Adobe Inc. · Risk factors

Prior heading: Introduction of new technology could harm our business and results of operations.

The expectations We operate in rapidly evolving markets and needs expect the pace of technology consumers are constantly evolving. As innovation to continue to accelerate. We must continually introduce new, and enhance existing, products, services and solutions to retain customers and attract new technology customers. Developing new products is developed, integration of complex and may not be profitable, and our products investments in new technologies are speculative and may not yield the expected business or financial benefits. The commercial success of new or enhanced products, services and solutions depends on a number of factors, including timely and successful development; effective distribution and marketing; market acceptance; compatibility with one another existing and emerging standards, platforms, software delivery methods and technologies; accurately predicting and anticipating customer needs and expectations and the direction of technological change; identifying and innovating in the right technologies; and differentiation from other companies’ offerings creates an increasingly complex ecosystem that is also partly reliant on third parties. If any disruptive technology, or competing products, services and solutions. If we fail to anticipate or operating systems that are not compatible with our solutions, achieve widespread acceptance, identify technological trends or fail to devote appropriate resources to adapt to such trends, our operating results business could suffer be harmed. For example, generative artificial intelligence technologies provide new ways of marketing, creating content and interacting with documents that could disrupt industries in which we operate, and our business could may be harmed. The introduction of, harmed if we fail to invest or limitations on, certain technologies may reduce adapt. While we have released new generative artificial intelligence products, such as Adobe Firefly, and are focused on enhancing the effectiveness artificial intelligence (“AI”) capabilities of our such products and our business operations. For example, some of incorporating AI into existing products, services and solutions, there can be no assurance that our products and services, including those marketed or licensed through adobe.com, rely on tracking, third-party cookies will be successful or other identifiers to help our customers more that we will innovate effectively advertise and detect and prevent fraudulent activity. However, consumers can, with increasing ease, implement technologies to limit keep pace with the ability to collect and use data to deliver or advertise services. Increased use rapid evolution of methods AI across our Creative Cloud, Document Cloud and Experience Cloud. If we do not successfully innovate, adapt to control the use of these technologies through customers’ browsers, operating systems, device settings or “ad-blocking” software or applications may harm rapid technological changes and meet customer needs, our business.business and our financial results may be harmed.

Added · Removed · word-level comparison of the two filings

Prior heading: Social and ethical issues relating to the use of new and evolving technologies, such as AI, in our offerings may result in reputational harm and liability.

Social and ethical issues relating to the use of new and evolving technologies such as artificial intelligence (“AI”) AI, including generative AI, in our offerings, offerings may result in reputational harm and liability, harm, liability and may cause us to incur additional research and development costs to resolve such issues. costs. We are increasingly building incorporating AI technologies into many of our offerings. As with many innovations, AI presents risks and challenges that could affect its adoption, and therefore our business. If we enable our AI development, deployment, content labeling or offer solutions governance is ineffective or inadequate, it may result in incidents that draw controversy due impair the public acceptance of AI solutions or cause harm to their perceived individuals, customers or actual impact on society, we may experience brand or reputational harm, competitive harm result in our offerings not working as intended or legal liability. Potential government producing unexpected outcomes. Around the world, AI regulation related to is in the nascent stages of development. The evolving AI use and ethics regulatory environment may also increase the burden and cost of our research and development in this area, and failure costs, increase our liability related to properly remediate the use of AI usage by our customers or ethics issues may cause public confidence users that are beyond our control and result in AI inconsistencies in evolving legal frameworks across jurisdictions. While we have taken a responsible approach to be undermined, which could slow adoption the development and use of AI in our products and services. The rapid evolution of offerings, there can be no guarantee that future AI regulations will require the application of resources not adversely impact us or conflict with our approach to develop, test and maintain AI, including affecting our products and services ability to help ensure that make our AI is implemented ethically in order offerings available without costly changes, requiring us to minimize unintended, harmful impact. change our AI development practices, monetization strategies and/or indemnity protections and subjecting us to additional compliance requirements, regulatory action, competitive harm or legal liability. In addition, new competition regulation on AI development and deployment could impose new requirements on our markets that could impact our business and financial results. Uncertainty around new and emerging evolving AI applications such as use, including generative AI content creation AI, may require additional investment in the development of to develop responsible use frameworks, develop or license proprietary datasets and machine learning models, development of models and develop new approaches and processes to provide attribution attribute or remuneration to compensate content creators and building systems that enable creatives to have greater control over the use of their work in the development of AI, creators, which may be costly and could impact our profit margin if we decide to expand generative AI into all our product offerings. be costly. Developing, testing, testing and deploying AI systems may also increase the cost profile of our offerings offerings, including due to the nature of the computing costs involved in such systems.systems. These costs could adversely impact our margins as we continue to add AI capabilities to our offerings and scale our AI offerings without assurance that our customers and users will adopt them. Further, as with any new offerings based on new technologies, consumer reception and monetization pathways are uncertain, our strategies may not be successful and our business and financial results could be adversely impacted. New AI offerings and technologies could disrupt workforce needs, result in negative publicity about AI and have the potential to affect demand for our existing products, services and solutions, all of which could adversely impact our business.

Added · Removed · word-level comparison of the two filings

Prior heading: We may not realize the anticipated benefits of past or future investments or acquisitions, and integration of acquisitions may disrupt our business and management.

We may not realize Investments and acquisitions involve numerous risks and uncertainties, the anticipated benefits of an investment or acquisition of a company, division, product or technology, each occurrence of which involves numerous risks. may have an adverse effect on our business. These risks and uncertainties include: •inability to achieve the financial and strategic goals for of the acquired and combined businesses; investment or acquisition; •difficulty in, and the cost of, in effectively integrating the operations, technologies, products or products, services, and solutions, culture or personnel of the acquired business; •potential identified •disruption of our ongoing business and distraction of our management and other personnel; •challenges to completing or unknown security vulnerabilities in acquired products that expose us failure to additional security risks complete an announced investment or delay our ability acquisition related to integrate the product into our offerings; failure to obtain regulatory approval, or the need to satisfy certain conditions precedent to closing such transaction (such as divestitures, ownership or operational restrictions or other structural or behavioral remedies) that could limit the anticipated benefits of the transaction; •entry into markets in which we have minimal prior experience and where competitors in such markets have stronger market positions; •disruption of our ongoing business and distraction of our management and other employees from other opportunities and challenges; •inability to retain personnel of the acquired business; •inability to retain personnel, key customers, distributors, vendors and other business partners of the acquired business; •inability •delay in customer and distributor purchasing decisions due to take advantage uncertainty about the direction of anticipated tax benefits; our product and service offerings; •incurring acquisition-related higher than anticipated costs to effectively integrate an acquired business, to bring an acquired company into compliance with applicable laws and regulations, additional compensation issued or amortization assumed in connection with an acquisition, to divest products, services or solutions acquired in unsuccessful investments or acquisitions, to amortize costs for acquired intangible assets that could impact or because of our operating results; •elevated inability to take advantage of anticipated tax benefits; •increased collection times, elevated delinquency or bad debt write-offs related to receivables of the an acquired business we assume; •additional costs of bringing acquired companies into compliance with laws and regulations applicable to a multinational corporation; •difficulty in maintaining controls, procedures and policies during the transition and integration; •impairment of integration and inability to conclude that our relationships with employees, customers, partners, distributors internal controls over financial reporting are effective; •potential identified or third-party providers of our technologies, unknown security vulnerabilities in acquired products that expose us to additional security risks or services; •failure of delay our due diligence processes ability to identify significant problems, liabilities or other challenges of an acquired company or technology; integrate the product into our offerings; •exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, an acquisition, such as claims from terminated employees, customers, former stockholders or other third parties; •incurring significant exit charges if products or services acquired in business combinations are unsuccessful; •inability to conclude that our internal controls over financial reporting are effective; •inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay prevent or impose conditions on such acquisitions; •the failure acquisition; •incurrence of strategic investments to perform as expected or to meet financial projections; •delay in customer and distributor purchasing decisions due additional debt to uncertainty about the direction of our product and service offerings; •additional stock-based compensation issued or assumed in connection with finance an acquisition, including the impact on stockholder dilution and which will increase our results of operations; •increased accounts receivables collection times and working capital requirements associated with acquired business models; interest expense and •incompatibility leverage, and/or issuance of business cultures. Mergers equity securities to finance acquisitions, which will dilute current shareholders’ percentage ownership and acquisitions of technology companies are inherently risky. If we do not complete an announced acquisition transaction, including the pending acquisition of Figma, Inc., or integrate an acquired business successfully earnings per share; and in a timely manner, we may not realize the benefits of the acquisition •failure to the extent anticipated, and in certain circumstances an acquisition could harm our financial position. identify significant problems, liabilities or other challenges during due diligence. Our ability to acquire other businesses or technologies, make strategic investments or integrate acquired businesses effectively may also be impaired by the effects of the COVID-19 pandemic, adverse economic and political events, including government actions in light of the pandemic, trade tensions, restrictions and increased global scrutiny of foreign acquisitions and strategic investments. For example, a A number of countries, including the United States and countries in Europe and the Asia-Pacific region, are considering or have adopted more stringent restrictions on foreign investments. or guidelines for such transactions. Governments may continue to adopt or tighten restrictions of this nature, and such restrictions or government actions could negatively impact our business and financial results. Further, if we are not able to complete an announced acquisition or investment, or we do not achieve the financial and strategic goals of an acquisition or investment, we may not realize the anticipated benefits of such acquisition or investment or we may incur additional costs, which may negatively impact our business and financial results.

