focus on technological innovation, expertise and enterprise-class capabilities is positioning LivePerson as a leader in digital customer conversations. We have current and potential competition from providers of messaging and digital engagement solutions that enable companies to engage and connect with their consumer customers, as well as technology providers that offer customer relationship management and contact center solutions.
We believe this focus on technological innovation, expertise and enterprise-class capabilities is positioning LivePerson as a leader in digital customer conversation. 5 We have current and potential competition from providers of messaging and digital engagement solutions that enable companies to engage and connect with their consumer customers, as well as technology providers that offer customer relationship management and contact center solutions.
Utilizing scalable network infrastructure and protocols, our network, hardware and software are designed to accommodate our customers’ demand for secure, high-quality 24/7 service, including during peak times such as the holiday shopping season. We have begun the process of migrating our technology infrastructure to the public cloud.
Utilizing scalable network infrastructure and protocols, our network, hardware and software are designed to accommodate our customers’ demand for secure, high-quality 24/7 service, including during peak times such as the holiday shopping season. We are progressing the process of migrating our technology infrastructure to the public cloud.
We plan to continue to focus on key target markets: telecommunications, financial services, travel/hospitality, technology, healthcare, automotive, and consumer/retail within the United States of America (“U.S.”) and Canada, Latin America, Europe, and the Asia-Pacific (“APAC”) region. No single customer accounted for or exceeded 10% of our total revenue for 2024, 2023, or 2022. Sales and Marketing Sales.
We plan to continue to focus on key target markets: telecommunications, financial services, travel/hospitality, technology, healthcare, automotive, and consumer/retail within the United States of America (“United States” or “U.S.”) and Canada, Latin America, Europe, and the Asia-Pacific (“APAC”) region. No single customer accounted for or exceeded 10% of our total revenue for 2025, 2024, or 2023. Sales and Marketing Sales.
In addition, our deep integrations with CRM, service, and IT systems allows us to deliver a unified agent experience through a single pane of glass. We believe that LivePerson’s proprietary digital customer conversation offerings provide a superior alternative to traditional customer experiences.
In addition, our deep integrations with customer relationship management, service, and IT systems allows us to deliver a unified agent experience through a single pane of glass. We believe that LivePerson’s proprietary digital customer conversation offerings provide a superior alternative to traditional customer experiences.
Government Regulation We and our customers are subject to numerous laws and regulations applicable to our and their businesses throughout the world, including laws regarding data privacy, data protection, information security, cybersecurity, restrictions on the collection, use, storage, protection, disposal, transfer or other processing of consumer data, content, consumer protection, advertising, 6 taxation, provision of online payment services (including credit card processing), and intellectual property rights, which are continuously evolving and developing.
We also enable our customers to mask certain sensitive data. 6 Government Regulation We and our customers are subject to numerous laws and regulations applicable to our and their businesses throughout the world, including laws regarding data privacy, data protection, information security, cybersecurity, restrictions on the collection, use, storage, protection, disposal, transfer or other processing of consumer data, content, consumer protection, advertising, taxation, provision of online payment services (including credit card processing), and intellectual property rights, which are continuously evolving and developing.
Of these, 356 were located in the Americas, 380 in Europe, the Middle East, and Africa (“EMEA”), and 184 in APAC. Although we have statutory employee representation obligations in certain countries, our U.S. employees are not covered by collective bargaining arrangements. We believe we have good relations with our employe es.
Of these, 218 were located in the Americas, 260 in Europe, the Middle East, and Africa (“EMEA”), and 137 in APAC. Although we have statutory employee representation obligations in certain countries, our U.S. employees are not covered by collective bargaining arrangements. We believe we have good relations with our employe es.
Intellectual Property and Proprietary Rights We own a portfolio of patents and patent applications in the United States and internationally and regularly file patent applications to protect intellectual property that we believe is important to our business. As of December 31, 2024, we have 372 patents issued in the U.S. and abroad, and 222 patents pending.
Intellectual Property and Proprietary Rights We own a portfolio of patents and patent applications in the United States and internationally and regularly file patent applications to protect intellectual property that we believe is important to our business. As of December 31, 2025, we have 443 patents issued in the U.S. and abroad, and 309 patents pending.
Human Capital Management As a leading provider of digital customer conversation solutions, we are at the forefront of a consumer-led shift to Conversational AI, and our platform is setting the industry standard for this future. As of December 31, 2024, we had 928 full-time employees worldwide, located in more than 20 countries.
Human Capital Management As a leading provider of digital customer conversation solutions, we are at the forefront of a consumer-led shift to Conversational AI, and our platform is setting the industry standard for this future. As of December 31, 2025, we had 615 full-time employees worldwide, located in 19 countries.
For increased security, through a multi-layered approach, we use next-generation endpoint detection and response, offer enterprise encryption standards and employ third-party independent service providers to further validate our systems’ security. We also enable our customers to mask certain sensitive data.
For increased security, through a multi-layered approach, we use next-generation endpoint detection and response, offer enterprise encryption standards and employ third-party independent service providers to further validate our systems’ security.
LivePerson’s Conversational AI systems have these capabilities, and are integrated with best-in-class generative AI systems including OpenAI, Microsoft, Google, and others, situating the LivePerson technology stack to benefit from the anticipated growth in the generative AI space. • We support our customers through a secure, scalable server infrastructure.
LivePerson’s Conversational AI systems have these capabilities, and are integrated with best-in-class generative AI systems including OpenAI, Microsoft, Google, and others, situating the LivePerson technology stack to benefit from the anticipated growth in the generative AI space. • We support our customers through a secure, scalable server infrastructure hosted in secure, top-tier, third-party server centers located in the United States, the United Kingdom (“U.K.”) and Australia.
Organizations that adopt a fully-hosted, multi-tenant architecture that is maintained by LivePerson eliminate the majority of the time, server infrastructure costs, and information technology (“IT”) resources required to implement, maintain, and support traditional on-premise software.
Organizations that adopt a fully-hosted, multi-tenant architecture that is maintained by LivePerson eliminate the majority of the time, server infrastructure costs, and information technology (“IT”) resources required to implement, maintain, and support traditional on-premise software. The world’s leading brands use our award-winning LivePerson Platform to connect with millions of consumers.
Website Access to Reports We make available on our website ( ir.liveperson.com ), our annual reports on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we have electronically filed such material with, or furnished it to, the Securities and Exchange Commission (“SEC”).
We value a wide range of perspectives, and believe this supports our successful delivery of innovative AI solutions and consumer experience products and services to our global customer base. 7 Website Access to Reports We make available on our website ( ir.liveperson.com ), our annual reports on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we have electronically filed such material with, or furnished it to, the Securities and Exchange Commission (the “SEC”).
Intent Manager is currently being used by top brands to gain real-time insights and take action to improve customer service, marketing, and sales automation. Professional Services The mission of our LP 360 Professional Services team is to help customers optimize the performance of our products in order to drive incremental value through their mobile and online sales and/or service channel(s).
Professional Services The mission of our LP 360 Professional Services team is to help customers optimize the performance of our products in order to drive incremental value through their mobile and online sales and/or service channel(s).
We had 27 patents awarded in the U.S. during 2024, and added 65 global patents. Our patents cover Conversational AI and insights, messaging across various consumer channels, behavioral analytics and personalization, and agent effectiveness and call center operations.
Our patents cover Conversational AI and insights, messaging across various consumer channels, behavioral analytics and personalization, and agent effectiveness and call center operations.
Intent Manager is powered by LivePerson’s proprietary natural language understanding (“NLU”) capabilities and machine learning algorithms, which are grounded in over 20+ years of conversational data and more than one billion messaging transcripts across a variety of industries.
Intent Manager is powered by LivePerson’s proprietary natural language understanding (“NLU”) capabilities and machine learning algorithms, which are informed by over 20+ years of conversational data and nearly one billion interactions across a variety of industries. Intent Manager is currently being used by top brands to gain real-time insights and take action to improve customer service, marketing, and sales automation.
Removed
Hundreds of the world’s biggest brands, including HSBC, Virgin Media, and Burberry use our digital customer conversation solutions to integrate humans and AI, at scale, and create a convenient personalized relationship with their customers. LivePerson was incorporated in the State of Delaware in November 1995 and the LivePerson service was introduced in November 1998.
Added
We power nearly one billion conversational interactions every month providing uniquely rich data analytics and safety tools to unlock the power of conversational AI for better business outcomes. LivePerson was incorporated in the State of Delaware in November 1995 and the LivePerson service was introduced in November 1998.
Removed
Currently, in North America, our servers are hosted in a secure, top-tier, third-party server center located in the Mid-Atlantic United States, and have data backups in a top-tier facility located in the Western United States.
Added
Syntrix. Syntrix, introduced in November 2025, is our simulation and evaluation platform that allows brands to launch customer-facing AI agents with confidence and validate human agent readiness at scale. Conversation Simulator, the first capability within the Syntrix platform, enables enterprises to test, evaluate, and validate AI behavior by identifying drift and failures before they reach real customers.
Removed
In Europe, our servers are hosted in a secure, top-tier, third-party server center located in the United Kingdom (“U.K.”) and have data backups in a top-tier facility located in The Netherlands. In the Asia Pacific region, our servers and data backups are hosted in secure, top-tier, third-party server centers located in Australia.
Removed
We value a wide range of perspectives, and believe this supports our successful delivery of innovative AI solutions and consumer experience products and services to our global customer base.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

117 edited+25 added−33 removed402 unchanged
Biggest changeThere is a significant risk that we may not be able to secure necessary financing on commercially reasonable terms, or at all. • Our sales cycles can be lengthy, and the timing of sales can cause our operating results to vary significantly. • Delays in our implementation cycles could have an adverse effect on our results of operations. • Our quarterly revenue and operating results may fluctuate significantly, which may cause a substantial decline in the trading price of our securities. • In the past we have experienced losses, we had an accumulated deficit of $991.3 million as of December 31, 2024 and we may incur losses in the future. • The non-payment or late payment of amounts due to us from a significant number of customers may negatively impact our financial condition or make it difficult to forecast our revenues accurately. • There are inherent limitations on the effectiveness of our controls. • As a “smaller reporting company,” we may comply with certain reduced reporting and disclosure requirements which could make our common stock less attractive to investors. • Because we recognize revenue from subscriptions for our service over the term of the subscription, declines in business may not be immediately reflected in our operating results. • If our goodwill or long-lived assets become impaired, we may be required to record a significant charge to earnings. • If we are unable to develop and maintain successful relationships with partners, service partners, social media, and other third-party consumer messaging platforms and endpoints, our business, results of operations, and financial condition could be adversely affected. • If we are unable to effectively operate on mobile devices, our business could be adversely affected. • The markets in which we participate are highly competitive, and we may lose customers and revenue if we are not able to innovate or effectively compete. • Downturns in the global economic environment or in particular industries in which our sales are concentrated may adversely affect our business and results of operations. • Failures or security breaches in our services or systems, those of our third-party service providers, or in the websites of our customers, including those resulting from cyber-attacks, security vulnerabilities, defects, or errors, could harm our business. 8 • We may be liable if third parties access or misappropriate confidential or personal data from our systems or services. • We provide service-level commitments to certain customers.
Biggest changeThese risks are discussed more fully below and include: • The success of our business depends on retention of existing customers and their purchase of additional services, and attracting new customers. • Supporting our customer base requires intensive personnel, infrastructure and resource commitment, and if we are unable to scale our operations and increase productivity, we may not be able to successfully implement our business plan. • Our business depends significantly on our ability to retain our key personnel, attract new personnel, and manage attrition. • There can be no assurance that further restructuring activities will not be necessary or that we will realize the intended operational efficiencies and cost savings from our restructuring initiatives. • Our expansion into new products, services, and technologies could subject us to additional risks. • If we do not successfully integrate past or potential future acquisitions, we may not realize the expected business or financial benefits and our business could be adversely impacted. • If we do not effectively implement our plans to migrate our technology infrastructure to the public cloud, our operations could be significantly disrupted. • Capital requirements to execute our business strategy or refinance our existing indebtedness could increase substantially, and there is a significant risk that we may not be able to secure necessary financing on commercially reasonable terms, or at all. • Our sales cycles can be lengthy, and the timing of sales can cause our operating results to vary significantly. • Delays in our implementation cycles could have an adverse effect on our results of operations. • Our quarterly revenue and operating results may fluctuate significantly, which may cause a substantial decline in the trading price of our securities. • In the past we have experienced losses, we had an accumulated deficit of $1,058.5 million as of December 31, 2025 and we may incur losses in the future. • The non-payment or late payment of amounts due to us from a significant number of customers may negatively impact our financial condition or make it difficult to forecast our revenues accurately. • There are inherent limitations on the effectiveness of our controls. • As a “smaller reporting company,” we may comply with certain reduced reporting and disclosure requirements which could make our common stock less attractive to investors. • Because we recognize revenue from subscriptions for our service over the term of the subscription, declines in business may not be immediately reflected in our operating results. 8 • If our goodwill or long-lived assets become impaired, we may be required to record a significant charge to earnings. • If we are unable to develop and maintain successful relationships with technology partners, strategic partners, social media, and other third-party consumer messaging platforms and endpoints, our business, results of operations, and financial condition could be adversely affected. • If we are unable to effectively operate on mobile devices, our business could be adversely affected. • The markets in which we participate are highly competitive, and we may lose customers and revenue if we are not able to innovate or effectively compete. • Downturns in the global economic environment or in particular industries in which our sales are concentrated may adversely affect our business and results of operations. • Failures or security breaches in our services or systems, those of our third-party service providers, or in the websites of our customers, including those resulting from cyber-attacks, security vulnerabilities, defects, or errors, could harm our business. • We may be liable if third parties access or misappropriate confidential or personal data from our systems or services. • We provide service-level commitments to certain customers.
