Similarweb(SMWB)2025-02-27 14:11Taxation and Regulatory Risks - The company may be classified as a passive foreign investment company (PFIC) if 75% or more of its gross income is passive income, which could lead to adverse U.S. federal income tax consequences for U.S. holders of its ordinary shares [228]. - The company does not believe it was classified as a PFIC for the taxable year ended December 31, 2024, but this determination must be made annually and could change based on income and asset composition [228]. - Changes in tax laws or regulations could increase the costs of the company's solutions and harm its business, potentially requiring the company or its customers to pay additional taxes or fines [231]. - The company may face substantial tax liabilities if required to collect sales or other related taxes in jurisdictions where it has not historically done so [235]. - The company's financial statements may not reflect adequate reserves for potential tax liabilities arising from challenges by taxing authorities [237]. - The application of U.S. federal, state, local, and non-U.S. tax laws to services provided electronically is unclear and evolving, which could adversely affect the company's results of operations [232]. - The enactment of legislation implementing changes in taxation of international business activities could impact the company's future financial position and results of operations [238]. Shareholder and Market Dynamics - As of December 31, 2024, there were 82,618,511 ordinary shares outstanding, with 44.6% beneficially owned by insiders [245]. - The company had 6,408,897 shares available for future grants under its 2021 Plan, increasing to 10,539,823 shares as of January 1, 2025 [250]. - The company does not anticipate paying any dividends in the foreseeable future, intending to retain future earnings to finance operations and expand its business [258]. - The concentration of share ownership with insiders may limit the ability of other shareholders to influence corporate matters [245]. - Future sales of ordinary shares in the public market could cause the market price to decline, impacting the company's ability to raise capital [246]. - The company may lose its "foreign private issuer" status, resulting in significant additional costs and expenses related to compliance with U.S. reporting requirements [256]. Geopolitical and Operational Risks - The ongoing military conflicts in Israel may adversely affect the company's operations and limit its ability to market products, potentially leading to decreased revenues [263]. - The war declared against Hamas has contributed to a deterioration of Israel's economic standing, including credit rating downgrades by agencies such as Moody's and S&P Global [266]. - Several hundred thousand Israeli military reservists were drafted, potentially disrupting operations and adversely affecting business results [267]. - Absences of employees from Israeli suppliers due to military service may impact the ability to deliver products and services [268]. - Ongoing hostilities and cyberattacks could lead to increased costs and risks to employee safety, potentially resulting in financial losses [269]. - The global perception of Israel may lead to increased sanctions and a boycott of Israeli goods, affecting business operations [270]. - Proposed changes to Israel's judicial system could negatively impact the business environment and lead to political instability [271]. - The company has a significant operational presence in Israel, which is affected by geopolitical tensions, potentially disrupting operations and impacting financial performance [287]. - Approximately 50 employees are engaged in Ukraine, primarily in software development, and ongoing military conflict may disrupt development efforts and increase costs [288]. - The company faces risks from sanctions against Russia, which could adversely affect operations and revenue generation in affected regions [290]. Financial Performance and Conditions - The company's share price may be volatile, influenced by factors such as market conditions, operating performance, and changes in financial estimates by analysts [241]. - A hypothetical 10% change in foreign currency exchange rates could impact the company's net loss by 9.8 million for the years ended December 31, 2023, and 2024, respectively [492]. - As of December 31, 2023, the company had cash and cash equivalents of $81.8 million, which are subject to interest rate risk but are not expected to materially impact financial statements [493]. - The company had no outstanding borrowings under the SVB LSA as of December 31, 2024, and a hypothetical 10% change in interest rates would not have materially impacted financial statements [494]. - The company does not believe inflation has materially affected historical results, but significant inflationary pressures could adversely impact financial condition and operations [495]. Corporate Governance and Compliance - The company is classified as an "emerging growth company," allowing it to delay adopting new accounting standards until they apply to private companies [251]. - The company qualifies as an "emerging growth company" and has elected to use an extended transition period for complying with new accounting standards, which may affect comparability with other public companies [496]. - The company is incorporated under Israeli law, which may differ from U.S. corporate governance practices, affecting shareholder rights [274]. - Provisions of Israeli law may delay or prevent acquisitions, impacting shareholder value and control changes [275]. Strategic Growth and Acquisitions - The company acquired two companies in 2024 and two more in Q1 2025 to enhance its platform and optimize products [282]. - Future acquisitions may divert management attention and pose integration challenges, potentially harming financial performance [283]. - The company may face litigation risks that could adversely affect its reputation and financial condition [285].