Added · Removed · word-level comparison of the two filings

Prior heading: The markets in which we participate are intensely competitive, and if we cannot continue to develop, acquire, market and offer new products and services or enhancements to existing products and services that meet customer requirements, our operating results could suffer.

The markets for our products products, services and solutions are rapidly evolving and intensely competitive. We expect competition to continue to intensify. Our competitors range in size from diversified global companies with significant sales and research and development resources, broad brand awareness, long operating histories or access to large customer bases to small, specialized companies whose narrow focuses may allow them to be more effective in deploying technical, marketing and financial resources. Our competitors may develop products, services or solutions that are characterized by intense competition, new similar to ours or that achieve greater acceptance, may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies. As a result, current and potential customers may select the products, services or solutions of our competitors. Further, our future success depends on our continued ability to effectively appeal to businesses and consumers. New industry standards, evolving distribution models, limited barriers to entry, new technology developments, short product life cycles, customer price sensitivity, global market conditions and the frequent product introductions (including alternatives with limited functionality available at lower costs or free of charge). Any entry of these factors could new products or competitors may create downward pressure on pricing and gross margins and could adversely affect our renewal and renewal, upsell and cross-sell rates, rates as well as our ability to attract new customers. Our future success will depend on our continued ability to enhance and integrate our existing products and services, introduce new products and services in a timely and cost-effective manner, meet changing customer expectations and needs, extend our core technology into new applications, and anticipate emerging standards, business models, software delivery methods and other technological developments. For example, consumers continue to migrate from personal computers customers. In addition, we expect to tablet and mobile devices and from desktop face more competition as AI continues to be integrated into the web. While we offer our products on a variety of platforms, if markets in which we cannot continue adapting our products to tablet and mobile devices or the web, or if our compete. Our competitors can adapt their products more quickly than us, our business could be harmed. In addition, releases of new devices or operating systems other third parties may make it incorporate AI into their offerings more difficult for our products to perform or may require significant cost to adapt our solutions. The potential costs and delays incurred as a result could harm our business. If successfully than we fail to anticipate or misjudge customers’ rapidly changing needs do and expectations or adapt to emerging technological trends, our market share achieve greater and results of operations faster adoption, which could suffer. Furthermore, some of impair our competitors and potential competitors enjoy competitive advantages, such as greater financial, technical, sales, marketing and other resources, broader brand awareness and access ability to larger customer bases. As a result of these advantages, potential compete effectively and current customers might select adversely affect our business and financial results. Further, we expect the products markets for standalone AI offerings to be highly competitive and services of our competitors, causing a loss of our market share. Our competitors, including large enterprises, may develop products, features or services rapidly evolving. For example, we face increasing competition from companies offering text-to-image generative AI technology that may compete directly with our own creative offerings. If we are similar not able to ours or provide products, services and solutions that achieve greater acceptance, may undertake more far-reaching compete effectively, we could experience reduced sales and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies. our business could be adversely affected. For additional information regarding our competition and the risks arising out of the competitive environment in which we operate, see the section titled “Competition” contained in Part I, Item 1 of this report.

Added · Removed · word-level comparison of the two filings

Prior heading: If our products or platforms are used to create or disseminate objectionable content, particularly misleading content intended to manipulate public opinion, our brand reputation may be damaged, and our business and financial results may be harmed.

We believe that our reputation and brands have significantly contributed been, and we expect them to the success of continue to be, important to our business. business and financial results. Maintaining and enhancing the brands within Adobe increases our ability brands may require us to enter make substantial investments and these investments may not be successful. There are numerous ways that our reputation or brands could be damaged, including, among other things, introduction of new categories, launch products, features or services that do not meet customer expectations, our position on or approach to new and innovative products evolving technologies, backlash from customers, government entities or other stakeholders that disagree with our product offering decisions or public policy positions, significant litigation or regulatory actions that negatively reflect on our business practices, our action or inaction or actual or perceived failure to better serve meet our customers commitments on environmental, social and expand governance, ethical or political issues, public scrutiny regarding our customer base. Our handling of user privacy, data practices or content, data security breaches or compliance failures, or our approach to AI. Further, our brands may be negatively affected by the use uses of our products or products, services or solutions, particularly our AI offerings, in ways that are out of our control, such as to create or disseminate newsworthy content that is deemed to be misleading, deceptive or intended to manipulate public opinion (e.g., “DeepFakes”), by the use of our products opinion, or services for illicit, objectionable or illegal ends, or by our failure to respond appropriately and expeditiously in a timely manner to such uses of our products and services. uses. Such uses of our products and services may also cause us to face result in controversy or claims related to defamation, rights of publicity and privacy, publicity, illegal content, intellectual property infringement, harmful content, misinformation and disinformation, harmful bias, misappropriation, data privacy, derivative uses of third-party AI and personal injury torts. Maintaining and enhancing our brands may require us to make substantial investments and these investments may not be successful. If we fail to appropriately respond to objectionable content created using our products or products, services or solutions or shared on our platforms, our users may lose confidence in our brands. Entry into markets with weaker protection of brands and or changes in the legal systems in countries in which we operate may also impact our ability to protect our brands. If we fail to maintain, enhance or protect our brands, or if we incur excessive expenses in our efforts to do so, our business and financial results may be adversely affected. In addition, government regulation designed to address DeepFakes could adversely impact our product offerings.affected.

Added · Removed · word-level comparison of the two filings

Prior heading: We rely on data centers managed both by Adobe and third parties to host and deliver our services, as well as access, collect, process, use, transmit and store data, and any interruptions or delays in these hosted services, or failures in data collection or transmission could expose us to liability and harm our business and reputation.