Some of the important factors that may cause our revenue and operating results to fluctuate include: • our ability to attract and retain new customers; • our ability to retain and increase sales to existing customers; • demand from customers for our services; • our ability to innovate and provide new services to current and future customers; • our ability to add AI, machine learning, and automation into our services; • the introduction of new services by us or our competitors; • our ability to avoid and/or manage service interruptions, disruptions, or security incidents; • changes in our pricing models or policies or in those of our competitors; • our ability to maintain and add integrations with third-party consumer messaging platforms and endpoints; • levels of adoption by companies of mobile and cloud-based messaging solutions; 14 • investments in growing our sales and marketing programs; • levels of adoption by users of conversational AI and web and mobile-based conversation technology; • exposure to foreign currency exchange rate fluctuations; and • the amount and timing of capital expenditures and other costs related to operation and expansion of our business, including those related to acquisitions.
Some of the important factors that may cause our revenue and operating results to fluctuate include: • our ability to attract and retain new customers; • our ability to retain and increase sales to existing customers; • demand from customers for our services; • our ability to innovate and provide new services to current and future customers; 14 • our ability to add AI, machine learning, and automation into our services; • the introduction of new services by us or our competitors; • our ability to avoid and/or manage service interruptions, disruptions, or security incidents; • changes in our pricing models or policies or in those of our competitors; • our ability to maintain and add integrations with third-party consumer messaging platforms and endpoints; • levels of adoption by companies of mobile and cloud-based messaging solutions; • investments in growing our sales and marketing programs; • levels of adoption by users of Conversational AI and web and mobile-based conversation technology; • exposure to foreign currency exchange rate fluctuations; and • the amount and timing of capital expenditures and other costs related to operation and expansion of our business, including those related to acquisitions.
Furthermore, while the Company has designed an information security program to protect our information systems from cybersecurity threats, and to ensure the confidentiality, integrity and availability of systems and information used, owned or managed by the Company related to our 19 employees, our customers and their users, implementation of the supporting controls has coverage gaps and weaknesses and potential for human error that could provide threat actors a window of time to exploit such weaknesses before they are identified and/or addressed.
Furthermore, while the Company has designed an information security program to protect 19 our information systems from cybersecurity threats, and to ensure the confidentiality, integrity and availability of systems and information used, owned or managed by the Company related to our employees, our customers and their users, implementation of the supporting controls has coverage gaps and weaknesses and potential for human error that could provide threat actors a window of time to exploit such weaknesses before they are identified and/or addressed.
Policing unauthorized use of our services and intellectual property rights is difficult, and we cannot be certain that the steps we have taken will prevent misappropriation of our technology or intellectual property rights, particularly in foreign countries where we do business, where our services are sold or used, where the laws may not protect proprietary rights as fully as do the laws of the U.S. or where enforcement of laws protecting proprietary rights is not common or effective.
Policing unauthorized use of our services and intellectual property rights is difficult, and we cannot be certain that the steps we have taken will prevent misappropriation of our technology or intellectual property rights, particularly in foreign countries where we do business, where our services are sold or used, where the laws may not protect proprietary rights as fully as do the laws of the U.S. or where enforcement of laws protecting proprietary rights is not common or effective.
Our international operations may subject us to other risks inherent in foreign operations, including: • varied, unfamiliar, unclear and changing legal and regulatory restrictions, including different legal and regulatory standards applicable to internet or mobile services, communications, privacy, data protection, and AI; • difficulties in staffing and managing foreign operations; • differing intellectual property laws that may not provide sufficient protection for our intellectual property; • adverse tax consequences or additional tax liabilities; • difficulty in addressing country-specific business requirements and regulations including, for instance, data privacy laws; • fluctuations in currency exchange rates; • strains on financial and other systems to properly administer value-added tax (“VAT”) and other taxes; • different consumer preferences and requirements in specific international markets; • international legal, compliance, political, regulatory or systemic restrictions, or other international governmental scrutiny, applicable to U.S. companies with sales and operations in foreign countries, including, but not limited to, possible compliance issues involving the U.S.
Our international operations may subject us to other risks inherent in foreign operations, including: • varied, unfamiliar, unclear and changing legal and regulatory restrictions, including different legal and regulatory standards applicable to internet or mobile services, communications, privacy, data protection, and AI; • difficulties in staffing and managing foreign operations; • differing intellectual property laws that may not provide sufficient protection for our intellectual property; • adverse tax consequences or additional tax liabilities; • difficulty in addressing country-specific business requirements and regulations including, for instance, data privacy laws; • fluctuations in currency exchange rates; • strains on financial and other systems to properly administer value-added tax (“VAT”) and other taxes; • different consumer preferences and requirements in specific international markets; • international legal, compliance, political, regulatory or systemic restrictions, or other international governmental scrutiny, applicable to U.S. companies with sales and operations in foreign countries, including, but not limited 34 to, possible compliance issues involving the U.S.
Acquisitions and investments also involve numerous other risks to us, including: • potential failure to achieve the expected benefits of the combination or acquisition; • inability to generate sufficient revenue to offset acquisition or investment cost; • difficulties in integrating operations, technologies, products, and personnel; • diversion of financial and management resources from efforts related to existing operations; • risks of entering new markets in which we have little or no experience or where competitors may have stronger market positions; • potential loss of our existing key employees or key employees of the company we acquire; 11 • inability to maintain relationships with customers and partners of the acquired business; • potential unknown liabilities associated with the acquired businesses; and • the tax effects of any such acquisitions.
Acquisitions and investments also involve numerous other risks to us, including: • potential failure to achieve the expected benefits of the combination or acquisition; • inability to generate sufficient revenue to offset acquisition or investment cost; • difficulties in integrating operations, technologies, products, and personnel; • diversion of financial and management resources from efforts related to existing operations; • risks of entering new markets in which we have little or no experience or where competitors may have stronger market positions; • potential loss of our existing key employees or key employees of the company we acquire; • inability to maintain relationships with customers and partners of the acquired business; • potential unknown liabilities associated with the acquired businesses; and • the tax effects of any such acquisitions.
This limits the ability of minority stockholders to elect director candidates; • Our stockholders may only act at a duly called annual or special meeting and may not act by written consent; • Stockholders must provide advance notice to nominate individuals for election to our board of directors or to propose other matters that can be acted upon at a stockholders’ meeting; • We require supermajority voting by stockholders to amend certain provisions in our amended and restated certificate of incorporation and to amend our amended and restated bylaws; and • Our amended and restated bylaws expressly authorize a supermajority of the board of directors to amend our amended and restated bylaws.
This limits the ability of minority stockholders to elect director candidates; • Our stockholders may only act at a duly called annual or special meeting and may not act by written consent; 40 • Stockholders must provide advance notice to nominate individuals for election to our board of directors or to propose other matters that can be acted upon at a stockholders’ meeting; • We require supermajority voting by stockholders to amend certain provisions in our amended and restated certificate of incorporation and to amend our amended and restated bylaws; and • Our amended and restated bylaws expressly authorize a supermajority of the board of directors to amend our amended and restated bylaws.
In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” (generally defined as a greater than 50-percentage-point 35 cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period) is subject to limitations on its ability to utilize its pre-change NOLs to offset post-change taxable income.
In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” (generally defined as a greater than 50-percentage-point cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period) is subject to limitations on its ability to utilize its pre-change NOLs to offset post-change taxable income.
For example, the State of California and other states have passed laws relating to disclosure of companies’ practices with regard to global opt-out signals from internet browsers, the ability to delete information of minors, age appropriate design obligations for companies that offer online services, products or features “likely to be accessed” by children, and new data breach notification requirements.
For example, the State of California and other states have passed laws relating to disclosure of companies’ practices with regard to global opt- 27 out signals from internet browsers, the ability to delete information of minors, age appropriate design obligations for companies that offer online services, products or features “likely to be accessed” by children, and new data breach notification requirements.
Existing and proposed laws and regulations regarding cybersecurity and monitoring of online behavioral data, such as proposed “Do Not Track” regulations, regulations aimed at restricting certain targeted advertising 27 practices and collection and use of data from mobile devices, new and existing tools that allow consumers to block online advertising and other content, and other proposed online privacy legislation could potentially apply to some of our current or planned products and services.
Existing and proposed laws and regulations regarding cybersecurity and monitoring of online behavioral data, such as proposed “Do Not Track” regulations, regulations aimed at restricting certain targeted advertising practices and collection and use of data from mobile devices, new and existing tools that allow consumers to block online advertising and other content, and other proposed online privacy legislation could potentially apply to some of our current or planned products and services.
Our trading price could fluctuate substantially in the future, including in response to the following factors, some of which are beyond our control: • quarterly variations in our operating results or those of our competitors; • earnings announcements that are not in line with analyst expectations; • changes in recommendations or financial estimates by securities analysts; • announcements or rumors about mergers or strategic acquisitions by us or by our competitors; • announcements about customer additions and cancellations or failure to complete significant sales; • changes in market valuations of companies that investors believe are comparable to us; • additions or departures of key personnel; • consequences of unexpected geopolitical events, natural disasters, acts of war or climate change; • pandemics, epidemics or similar widespread public health concerns; and • general economic, political and market conditions, such as recessions, political unrest or terrorist attacks, or in the specific locations where we operate, such as the United States, Israel and the U.K.
Our trading price could fluctuate substantially in the future, including in response to the following factors, some of which are beyond our control: • quarterly variations in our operating results or those of our competitors; • earnings announcements that are not in line with analyst expectations; • changes in recommendations or financial estimates by securities analysts; • announcements or rumors about mergers or strategic acquisitions by us or by our competitors; • announcements about customer additions and cancellations or failure to complete significant sales; • changes in market valuations of companies that investors believe are comparable to us; • additions or departures of key personnel; • consequences of unexpected geopolitical events, natural disasters, acts of war or climate change; • pandemics, epidemics or similar widespread public health concerns; and • general economic, political and market conditions, such as recessions, political unrest or terrorist attacks, or in the specific locations where we operate, such as the United States and Israel.
If any of our public cloud providers increases pricing terms, terminates or seeks to terminate our contractual relationship, establishes more favorable relationships with our competitors, or changes or interprets their terms of service or policies in a manner that is unfavorable to us, we may be required to transfer to another provider and may incur significant costs and experience service interruptions.
If any of our public cloud providers increases pricing terms, terminates or seeks to terminate our contractual relationship, establishes more favorable relationships with our competitors, or changes or interprets their terms of service or policies in a manner that is 12 unfavorable to us, we may be required to transfer to another provider and may incur significant costs and experience service interruptions.
In addition, even if holders of the relevant series of Notes do not elect to convert their Notes of such series, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes of such series as a current rather than long-term liability, which would result in a material reduction of our net working capital.
In addition, even if holders of the relevant series of Notes do not elect to convert their Notes of such series, we could be 38 required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes of such series as a current rather than long-term liability, which would result in a material reduction of our net working capital.
If our retention and recruitment efforts are ineffective, employee turnover could increase and our ability to provide services to our customers would be materially and adversely affected. 10 Following the onset of the global novel coronavirus disease (“COVID-19”) pandemic, we vacated most of our physical offices around the world, and transitioned to a work-from-anywhere model.
If our retention and recruitment efforts are ineffective, employee turnover could increase and our ability to provide services to our customers would be materially and adversely affected. Following the onset of the global novel coronavirus disease (“COVID-19”) pandemic, we vacated most of our physical offices around the world, and transitioned to a work-from-anywhere model.
We also face climate change risks associated with the process of transitioning to a low-carbon economy. For example, in response to concerns about global climate change, governments may adopt new regulations affecting the use of fossil fuels or requiring the use of alternative fuel sources, resulting in increased costs for the energy usage of our global data centers.
We also face climate change risks associated with the process of transitioning to a low-carbon economy. 30 For example, in response to concerns about global climate change, governments may adopt new regulations affecting the use of fossil fuels or requiring the use of alternative fuel sources, resulting in increased costs for the energy usage of our global data centers.
In the event that industry conditions deteriorate in one or more of these industries, we could experience, among other things, cancellation or non-renewal of existing contracts, reduced demand for our products and reduced sales. Weak economic conditions may cause our customers to experience difficulty in supporting their current operations and implementing their business plans.
