Risk Factors Dashboard

Once a year, publicly traded companies issue a comprehensive report of their business, called a 10-K. A component mandated in the 10-K is the ‘Risk Factors’ section, where companies disclose any major potential risks that they may face. This dashboard highlights all major changes and additions in new 10K reports, allowing investors to quickly identify new potential risks and opportunities.

Risk Factors - ALTR

-New additions in green
-Changes in blue
-Hover to see similar sentence in last filing

$ALTR Risk Factor changes from 00/02/24/23/2023 to 00/02/22/24/2024

Item 1A. Risk Factors An investment in our Class A common stock involves a high degree of risk.

You should carefully consider the risks and uncertainties described below, together with all the other information in this Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes. If any of the following risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. Unless otherwise indicated, references to our business being seriously harmed in these risk factors will include harm to our business, reputation, financial condition, results of operations, revenue, liquidity and future prospects. 14 Table of Contents SUMMARY The following summarizes key risks and uncertainties that could materially adversely affect us. You should read this summary together with the more detailed description of each risk factor contained below. Risks relating to our business and industry, including risks relating to: •the sustainability of our revenue growth rate and the impact of our revenue mix; •the sustainability of our culture of innovation, teamwork and communications; •our ability to expand the usage of our software by existing customers; •our ability to introduce our software to new customers; •the length of our sales cycle; •our customers’ ability and plans to spend on product design and development; •our customers’ software license renewal rates; •the impact that acquisitions of businesses and products may have upon us; •the impact of competition; •the strength of the markets into which we sell, including automotive and BFSI; •fluctuations in our quarterly results; •fluctuations in foreign currency exchange rates; •the extent to which software vendors participate in our APA program; •the performance of our distributors and resellers; •our ability to adapt to and lead technology changes; •the impact on profitability of our focus on growth and research & development; •the impact of any unanticipated departures by key employees; •the impact of our global presence; •the impact of any impairments of goodwill or intangible assets; •the impact of any product liability claims or other legal proceedings: and •the impact of the development and use of AI and machine learning in our offerings. Risks relating to our business and industry, including risks relating to: •the sustainability of our revenue growth rate and the impact of our revenue mix; •the sustainability of our culture of innovation, teamwork and communications; •our ability to expand the usage of our software by existing customers; •our ability to introduce our software to new customers; •the length of our sales cycle; •our customers’ ability and plans to spend on product design and development; •our customers’ software license renewal rates; •the impact that acquisitions of businesses and products may have upon us; •the impact of competition; •the strength of the markets into which we sell, including automotive and BFSI; •the impact of COVID-19 and other global conditions outside our control; •fluctuations in our quarterly results; •fluctuations in foreign currency exchange rates; •the extent to which software vendors participate in our APA program; •the performance of our distributors and resellers; •our ability to adapt to and lead technology changes; •the impact on profitability of our focus on growth and research & development; •the impact of any unanticipated departures by key employees; •the impact of our global presence; •the impact of any impairments of goodwill or intangible assets; and •the impact of any product liability claims or other legal proceedings. Risks relating to our intellectual property, including risks relating to: •the impact of potential defects or errors in our software; •our ability to protect and enforce our technology and intellectual property rights; •the impact of intellectual property disputes; •the impact of any security breaches, computer malware, computer hacking attacks and other security incidents; •any failure of software to work seamlessly with our customers’ existing software, hardware, or network environment; •product liability claims that may arise as a result of our customers’ use of our software or services; •any failures by us to adequately train our customers regarding the use and benefits of our software; and •our use of open source software and open source technology. Risks relating to our intellectual property, including risks relating to: •the impact of potential defects or errors in our software; •our ability to protect and enforce our technology and intellectual property rights; •the impact of intellectual property disputes; •the impact of any security breaches, computer malware, computer hacking attacks and other security incidents; •any failure of software to work seamlessly with our customers’ existing software, hardware, or network environment; 15 Table of Contents •product liability claims that may arise as a result of our customers’ use of our software or services; •any failures by us to adequately train our customers regarding the use and benefits of our software; and •our use of open source software and open source technology. Risks relating to legal or regulatory