PagerDuty(PD) - 2021 Q4 - Annual Report

Financial Reporting and Estimates - The company relies on estimates and assumptions for financial reporting, which if incorrect, could adversely affect operations and stock price [159]. - Significant estimates include stock-based compensation, fair value of employee stock purchase plans, and tax provisions, which could lead to fluctuations in financial results [159]. - The effectiveness of internal controls over financial reporting is critical; deficiencies could lead to loss of investor confidence and stock price decline [239]. - The company may face challenges in timely and accurate financial reporting due to the implementation of internal controls [240]. Management and Operational Risks - The management team has limited experience in managing a public company, which may divert attention from daily operations and impact financial performance [163]. - Acquisitions, such as the purchase of Rundeck, may divert management's attention and incur expenses, potentially affecting operational results [217]. - The company has limited experience in making acquisitions, which could hinder its ability to find suitable candidates or complete deals on favorable terms [218]. - The integration of acquired businesses may require substantial resources and could disrupt normal operations, affecting financial performance [221]. Legal and Regulatory Compliance - The company is subject to anti-corruption laws, and non-compliance could lead to significant legal and financial repercussions [174]. - Evolving privacy and data protection laws may increase regulatory scrutiny and potential liabilities for the company [178]. - The General Data Protection Regulation (GDPR) imposes fines of up to €20 million or 4% of a company's total worldwide turnover for non-compliance [181]. - The California Consumer Privacy Act (CCPA) went into effect on January 1, 2020, providing expanded rights to California residents, with significant expansions expected on January 1, 2023 [185]. - Compliance with GDPR and CCPA is expected to increase operational costs and legal risks associated with cross-border data transfers [182]. - Future laws and regulations regarding privacy and data protection may impair the ability to develop and market new functionalities, potentially increasing costs [191]. - Government scrutiny of the technology industry is increasing, which could lead to investigations and changes in business operations [193]. - The company is subject to U.S. export controls and economic sanctions laws, which could impair international market competitiveness [198]. - Violations of export control or economic sanctions regulations can result in significant fines or penalties, impacting the company's operations [199]. Financial Condition and Capital Structure - The company issued $287.5 million in 1.25% convertible senior notes due 2025, with interest payable semi-annually [202]. - The company may face challenges in servicing its debt, which could adversely affect its business and results of operations [202]. - The conditional conversion feature of the notes could impact the company's liquidity if triggered, requiring cash payments for conversions [207]. - Future sales of common stock could depress market prices and impair the company's ability to raise capital [228]. - The company does not intend to pay dividends in the foreseeable future, relying on stock price appreciation for investor returns [234]. - The company may require additional capital for growth, which might not be available on favorable terms, potentially harming business operations [235]. - Future issuance of equity securities could dilute existing stockholders' interests and reduce the value of common stock [235]. Ownership and Governance - Concentration of ownership among executive officers and directors may limit new investors' influence on corporate decisions [236]. - The company is governed by anti-takeover provisions that may deter potential acquirers and limit stockholder influence [246]. - The company has a significant percentage of its common stock owned by a small group, which may not align with the interests of other stockholders [236]. Market and Economic Factors - The company's stock price may be volatile due to various factors, including acquisition-related costs and market conditions [224]. - A hypothetical 10% relative change in interest rates would not have a material impact on the consolidated financial statements as of January 31, 2021 [419]. - The company's reporting currency is the U.S. dollar, and substantially all revenue is not currently subject to significant foreign currency risk [420]. - Operating expenses are denominated in the currencies of the countries where operations are located, primarily in the U.S., Canada, the U.K., and Australia [420]. - A hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other currencies would not have a material effect on operating results [420].