In the event that industry conditions deteriorate in one or more of these industries, we could experience, among other things, cancellation or non-renewal of existing contracts, reduced demand for our products and reduced sales. Weak economic conditions may cause our 18 customers to experience difficulty in supporting their current operations and implementing their business plans.
Given the increased focus by the FTC and other regulators on the use of AI, it is likely that additional laws, regulations, and standards related to AI may be introduced in the future. Regulation in this area could impact how businesses use our products and services to interact with consumers and how we provide our 26 services to our customers.
Given the increased focus by the FTC and other regulators on the use of AI, it is likely that additional laws, regulations, and standards related to AI may be introduced in the future. Regulation in this area could impact how businesses use our products and services to interact with consumers and how we provide our services to our customers.
We believe that continued growth for companies in our industry depends, in part, on enabling brands to connect with consumers across consumers’ preferred conversational channels and messaging endpoints, such as SMS, Facebook Messenger, 16 WhatsApp, Apple Business Chat, Google Rich Business Messenger, Line, Kakao Talk, Instagram, and WeChat.
We believe that continued growth for companies in our industry depends, in part, on enabling brands to connect with consumers across consumers’ preferred conversational channels and messaging endpoints, such as SMS, Facebook Messenger, WhatsApp, Apple Business Chat, Google Rich Business Messenger, Line, Kakao Talk, Instagram, and WeChat.
Additionally, tariffs and retaliatory trade measures could result in an increase in supply chain costs that we may not be able to offset in full or in part or that may otherwise adversely impact our financial results. Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations, or interpretive positions could harm our business.
Additionally, tariffs and retaliatory trade measures could result in an increase in supply chain costs that we may not be able to offset in full or in part or that may otherwise adversely impact our financial results. 29 Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations, or interpretive positions could harm our business.
This decision may significantly increase the effort, resources and costs associated with the sales tax collection and compliance burden. Since the decision, a number of states have enacted sales tax enabling legislation which has had the effect of significantly expanding the liability of e-commerce companies to register, collect and remit state sales taxes from customers.
This decision 35 may significantly increase the effort, resources and costs associated with the sales tax collection and compliance burden. Since the decision, a number of states have enacted sales tax enabling legislation which has had the effect of significantly expanding the liability of e-commerce companies to register, collect and remit state sales taxes from customers.
These sales also might make it more 40 difficult for us to sell equity securities in the future at a time and price that we deem appropriate. No prediction can be made as to the effect, if any, that market sales of our common stock will have on the market price of our common stock.
These sales also might make it more difficult for us to sell equity securities in the future at a time and price that we deem appropriate. No prediction can be made as to the effect, if any, that market sales of our common stock will have on the market price of our common stock.
Such legislation typically focuses on restricting the proliferation of software that, when installed on an end user’s computer, is used to intentionally and deceptively take control of the end user’s machine. We do not believe that the data monitoring methods that we employ constitute “spyware” or are prohibited by applicable laws.
Such legislation typically focuses on restricting the proliferation of software that, when installed on an end user’s computer, is used to intentionally and deceptively take control of the end user’s machine. We do 25 not believe that the data monitoring methods that we employ constitute “spyware” or are prohibited by applicable laws.
If we do not meet these contractual commitments, we could be obligated to provide credits or refunds or face contract terminations, which could adversely affect our revenue and harm our reputation. • Failure to license necessary third-party software for use in our products and services, or failure to successfully integrate third-party software, could cause delays or reductions in our sales, or errors or failures of our service. • Our business is subject to a variety of U.S. and international laws and regulations regarding privacy, data protection, and AI, and increased public scrutiny of privacy, security, and AI issues could result in increased government regulation, industry standards, and other legal obligations that could adversely affect our business. • We are the subject of a number of ongoing actions that have resulted in significant expense, and adverse developments in our ongoing actions and/or future actions could have a material adverse effect on our business results of operations and financial condition. • We may be subject to governmental export controls and economic sanctions regulations that could impair our ability to compete in international markets due to licensing requirements and could subject us to liability if we are not in compliance with applicable laws. • Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations, or interpretive positions could harm our business. • Future regulation of the internet or mobile devices may result in decreased demand for our services and increased costs of doing business. • Our products and services may infringe upon intellectual property rights of third parties and any infringement could require us to incur substantial costs and may distract our management. • Our business and prospects would suffer if we are unable to protect and enforce our intellectual property rights. • Issues in the use of AI in our product offerings or by our vendors may result in reputational harm or liability. • Our results of operations may be adversely impacted due to our exposure to foreign currency exchange rate fluctuations. • We may be unsuccessful in expanding our operations internationally due to additional regulatory requirements, tax liabilities, currency exchange rate fluctuations, and other risks, which could adversely affect our results of operations. • Our operations may expose us to greater than anticipated income, non-income, and transactional tax liabilities, which could harm our financial condition and results of operations. • Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations. • Political, economic, and military conditions in Israel could negatively impact our Israeli operations. • Servicing our debt may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our indebtedness. • The terms of our First Lien Convertible Senior Notes due 2029 require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility.
If we do not meet these contractual commitments, we could be obligated to provide credits or refunds or face contract terminations, which could adversely affect our revenue and harm our reputation. • Failure to license necessary third-party software for use in our products and services, or failure to successfully integrate third-party software, could cause delays or reductions in our sales, or errors or failures of our service. • Our business is subject to a variety of U.S. and international laws and regulations regarding privacy, data protection, and AI, and increased public scrutiny of privacy, security, and AI issues could result in increased government regulation, industry standards, and other legal obligations that could adversely affect our business. • We are the subject of a number of ongoing actions that have resulted in significant expense, and adverse developments in our ongoing actions and/or future actions could have a material adverse effect on our business results of operations and financial condition. • We may be subject to governmental export controls and economic sanctions regulations that could impair our ability to compete in international markets due to licensing requirements and could subject us to liability if we are not in compliance with applicable laws. • Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations, or interpretive positions could harm our business. • Future regulation of the internet or mobile devices may result in decreased demand for our services and increased costs of doing business. • Our products and services may infringe upon intellectual property rights of third parties and any infringement could require us to incur substantial costs and may distract our management. • Our business and prospects would suffer if we are unable to protect and enforce our intellectual property rights. • Issues in the use of AI in our product offerings or by our vendors may result in reputational harm or liability. • Our results of operations may be adversely impacted due to our exposure to foreign currency exchange rate fluctuations. • We may be unsuccessful in expanding our operations internationally due to additional regulatory requirements, tax liabilities, currency exchange rate fluctuations, and other risks, which could adversely affect our results of operations. • Our operations may expose us to greater than anticipated income, non-income, and transactional tax liabilities, which could harm our financial condition and results of operations. • Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations. • Political, economic, and military conditions in Israel could negatively impact our Israeli operations. • Servicing our debt may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our indebtedness. • The terms of our First Lien Convertible Senior Notes due 2029 and 10.0% Second Lien Senior Subordinated Secured Notes require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility.
Profitability, if any, in our newer activities may not meet our expectations, and we may not be successful enough in these newer activities to recoup our investments in them. Failure to realize the benefits of amounts we invest in new technologies, products, or services could result in the value of those investments being written down or written off.
Profitability, if any, in our newer activities may not meet our expectations, and we may not be successful enough in these newer activities to recoup our investments 11 in them. Failure to realize the benefits of amounts we invest in new technologies, products, or services could result in the value of those investments being written down or written off.
If new or existing customers cancel or have difficulty deploying our products or require significant amounts of our professional services, support, or customized features, revenue recognition could be canceled or delayed and our costs could increase, which could negatively impact our operating results. Our services are subject to payment-related risks.
If new or existing customers cancel or have difficulty deploying our products or require significant amounts of our professional services, support, or customized features, revenue recognition could be canceled or delayed and our costs could increase, which could negatively impact our operating results. 13 Our services are subject to payment-related risks.
If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction 13 fees and lose our ability to accept credit and debit card payments from our customers or facilitate other types of online payments, and our business and operating results could be adversely affected.
If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our customers or facilitate other types of online payments, and our business and operating results could be adversely affected.
Our customers 18 may reduce their spending on our services, may not be able to discharge their payment and other obligations to us, may experience difficulty raising capital, or may elect to scale back the resources they devote to customer service and/or sales and marketing technology, including services such as ours.
Our customers may reduce their spending on our services, may not be able to discharge their payment and other obligations to us, may experience difficulty raising capital, or may elect to scale back the resources they devote to customer service and/or sales and marketing technology, including services such as ours.
IT system failures, including a breach of our or our third-party service providers’ data security, could disrupt our ability to function in the normal course of business by potentially causing, among other things, an unintentional disclosure of customer information or loss of information.
IT system failures, including a breach of our or our third-party service providers’ data security, 21 could disrupt our ability to function in the normal course of business by potentially causing, among other things, an unintentional disclosure of customer information or loss of information.
Additionally, despite our security procedures or those of our third-party 21 service providers, information systems may be vulnerable to threats such as computer hacking, ransomware, cyber-terrorism or other unauthorized attempts by third parties to access, obtain, modify or delete our or our customers’ data.
Additionally, despite our security procedures or those of our third-party service providers, information systems may be vulnerable to threats such as computer hacking, ransomware, cyber-terrorism or other unauthorized attempts by third parties to access, obtain, modify or delete our or our customers’ data.
We may not have the ability to raise the funds necessary to settle conversions of our outstanding convertible debt securities and cash-settled warrants in cash or to repurchase our outstanding convertible debt securities upon a fundamental change, and 37 any future debt may contain limitations on our ability to pay cash upon conversion or repurchase of our outstanding convertible debt securities and cash-settled warrants.
We may not have the ability to raise the funds necessary to settle conversions of our outstanding convertible debt securities and cash-settled warrants in cash or to repurchase our outstanding convertible debt securities upon a fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase of our outstanding convertible debt securities and cash-settled warrants.
Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
Further, because of the inherent limitations 15 in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.
In 36 addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.
The FTC in particular has aggressively investigated and brought enforcement actions against companies that fail to comply with their privacy or data security commitments to consumers, or fail to comply with regulations or statutes such as the Children’s Online Privacy Protection Act.
The FTC in particular has aggressively investigated and brought enforcement actions against companies that fail to comply with their privacy or data security commitments to consumers, or fail to comply with regulations or statutes such as the Children’s Online Privacy Protection Act (“COPPA”).
Export Administration Regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. Exports of our products and the provision of our services must be made in compliance with these laws and regulations.
Export Administration Regulations and various economic and trade sanctions regulations administered by the U.S. Treasury 28 Department’s Office of Foreign Assets Control. Exports of our products and the provision of our services must be made in compliance with these laws and regulations.
In addition, changes in our products or services, or changes in applicable export or economic sanctions regulations may create delays in the introduction and deployment of our products and services in international markets, or, in some cases, prevent the export of our products or provision of our 28 services to certain countries or end users, or for certain end uses.
In addition, changes in our products or services, or changes in applicable export or economic sanctions regulations may create delays in the introduction and deployment of our products and services in international markets, or, in some cases, prevent the export of our products or provision of our services to certain countries or end users, or for certain end uses.
We enter into confidentiality and other written agreements (including invention assignment agreements) with our employees, consultants, customers, potential customers, strategic partners, and other third parties, and through these and other written agreements, we seek to control access to and distribution of our software, documentation and other proprietary information.
We enter into confidentiality and other written agreements (including invention assignment agreements) with our employees, consultants, customers, potential customers, strategic partners, and other third parties, and through these and other written agreements, we seek 31 to control access to and distribution of our software, documentation and other proprietary information.
Accordingly, we have identified and developed, and maintain, strategic relationships with many key technology partners. As part of our growth strategy, we plan to further develop partnerships and specific solution areas with additional technology partners.
Accordingly, we 16 have identified and developed, and maintain, strategic relationships with many key technology partners. As part of our growth strategy, we plan to further develop partnerships and specific solution areas with additional technology partners.
If, for example, the scope of the 25 previously mentioned “spyware” legislation were changed to include web analytics, such legislation could apply to the technology we use and potentially restrict our ability to conduct our business.
If, for example, the scope of the previously mentioned “spyware” legislation were changed to include web analytics, such legislation could apply to the technology we use and potentially restrict our ability to conduct our business.
For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or that require financial services providers to obtain regulatory 29 approval prior to outsourcing certain functions.
For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or that require financial services providers to obtain regulatory approval prior to outsourcing certain functions.
With respect to our trademarks and trade names, trademark laws and rights are generally territorial in scope and limited to those countries where a mark has been 31 registered or protected.
With respect to our trademarks and trade names, trademark laws and rights are generally territorial in scope and limited to those countries where a mark has been registered or protected.
We depend on monthly fees and interaction-based fees from our services for substantially all of our revenue. As part of our strategy, we frequently offer customers subscriptions with interaction-based fees.
We depend on monthly fees and interaction-based fees from our services for substantially all of our revenue. As part of our strategy, we offer customers subscriptions with interaction-based fees.