Much of our business business, including our online store at adobe.com and our Creative Cloud, Document Cloud and Experience Cloud solutions, relies on hardware and services that are hosted, managed and controlled directly by Adobe us or third-party service providers, including our online store at adobe.com and our Creative Cloud, Document Cloud providers to be available to customers and Experience Cloud solutions. users without disruption. We do not have redundancy for all of our systems, many of our critical applications (“apps”) reside in only one of our data centers, and our disaster recovery planning may not account for all eventualities. If our business relationship with a any critical third-party service provider of hosting or content delivery services is negatively affected, affected or if one of our content delivery suppliers were becomes unavailable to terminate its agreement with us without adequate notice, for any reason, we might may not be able to deliver the corresponding hosted offerings products, services or solutions to our customers, which customers and users. Failure of our systems or those of our third-party service providers could disrupt our business operations and those of our customers, subject us to reputational harm, require costly and time-intensive notification requirements, notifications, and cause us to lose customers customers, users and future business. The COVID-19 pandemic has disrupted and may continue to disrupt the supply chain of hardware needed to maintain these third-party systems and services or to run our business. In addition, supply chain disruptions stemming from the Russia-Ukraine war may harm our customers and suppliers and further complicate existing supply chain constraints. Occasionally, we migrate data among data centers and to third-party hosted environments. If a transition among data centers or to third-party service providers encounters unexpected interruptions, unforeseen complexity or unplanned disruptions despite precautions undertaken during the process, this may impair our delivery of products and products, services and solutions to customers and result in increased costs and liabilities, which may harm our operating results, reputation and our business. It is also possible that hardware or software failures or errors in our systems (or those of our third-party service providers) could result in data loss or corruption, cause the information that we collect or maintain to be incomplete or contain inaccuracies that our customers regard as significant, or cause us to fail to meet committed service levels or comply with applicable notification requirements. requirements or other relevant contractual obligations to our customers. Furthermore, our ability to collect and report data may be delayed or interrupted by a number of factors, including access to the internet, the failure of our network or software systems, security breaches or significant variability in visitor traffic on customer websites. In addition, the loss of data resulting from computer viruses, worms, ransomware or other malware may harm our systems could expose us to litigation or regulatory investigation, and costly and time-intensive notification requirements. We may also find, on occasion, that we cannot deliver data and reports to our customers in near real time real-time due to factors such as significant spikes in customer activity on their websites or failures of our network or software (or that of a third-party service provider). If we fail to plan infrastructure capacity appropriately and expand it proportionally with the needs of our customer and user base, and we experience a rapid and significant demand on the capacity of our data centers or those of third parties, service outages or performance issues could occur, which would may impact our customers. Such a strain on our infrastructure capacity could may subject us to regulatory and customer notification requirements, violations of service level agreement commitments or financial liabilities and result in customer dissatisfaction or harm our business. If we supply materially inaccurate information or experience significant interruptions in our systems, our reputation could be harmed, we could lose customers and we could be found liable for damages or incur other losses.

Added · Removed · word-level comparison of the two filings

Prior heading: Security vulnerabilities in our products and systems, or in our supply chain, could lead to reduced revenue or to liability claims.

Maintaining the security of Our products, services and solutions collect, store, manage and otherwise process third-party data, including our products customers’ data and our own data. Such products, services is a critical issue for us and solutions as well as our customers. Cyberthreats are constantly evolving technologies, systems and becoming increasingly sophisticated networks have been subject to, and complex, making it increasingly difficult to detect may in the future be subject to, cyberattacks, computer viruses, ransomware or other malware, fraud, worms, social engineering, denial-of-service attacks, malicious software programs, insider threats and successfully defend against them. Certain unauthorized parties other cybersecurity incidents that have in the past managed, past, and may again in the future manage, to gain access future, result in the unauthorized access, disclosure, acquisition, use, loss or destruction of sensitive personal or business data belonging to us and misuse some of our systems and software, customers. Cybersecurity incidents can be caused by human error from our workforce or that of our third-party service providers, in order to access the authentication, payment and personal information of our end users and employees. In addition, cyber-attackers (which may include individuals by malicious third parties, acting alone or in groups, as well as or by more sophisticated groups with significant resources, such as nation-state organizations, including nation-states and state-sponsored attackers) also develop and deploy viruses, worms, credential stuffing attack tools and other malicious software programs, some of which organizations. Such risks may be specifically designed to attack our products, services, information systems or networks. The frequency and sophistication of such threats continues to increase and often becomes further heightened elevated in connection with geopolitical tensions. Hardware, software and operating system applications that we develop or procure from third tensions, including the Russia-Ukraine war. Certain unauthorized parties have contained in the past managed, and may contain in the future manage, to overcome our security measures and those of our third-party service providers to access and misuse systems and software by exploiting defects in design or manufacture, including bugs, vulnerabilities and other problems that could unexpectedly compromise the security of the system or impair operation of a customer’s ability to operate or use our products. Like other global companies, we face an increasingly difficult challenge to attract and retain highly qualified security personnel to assist us in combating these security threats. The costs to prevent, eliminate, mitigate or alleviate cyber product or other security problems, bugs, viruses, worms, system. Further, malicious software programs and security vulnerabilities are significant, and our efforts to address these problems, including notifying affected parties, may not be successful or may be delayed and could result in interruptions, delays, cessation of service and loss of existing or potential customers. It is impossible to predict the extent, frequency or impact these problems may have on us. Outside third parties have in the past attempted, and may in the future attempt attempt, to fraudulently induce our employees or users of our products or products, services or solutions to disclose sensitive, personal or confidential information via illegal electronic spamming, phishing or other tactics. This existing tactics, and this risk is compounded given the heightened in our current hybrid model work environment, where a large portion of our workforce spends a portion of their time working environment. Malicious actors may engage in fraudulent or abusive activities through our offices products, services and a portion solutions, including unauthorized use of their time working accounts through stolen credentials, use of stolen credit cards or other payment vehicles, failure to pay for services accessed, or other activities that violate our terms of service. While we actively combat such fraudulent activities, we have experienced, and may in the future experience, impacts to our revenue from home. Unauthorized such activities. Further, unauthorized parties may also attempt to gain physical access to our facilities in order to and infiltrate our information systems or attempt to gain logical access to our products, services or information systems for the purpose of exfiltrating to access content and data. These actual and potential breaches The loss of our security measures and the accidental loss, inadvertent disclosure or unauthorized dissemination of proprietary information or sensitive, personal or confidential data about us, our employees, our customers or their end users, including the potential loss or disclosure of access to data, such information or data could expose us, our employees, our customers as resulting from computer viruses, worms, ransomware or other individuals affected to a risk of loss or misuse of this information. This malware may result in litigation and liability or fines, costly and time-intensive notice requirements, governmental inquiry or oversight or a loss of customer confidence, any of which could harm our business or damage our brand and reputation, thereby requiring time and resources to mitigate these impacts. These risks will likely increase as we expand our hosted offerings, integrate our products and services and store and process more data. These issues affect our products and services in particular because cyber-attackers tend to focus their efforts on popular offerings with a large user base, and we expect them to continue to do so. From time to time we have identified, and in the future we may identify other, vulnerabilities in some of our applications and services and those of our third-party service providers. In some cases, such vulnerabilities may not be immediately detected, which may make it difficult to recover critical services and lead to damaged assets. We continuously monitor and develop our information technology networks and infrastructure in an effort to prevent, detect, address and mitigate the risk of threats to our data, systems and networks, including malware and computer virus attacks, ransomware, unauthorized access, business email compromise, misuse, denial-of-service attacks, system failures and disruptions. These continued enhancements and changes, as well as changes designed to update and enhance our protective measures systems, expose us to address new threats, may increase the risk of a system or process failure or the creation of a gap in the associated security measures. Any such failure litigation or gap could materially regulatory investigation and adversely affect our business, results of operations subject us to costly and financial results. time-intensive notification requirements. We devote significant resources to address security vulnerabilities through engineering more secure products, enhancing security and reliability features in our products and systems, code hardening, conducting rigorous penetration tests, deploying updates to address security vulnerabilities, regularly reviewing our service providers’ security controls, reviewing and auditing our hosted products, services and solutions against independent information security control frameworks (such as ISO 27001, SOC 2 and PCI), frameworks, providing resources, such as mandatory security training, for to our workforce workforce, and improving continually assessing and improving, as appropriate, our incident response time, but security vulnerabilities cannot be totally eliminated. The cost of undertaking these efforts could reduce our operating margins, and we may be unable to implement these measures quickly enough to prevent unauthorized access into our systems and products in all circumstances. process. Despite our preventative efforts, there is no assurance that our security measures will provide full effective protection from such events, and actual events. The costs to prevent, eliminate, mitigate or perceived remediate cybersecurity or other security problems and vulnerabilities in our products are significant and systems may harm reduce our reputation or lead operating margins. Further, our efforts to claims against us (and address these problems, including notifying affected third parties when appropriate, have in the past led to such claims) been, and could lead some customers to stop using certain products or services may in the future be, unsuccessful or to reduce delayed, which could result in business interruptions, cessation of service and loss of existing or delay future purchases. If we do not make potential customers. Maintaining the appropriate level security of investment in our technology systems products, services and we are not able solutions is a critical issue for us and our customers. It is impossible to deliver predict the quality extent, frequency or impact cybersecurity issues may have on us. Breaches of data our security measures and privacy the accidental loss, inadvertent disclosure or unauthorized dissemination of proprietary information or sensitive, personal or confidential data about us, our employees, our customers require or that meet their end users, including the potential loss or disclosure of such information or data could expose us, our independent employees, our customers or other individuals affected to a risk of loss or misuse of this information. Actual or perceived security control certification vulnerabilities or incidents may result in claims or litigation and liability or fines (and have in the past led to such claims), costly and time-intensive notice requirements, governmental inquiry or oversight or a loss of customer confidence, any of which could harm our business could be adversely affected. Customers and damage our brand and reputation. Our customers may also adopt security measures designed to protect their existing computer systems and their instances of our software from attack, which attack and may suffer a cybersecurity attack on their own systems, unrelated to our systems. Even if such breach is unrelated to our security systems, solutions or programs, such breach could delay adoption of new technologies. cause us reputational harm and require us to incur significant economic and operational consequences to adequately assess and respond to their breach, and to implement additional safeguards designed to protect against future breaches. While we maintain insurance to cover operational risks, such as cyber risk and technology outages, our insurance may not be sufficient to cover all liability described herein. These risks will likely increase as we expand our hosted offerings, integrate our products, services and solutions and store and process more data. Moreover, delayed sales, lower margins or lost customers resulting from disruptions caused by cyber-attacks, cyberattacks, overly burdensome preventative security measures or failure to fully meet independent information security control certification requirements could materially and adversely affect our financial results, stock price and reputation.