matters, including risks relating to: •the difficulties associated with complying with a wide range of complex regulations, including in relation to sales to government agencies, and in a variety of jurisdictions and the impact of any non-compliance; 15 Table of Contents •the impact of changes in laws, regulations, regulatory policies and regulatory practices and uncertainties resulting from potential changes, including potential tax law changes; •the impact of export and import controls on our ability to operate and compete in international markets; •the breadth of data privacy and anti-bribery laws and regulations; •our ability to use our deferred tax assets in the United States; and •the impact of any challenges to our global tax methodology. Risks relating to legal or regulatory matters, including risks relating to: •the difficulties associated with complying with a wide range of complex regulations, including in relation to sales to government agencies, and in a variety of jurisdictions and the impact of any non-compliance; •the impact of changes in laws, regulations, regulatory policies and regulatory practices and uncertainties resulting from potential changes, including potential tax law changes; •the impact of export and import controls on our ability to operate and compete in international markets; •the breadth of data privacy and anti-bribery laws and regulations; •our ability to use our deferred tax assets in the United States; and •the impact of any challenges to our global tax methodology. Risks relating to ownership of our Class A Common Stock, including risks relating to: •the sustainability of an active public trading market for our stock; •the volatility of the market price of our stock; •our expectations that we will not pay dividends in the foreseeable future; •the impact of any failure to maintain effective internal controls; •the difficulty of predicting the impact of our dual class common stock structure; •the nature and content of public research or reports about our company; •the potential dilutive impact of future sales of our Class A Common Stock, including upon conversion of our Convertible Notes; and •the impact of antitakeover provisions in our governing documents and under Delaware law. Risks relating to our indebtedness, including risks relating to: •the effective subordination of our Convertible Notes to our secured debt and to our subsidiaries’ liabilities; •the impact of our organizational structure, pursuant to which a substantial portion of our operations are conducted through, and a substantial portion of our assets are held by, our subsidiaries; •our current debt service obligations and potential future debt service obligations; •limitations on our ability to pay cash in whole or in part upon conversion of our Convertible Notes; •the dilutive impact of issuing our Class A Common Stock upon such conversions; •the potential that our Convertible Notes may become convertible sooner than the mandatory convertibility date as a result of increases in the market price of our Class A Common Stock; •limitations that may deter or prevent a business combination; and •the impact of operating and financial covenants in our loan agreements. General risks, including risks relating to: •our ability to attract and retain key personnel; •any need we may have to raise additional capital; •the difficulties associated with predicting our growth; •the impact of global conditions outside our control; •business interruptions; and •the impact of potential changes in accounting principles. General risks, including risks relating to: •our ability to attract and retain key personnel; •any need we may have to raise additional capital; •the difficulties associated with predicting our growth; •business interruptions; and 16 Table of Contents •the impact of potential changes in accounting principles. 16 Table of Contents Risks relating to our business and industry We have experienced significant revenue growth and we may fail to sustain that growth rate or may not grow in the future. Risks relating to our business and industry We have experienced significant revenue growth and we may fail to sustain that growth rate or may not grow in the future. We were founded in 1985 and launched our first commercial software in 1990. Our growth has primarily been attributed to the increasing sales of our simulation, high-performance computing and data analytics technologies to enhance decision making, product performance, compress development time, and reduce costs. Revenue from our software segment has historically constituted a significant portion of our total revenue. Our revenue growth could decline over time as a result of a number of factors, including increasing competition from smaller entities and well-established, larger organizations, limited ability to, or our decision not to, increase pricing, contraction of our overall market, the manner in which the markets for our products, including our data analytics products, evolve or our failure to capitalize on growth opportunities. Other factors include managing our global organization, revenues generated outside the United States that are subject to adverse currency fluctuations, uncertain international geopolitical landscapes and the acquisition of businesses which may grow more slowly than our business. Accordingly, we may not achieve similar growth rates in future periods, and you should not rely on our historical revenue growth as an indication of our future revenue or revenue growth. If we cannot maintain our company culture of innovation, teamwork, and communication, our business may be harmed. We believe that a critical component to our success has been our company