Inappropriate or controversial data practices by us or others could impair the acceptance of AI solutions. These deficiencies could undermine the decisions, predictions, or analysis AI applications produce.
Inappropriate or controversial data practices by us or others could 32 impair the acceptance of AI solutions. These deficiencies could undermine the decisions, predictions, or analysis AI applications produce.
Refer to Note 14 - Legal Matters in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding material ongoing Actions. Legal proceedings in general, and securities and class action litigation and regulatory investigations in particular, can be expensive and disruptive.
Refer to Note 13 - Legal Matters in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding material ongoing Actions. Legal proceedings in general, and securities and class action litigation and regulatory investigations in particular, can be expensive and disruptive.
In addition, upon conversion of the Notes, we are required to make cash payments in respect of the Notes being converted (except, in the case of the 2026 Notes, if we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share)).
In addition, upon conversion of the 2026 Notes or the 2029 Notes, we are required to make cash payments in respect of the Notes being converted (except, in the case of the 2026 Notes, if we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share)).
Because of the small amount of services historically sold in initial orders, we depend significantly on the growth of our customer base, sales to new customers and sales of additional services to our existing customers. If we are able to obtain additional customers or if existing customers decline to purchase additional services, our revenues will be adversely affected.
Because of the small amount of services historically sold in initial orders, we depend significantly on the growth of our customer base, sales to new customers and sales of additional services to our existing customers. If we are unable to obtain additional customers or if existing customers decline to purchase additional services, our revenues will be adversely affected.
Factors including dissatisfaction with the nature or quality of our services as well as reductions in our customers’ spending levels, or declines in customer activity as a result of general economic conditions or uncertainty in financial markets, could lead customers to terminate our service.
Factors including dissatisfaction with the nature or quality of our services, or customer uncertainty regarding our financial stability, as well as reductions in our customers’ spending levels, or declines in customer activity as a result of general economic conditions or uncertainty in financial markets, could lead customers to terminate our service.
The 2029 Notes are guaranteed on a senior basis by certain of our direct and indirect domestic and foreign subsidiaries and secured by first priority security interests in substantially all of the assets of the Company and the subsidiary guarantors, subject to customary exceptions.
The 2029 Notes and Second Lien Notes are guaranteed on a senior basis by certain of our direct and indirect domestic and foreign subsidiaries and secured by first priority security interests in substantially all of the assets of the Company and the subsidiary guarantors, subject to customary exceptions.
Additionally, following the United Kingdom’s withdrawal from the E.U., we also are subject to the U.K. General Data Protection Regulation (“U.K. GDPR”), a version of the GDPR as implemented into the laws of the U.K. While the GDPR and U.K.
Additionally, following the United Kingdom’s withdrawal from the E.U., we also are subject to the U.K. General Data Protection Regulation (“U.K. GDPR”), a version of the GDPR as implemented into the laws of the U.K.
Risks Related to Industry Dynamics and Competition If we are unable to develop and maintain successful relationships with partners, service partners, social media, and other third-party consumer messaging platforms and endpoints, our business, results of operations, and financial condition could be adversely affected.
Risks Related to Industry Dynamics and Competition If we are unable to develop and maintain successful relationships with technology partners, strategic partners, social media, and other third-party consumer messaging platforms and endpoints, our business, results of operations, and financial condition could be adversely affected.
We can provide no assurance that we will be able to maintain or restore our compliance with the listing requirements or that any actions taken by us in an effort to maintain or restore our compliance would allow our common stock to remain listed, stabilize the market price of our common stock, improve the liquidity of our common stock, prevent our common stock from again dropping below the minimum bid price requirement, or prevent future non-compliance with the listing requirements.
We can provide no assurance that we will be able to prevent future non-compliance with the listing requirements or that any actions taken by us in an effort to maintain or restore our compliance, including the reverse stock split, will stabilize the market price of our common stock, improve the liquidity of our common stock, prevent our common stock from again dropping below the minimum bid price requirement, prevent future non-compliance with the listing requirements or allow our common stock to remain listed.
For example, in the United States, the CAN-SPAM Act regulates the transmission and content of commercial emails, and, among other things, obligates the sending of such emails to provide recipients with the ability to opt-out or unsubscribe and other requirements; and the Children’s Online Privacy Protection Act regulates the ability of certain online services to collect or use certain categories of information from children under age 13 absent parental consent.
For example, in the United States, the CAN-SPAM Act regulates the transmission and content of commercial emails, and, among other things, obligates the sending of such emails to provide recipients with the ability to opt-out or unsubscribe and other requirements; and COPPA regulates the ability of certain online services to collect or use certain categories of information from children under age 13 absent parental consent.
A substantial portion of our product development staff, help desk and online sales support operations are located in Israel. As of December 31, 2024, we had 68 full-time employees in Israel. Although substantially all of our sales to date have been made to customers outside Israel, we are directly influenced by the political, economic and military conditions affecting Israel.
A substantial portion of our product development staff, help desk and online sales support operations are located in Israel. As of December 31, 2025, we had 39 full-time employees in Israel. Although substantially all of our sales to date have been made to customers outside Israel, we are directly influenced by the political, economic and military conditions affecting Israel.
As discussed in Note 5 – Goodwill and Intangible Assets, Net in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K, we have experienced impairments in the past, and from time to time, we may be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, resulting in a negative impact on our results of operations.
As discussed in Note 5 – Goodwill and Intangible Assets, Net in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K, we have experienced impairments in the current year and in the past, and from time to time, we may be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill or long-lived assets is determined, resulting in a negative impact on our results of operations.
Washington State recently enacted the “My Health, My Data Act,” which broadly protects the privacy of certain personal health information and generally requires consent for the collection, use, or sharing of any such information.
Washington State in 2023 enacted the “My Health, My Data Act,” which broadly protects the privacy of certain personal health information and generally requires consent for the collection, use, or sharing of any such information.
If the payment of either or both Series of Notes were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the Notes, to repurchase the Notes or to pay cash upon conversions of the Notes.
If the payment of any Series of Notes were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds available to repay the Notes, to repurchase the Notes or to pay cash upon conversions of the Notes.
If we enable or offer AI solutions that are controversial because of their impact on human rights, privacy, employment, intellectual property, or other social issues, we may experience a material adverse effect on our business, results of operations and cash flows.
If we enable or offer AI solutions that have unintended consequences, unintended usage, or are controversial because of their impact on human rights, privacy, employment, intellectual property, or other social issues, we may experience a material adverse effect on our business, results of operations and cash flows.
Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable include a decline in stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in our industry.
Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or long-lived assets may not be recoverable include a decline in stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in our industry.
The terms of our First Lien Convertible Senior Notes due 2029 require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.
The terms of our First Lien Convertible Senior Notes due 2029 and 10.0% Second Lien Senior Subordinated Secured Notes require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.
Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations. As of December 31, 2024, we had federal net operating loss carryforwards (“NOLs”) of $644.0 million which are available to offset future federal taxable income.
Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations. As of December 31, 2025, we had federal net operating loss carryforwards (“NOLs”) of $646.0 million which are available to offset future federal taxable income.
For the years ended December 31, 2024, 2023 and 2022, our allowance for credit losses was $8.6 million, $9.3 million and $9.2 million, respectively . We base our allowance for credit losses on specifically identified credit risks of customers, historical trends, and other information that we believe to be reasonable.
For the years ended December 31, 2025, 2024 and 2023, our allowance for credit losses was $4.5 million, $8.6 million and $9.3 million, respectively . We base our allowance for credit losses on specifically identified credit risks of customers, historical trends, and other information that we believe to be reasonable.
There has been an increased focus in 2024 on laws and regulations related to AI. For example, states, regions and supranational bodies, including the European Union and the United States, have passed or proposed new rules and regulations related to the development and use of AI technology, which cover, among other things, consumer protection, algorithmic accountability, privacy and transparency.
There continues to be an increased focus on laws and regulations related to AI. For example, states, regions and supranational bodies, including the European Union and the United States, have passed or proposed new rules and regulations related to the development and use of AI technology, which cover, among other things, consumer protection, algorithmic accountability, privacy and transparency.
We have begun the process of migrating our technology infrastructure to the public cloud and may in the future be unable to secure additional cloud hosting capacity on commercially reasonable terms or at all.
We are progressing the process of migrating our technology infrastructure to the public cloud and may in the future be unable to secure additional cloud hosting capacity on commercially reasonable terms or at all.
The indenture governing the 2029 Notes restricts our ability to, among other things, pursue certain dispositions, mergers or acquisitions, encumber our intellectual property, incur debt, preferred stock or liens, pay dividends or make other payments in respect of our capital stock, or make investments and engage in certain business transactions.
The indentures governing the 2029 Notes and Second Lien Notes restrict our ability to, among other things, pursue certain dispositions, mergers or acquisitions, encumber our intellectual property, incur debt, preferred stock or liens, pay dividends or make other payments in respect of our capital stock, or make investments and engage in certain business transactions.
Further, various federal, state and foreign government bodies and agencies are highly focused on consumer protection initiatives, particularly in light of the increase in new technologies and services that incorporate or use bots, AI and/or machine learning. For example, the California B.O.T.
Further, various federal, state and foreign government bodies and agencies are highly focused on consumer protection initiatives, particularly in light of the increase in new technologies and services that incorporate or use bots, AI and/or machine learning.
We conduct business in currencies other than the U.S. dollar in Europe, Australia, Japan and Israel. Because we conduct business in currencies other than the U.S. dollar but report our financial results in U.S. dollars, fluctuations in currency exchange rates could adversely affect our results of operations.
Because we conduct business in currencies other than the U.S. dollar but report our financial results in U.S. dollars, fluctuations in currency exchange rates could adversely affect our results of operations.
While we continue to take measures to enhance our information security program and safeguard our products and services, cybersecurity threats and vulnerabilities in desktop computers, mobile phones, smartphones and handheld devices, as well as cyber-attacks, cybersecurity threats, malicious actors and other security incidents continue to evolve in sophistication and frequency industry-wide, and there can be no assurance that we can prevent all security risks.
While we continue to take measures to enhance our information security program and safeguard our products and services, cybersecurity threats and vulnerabilities in desktop computers, mobile phones, smartphones and handheld devices, as well as cyber-attacks, cybersecurity threats, malicious actors and other security incidents continue to evolve in sophistication (including through the use of artificial intelligence by threat actors) and frequency industry-wide, and there can be no assurance that we can prevent all security risks.
In addition, to maintain a listing with Nasdaq, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding minimum stockholders’ equity, and certain corporate governance requirements.
In addition to satisfying the minimum bid price requirement, we must satisfy minimum financial and other continued listing requirements and standards to maintain a listing with Nasdaq, including those regarding minimum stockholders’ equity, and certain corporate governance requirements.
Our ability to expand into international markets is subject to risks, including the possibility that returns on such investments will not be achieved in the near future, or ever, and the difficulty of competing in markets with which we are unfamiliar.
We have also invested in global messaging initiatives and in acquisitions. Our ability to expand into international markets is subject to risks, including the possibility that returns on such investments will not be achieved in the near future, or ever, and the difficulty of competing in markets with which we are unfamiliar.
Potential government regulation related to AI use and ethics may also increase the burden and cost of operations and R&D efforts in this area, and the risk of regulatory compliance issues or 32 other liabilities.
The regulatory landscape regarding AI is evolving globally. Potential government regulation related to AI use and ethics may also increase the burden and cost of operations and R&D efforts in this area, and the risk of regulatory compliance issues or other liabilities.
As with many disruptive innovations, AI presents risks and challenges that could affect its adoption, and therefore our business. AI algorithms and models may be flawed. Datasets may be insufficient or contain biased information. Content generated by AI systems may be offensive, illegal, or harmful.
As with many disruptive innovations, AI presents risks and challenges that could affect its adoption, and therefore our business. AI algorithms and models may be flawed, including in ways that may be difficult to anticipate, detect or control. Datasets may be insufficient or contain biased information. Content generated by AI systems may be offensive, illegal, or harmful.
If we fail to successfully scale our operations and increase productivity, we may be unable to execute our business plan and the market price of our securities could decline. Our business depends significantly on our ability to retain our key personnel, attract new personnel, and manage attrition. Our success depends largely on the continued services of our senior management team.
If we fail to successfully scale our operations and increase productivity, we may be unable to execute our business plan and the market price of our securities could decline. 10 Our business depends significantly on our ability to retain our key personnel, attract new personnel, and manage attrition.
In the past we have experienced losses, we had an accumulated deficit of $991.3 million as of December 31, 2024 and we may incur losses in the future. We have in the past experienced, and we may in the future experience, losses and negative cash flow, either or both of which may be significant.
In the past we have experienced losses, we had an accumulated deficit of $1,058.5 million as of December 31, 2025 and we may incur losses in the future. We have in the past experienced, and we may in the future experience, losses and negative cash flow, either or both of which may be significant.