Added · Removed · word-level comparison of the two filings

Prior heading: Failure to manage our sales, partner and distribution channels effectively could result in a loss of revenue and harm our business.

We contract with a number of software distributors and other strategic partners, third parties to distribute our products, services and solutions, none of which are individually responsible for a material amount of our total net revenue in any recent period. Nonetheless, if Successfully managing our distribution channels and sales partners to reach various customers for our products, services and solutions is a complex and global process. If an agreement with one of our distributors were or partners was terminated, any prolonged delay in securing a replacement distributor or partner could have a negative impact on our results of operations. Successfully managing our indirect distribution channel efforts to reach various customer segments for our products and services is a complex process across the broad range of geographies where we do business or plan to do business. Our distributors and other channel partners are independent businesses that we do not control. Notwithstanding the independence of our channel partners, we operations. We also face legal risk and potential reputational harm from the activities of these independent third parties including, but not limited to, export control violations, workplace conditions, corruption and anti-competitive behavior. We cannot be certain that our distribution channel will continue to market or sell our products and services effectively. If our partner and distribution channels are not successful, effective or if we stop or change our partner or distribution channels, we may lose sales opportunities, customers and revenue. If our distributors favor our competitors’ products or services for any reason, they may fail to market our products or services effectively, which would cause our results to suffer. If our OEMs through which we distribute products and services decide not to bundle our applications We rely on their devices, our results could suffer. Further, the financial health of our distributors and partners third-party distribution platforms and our continuing relationships with them are important subject to our success. Some changes in pricing structure, terms of these distributors service, privacy practices and partners may be unable to withstand other policies at the discretion of the platform provider. Any adverse changes in economic conditions, which could result in insolvency, to the inability of terms with such distributors and partners to obtain credit to finance access third-party distribution platforms which we rely on to or purchases of distribute our products products, services and services, or a delay in paying their obligations solutions may adversely affect our financial results. Additionally, our distribution channels may not continue to us. We also market or sell some of our products products, services and solutions effectively and may favor products, services and solutions of other companies. We sell many products, services and solutions through our direct sales force. Risks associated with this sales channel include more extended sales and collection cycles, challenges related to hiring, retaining and motivating our direct sales force, and substantial amounts of ongoing training for sales representatives. Moreover, recent hires may not be as productive as we would like, as in most cases it takes significant time for them to achieve full productivity. Our business could be seriously harmed if our expansion efforts of our direct sales expansion efforts do not generate a corresponding significant increase in revenue and we are unable to achieve the corresponding efficiencies and revenue we anticipate. anticipated from such investment. In addition, the loss of key sales employees could impact our customer relationships and future ability to sell to certain accounts covered by such employees.employees. We rely on third-party service providers and technologies to deliver our products, services and business operations and to operate critical business systems, such as cloud-based infrastructure, data center facilities, encryption and authentication technology and company email, communications with customers. If such third parties are negatively affected, if we fail to effectively develop, manage and maintain our relationships with such third parties, or if we are unable to renew our agreements with them on favorable terms or at all, our expenses could significantly increase, and we and our customers may experience service interruptions. Any disruption or damage to, or failure of our systems generally, including the systems of our third-party platform providers, could result in interruptions in our services and harm our business. Further, interruptions in our services caused by us or our third-party service providers may cause us to issue credits or pay penalties, cause customers to make warranty or other claims against us or to terminate their subscriptions or contracts, and adversely affect our attrition rates and our ability to attract new customers, all of which may adversely affect our financial results. Our business and reputation would also be harmed if our customers and potential customers believe our services are unreliable.

Added · Removed · word-level comparison of the two filings

Prior heading: We face various risks associated with our operating as a multinational corporation.