culture, which is based on our core values of innovation, envisioning the future, communicating honestly and broadly, seeking technology and business firsts, and embracing diversity. We have invested substantial time and resources in building a company embodying this culture. As we continue to grow, we may find it difficult to maintain these valuable aspects of our corporate culture. Any failure to preserve our culture, or embed our culture in our acquired businesses, could negatively impact our future success, including our ability to attract and retain personnel, encourage innovation and teamwork, and effectively focus on and pursue our corporate objectives. If our existing customers or users do not increase their usage of our software, or we do not add new customers, the growth of our business may be harmed. Our software includes a comprehensive open architecture solution for simulation, high-performance computing, data analytics, and artificial intelligence. Our future success depends, in part, on our ability to increase the: •number of customers and users accessing our software; •usage of our software to address expanding design, engineering, AI, computing and analytical needs; and/or •number of our applications and functionalities accessed by users and customers through our licensing model. Our future success may also depend upon the degree to which the evolution of our units licensing model is accepted by our current and potential customers. In addition, through our Altair Partner Alliance, or APA, our customers have access to additional software offered by independent third parties, without the need to enter into additional license agreements. If we fail to increase the number of customers or users and/or application usage among existing users of our software and the software of our APA partners, our ability to license additional software will be adversely affected, which would harm our operating results and financial condition. 17 Table of Contents If we fail to increase the number of customers or users and/or application usage among existing users of our software and the software of our APA partners, our ability to license additional software will be adversely affected, which would harm our operating results and financial condition. Our ability to acquire new customers is difficult to predict because our software sales cycle can be long. Our ability to increase revenue and maintain or increase profitability depends, in part, on widespread acceptance of our software by mid- to- large-size organizations worldwide. We face long, costly, and unpredictable sales cycles. As a result of the variability and length of the sales cycle, we have only a limited ability to forecast the timing of sales. A delay in or failure to complete sales could harm our business and financial results, and could cause our financial results to vary significantly from period to period. Our sales cycle varies widely, reflecting differences in potential customers’ decision-making processes, procurement requirements, budget cycles and the specific software or products being purchased, and is subject to significant risks over which we have little or no control, including: •longstanding use of competing products and hesitancy to change; 17 Table of Contents •customers’ budgetary constraints and priorities; •timing of customers’ budget cycles; •need by some customers for lengthy evaluations; •hesitation to adopt new processes and technologies; •length and timing of customers’ approval processes; and •development of software by our competitors perceived to be equivalent or superior to our software. Our sales cycle varies widely, reflecting differences in potential customers’ decision-making processes, procurement requirements, budget cycles and the specific software or products being purchased, and is subject to significant risks over which we have little or no control, including: •longstanding use of competing products and hesitancy to change; •customers’ budgetary constraints and priorities; •timing of customers’ budget cycles; •need by some customers for lengthy evaluations; •hesitation to adopt new processes and technologies; •length and timing of customers’ approval processes; and •development of software by our competitors perceived to be equivalent or superior to our software. To the extent any of the foregoing occur, our average sales cycle may increase, and we may have difficulty acquiring new customers. Reduced spending on product design and development activities by our customers may negatively affect our revenues. Our revenues are largely dependent on our customers’ overall product design and development activities, particularly demand from mid- to- large-size organizations worldwide and their supplier base. The licensing of our software is discretionary. Our customers may reduce their research and development budgets, which could cause them to reduce, defer, or forego licensing of our software. To the extent licensing of our software is perceived by existing and potential customers to be extraneous to their needs, our revenue may be negatively affected by our customers’ delays or reductions in product development research and development spending. Customers may delay or cancel software licensing or seek to lower their costs. Deterioration in the demand for product design and development software for any reason would harm our business, operating results, and financial condition in the future. Our business largely depends on annual renewals of our software licenses. We typically license our software to our customers on an annual basis. In order for us to maintain or improve our operating results, it is important that our customers renew and/or increase the amount of software licensed on an annual basis. Customer renewal rates may be affected by a number of factors, including: •our pricing or license term and those of our competitors; •our reputation for performance and reliability; •new product releases by us or our competitors; •customer satisfaction with our software or support; •consolidation within our customer base; •availability of comparable software from our competitors; •effects of global or industry specific economic conditions; •our customers’ ability to continue their operations and spending levels; and •other factors, a number of which are beyond our control. If our customers fail to renew their licenses or renew on terms that are less beneficial to us, our renewal rates may decline or fluctuate, which may harm our business. 