As of December 31, 2024, $70.3 million of our $644.0 million of federal NOLs were generated in taxable years ending on or before December 31, 2017. If our ability to utilize federal NOLs were limited by Section 382 of the Code, it could result in NOLs generated on or before December 31, 2017, expiring unused.
As of December 31, 2025, $67.7 million of our $646.0 million of federal NOLs were generated in taxable years ending on or before December 31, 2017. If our ability to utilize federal NOLs were limited by Section 382 of the Code, it could result in NOLs generated on or before December 31, 2017, expiring unused.
Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries, Hamas, Hezbollah and other armed groups, including the Israel-Hamas war. Furthermore, Iran has threatened to attack Israel and may be developing nuclear weapons.
Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries, Hamas, Hezbollah and other armed groups, including the Israel-Hamas war and the ongoing conflict between the United States and Israel and Iran. Furthermore, Iran may be developing nuclear weapons.
If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business. • We may not have the ability to raise the funds necessary to settle conversions of our outstanding convertible debt securities and cash-settled warrants in cash or to repurchase our outstanding convertible debt securities upon a fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase of our outstanding convertible debt securities and cash-settled warrants. • Provisions in the indentures for our outstanding convertible debt securities may deter or prevent a business combination that may be favorable to security holders. • Our stock price has been, and may continue to be, highly volatile, which could reduce the value of your investment and subject us to litigation. • If our common stock continues to trade below $1.00, we may fail to meet the continued listing requirements of The Nasdaq Stock Market LLC, which could result in a delisting of our common stock. • Our common stock is traded on more than one market and this may result in price variations. • Provisions in our charter documents, Delaware law and the indentures for our outstanding convertible debt securities could discourage, delay or prevent a takeover that stockholders may consider favorable. 9 Risks Related to Operating our Business The success of our business depends on retention of existing customers and their purchase of additional services, and attracting new customers.
If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business. • We may not have the ability to raise the funds necessary to settle conversions of our outstanding convertible debt securities and cash-settled warrants in cash or to repurchase our outstanding convertible debt securities upon a 9 fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase of our outstanding convertible debt securities and cash-settled warrants. • Provisions in the indentures for our outstanding convertible debt securities may deter or prevent a business combination that may be favorable to security holders. • Our stock price has been, and may continue to be, highly volatile, which could reduce the value of your investment and subject us to litigation. • Our failure to comply with the continued listing requirements of The Nasdaq Global Select Market could result in a delisting of our common stock. • Our common stock is traded on more than one market and this may result in price variations. • Provisions in our charter documents, Delaware law and the indentures for our outstanding convertible debt securities could discourage, delay or prevent a takeover that stockholders may consider favorable.
The loss of one or more members of senior management could have a material adverse effect on our business, results of operations, and financial condition.
Our success depends largely on the continued services of our senior management team. The loss of one or more members of senior management could have a material adverse effect on our business, results of operations, and financial condition.
We have current and potential competitors in many different industries, including: • technology or service providers offering or powering competing digital engagement, contact center, communications, or customer relationship management solutions, such as eGain, Genesys, Nuance, Oracle, Salesforce.com and Twilio; • service providers that offer basic messaging products or services with limited functionality free of charge or at significantly reduced entry level prices; 17 • social media, social listening, messaging, AI, bots, e-commerce, and/or data and data analytics companies, such as Meta Platforms, Google and WeChat, which may leverage their existing or future capabilities and consumer relationships to offer competing B2B solutions; and • customers that develop and manage their messaging solutions in-house.
We have current and potential competitors in many different industries, including: • technology or service providers offering or powering competing digital engagement, contact center, communications, or customer relationship management solutions, such as eGain, Genesys, Oracle, Salesforce.com and Twilio; • AI-native companies and emerging startups that leverage generative AI and LLMs as the core foundation of their architecture, offering highly specialized, autonomous, or automated solutions that may bypass traditional business process workflows or displace established user interfaces; • service providers that offer basic messaging products or services with limited functionality free of charge or at significantly reduced entry level prices; 17 • social media, social listening, messaging, AI, bots, e-commerce, and/or data and data analytics companies, such as Meta Platforms, Google and WeChat, which may leverage their existing or future capabilities and consumer relationships to offer competing B2B solutions; and • customers that develop and manage their messaging solutions in-house.
We recorded a net loss of $134.3 million for the year ended December 31, 2024, and as of December 31, 2024, our accumulated deficit was $991.3 million. We cannot assure you that we can sustain or increase profitability on a quarterly or annual basis in the future.
We recorded a net loss of $67.2 million for the year ended December 31, 2025, and as of December 31, 2025, our accumulated deficit was $1,058.5 million. We cannot assure you that we can sustain or increase profitability on a quarterly or annual basis in the future.
While these developments increase uncertainty with regard to data protection regulation in the U.K., even in their current, substantially similar form, the GDPR and U.K. GDPR can expose businesses to divergent parallel regimes that may be subject to potentially different interpretations and enforcement actions for certain violations and related uncertainty. The GDPR and U.K.
These developments increase uncertainty with regard to data protection regulation in the E.U. and U.K., and could expose businesses to divergent parallel regimes that may be subject to potentially different interpretations and enforcement actions for certain violations and related uncertainty. The GDPR and U.K.
And while technological advancements enable more data and processes, such as mobile computing and mobile payments, they also increase the risk that cyber-attacks and other security incidents will occur. Additionally, the global threat of cyber-attacks has increased in response to the Russia-Ukraine war and the Israel-Hamas war.
And while technological advancements enable more data and processes, such as AI, mobile computing and mobile payments, they also increase the risk that cyber-attacks and other security incidents will occur. Additionally, the global threat of cyber-attacks has increased in response to the Russia-Ukraine war and conflicts in the Middle East involving Hamas, Israel, Iran, other nation-states and related state-sponsored actors.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeA resultant risk assessment produced by the committee is leveraged to inform senior leadership and our Board of Directors on top areas of risk, as well as to shape the security and technology team’s roadmap. 41 Our cybersecurity program includes a number of components, such as: • regular cybersecurity risk assessments, audits, and penetration tests; • policies generally aligned with industry standards such as Information Security Standard (“ISO”) / International Electrotechnical Commission –27001 and the PCI Data Security Standard; • measures to block and prevent certain malicious activity, such as endpoint detection and response controls; • measures to block and prevent certain network attacks, such as firewalls and Distributed Denial of Service mitigation tools; • measures to secure remote access, such as virtual private networks and multi-factor authentication; • cybersecurity training programs for employees, contractors and agents, including regular phishing simulations; • a vulnerability disclosure program to compensate researchers for responsible disclosure of vulnerabilities in our platform; • the maintenance of a Security Incident Response Plan with periodic tabletop testing; and • third-party risk management processes designed to manage risks associated with vendors and suppliers.
Biggest changeOur cybersecurity program includes a number of components, such as: • regular cybersecurity risk assessments, audits, and penetration tests; • policies generally aligned with industry standards such as Information Security Standard (“ISO”) / International Electrotechnical Commission –27001 and the PCI Data Security Standard; • measures to block and prevent certain malicious activity, such as endpoint detection and response controls; • measures to block and prevent certain network attacks, such as firewalls and Distributed Denial of Service mitigation tools; • measures to secure remote access, such as virtual private networks and multi-factor authentication; • cybersecurity training programs for employees, contractors and agents, including regular phishing simulations; • a vulnerability disclosure program to compensate researchers for responsible disclosure of vulnerabilities in our platform; • the maintenance of a Security Incident Response Plan with periodic tabletop testing; and • third-party risk management processes designed to manage risks associated with vendors and suppliers. 41 The goal of the Company’s information security program is to manage risks in a prioritized fashion; however, control gaps and/or their related control effectiveness, resource constraints, and execution failure can pose cybersecurity risk to the Company.
These reports include updates on the Company’s cyber risks and threats, the status of projects to strengthen its information security systems, assessments of the cybersecurity program and the emerging threat landscape. The cybersecurity program is periodically evaluated by internal and external experts with the results of those reviews reported to senior management and the Board of Directors.
These reports include updates on the Company’s cyber risks and threats, the status of projects to strengthen its information security systems, assessments of the cybersecurity program and the emerging threat landscape. The 42 cybersecurity program is periodically evaluated by internal and external experts with the results of those reviews reported to senior management and the Board of Directors.
As of the date of this report and for the time period of January 1, 2024, through December 31, 2024, the Company is not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition.
As of the date of this report and for the time period of January 1, 2025, through December 31, 2025, the Company is not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition.
Our Board of Directors takes an active role in overseeing the management of cybersecurity risks to the Company. The information security team provides periodic reports to the Cybersecurity and Technology Committee of the Board, as well as to the full Board, the Company’s Chief Executive Officer and other members of senior management, as appropriate.
Our Board of Directors takes an active role in overseeing the management of cybersecurity risks to the Company. The information security team provides periodic reports to the Board, the Company’s Chief Executive Officer and other members of senior management, as appropriate.
The Company also regularly engages with external parties to perform: • periodic cybersecurity assessments, such as maturity assessments against the National Institute of Standards and Technology Cybersecurity Framework; • managed detection and response for certain public cloud environments; • penetration testing; • continuous proactive threat hunting; • cyber threat intelligence services including dark web monitoring; and • audits against industry standards including Systems and Organization Controls 2 (“SOC 2”), ISO 27001, PCI, and the HITRUST CST.
The Company also regularly engages with external parties to perform: • periodic cybersecurity assessments, such as maturity assessments against the National Institute of Standards and Technology Cybersecurity Framework; • managed detection and response for certain public cloud environments; • penetration testing; and • audits against industry standards including Systems and Organization Controls 2 (“SOC 2”), ISO 27001, PCI, and the HITRUST CST.
This program is managed by the Security Risk Committee, chaired by the Chief Security Officer (“CSO”), as well as representative members from security, operations, and internal audit leadership. The committee meets at least twice annually.
This program is managed by the Security Risk Committee, chaired by the Head of Security (“HOS”), as well as representative members from security, operations, and internal audit leadership. The committee meets at least twice annually.
Governance Our information security team is led by our CSO. Mr. Friedman has held the position of CSO at organizations across multiple industries, including financial services, for over 13 years and holds industry security certifications including Certified 42 Information Systems Security Professional (“CISSP”), Certified Information Systems Auditor (“CISA”), Certified Information Security Manager, and Certified in Risk and Information Systems Control.
Governance Our information security team is led by our HOS. Mr. Tinwala has over 15 years of information security experience at organizations across multiple industries, including financial services, and holds industry security certifications including Certified Information Systems Security Professional (“CISSP”) and Certified Information Systems Auditor (“CISA”).
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The goal of the Company’s information security program is to manage risks in a prioritized fashion; however, control gaps and/or their related control effectiveness, resource constraints, and execution failure can pose cybersecurity risk to the Company.
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A resultant risk assessment produced by the committee is leveraged to inform senior leadership and our Board of Directors on top areas of risk, as well as to shape the security and technology team’s roadmap.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2024, we utilize third-party data centers in the United States, Australia and Europe. We believe that our current facilities properties are in good condition and provide adequate capacity to meet our current needs. If required, we believe that we will be able to obtain suitable additional space on commercially reasonable terms.
Biggest changeAs of December 31, 2025, we utilize third-party data centers in the United States, Australia and Europe. We believe that our current facilities properties are in good condition and provide adequate capacity to meet our current needs. If required, we believe that we will be able to obtain suitable additional space on commercially reasonable terms.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeNotwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate by reference this Annual Report on Form 10-K or future filings made by the Company under those statutes, the Stock Performance Graph above is not deemed filed with the SEC, is not deemed soliciting material and shall not be deemed incorporated by reference into any of those prior filings or into any future filings made by us under those statutes, except to the extent that we specifically incorporate such information by reference into a previous or future filing, or specifically request that such information be treated as soliciting material, in each case under those statutes.
Biggest change(3) Stockholder returns over the indicated period should not be considered indicative of future stockholder returns. 44 Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate by reference this Annual Report on Form 10-K or future filings made by the Company under those statutes, the Stock Performance Graph above is not deemed filed with the SEC, is not deemed soliciting material and shall not be deemed incorporated by reference into any of those prior filings or into any future filings made by us under those statutes, except to the extent that we specifically incorporate such information by reference into a previous or future filing, or specifically request that such information be treated as soliciting material, in each case under those statutes.
We intend to retain earnings, if any, to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Issuer Purchases of Equity Securities. There were no repurchases of the Company’s equity securities during the three months ended December 31, 2024. Stock Performance Graph.
We intend to retain earnings, if any, to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Issuer Purchases of Equity Securities. There were no repurchases of the Company’s equity securities during the three months ended December 31, 2025. Stock Performance Graph.
(2) The graph assumes that $100 was invested at the market close on December 31, 2019 in LivePerson’s Common Stock, in the Standard & Poor’s SmallCap 600 Index and in the Standard & Poor’s Information Technology Index, and that all dividends were reinvested. No cash dividends have been declared on LivePerson’s Common Stock.