As We derive a global business that generates approximately 42% large portion of our total revenue from sales to customers from, and have significant operations, outside of the Americas, United States. As a multinational corporation, we are subject to a number of risks, including: including from global adverse economic conditions, that are uncertain and beyond our control and that make forecasting operating results and decisions about future investments difficult, such as: •inflation and actions taken by central banks to counter inflation; •foreign currency fluctuations and controls; inflation, including increasing interest rates; •international and regional economic, political and labor conditions, including any instability or security concerns abroad, such as uncertainty caused by economic sanctions, downturns and recessions, trade disputes, armed conflicts and wars; •tax laws (including U.S. taxes on foreign subsidiaries); •increased financial accounting and reporting burdens and complexities; •changes in, or impositions of, legislative or regulatory requirements; requirements, including antitrust and competition regulations; •changes in laws governing the free flow of data across international borders; •failure of laws to protect our intellectual property rights adequately; •inadequate local infrastructure and difficulties in managing and staffing international operations; •delays •costs, potential liability, delays or loss of sales resulting from difficulty in obtaining export licenses for certain technology, tariffs, quotas trade restrictions imposed by the United States and other countries, as well as trade barriers; •the imposition of governmental laws, including but not limited to economic sanctions on countries in which we do business or where we plan to expand our business; and export controls; •costs and delays associated with developing products in multiple languages; languages; and •operating in locations with a higher incidence rate of corruption and fraudulent business practices; and •other factors beyond our control, such as terrorism, war, natural disasters, climate change and pandemics, including the COVID-19 pandemic and resulting restrictions on practices. Additionally, third parties we do business activity, which may vary significantly by region. Some of with and our third-party business partners customers have international operations and are also subject to these risks, the above risks. Adverse changes in global economic conditions have in the past resulted and may in the future result in our customers’ and business partners’ insolvency, inability to obtain credit to finance or purchase our products, services and solutions, or a delay in paying or an inability to pay their obligations to us. Other third parties, such as our service providers, suppliers and distributors, may be harmed if such partners are unable to appropriately manage these deliver or be delayed in delivering critical services, products or technologies that we rely on, and our business and reputation may be harmed. Our customers’ spending rate and demand for our products, services and solutions may also be adversely affected by the above risks. If sales to any of our customers outside of the Americas global sales are reduced, delayed or canceled because of any of the above factors, risks, our revenue may decline.decline. Further, a disruption in global financial markets could impair our banking partners, on which we rely for operating cash management, capital market transactions and derivative programs. Such disruption could also negatively impact our customers’ ability to pay us due to delays or inability to access their existing cash. As of December 1, 2023, our investment portfolio consisted of asset-backed securities, corporate debt securities, money market funds, time deposits, U.S. agency securities and U.S. Treasury securities. These investments are subject to credit, liquidity, market, and interest rate risks as well as economic downturns or events that affect global or regional financial markets that may cause the value of our investments to decline, requiring impairment charges, which could adversely affect our financial condition.

Added · Removed · word-level comparison of the two filings

Prior heading: If we are unable to recruit and retain key personnel, our business may be harmed, and our attempts to operate under a hybrid work model may not be successful and adversely impact our business.

Much of our future success depends on the continued service, availability and performance of our senior management and highly-skilled highly skilled personnel across all levels of our organization. Our senior management has acquired specialized knowledge and skills with respect to our business, and the loss of any of these individuals could harm our business, especially if we are not successful in developing adequate succession plans. Our efforts to attract, develop, integrate and retain highly skilled employees with appropriate qualifications may be compounded by intensified restrictions on travel, immigration or the availability of work visas. Competition for experienced personnel in the information The technology industry is intense and has recently intensified further due often subject to industry trends in many areas where our employees substantial and continuous competition for talent, particularly with cybersecurity and AI backgrounds, and demand for cutting-edge or unique skill sets can be highly competitive, both of which are located. Further, heightened with the increased availability of hybrid or remote working arrangements has expanded the pool of companies that can compete for our employees arrangements. We face an increasingly difficult challenge to attract and employment candidates. retain highly qualified security personnel to assist us in combating security threats. We may experience higher compensation costs to retain and recruit senior management and experienced highly skilled personnel that may not be offset by improved productivity or increased sales. A Our hybrid work environment may also present operational, cybersecurity operational and workplace culture challenges. If we are unable to continue challenges, which could negatively affect our ability to successfully attract execute against our business objectives and retain highly skilled personnel and maintain our corporate culture in a hybrid work environment, our business may be harmed. recruit personnel. We continue to hire personnel in countries where exceptional technical knowledge and other expertise are offered at lower costs, which increases the efficiency of our global workforce structure and reduces our personnel related personnel-related expenditures. Nonetheless, as globalization continues, competition for employees talent in these those countries has increased, which may impact our ability to retain these employees and increase our compensation-related expenses. We may continue to expand our international operations and international sales and marketing activities, which would require significant management attention and resources. We may be unable to scale our infrastructure effectively or as quickly as our competitors in these markets, and our revenue may not increase sufficiently to offset these expected increases in costs, causing our results to suffer. We believe that a critical contributor to our success to date has been our corporate culture, which we have built to foster innovation, teamwork and employee satisfaction. As we grow, including from the integration of employees and businesses acquired in connection with previous or future acquisitions, we may find it difficult to maintain important aspects of our corporate culture, which could negatively affect our ability to retain and recruit personnel who are essential to our future success.expenses.

Added · Removed · word-level comparison of the two filings

Prior heading: Some of our enterprise offerings have extended and complex sales cycles, which can make our sales cycles unpredictable.

Sales cycles As we continue to target large enterprise customers for some certain of our enterprise offerings, including our Adobe Experience Cloud and Adobe in our Digital Experience Platform solutions business and our Enterprise Term License Agreements (“ETLAs”) in our Digital Media business, are multi-phased and complex, which also makes it difficult to predict when a given we may face increased costs, longer sales cycle will close. The complexity cycles, greater competition and less predictability in these sales cycles is due to several factors, including: •the need for completing our sales representatives sales. For our enterprise customers, the evaluation process may be longer and more involved, and require us to educate invest more in educating our customers about our products, services and solutions, particularly because the decision to use and benefit of large-scale deployments of our products products, services and services; •the desire of organizations solutions is often an enterprise-wide decision. We may be required to undertake significant submit more robust proposals, participate in extended proof-of-concept evaluation processes to determine their technology requirements prior to making information technology expenditures cycles and the need for engage in more extensive contract negotiations. In addition, our representatives to spend a significant amount of time assisting with such evaluations; •intensifying competition within enterprise customers often demand more complex configurations and additional integration services and product features. Adverse macroeconomic conditions have caused, and may cause in the industry; •the negotiation of large, complex, enterprise-wide contracts; •the need for future, delays in our customers enterprise customers’ purchasing decisions. Due to obtain requisition approvals from various decision makers within their organizations due these factors, we often must devote greater sales support to the complexity of certain enterprise customers, which increases our solutions touching multiple departments; and •customer budget constraints, economic conditions costs and unplanned administrative delays. We spend substantial time and expense on our sales efforts required to complete a sale, without assurance that potential customers will ultimately purchase our solutions. As we target We also may be required to devote more services resources to implementation, which increases our sales efforts costs, without assurance that customers receiving these services will renew or renew at larger the same level. Since the sales cycles for our enterprise customers, these trends offerings are expected to continue multi-phased and could have complex, it is often unpredictable when a greater impact on our results given sales cycle will close. Our revenue from enterprise customers may be affected by longer-than-expected sales and implementation cycles, extended collection cycles, potential deferral of operations. revenue and alternative licensing arrangements. Additionally, our enterprise sales pattern has historically been uneven, where a higher percentage of a quarter’s total sales occur during the final weeks of each quarter, which is common in our industry.

Added · Removed · word-level comparison of the two filings

Prior heading: Increasing regulatory focus on privacy and security issues and expanding laws could impact our business models and expose us to increased liability.