18 Table of Contents If our customers fail to renew their licenses or renew on terms that are less beneficial to us, our renewal rates may decline or fluctuate, which may harm our business. We believe our future success will depend, in part, on the growth in demand for our software by customers other than simulation engineering specialists and in additional industry verticals. Historically, our customers have been simulation engineering specialists. To enable concept engineering, driven by simulation, we make our physics solvers more accessible to designers by wrapping them in powerful simple interfaces. We believe our future success will depend, in part, on growth in demand for our software by these designers, which could be negatively impacted by the lack of: •continued and/or growing reliance on software to optimize and accelerate the design process; •adoption of simulation technology by designers other than simulation engineering specialists; •continued proliferation of mobility, large data sets, cloud computing and IoT; 18 Table of Contents •our ability to predict demands of designers other than simulation engineering specialists and achieve market acceptance of our software or products within these additional areas and customer bases or in additional industry verticals; or •our ability to respond to changes in the competitive landscape, including whether our competitors establish more widely adopted products for designers other than simulation engineering specialists. We believe our future success will depend, in part, on growth in demand for our software by these designers, which could be negatively impacted by the lack of: •continued and/or growing reliance on software to optimize and accelerate the design process; •adoption of simulation technology by designers other than simulation engineering specialists; •continued proliferation of mobility, large data sets, cloud computing and IoT; •our ability to predict demands of designers other than simulation engineering specialists and achieve market acceptance of our software or products within these additional areas and customer bases or in additional industry verticals; or •our ability to respond to changes in the competitive landscape, including whether our competitors establish more widely adopted products for designers other than simulation engineering specialists. If some or all of this software does not achieve widespread adoption, our revenues and profits may be adversely affected. Our ability to grow our business may be adversely impacted by difficulties we may experience in integrating recent acquisitions or in integrating future acquisitions. We believe that our recent acquisitions result in certain benefits, including expanding our portfolio of software and products and enabling us to better serve our customers’ needs. However, to realize some of these anticipated benefits, the acquired businesses must be successfully integrated. The success of these acquisitions will depend in part on our ability to realize these anticipated benefits. We may fail to realize the anticipated benefits of these acquisitions for a variety of reasons, including the following: •failure to successfully manage relationships with new or potential customers; •failure of existing customers to accept new service and product offerings from us; •revenue attrition in excess of anticipated levels; •unanticipated incompatibility of technologies and systems; •failure to leverage the increased scale of our business quickly and effectively; •potential difficulties integrating and harmonizing financial reporting systems; •the loss of key employees; •failure to effectively coordinate sales and marketing efforts to communicate the capabilities of our enhanced portfolio of software and products; •failure to combine product offerings and product lines quickly and effectively; •failure to convert an increasing amount of new or acquired customer relationships revenue from perpetual to annual recurring revenue streams; or •failure to effectively invest in further sales, marketing, and research and development efforts that lead to increased revenues. We face significant competition, which may adversely affect our ability to add new customers, retain existing customers, and grow our business. The market for simulation, data analytics, and high-performance computing software is highly fragmented. Our primary competitors include companies such as IBM, Dassault Systèmes, Siemens, Ansys, MSC Software (a Hexagon company), and Alteryx. Many are large public companies, with significant financial resources. In addition to these competitors, we compete with many smaller companies offering similar software applications. A significant number of companies have developed or are developing software and services that currently, or in the future, may compete with some or all of our software and services. 