(2) The graph assumes that $100 was invested at the market close on December 31, 2020 in LivePerson’s Common Stock, in the Standard & Poor’s SmallCap 600 Index and in the Standard & Poor’s Information Technology Index, and that all dividends were reinvested. No cash dividends have been declared on LivePerson’s Common Stock.
The graph depicted below compares the annual percentage changes in LivePerson’s cumulative total stockholder return with the cumulative total return of the Standard & Poor’s SmallCap 600 Index and the Standard & Poor’s Information Technology Index. 44 ___________________________ (1) The graph covers the period from December 31, 2019 to December 31, 2024.
The graph depicted below compares the annual percentage changes in LivePerson’s cumulative total stockholder return with the cumulative total return of the Standard & Poor’s SmallCap 600 Index and the Standard & Poor’s Information Technology Index. ___________________________ (1) The graph covers the period from December 31, 2020 to December 31, 2025.
As of February 28, 2025, there were approximately 209 holders of record of our common stock. Dividends. We have not declared or paid any cash dividends on our capital stock since our inception.
As of March 6, 2026, there were approximately 127 holders of record of our common stock. Dividends. We have not declared or paid any cash dividends on our capital stock since our inception.
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(3) Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.

Item 7. Management's Discussion & Analysis

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

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Biggest changeOur net loss was $100.4 million, which included the effect of non-cash expenses related to depreciation of $32.6 million, amortization of purchased intangible assets and finance leases of $22.2 million, amortization of debt issuance costs of $4.0 million, allowance for credit losses of $3.3 million, a goodwill impairment of $11.9 million, intangible and other assets impairment of $8.0 million related to our WildHealth reporting unit and internal-use software development costs, a $4.6 million change in fair value of contingent consideration, and stock-based compensation of $11.9 million, partially offset by a gain on divestiture of $17.6 million and a gain on repurchase of convertible notes of $7.2 million.
Biggest changeOur net loss was $67.2 million, which includes the effect of non-cash expenses related to goodwill impairment of $41.6 million, depreciation and amortization of $22.0 million, non-cash interest expense of $15.3 million, stock-based compensation of $14.3 million, and amortization of debt issuance costs and accretion of discount of $7.6 million.
The Company may from time to time, subject to board authorization and any applicable restrictions under contracts to which it may be or become a party, depending upon market conditions and the Company’s financing needs, use available funds to refinance or repurchase its outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms the Company deems appropriate (which, in the case of debt securities, may be below par) and subject to the Company’s cash requirements for other purposes and other factors management deems relevant.
The Company may from time to time, subject to board authorization and any applicable restrictions under contracts to which it may be or become a party, depending upon market conditions and the Company’s financing needs, use available funds to refinance or repurchase its outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms the Company deems 53 appropriate (which, in the case of debt securities, may be below par) and subject to the Company’s cash requirements for other purposes and other factors management deems relevant.
The critical accounting estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below. Revenue Recognition The majority of our revenue is generated from hosted service revenues, including platform access, usage and related professional services .
The critical accounting policies, estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below. Revenue Recognition The majority of our revenue is generated from hosted service revenues, including platform access, usage and related professional services .
Net cash used in operating activities was further driven by a decrease in accounts payable, accrued expenses and other current liabilities of $44.5 million and a decrease in deferred revenue of $23.1 million, partially offset by a decrease in accounts receivable of $37.5 million, a decrease in prepaid expenses and other current assets of $7.3 million, and a decrease in contract acquisition costs of $3.3 million.
Net cash used in operating activities was further driven by a decrease in accounts payable, accrued expenses and other current liabilities of $44.5 million and a decrease in 52 deferred revenue of $23.1 million, partially offset by a decrease in accounts receivable of $37.5 million, a decrease in prepaid expenses and other current assets of $7.3 million, and a decrease in contract acquisition costs of $3.3 million.
Cash Flows from Financing Activities Net cash provided by financing activities was $15.0 million in the year ended December 31, 2024 which was primarily driven by proceeds from issuance of 2029 Notes of $50.0 million, and proceeds from the Delayed Draw Notes of $50.0 million.
Net cash provided by financing activities was $15.0 million in the year ended December 31, 2024, which was primarily driven by proceeds from issuance of 2029 Notes of $50.0 million, and proceeds from the Delayed Draw Notes of $50.0 million.
Our net loss was $134.3 million, which includes the effect of non-cash expenses related to depreciation of $30.3 million, amortization of purchased intangible assets and finance leases of $12.0 million, change in the fair value of Warrants of $12.2 million, PIK interest expense of $5.8 million, amortization of debt issuance costs and accretion of discount of $4.5 million, allowance for credit losses of $15.0 million, and stock-based compensation of $22.0 million.
Our net loss was $134.3 million, which includes the effect of non-cash expenses related to depreciation and amortization of $30.3 million, amortization of intangible assets and finance leases of $12.0 million, change in the fair value of Warrants of $12.2 million, non-cash interest expense of $5.8 million, amortization of debt issuance costs and accretion of discount of $4.5 million, allowance for credit losses of $15.0 million, and stock-based compensation of $22.0 million.
Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in “Risk Factors.” This section of this Form 10-K generally discusses 2024 and 2023 items and year over year comparisons between 2024 and 2023.
Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in “Risk Factors.” This section of this Form 10-K generally discusses 2025 and 2024 items and year over year comparisons between 2025 and 2024.
Discussions of 2022 items and the year over year comparisons between 2023 and 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 the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Discussions of 2023 items and the year over year comparisons between 2024 and 2023 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 the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal. Currently, we have no liabilities recorded for these agreements as of December 31, 2024. Contractual Obligations Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business.
As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal. Currently, we have no liabilities recorded for these agreements as of December 31, 2025. Contractual Obligations Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business.
Hosted Services Revenue Hosted services revenue is reported at the amount that reflects the ultimate consideration expected to be received and primarily consist of fees that provide customers access to the LivePerson Platform. We have determined such access represents a stand-ready service provided continually throughout the contract term.
Hosted Services Revenue Hosted services revenue is reported at the amount that reflects the ultimate consideration expected to be received and primarily consists of fees that provide customers access to the LivePerson Platform. We have determined such access represents a stand-ready service provided continually throughout the contract term.
Proceeds of the 2029 Notes may be used only to (i) pay interest, or cash settle, the 2029 Notes, (ii) cash settle the Warrants, (iii) exchange, repurchase, redeem, replace or otherwise refinance 2026 Notes (or refund or replenish cash of the Company or any of its subsidiaries used to do so after May 13, 2024) or (iv) pay or reimburse certain fees, costs and expenses related to the foregoing and the other transactions contemplated by the Exchange and Purchase Agreement as amended or otherwise modified from time to time.
Proceeds of the 2029 Notes may be used only to (i) pay interest, or cash settle, the 2029 Notes, (ii) cash settle the Warrants, (iii) exchange, repurchase, redeem, replace or otherwise refinance 2026 Notes (or refund or replenish cash of the Company or any of its subsidiaries used to do so), or (iv) pay or reimburse certain fees, costs and expenses related to the foregoing and the other transactions contemplated by the Exchange and Purchase Agreement as amended or otherwise modified from time to time.
This impairment consisted of non-cash charges of $23.7 million related to developed technology, $11.0 million related to customer relationships, $0.5 million related to trademarks, $9.5 million related to property and equipment - internal-use software development costs, and $2.2 million attributable to the intangible assets associated with our WildHealth reporting unit, which was fully divested during 2024.
Impairment of intangibles and other assets was $46.9 million and consisted of non-cash charges of $23.7 million related to developed technology, $11.0 million related to customer relationships, $0.5 million related to trademarks, $9.5 million related to property and equipment - internal-use software development costs, and $2.2 million attributable to the intangible assets associated with our WildHealth reporting unit, which was fully divested during 2024.
Convertible Senior Notes Convertible Notes We account for convertible debt and related transactions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 470, Debt , ASC 815, Derivatives and Hedging , and ASC 480, Distinguishing Liabilities from Equity .
Senior Notes and Warrants Convertible Senior Notes due 2029 We account for convertible debt and related transactions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 470, Debt , ASC 815, Derivatives and Hedging , and ASC 480, Distinguishing Liabilities from Equity .
Restructuring Costs We maintain restructuring initiatives to realign our cost structure with our current business model, in which we have flattened the organization to align to more efficient sales and service support.
Restructuring Costs We maintain restructuring initiatives to realign our cost structure with our current business model, in which we have flattened the Company’s organizational structure to align to more efficient sales and service support.
We evaluate convertible debt instruments and related transactions at inception to determine if those contracts include embedded features that should be bifurcated as an embedded derivative. The 2029 Notes issued during the current year are accounted for as a liability. The transaction was accounted for as a debt extinguishment and a gain on extinguishment was recorded.
We evaluate convertible debt instruments and related transactions at inception to determine if those contracts include embedded features that should be bifurcated as an embedded derivative. The 2029 Notes issued during 2024 were accounted for as a liability. The transaction was accounted for as a debt extinguishment and a gain on extinguishment was recorded.
Warrants The cash-settled and share-settled warrants (together, “Warrants”) issued by the Company are classified as current liabilities in the consolidated balance sheets and recorded at their fair value. Changes in fair value are recorded in the Company’s consolidated statements of operations.
Warrants The cash-settled and share-settled warrants (together, “Warrants”) issued by the Company are classified as current liabilities in the consolidated balance sheets and recorded at their fair value. Changes in fair value are recorded in Other income (expense), net in the Company’s consolidated statements of operations.
Our consolidated effective tax rate was impacted by the statutory income tax rates applicable to each of the jurisdictions in which we operate, valuation allowance recorded against losses generated in the U.S. and Germany and changes to unrecognized tax benefits in Israel.
Our consolidated effective tax rate was impacted by the statutory income tax rates applicable to each of the jurisdictions in which we operate, valuation allowance recorded against losses generated in the U.S. and Germany, a tax benefit related to an increase in tax receivables, and changes to unrecognized tax benefits in Israel.
Historically, we have incurred net losses and negative cash flows for various quarterly and annual periods since our inception, including during numerous quarters and annual periods in the past several years. As of December 31, 2024, we had an accumulated deficit of $991.3 million.
Historically, we have incurred net losses and negative cash flows for various quarterly and annual periods since our inception, including during numerous quarters and annual periods in the past several years. As of December 31, 2025, we had an accumulated deficit of $1,058.5 million.
In addition, the 2026 Notes and the 2029 Notes are subject to repurchase at the option of holders if the Company undergoes a “fundamental change”, and the 2026 Notes and the 2029 Notes are subject to events of default customary for notes issued in connection with similar transactions, which could result in the acceleration of amounts owed.
In addition, the 2026 Notes, the 2029 Notes and the Second Lien Notes are subject to repurchase at the option of holders if the Company undergoes a “Fundamental Change” (as defined in the indentures governing the 2026 Notes, the 2029 Notes and the Second Lien Notes, as applicable), and the 2026 Notes, the 2029 Notes and the Second Lien Notes are subject to events of default customary for notes issued in connection with similar transactions, which could result in the acceleration of amounts owed.
Cost of Revenue Cost of revenue consists of compensation costs relating to employees who provide customer service to our customers, compensation costs relating to our network support staff, outside labor provider costs, the cost of supporting our server and network infrastructure, and allocated occupancy costs and related overhead.
Cost of Revenue (exclusive of depreciation and amortization shown separately below) Cost of revenue consists of compensation costs relating to employees who provide customer service to our customers, compensation costs relating to our network support staff, outside labor provider costs, the cost of supporting our server and network infrastructure, and allocated occupancy costs and related overhead.
See Note 8 – Convertible Senior Notes, Net of Current Portion, Capped Call Transactions, and Warrants and Note 10 - Fair Value Measurements in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information.
See Note 8 – Senior Notes, Capped Call Transactions, Warrants and Preferred Stock and Note 9 - Fair Value Measurements in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information.
In connection with the annual impairment test completed as of October 1, 2024 using the quantitative “Step 1” assessment, we determined the fair value of our reporting unit, using both an income approach and a market approach.
In connection with the annual impairment test performed as of October 1, 2025 and the interim test performed as of December 31, 2025 using the quantitative “Step 1” assessment, we determined the fair value of our reporting unit, using both an income approach and a market approach.
Net cash used in operating activities was further driven by a decrease in deferred revenue of $3.2 million, a decrease in other liabilities of $7.8 million, and an increase in prepaid expenses and other current assets of $3.4 million, partially offset by an increase in accounts payable, accrued expenses and other current liabilities of $10.8 million, a decrease in contract acquisition costs of $5.0 million and a decrease in accounts receivable of $1.5 million.
Net cash used in operating activities was further driven by a decrease in accounts payable, accrued expenses and other current liabilities of $19.8 million, a decrease in deferred revenue of $4.3 million, and a decrease in other liabilities of $3.7 million, partially offset by a decrease in contract acquisition costs of $10.4 million and a decrease in prepaid expenses and other current assets of $3.6 million.
We have incurred significant expenses to develop our technology and services, to hire employees in our customer service and sales and marketing departments, and for the amortization of purchased intangible assets, as well as acquisition costs and non-cash compensation costs.