As a global company, Adobe is We are subject to global data protection, privacy and security laws, regulations and codes of conduct that apply relate to our various business units and data processing activities. activities, which may include sensitive, confidential, and personal information. These laws, regulations and codes may be are inconsistent across jurisdictions and are subject to evolving and differing (sometimes conflicting) interpretations. Government officials and regulators, privacy advocates and class action attorneys are increasingly scrutinizing how companies collect, process, use, store, share and transmit personal data. This increased scrutiny may can result in new and shifting interpretations of existing laws, thereby further impacting Adobe’s our business. Globally, laws such as For example, the General Data Protection Regulation (“GDPR”) in Europe the European Economic Area, and the United Kingdom continues to be interpreted by European and UK courts in novel ways leading to shifting requirements, country specific differences in application and uncertain enforcement priorities. More recently enacted laws, such as the Personal Information Protection Law (“PIPL”) in China, and new and emerging state laws in the United States on privacy, data and related technologies, such as the California Consumer Privacy Act, the California Privacy Rights Act, the Colorado Privacy Act and the Virginia Consumer Data Protection Act, as well as industry self-regulatory codes, codes and regulatory requirements, create new privacy and security compliance obligations and expand the scope of potential liability, either jointly or severally with our customers and suppliers. As a security example, pursuant to the U.S. Securities and Exchange Commission’s Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure we are required to make certain disclosures related to material cybersecurity incidents and the reasonably likely impact of such an incident on Form 8-K and will be required to make certain other cybersecurity disclosures on Form 10-K. Determining whether a cybersecurity incident is notifiable or reportable may not be straightforward and any such mandatory disclosures could be costly and lead to negative publicity, loss of customer confidence in the effectiveness of our security measures, diversion of management’s attention and governmental investigations. While we have invested in readiness to comply with applicable requirements, the dynamic and evolving nature of these laws, regulations and codes, as well as their interpretation by regulators and courts, may affect our ability (and our enterprise customers’ ability) to reach current and prospective customers, to respond to both enterprise and individual customer requests under the laws (such as individual rights of access, correction and deletion of their personal information) and information), to implement our business models effectively. effectively and to adequately address disclosure requirements. These laws, regulations and codes may also impact our innovation and business drivers in developing new and emerging technologies (e.g., artificial intelligence (for example, AI and machine learning). These requirements, among others, learning) and may impact demand for our offerings and force us to bear the burden of more onerous obligations in our contracts. Any perception Perception of our practices, products or products, services or solutions, even if unfounded, as a violation of individual privacy or privacy, data protection rights may subject or cybersecurity requirements, subjects us to public criticism, class action lawsuits, reputational harm, or investigations or investigations, claims and other proceedings by regulators, industry groups or other third parties, all of which could disrupt or adversely impact our business and reputation and expose us to increased liability. liability, fines and other punitive measures including prohibition on sales of our products, services or solutions, restrictive judicial orders and disgorgement of data. Additionally, we collect and store information on behalf of our business customers and if our customers fail to comply with contractual obligations or applicable laws, it could result in litigation or reputational harm to us. Transferring personal information across international borders is complex and subject to legal and regulatory requirements as well as active litigation and enforcement in a number of jurisdictions around the world, each of which could have an adverse impact on our ability to process and transfer personal data as part of our business operations. For example, European data transfers outside the European Economic Area are highly regulated and litigated. The mechanisms that we and many other companies rely upon for European data transfers (e.g., (for example, Standard Contractual Clauses) Clauses and the EU - US Data Privacy Framework) are the subject of legal challenge, regulatory interpretation and judicial decisions by the Court of Justice of the European Union. We The suitability of Standard Contractual Clauses for data transfer in some scenarios has recently been the subject of legal challenge, and while the United States and the European Union reached agreement on the EU - US Data Privacy Framework, there are legal challenges to that data transfer mechanism as well. We continue to closely monitoring monitor for developments related to valid transfer mechanisms available for transferring personal data outside the European Economic Area (including the Trans-Atlantic EU - US Data Privacy Framework) and other countries that have similar trans-border data flow requirements and adjusting adjust our practices accordingly. The open judicial questions and regulatory interpretations related to the validity of transfers using Standard Contractual Clauses have resulted in some changes in the obligations required to provide our services in the European Union and could expose us to potential sanctions and fines for non-compliance. Several other countries, including China, Australia, New Zealand, Brazil, Hong Kong and Japan, have also established specific legal requirements for cross-border transfers of personal information and certain countries have also established specific legal requirements for data localization (i.e., (such as where personal data must remain stored in the country). If other countries implement more restrictive regulations for cross-border data transfers or do not permit data to leave the country of origin, such developments could adversely impact our business and our enterprise customers’ business, our financial condition and our results of operations in those jurisdictions.

Added · Removed · word-level comparison of the two filings

Prior heading: Our intellectual property portfolio is a valuable asset and we may not be able to protect our intellectual property rights, including our source code, from infringement or unauthorized copying, use or disclosure.

Our intellectual property portfolio is a valuable asset. Infringement or misappropriation of our patents, trademarks, trade secrets, copyrights and other intellectual property rights are valuable assets to us. Infringement or misappropriation of such intellectual property could result in lost revenues and ultimately reduce their value. Preventing We protect our intellectual property by relying on federal, state and common law rights in the United States and internationally, as well as a variety of administrative procedures and contractual restrictions. Despite our efforts, protecting our intellectual property rights and preventing unauthorized use or infringement of our intellectual property rights is are inherently difficult. We For instance, we actively combat software piracy as we enforce our intellectual property rights, piracy, but we nonetheless continue to lose significant revenue due to illegal use of our software. If piracy activities continue at historical levels or increase, they Third parties may further harm illegally copy and sell counterfeit versions of our business. products. To the extent counterfeit installations and sales replace otherwise legitimate ones, our operating results could be adversely affected. We apply for patents in the United States and internationally to protect our newly created technology and if in foreign countries, but we are unable to obtain not always successful in obtaining patent protection for the technology described or in obtaining such protection timely to meet our pending patent, business needs. Our patents may be invalidated or if the patent is not obtained timely, this could result circumvented. Moreover, due to challenges in revenue loss, or have other adverse effects on operations and harm our business. We offer detecting patent infringement pertaining to generative AI technologies, it may be more difficult to protect our products generative AI and services related innovations with patents. Additionally, if we use generative AI in foreign countries and the creation of our source code, we may seek not be able to rely on copyright to protect such intellectual property protection from those foreign legal systems. Some property. Further, the laws of those some foreign countries may do not have as robust or comprehensive provide the same level of intellectual property protection as U.S. laws and schemes as those offered in the United States, courts and the mechanisms to enforce intellectual property rights may be inadequate to protect our technology, which could harm our business. We also seek fail to adequately protect our confidential information and trade secrets through the use of non-disclosure agreements with our customers, contractors, vendors and partners. However, there is a risk that our confidential information and trade secrets may be disclosed or published without our authorization, and in these situations, enforcing our rights may be difficult or costly. intellectual property rights. If unauthorized disclosure of our source code occurs through security breach, cyber-attack or otherwise, we could lose future trade secret protection for that source code. Such loss could make it easier for third parties to compete with our products by copying functionality, which could cause us to lose customers and could adversely affect our revenue and operating margins.margins. If we cannot protect our intellectual property against unauthorized copying, use, or other misappropriation, our business could be harmed.

Added · Removed · word-level comparison of the two filings

Prior heading: We may incur substantial costs defending against third parties alleging that we infringe their proprietary rights.

We have been, are currently subject to various legal proceedings (including class action lawsuits), claims and regulatory inquiries that are not yet resolved and additional claims, enforcement actions and inquiries may arise in the future. Any proceedings, actions, claims or inquiries initiated by or against us, whether successful or not, may be time consuming; result in costly litigation, damage awards, consent decrees, injunctive relief or increased costs of business; require us to change our business practices or products; result in negative publicity; require significant amounts of management time; result in the diversion of significant operational resources, or otherwise harm our business and financial results. Additionally, we are currently, and may in the future be subject to claims, negotiations and complex, protracted litigation relating to disputes regarding the validity or alleged infringement of third-party intellectual property rights, including patent rights. Intellectual property disputes and litigation are typically costly and can be disruptive to our business operations by diverting the attention of management and key personnel. We may not prevail in every lawsuit or dispute. Third-party intellectual property disputes, including those initiated by patent assertion entities, could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from offering certain products products, services or services, solutions, subject us to injunctions restricting our sales, cause severe disruptions to our operations or the markets in which we compete, or require us to satisfy indemnification commitments with our customers, including contractual provisions under various license arrangements and service agreements. In addition, we have incurred, and may incur in the future incur, significant costs in acquiring the necessary third-party intellectual property rights for use in our products, in some cases to fulfill contractual obligations with our customers. Any of these occurrences could significantly harm our business.business. We have not prevailed, and may not in the future prevail, in every lawsuit or dispute. For further information about specific litigation and proceedings, see the section titled “Legal Proceedings” contained in Part II, Item 8, Note 16 of our Notes to Consolidated Financial Statements of this report.