We have incurred significant expenses to develop our technology and services and to hire employees in our customer service and sales and marketing departments, as well as acquisition costs and non-cash compensation costs.
Cash Flows from Investing Activities Net cash used in investing activities was $28.2 million in the year ended December 31, 2024 which was primarily driven by purchases of property and equipment and capitalization of internally developed software.
Net cash used in investing activities was $28.2 million in the year ended December 31, 2024 which was primarily driven by purchases of property and equipment and capitalization of internal-use software development costs.
Revenue retention for our enterprise and mid-market customers on the LivePerson Platform, which represents the trailing-twelve-month change in total revenue from existing customers after upsells, downsells and attrition, was approximately 82%, below our target range of 105% to 115% in 2024, a decline from the 95% retention rate in 2023 and an increase from the 79% retention rate for the trailing twelve months ended September 30, 2024.
Revenue retention for our enterprise and mid-market customers on the LivePerson Platform, which represents the trailing-twelve-month change in total revenue from existing customers after upsells, downsells and attrition, was 78%, below our long-range target of 105% to 115%, a decline from the 82% retention rate in 2024.
Impairment of Goodwill Year Ended December 31, 2024 2023 % Change (Dollars in thousands) Impairment of goodwill $ 60,551 $ 11,895 409% Percentage of total revenue 19 % 3% Goodwill impairment was $60.6 million for the year ended December 31, 2024, primarily related to goodwill impairment of $56.9 million as a result of our impairment test on October 1, 2024, and to a lesser extent, goodwill impairment of $3.6 million related to the WildHealth business, which was sold during the second quarter of 2024.
Goodwill impairment was $60.6 million for the year ended December 31, 2024, primarily related to goodwill impairment of $56.9 million as a result of our impairment test on October 1, 2024, and to a lesser extent, goodwill impairment of $3.6 million related to the WildHealth business, which was sold during the second quarter of 2024.
See Note 11 – Commitments and Contingencies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding our purchase obligations. 53 We also lease certain facilities under non-cancellable operating lease arrangements that expire at various dates through 2025.
We also lease certain facilities under non-cancelable operating lease arrangements that expire at various dates through 2027. See Note 1 – Description of Business and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding our lease obligations.
Provision For Income Taxes Year Ended December 31, 2024 2023 % Change (Dollars in thousands) Provision for income taxes $ 2,735 $ 4,163 (34)% We had a provision for income taxes of $2.7 million and $4.2 million for the years ended December 31, 2024 and 2023, respectively.
Provision For Income Taxes Year Ended December 31, 2025 2024 $ Change % Change (Dollars in thousands) Provision for income taxes $ 3,452 $ 2,735 $ 717 26% We had a provision for income taxes of $3.5 million and $2.7 million for the years ended December 31, 2025 and 2024, respectively.
Year Ended December 31, 2024 2023 % Change (Dollars in thousands) Restructuring costs $ 11,139 $ 22,664 (51) % Percentage of total revenue 4 % 6 % Restructuring costs decreased by 51% to $11.1 million for the year ended December 31, 2024, from $22.7 million for the year ended December 31, 2023.
Year Ended December 31, 2025 2024 $ Change % Change (Dollars in thousands) Restructuring costs $ 11,667 $ 11,139 $ 528 5 % Percentage of total revenue 5 % 4 % Restructuring costs increased by 5% to $11.7 million for the year ended December 31, 2025, from $11.1 million for the year ended December 31, 2024.
Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from their use and eventual disposition.
The carrying values are adjusted, if necessary, for the result of each impairment test prior to performing the next test. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from their use and eventual disposition.
Net cash used in operating activities was $19.8 million in the year ended December 31, 2023.
Net cash used in operating activities was $15.1 million in the year ended December 31, 2024.
Liquidity and Capital Resources The following describes the Company’s cash flows for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (In thousands) Net cash used in operating activities $ (15,130) $ (19,765) Net cash used in investing activities (28,216) (18,842) Net cash provided by (used in) financing activities 14,972 (151,142) As of December 31, 2024, we had $183.2 million in cash, cash equivalents, and restricted cash, a decrease of $29.7 million from December 31, 2023.
Liquidity and Capital Resources The following describes the Company’s cash flows for the years ended December 31, 2025 and 2024: Year Ended December 31, 2025 2024 (In thousands) Net cash used in operating activities $ (30,435) $ (15,130) Net cash used in investing activities (13,727) (28,216) Net cash (used in) provided by financing activities (45,503) 14,972 As of December 31, 2025, we had $95.0 million in cash and cash equivalents, a decrease of $88.2 million from December 31, 2024.
W e cannot assure you that additional funding will be available on favorable terms, when needed, if at all. If we are unable to obtain any necessary financing, we may be required to further reduce the scope of our planned sales and marketing and product development efforts, which could materially adversely affect our financial condition and operating results.
If we are unable to obtain any necessary financing, we may be required to further reduce the scope of our planned sales and marketing and product development efforts, which could materially adversely affect our financial condition and operating results.
See Note 8 – Convertible Senior Notes, Net of Current Portion, Capped Call Transactions, and Warrants for additional information.
See Note 8 – Senior Notes, Capped Call Transactions, Warrants and Preferred Stock for additional information.
Impairment of Intangibles and Other Assets Year Ended December 31, 2024 2023 % Change (Dollars in thousands) Impairment of intangibles and other assets $ 46,872 $ 7,974 488% Percentage of total revenue 15 % 2% Impairment of intangibles and other assets was $46.9 million for the year ended December 31, 2024.
Impairment of Intangibles and Other Assets Year Ended December 31, 2025 2024 $ Change % Change (Dollars in thousands) Impairment of intangibles and other assets $ 2,108 $ 46,872 $ (44,764) (96)% Percentage of total revenue 1 % 15% Impairment of intangibles and other assets was $2.1 million for the year ended December 31, 2025, related to pending patents.
The features do not have material values as of December 31, 2024, but they may have value in the future, should the estimates change, with any change in fair value recorded in the Company’s consolidated statements of operations.
The features do not have material values as of December 31, 2025, but they may have value in the future, should the estimates change, with any change in fair value recorded in the Company’s consolidated statements of operations. Second Lien Senior Subordinated Secured Notes due 2029 We issued Second Lien Notes as part of our troubled debt restructuring in 2025.
This decrease in expense is primarily attributable to a decrease in outsourced labor and related costs of $20.1 million, a decrease in software and hosting expenses of $13.8 million, a decrease in salary and related employee expenses of $7.1 million due to attrition from the prior year, and a decrease in amortization expense of $9.5 million related to purchased intangible assets and finance leases. 48 Sales and Marketing Sales and marketing expenses consist of compensation and related expenses for sales and marketing personnel, as well as advertising, marketing events, public relations, trade show exhibit expenses and allocated occupancy costs and related overhead.
This decrease in expense is primarily attributable to a decrease in salary, stock-based compensation and employee-related expenses of $6.7 million due to restructuring activities, and a decrease in business services and outsourced expenses of $5.1 million, partially offset by an increase in software and hosting expenses of $5.3 million. 48 Sales and Marketing Sales and marketing expenses consist of compensation and related expenses for sales and marketing personnel, as well as advertising, marketing events, public relations, trade show exhibit expenses and allocated occupancy costs and related overhead.
Year Ended December 31, 2024 2023 % Change (Dollars in thousands) General and administrative $ 80,008 $ 91,619 (13) % Percentage of total revenue 26 % 23 % Headcount (at period end) 132 136 (3) % General and administrative expenses decreased by 13% to $80.0 million for the year ended December 31, 2024, from $91.6 million for the year ended December 31, 2023.
Year Ended December 31, 2025 2024 $ Change % Change (Dollars in thousands) General and administrative $ 44,441 $ 79,761 $ (35,320) (44) % Percentage of total revenue 18 % 26 % Headcount (at period end) 101 132 (23) % General and administrative expenses decreased by 44% to $44.4 million for the year ended December 31, 2025, from $79.8 million for the year ended December 31, 2024.
Pursuant to some of these agreements, we agree to indemnify certain customers from and against certain types of claims and losses suffered or incurred by them as a result of using our products. We also have agreements whereby certain of our officers and our directors are indemnified for certain events or occurrences.
Indemnifications We enter into service and license agreements in the ordinary course of business. Pursuant to some of these agreements, we agree to indemnify certain customers from and against certain types of claims and losses suffered or incurred by them as a result of using our products.
Net cash used in investing activities was $18.8 million in the year ended December 31, 2023 which was primarily driven by purchases of property and equipment and capitalization of internally developed software, partially offset by the proceeds from the sale of Kasamba.
Cash Flows from Investing Activities Net cash used in investing activities was $13.7 million in the year ended December 31, 2025 which was primarily driven by purchases of property and equipment and capitalization of internal-use software development costs.
However, we cannot assure you that we will not require additional funds prior to such time, and we would then seek to sell additional equity or debt securities through public financings, or seek alternative sources of financi ng. 52 Further, we continue to plan to refinance the remaining balance of the 2026 Notes on or prior to their maturity.
However, we cannot assure you that we will not require additional funds prior to such time, and we would then seek to sell additional equity or debt securities through public financings, or seek alternative sources of financi ng. W e cannot assure you that additional funding will be available on favorable terms, when needed, if at all.
Year Ended December 31, 2024 2023 % Change (Dollars in thousands) Product development $ 99,917 $ 124,792 (20) % Percentage of total revenue 32 % 31 % Headcount (at period end) 405 468 (13) % 49 Product development costs decreased by 20% to $99.9 million for the year ended December 31, 2024, from $124.8 million for the year ended December 31, 2023.
Year Ended December 31, 2025 2024 % Change % Change (Dollars in thousands) Product development $ 54,706 $ 79,784 $ (25,078) (31) % Percentage of total revenue 22 % 26 % Headcount (at period end) 239 405 (41) % 49 Product development costs decreased by 31% to $54.7 million for the year ended December 31, 2025, from $79.8 million for the year ended December 31, 2024.
Year Ended December 31, 2024 2023 % Change (Dollars in thousands) Cost of revenue $ 93,404 $ 142,823 (35) % Percentage of total revenue 30 % 36 % Headcount (at period end) 187 211 (11) % Cost of revenue decreased by 35% to $93.4 million for the year ended December 31, 2024, from $142.8 million for the year ended December 31, 2023 .
Year Ended December 31, 2025 2024 $ Change % Change (Dollars in thousands) Cost of revenue $ 69,392 $ 77,395 $ (8,003) (10) % Percentage of total revenue 28 % 25 % Headcount (at period end) 146 187 (22) % Cost of revenue decreased by 10% to $69.4 million for the year ended December 31, 2025, from $77.4 million for the year ended December 31, 2024 .
Year Ended December 31, 2024 2023 % Change (Dollars in thousands) Sales and marketing $ 100,475 $ 125,677 (20) % Percentage of total revenue 32 % 31 % Headcount (at period end) 224 328 (32) % Sales and marketing expenses decreased by 20% to $100.5 million for the year ended December 31, 2024, from $125.7 million for the year ended December 31, 2023.
Year Ended December 31, 2025 2024 $ Change % Change (Dollars in thousands) Sales and marketing $ 75,800 $ 97,337 $ (21,537) (22) % Percentage of total revenue 31 % 31 % Headcount (at period end) 129 224 (42) % Sales and marketing expenses decreased by 22% to $75.8 million for the year ended December 31, 2025, from $97.3 million for the year ended December 31, 2024.
Included in hosted services is a decrease of $16.6 million in revenue that is variable based on interactions and usage for the year ended December 31, 2024 . In addition, Professional Services decreased by $18.2 million for the year ended December 31, 2024.
Hosted services decreased by $54.1 million, primarily driven by customer cancellations and a decrease in customer commitments upon renewal of existing contracts. Included in hosted services is a decrease of $12.0 million in revenue that is variable based on interactions and usage for the year ended December 31, 2025 .
This decrease was primarily attributable to a decrease in salary and employee-related expenses of $14.0 million due to attrition from the prior year, a decrease in marketing expenses of $5.7 million, a decrease in software and hosting expenses of $3.6 million, and a decrease in business services, outsourced labor and related costs of $1.9 million.
This decrease was primarily attributable to a decrease in salary, stock-based compensation expense and employee-related expenses of $13.0 million due to restructuring activities, a decrease in marketing expenses of $3.3 million, a decrease in software and hosting expenses of $3.0 million, and a decrease in business services and outsourced expenses of $2.2 million.
This decrease is primarily related to a decrease in business services and outsourced labor of $13.9 million, a decrease in salary and employee-related expenses of $10.6 million due to attrition from the prior year , and a decrease in software and hosting expenses of $1.4 million, partially offset by an increase in stock compensation expense of $1.0 million.
This is primarily attributable to a decrease in bad debt expense of $14.1 million, a decrease in legal and insurance costs of $12.1 million, a decrease in salary, stock-based compensation expense and employee-related expenses of $4.8 million due to restructuring activities, a decrease in leadership transition costs of $3.0 million, and a decrease in business services and outsourced expenses of $1.0 million, partially offset by an increase in software expenses of $0.5 million.
In addition, we may require additional funds in order to fund more rapid expansion, to develop new or enhanced services or products or to invest in or acquire complementary businesses, technologies, services or products. The indenture governing the 2029 Notes includes a financial covenant that requires the Company to maintain a minimum cash balance of $60 million at all times.
In addition, we may require additional funds in order to fund more rapid expansion, to develop new or enhanced services or products or to invest in or acquire complementary businesses, technologies, services or products.
Interest expense represents interest expense from our convertible senior notes, amortization of debt issuance costs and debt discount. Interest income represents interest earned from cash deposits.
Refer to Note 5 - Goodwill and Intangible Assets, net, for additional information about the impairments. Total Other Income, net Interest expense represents interest expense from our senior notes, and amortization of debt issuance costs and debt discount. Interest income represents interest earned from cash deposits.
Year Ended December 31, 2024 2023 % Change (Dollars in thousands) Interest expense $ (14,486) $ (4,882) (197)% Interest income 5,860 9,551 (39)% Gain on debt extinguishment 73,083 7,200 915% Other (expense) income, net (12,800) 3,234 (496)% Total other income, net $ 51,657 $ 15,103 242% Total other income, net increased by $36.6 million to income of $51.7 million for the year ended December 31, 2024 from $15.1 million for the year ended December 31, 2023.
Year Ended December 31, 2025 2024 $ Change % Change (Dollars in thousands) Interest expense $ (31,530) $ (14,486) $ (17,044) (118)% Interest income 4,751 5,860 (1,109) (19)% Gain on troubled debt restructuring 27,720 — 27,720 —% Gain on debt extinguishment — 73,083 (73,083) (100)% Other income (expense), net 13,977 (12,800) 26,777 209% Total other income, net $ 14,918 $ 51,657 $ (36,739) (71)% Total other income, net decreased by $36.7 million to $14.9 million for the year ended December 31, 2025 from $51.7 million for the year ended December 31, 2024.
Year Ended December 31, 2024 2023 % Change (Dollars in thousands) Revenue $ 312,474 $ 401,983 (22) % Revenue decreased by 22% to $312.5 million for the year ended December 31, 2024, from $402.0 million for the year ended December 31, 2023. Hosted services decreased by $71.3 million, primarily driven by customer cancellations and downsells.
Year Ended December 31, 2025 2024 $ Change % Change (Dollars in thousands) Revenue $ 243,742 $ 312,474 $ (68,732) (22) % Revenue decreased by 22% to $243.7 million for the year ended December 31, 2025, from $312.5 million for the year ended December 31, 2024.
These proceeds were partially offset by full repayment of the 2024 Notes of $72.5 million, repurchases of the 2026 Notes of $4.9 million, and payment of debt issuance costs of $7.6 million. Net cash used by financing activities was $151.1 million in the year ended December 31, 2023, driven primarily by the repurchase of the 2024 Notes of $149.8 million.
These proceeds were partially offset by full repayment of the 0.750% Convertible Senior Notes due 2024 (the “2024 Notes”) of $72.5 million, repurchases of the 2026 Notes of $4.9 million, and payment of debt issuance costs of $7.6 million.
See Note 9 – Leases in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding our lease obligations.
As of December 31, 2025, the value of our non-cancelable unconditional purchase obligations was $74.4 million, primarily relating to contracts with vendors in connection with IT infrastructure. See Note 10 – Commitments and Contingencies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information regarding our purchase obligations.
The remaining amount of total other income, net fluctuation is primarily attributable to interest income on our money market accounts, and the impact of currency rate fluctuations.
These were partially offset by a $13.2 million favorable adjustment to the fair value of our Warrants in the current period, compared to an unfavorable adjustment of $12.2 million in the comparable 51 period. The remaining amount of total other income, net, is attributable to interest income on our money market accounts, and the impact of currency rate fluctuations.
This decrease is primarily attributable to a $6.9 million decrease in IT infrastructure contract termination costs. In addition, severance and other associated costs decreased by $4.6 million due to fewer reductions in our workforce compared to the year ended December 31, 2023. Refer to Note 13 – Restructuring for additional information about the restructuring initiative.
This increase is attributable to a reversal of IT contract termination costs of $1.2 million in the comparable year which did not recur in the current year, partially offset by a decrease in severance and other associated costs of $0.7 million due to fewer reductions in our workforce compared to the year ended December 31, 2024.
We anticipate that our current cash and cash equivalents and cash from operations will be sufficient to fund our capital expenditures for at least the next 12 months. Indemnifications We enter into service and license agreements in the ordinary course of business.
We do not engage in off-balance sheet financing arrangements. Capital Expenditures Total capital expenditures in 2025 were $12.1 million, primarily related to internal-use software development costs. We anticipate that our current cash and cash equivalents and cash from operations will be sufficient to fund our capital expenditures for at least the next 12 months.
Refer to Note 5 - Goodwill and Intangible Assets, net, for additional information about the impairments. 50 Total Other Income, net Total other income, net consists primarily of gain on debt extinguishment, fair value adjustments for our Warrants, foreign currency gains and losses and loss from our equity method investment.
Other income (expense), net consists primarily of fair value adjustments for our Warrants and foreign currency gains and losses.
These items were partially offset by an increase of $12.5 million in stock-based compensation expense driven by settlement of earn-outs in 2023. Product Development Our product development expenses consist of compensation and related expenses for product development personnel as well as allocated occupancy costs and related overhead and outsourced labor and expenses for testing new versions of our software.
In addition, the Company recognized $1.8 million of post-closing adjustments related to the Kasamba divestiture in 2024 that did not recur in 2025. Product Development Our product development expenses consist of compensation and related expenses for product development personnel as well as allocated occupancy costs and related overhead and outsourced labor and expenses for testing new versions of our software.
This is primarily related to a decrease in business services and outsourced labor of $9.4 million, a decrease in salary and related employee expenses of $5.7 million, and a decrease in other expenses of $8.3 million primarily related to legal, software and insurance costs.
This decrease is primarily related to a decrease in salary, stock-based compensation expense and employee-related expenses of $11.5 million due to restructuring activities, a decrease in software and hosting expenses of $6.8 million, and a decrease in business services and outsourced expenses of $5.5 million. We continued to make investments in public cloud migration, and in the LivePerson Platform.
The year ended December 31, 2023 includ ed $15.8 million of revenue related to the WildHealth business, which was sold in June 2024, and $7.1 million of revenue related to Kasamba, which was sold in March 2023. Refer to Key Metrics and Current Trends within Item 7.
In addition, Professional Services decreased by $14.7 million for the year ended December 31, 2025. Refer to Key Metrics and Current Trends within Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion of revenue trends.
These uses of cash were partially offset by proceeds of $50.0 million from issuance of the 2029 Notes, along with $50.0 million in proceeds from the Delayed Draw Notes transaction in the fourth quarter of fiscal year 2024. Cash Flows from Operating Activities Net cash used in operating activities was $15.1 million in the year ended December 31, 2024.
Cash Flows from Operating Activities Net cash used in operating activities was $30.4 million in the year ended December 31, 2025.
Removed
ARPC increased to approximately $625,000 in 2024, as compared to approximately $610,000 in 2023.
Added
ARPC is a measure of the average recurring revenue per enterprise and mid-market customer over the trailing twelve months. ARPC increased to $680,000 in 2025, as compared to $625,000 in 2024.
Removed
While our expectations for retention rates continue to improve as we look forward to the 2025 renewal cycle, we see heightened risk for the remainder of the current renewal cycle with customers who were likely making their renewal decisions before we installed our new customer success motion.
Added
We continue to observe slower than anticipated renewals and new business bookings, primarily driven by customer uncertainty regarding our financial stability as well as broader macroeconomic and industry factors extending enterprise buying cycles, including for high-value AI solutions, which can require additional approvals related to compliance reviews and other factors, with a corresponding impact on the Company’s revenue. 45 Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).
Removed
The last set of customers we have identified in this risk category has renewal dates in the first half of 2025.
Added
The fair value determination using an income approach requires management to make significant estimates and assumptions related to forecasts of future revenues, EBITDA and the discount rate.
Removed
As a result, we currently expect short-term attrition to continue into the first half of 2025 and revenue to decline sequentially as a consequence, with a transition toward positive net new annual recurring revenue expected in the second half of 2025. 45 Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).
Added
The fair value determination using a market approach requires management to make significant assumptions related to marketplace multiples from within a peer public company group. 46 Prior to testing goodwill for impairment, the Company first tests its long-lived assets for impairment.
Removed
The income approach uses a discounted cash flow model that reflects our assumptions regarding revenue growth rates, operating margins, risk-adjusted discount rate, economic and market trends and other expectations about the anticipated operating results of the reporting unit.
Added
They are accounted for as a liability and a troubled debt restructuring gain was recorded in other income (expense), net. The Company paid third party fees in connection with the transaction, which reduced the gain recorded.
Removed
Under the market approach, we estimate the fair value based on market multiples of revenues derived from comparable publicly traded companies with operating characteristics similar to the reporting unit. 46 During the fourth quarter of 2023, the Company voluntarily changed its annual goodwill testing date from September 30 to October 1.
Added
While innovation remains a core component of our strategy, we are operating in a competitive environment characterized by aggressive investment in artificial intelligence and other technological innovation by competitors with significant resources and investment capital. During the years ended December 31, 2025 and 2024, $11.3 million and $19.3 million was capitalized, respectively.
Removed
The Company believes this change of method of applying the accounting principle is preferable, as it more closely aligns the annual impairment testing date with the most current information from the budgeting and strategic planning process and provides management with sufficient time to complete its annual assessment. This change was applied prospectively.
Added
Depreciation and Amortization Our depreciation and amortization relates to depreciation and amortization of our property and equipment and to amortization of our intangible assets and finance leases.
Removed
In the second quarter of 2024, the Company entered into an agreement for and completed the sale of 100% of the equity in WildHealth to a third party. WildHealth was part of the Business segment and was a separate reporting unit. Subsequent to WildHealth divestiture, the Company has one reporting unit.
Added
Year Ended December 31, 2025 2024 $ Change % Change (Dollars in thousands) Depreciation and amortization $ 22,732 $ 42,272 $ (19,540) (46) % Percentage of total revenue 9 % 14 % Depreciation and amortization costs decreased by 46% to $22.7 million for the year ended December 31, 2025, from $42.3 million for the year ended December 31, 2024.
Removed
Prior to testing goodwill for impairment, the Company first tests its long-lived assets for impairment. The carrying values are adjusted, if necessary, for the result of each impairment test prior to performing the next test.
Added
This decrease is primarily related to the reduction in asset balances due to impairments in 2024 of $37.4 million related to intangible assets and $9.5 million related to internal-use software development costs. Refer to Note 5 - Goodwill and Intangible Assets, Net and Note 6 - Property and Equipment, Net for additional information on the impairment charges.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−1 removed5 unchanged
Biggest changeAccounts receivable are written off against the allowance for uncollectible accounts when we determine amounts are no longer collectible. Interest Rate Risk Our investments consist of cash and cash equivalents. Therefore, changes in market interest rates do not affect in any material respect the value of the investments as recorded by us.
Biggest changeTherefore, changes in market interest rates do not affect in any material respect the value of the investments as recorded by us. Inflation Risk We do not believe that inflation has had a material effect on our business, financial conditions or results of operations.
Receivables are written-off and charged against the applicable recorded allowance when we have exhausted collection efforts without success. We adjust our allowance for credit losses when accounts previously reserved have been collected. An allowance for credit losses is established for losses expected to be incurred on accounts receivable balances.
Receivables are written off and charged against the applicable recorded allowance when we have exhausted collection efforts without success. We adjust our allowance for credit losses when accounts previously reserved have been collected. 54 An allowance for credit losses is established for losses expected to be incurred on accounts receivable balances.
For all other customers, we use an aging schedule and recognize allowances for credit losses based on the creditworthiness of the debtor, the age and status of outstanding receivables, the current business environment and our historical collection experience adjusted for current expectations for the customer or industry.
For all other customers, we use an aging schedule and recognize allowances for credit losses based on the creditworthiness of the debtor, the age and status of outstanding receivables, the current business environment and our historical collection experience adjusted for current expectations for the customer or industry. Interest Rate Risk Our investments consist of cash and cash equivalents.
We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. During 2024, we decreased our allowance for credit losses from $9.3 million to $8.6 million. During 2023, we increased our allowance for credit losses from $9.2 million to $9.3 million.
We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. During 2025, we reduced our allowance for credit losses from $8.6 million to $4.5 million. During 2024, we reduced our allowance for credit losses from $9.3 million to $8.6 million.
Inflation Risk We do not believe that inflation has had a material effect on our business, financial conditions or results of operations. 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.
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. 55
Removed
Our inability or failure to do so could harm our business, financial condition and results of operations. 54

Other LPSN 10-K year-over-year comparisons