Added · Removed · word-level comparison of the two filings

Prior heading: Changes in tax rules and regulations or interpretations thereof may adversely affect our effective tax rates.

We are a United States-based U.S.-based multinational company subject to tax in multiple domestic and foreign tax jurisdictions. Significant judgment is required in determining our current provision for income taxes and deferred tax assets or liabilities. Tax laws in the United States as well as other countries and in foreign tax jurisdictions in which we conduct business are dynamic and subject to change as new laws are passed and and/or new interpretations are issued. The applicability and made available, which may have a material impact on our business. These countries, governmental bodies, such as the European Commission of changes the European Union, and intergovernmental economic organizations, such as the Organization for Economic Cooperation and Development, have made or could make unprecedented assertions about how taxation is determined and, in tax some cases, have proposed or enacted new laws that are contrary to the way in which rules and regulations have historically been interpreted and applied. Changes in our operating landscape, such as changes in laws or interpretations thereof of tax rules, could adversely affect our effective income tax rate and cash flows in future years. Unanticipated rates and/or cause us to respond by making changes in to our tax rates business structure, which could adversely affect our future results of operations. operations and financial results. Our future effective tax rates are likely to be unfavorably affected by changes in the tax rates in jurisdictions where our income is earned, changes in jurisdictions in which our profits are determined to be earned and taxed, changes in the valuation of our deferred tax assets and liabilities, changes in or interpretation of tax rules and regulations in the jurisdictions in which we do business, or unexpected negative changes in business and market conditions that could reduce certain tax benefits. In addition, the United States and other countries and jurisdictions in which we conduct business, including those covered by governing bodies that enact tax laws applicable to us, such as the European Commission of the European Union, could make changes to relevant tax, accounting or other laws and interpretations thereof that have a material impact to us. These countries, governmental bodies and intergovernmental economic organizations such as the Organization for Economic Cooperation and Development, have or could make unprecedented assertions about how taxation is determined and, in some cases, have proposed or enacted new laws that are contrary to the way in which rules and regulations have historically been interpreted and applied. In the current global tax policy environment, any changes benefits. An increase in laws, regulations and interpretations could adversely affect our effective tax rates, cause us to respond by making changes to our business structure, or result in other costs to us which could adversely affect rate would reduce our operations and financial results. profitability. Moreover, we are subject to the examination of our income tax returns by domestic and foreign tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations. We While we believe our tax estimates to be reasonable; however, are reasonable, we cannot provide assurance that the final determination of any of these examinations will not have an adverse effect on our financial position and results of operations.

Added · Removed · word-level comparison of the two filings

Prior heading: Contracting with government entities exposes us to additional risks inherent in the government procurement process.

We provide products products, services and services, solutions, directly and indirectly, to a variety of domestic and foreign government entities, which introduces certain risks, including extended sales risks and collection cycles, challenges not present in private commercial agreements, including varying governmental budgeting processes processes, fluctuations due to government spending cuts and shutdowns, highly competitive and lengthy bidding process that may be subject to political influence and adherence to complex procurement regulations and other government-specific contractual requirements. We incur significant up-front time and costs without any assurance that we will win a contract. Operating within a highly regulated industry, we have been, are currently been and may in the future be subject to audits and investigations relating to our government contracts and any violations could result in termination of contracts and various civil and criminal penalties and administrative sanctions, including termination of contracts, payment of fines and suspension or debarment from future government business, as well as harm to our reputation and financial results.results. We have made, and may continue to make, significant investments to support future sales opportunities in various government sectors, including to obtain various security authorizations and certifications. Such processes are complex, lengthy and can often be delayed. Furthermore, requirements may change, or we may be unable to achieve or sustain one or more government authorizations or certifications, which could affect our ability to sell to government entities until we meet any revised requirements.

Added · Removed · word-level comparison of the two filings

Prior heading: If our customers fail to renew subscriptions in accordance with our expectations, our future revenue and operating results could suffer, and our subscription offerings may create additional risk related to the timing of revenue recognition.

Our offerings are typically subscription-based, pursuant to product and service agreements. Since our customers have no obligation to renew their subscriptions for We generally recognize revenue from our services after subscription offerings ratably over the expiration terms of their initial subscription period, agreements, which typically ranges range from 1 to 36 months, our customers may not renew their subscriptions at the same or months. As a higher level result, most of service, for the same number of seats or for subscription revenue we report each quarter is the same duration result of time, if at all. Our varied customer base subscription agreements entered into during previous quarters. Lower sales and flexible duration complicates subscriptions, reduced demand for our ability products, services and solutions, and increases in our attrition rate in any given period may not be fully reflected in our results of operations until future periods. Our subscription model could also make it difficult for us to precisely forecast renewal rates. rapidly increase our revenue from subscription-based or hosted services through additional sales in any period, as revenue from new customers will be recognized over the applicable subscription term. Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their our customers’ level of satisfaction with our services, satisfaction, our ability to continue enhancing features and functionality, the reliability (including uptime) of our subscription offerings, the prices of offerings ours and competitors’ offerings, the actual or perceived information security of our systems and services, decreases in the size of our customer base, changes as a result of regulatory or legal requirements, changes in the composition of our customer base and reductions in our customers’ spending levels or declines in customer activity as a result of general economic conditions or uncertainty in financial markets, including as a result of a global health crisis and geopolitical conflict, which has affected and may continue to affect certain sectors of the economy disproportionately. activity. If our customers do not renew their subscriptions or if they renew on terms less favorable to us, our revenue may decline. We generally recognize revenue from decline. Further, such impact on our subscription offerings ratably over the terms of their subscription agreements. As a result, most of the subscription revenue we report in each quarter is the result of subscription agreements entered into during previous quarters. Any reduction in new or renewed subscriptions in a quarter may not be immediately reflected in our revenue financial results until a later quarter and may decrease our revenue in future quarters. Lower sales, reduced demand for our products and services and increases the period in which our attrition rate renewal rates changed and may not be fully reflected in adversely affect our financial results of operations until in future periods. Our subscription model could also make it difficult for us to rapidly increase our revenue from subscription-based or hosted services through additional sales in any period, as revenue from new customers will be recognized over the applicable subscription term. Additionally, in connection with our sales efforts to enterprise customers, a number of factors could affect our revenue, including longer-than-expected sales and implementation cycles, potential deferral of revenue and alternative licensing arrangements. If any of our assumptions about revenue from our subscription-based offerings prove incorrect, our actual results may suffer and vary materially from those anticipated.

Added · Removed · word-level comparison of the two filings

Prior heading: We may incur losses associated with currency fluctuations and may not be able to effectively hedge our exposure.

Our operating results and performance metrics are subject to fluctuations in foreign currency exchange rates due to the global scope of our business. Geopolitical and economic events, including war, trade disputes, economic sanctions and emerging market volatility, and associated uncertainty have caused, and may in the future cause, currencies to fluctuate. Accordingly, amounts reported as annualized recurring revenue, a performance metric which we measure at currency rates that are set at the beginning of each fiscal year and held constant throughout the year, may vary from actual revenue recognized in accordance with generally accepted accounting principles in the United States. We attempt to mitigate a portion of these foreign currency exchange risks to our operating results through foreign currency hedging based on our judgment of the appropriate trade-offs among risk, opportunity and expense. We regularly review our hedging program and make adjustments that we believe are appropriate. Our hedging activities have not not, and may not in the future future, offset more than a portion of the adverse financial impact impact, including on our actual revenue recognized, resulting from unfavorable movement in foreign currency exchange rates, which could adversely affect our financial condition condition, business performance or results of operations.

Added · Removed · word-level comparison of the two filings

Prior heading: We have issued $4.15 billion of notes in debt offerings and may incur other debt in the future, which may adversely affect our financial condition and future financial results.

We have $4.15 As of December 1, 2023, we had $3.65 billion in senior unsecured notes outstanding and a $3 billion commercial paper program with no amounts outstanding. We also had a $1.5 billion senior unsecured revolving credit agreement and $3.5 billion delayed draw term loan agreement, both of which is currently were undrawn. Subsequent to December 1, 2023, the delayed draw term loan agreement was terminated. This debt or future additional indebtedness may adversely affect our financial condition and future financial results by, among other things: •increasing our vulnerability to adverse changes in general economic and industry conditions; •requiring the dedication of a portion of our expected cash flows from operations to service our debt, thereby reducing the amount of expected cash flows available for other purposes, including capital expenditures and acquisitions; and •limiting acquisitions; •increasing our flexibility in planning for, or reacting to, vulnerability to adverse changes in our business and general economic and industry conditions; and •limiting our industry. ability to obtain future financing for working capital, capital expenditures, future acquisitions, general corporate or other purposes, which may also impact our ability to service and repay outstanding indebtedness as it becomes due. Our senior unsecured notes notes, commercial paper program and senior unsecured revolving credit agreement impose restrictions on us and require us to maintain compliance with specified covenants. Our ability to comply with these covenants may be affected by events beyond our control. If we breach any of the covenants and do not obtain a waiver from the noteholders or lenders, then, subject to applicable cure periods, any outstanding debt may be declared immediately due and payable. In addition, changes by any rating agency to our credit rating may negatively impact the value and liquidity of both our debt and equity securities, as well as the potential costs associated with a refinancing of our debt. Under certain circumstances, if our credit ratings are downgraded or other negative action is taken, the interest rate payable by us under our revolving credit facility agreement could increase. Downgrades in our credit ratings could also restrict our ability to obtain additional financing in the future and affect the terms of any such financing.

Added · Removed · word-level comparison of the two filings

Prior heading: Catastrophic events, including global pandemics such as the COVID-19 pandemic, may disrupt our business and adversely affect our financial condition and results of operations.

We are a highly automated Our business and rely relies on our network infrastructure and enterprise applications, apps, internal technology systems and website for our development, marketing, operations, support, hosted services and sales activities. In addition, some of our businesses rely on third-party hosted services, and we do not control the operation of third-party data center facilities serving our customers from around the world, which increases our vulnerability. websites. A disruption, infiltration or failure of these systems our systems, data centers or third-party hosted services in the event operations, or those of our third-party service providers due to a major earthquake, fire, flood, tsunami or other weather event, natural disasters, including climate-related events (such as drought, water security, heat waves, cold waves, wildfires and poor air quality), power shutoff or loss, telecommunications failure, software or hardware malfunctions, pandemics (including the COVID-19 pandemic), cyber-attack, epidemic, pandemic, war, terrorist attack or other catastrophic event that our disaster recovery plans do not adequately address, event, could cause system interruptions, reputational harm, interruptions to our systems and business operations, damage to critical infrastructure, loss of intellectual property, delays in our product development, lengthy interruptions in our services, breaches of data security breaches and loss of critical data. Any of these events could prevent us from fulfilling our customers’ orders or could negatively impact a country or region in which we sell our products, which could in turn decrease that country’s or region’s demand for our products. data loss. Our corporate headquarters, a significant portion of our research and development activities, activity, certain of our data centers and certain other critical business operations are located in the San Francisco Bay Area, Area and additional facilities where we conduct significant operations are located in the Salt Lake Valley Area, both of which are near major earthquake faults. A catastrophic event event, particularly one that results in the destruction or disruption of any of may disrupt our data centers or our critical business or information technology systems activities, could severely affect our ability to conduct prevent us from conducting normal business operations and, as a result, and providing our future operating results products, services and solutions, which could be adversely affected. The adverse effects of any such affect our business. A catastrophic event would could negatively impact a country or region in which we sell and, in turn, decrease demand for our products, services and solutions, which could negatively impact our business. Climate-related catastrophic events that may harm our business are also increasing in frequency and severity. We may be exacerbated if experienced at the same time as another unexpected subject to additional climate-related regulations and adverse event, such as the COVID-19 pandemic. reporting requirements and changing market dynamics and stakeholder expectations regarding climate change and our environmental impacts, all of which may impact our business, financial condition and results of operations. The occurrence of regional epidemics an epidemic or a global pandemic, such as the COVID-19 pandemic, have has had and may continue to have an adverse effect on how we and our customers are operating our businesses and our operating results. Our operations have also been and may in the future be negatively affected by a range of external factors related to the pandemic that are not within our control, including the emergence and spread of more transmissible variants. The extent to which global pandemics, such as the COVID-19 pandemic, epidemics and pandemics impact our financial condition or results of operations will depend on many factors such as the duration and scope outside of the pandemic, as well as our control and whether there is a material impact on the businesses or productivity of our customers, partners, employee, employees, suppliers and other partners. To the extent that the A global pandemic harms our business and results of operations, many of may also intensify the other risks described in this Part I, Item 1A of this report may be heightened.report.

Added · Removed · word-level comparison of the two filings

Prior heading: Revenue, margin or earnings shortfalls or the volatility of the market generally may cause the market price of our stock to decline.

In the past, the market price for our common Our stock experienced significant fluctuations price has been and it may do so continue to be volatile and subject to fluctuations. All factors described in the future. A number this Part I, Item 1A of factors this report, some of which are beyond our control, may affect the market price for our common stock, such as: stock price, including: •shortfalls in, in or changes in to estimates, recommendations or expectations about, about our revenue, margins, earnings, Annualized Recurring Revenue (“ARR”), sales of our Digital Experience offerings annualized recurring revenue or other key performance metrics; •changes metrics set forth in estimates guidance we provide or recommendations provided by securities financial analysts; •whether •changes in investor and analyst valuation models for our results meet analysts’ expectations; •compression or expansion of multiples used by investors stock; •changes in unearned revenue, remaining performance obligations and analysts to value high technology SaaS companies; •the announcement revenue recognized at a point in time, all of new which may impact implied growth rates; •developments related to products or services, product enhancements, service introductions, technological advancements, strategic alliances alliances, acquisitions or significant agreements transactions by us or our competitors; •changes in the amounts or frequency of stock repurchases; •the loss of large customers or our inability to retain or increase sales to existing customers, retain customers or attract new customers; •recruitment •changes to our management team, including recruitment or departure of key personnel; •variations in our or our competitors’ results of operations, changes in the competitive landscape generally and developments in our industry; •general socio-economic, economic, political or market conditions; •macroeconomic conditions and the economic impact of the COVID-19 pandemic, inflation and rising interest rates and global conflicts, including the Russia-Ukraine war; conditions; and •unusual events •other events, such as significant acquisitions by us or our competitors, divestitures, litigation, regulatory actions litigation and other factors, including factors unrelated to our operating performance. regulatory actions. In addition, the market for technology stocks or the stock market in general has experienced, and may experience uneven investor confidence, in the future experience, extreme fluctuations, which has caused, and may cause in the market price for future cause, our common stock price to decline for reasons unrelated to our operating financial performance. Volatility in the market our stock price of a company’s securities for a period of time may increase has increased, and in the company’s future may increase, our susceptibility to securities class action litigation. Oftentimes, this type of litigation is expensive litigation, which could result in substantial costs and diverts divert management’s attention and resources resources, which may adversely affect our business.

Added · Removed · word-level comparison of the two filings