19 Table of Contents A significant number of companies have developed or are developing software and services that currently, or in the future, may compete with some or all of our software and services. We may also face competition from participants in adjacent markets, including two-dimensional, or 2D, and three-dimensional, or 3D, CAD, and broader PLM competitors and others that may enter our markets by leveraging related technologies and partnering with or acquiring other companies. The principal competitive factors in our industry include: •breadth, depth and integration of software; •domain expertise of sales and technical support personnel; •consistent global support; •performance and reliability; and •price. 19 Table of Contents Many of our current and potential competitors have longer-term and more extensive relationships with our existing and potential customers that provide them with an advantage in competing for business with those customers. Many of our current and potential competitors have longer-term and more extensive relationships with our existing and potential customers that provide them with an advantage in competing for business with those customers. They may be able to devote greater resources to the development and improvement of their offerings than we can. These competitors could incorporate additional functionality into their competing products from their wider product offerings or leverage their commercial relationships in a manner that uses product bundling or closed technology platforms to discourage enterprises from purchasing our applications. Many existing and potential competitors enjoy competitive advantages over us, such as: •larger sales and marketing budgets and resources; •access to larger customer bases, which often provide incumbency advantages; •broader global distribution and presence; •greater resources to make acquisitions; •the ability to bundle competitive offerings with other software and services; •greater brand recognition; •lower labor and development costs; •greater levels of aggregate investment in research and development; •larger and more mature intellectual property portfolios; and •greater financial, technical, management and other resources. These competitive pressures in our markets or our failure to compete effectively may result in fewer customers, price reductions, licensing of fewer units, increased sales and marketing expenses, reduced revenue and gross profits and loss of market share. Any failure to address these factors could harm our business. Because we derive a substantial portion of our revenues from customers in the automotive industry, we are susceptible to factors affecting this industry. An adverse occurrence, including industry slowdown, recession, political instability, costly or constraining regulations, rapid technological obsolescence, excessive inflation, rising interest rates, prolonged disruptions in one or more of our automotive customers’ production schedules, supply disruptions, or labor disturbances, that results in a significant decline in the volume of sales in this industry, or in an overall downturn in the business and operations of our customers in this industry, could adversely affect our business. An adverse occurrence, including industry slowdown, due to the continuing impacts of COVID-19 or otherwise, recession, political instability, costly or constraining regulations, rapid technological obsolescence, excessive inflation, rising interest rates, prolonged disruptions in one or more of our automotive customers’ production schedules, supply disruptions, or labor disturbances, that results in a significant decline in the volume of sales in this industry, or in an overall downturn in the business and operations of our customers in this industry, could adversely affect our business. The automotive industry is highly cyclical in nature and sensitive to changes in general economic conditions, consumer preferences and rising interest rates. Any weakness in demand in this industry, the insolvency of a manufacturer or suppliers, or constriction of credit markets may cause our automotive customers to reduce their amount of software licensed or services requested or request discounts or extended payment terms, any of which may cause fluctuations or a decrease in our revenues and timing of cash flows. Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business. Our quarterly results of operations and our key metrics, including Billings, Adjusted EBITDA and Free Cash Flow, may vary significantly in the future and seasonally. Many customers make purchase decisions based on their fiscal year budgets, which often coincide with the calendar year. These seasonal trends materially affect our financial results, as license fees become due at the time the license term commences based upon agreed payment terms that customers may not adhere to. As a result, new and renewal licenses have been concentrated in the first and fourth quarter of the year, and our cash flows from operations have been highest late in the first quarter and early in the second quarter of the succeeding fiscal year. Period-to-period comparisons of our operating results may not be meaningful. The results of any one quarter should not be relied upon as an indication of future performance. Our quarterly financial results and key metrics may fluctuate as a result of a variety of factors including: •seasonal variations in customer purchasing patterns; •our ability to retain and/or increase sales to existing customers at various times; •our ability to attract new customers; •the addition or loss of large customers, including through their acquisitions or industry consolidations; 20 Table of Contents •the timing of recognition of revenues; •the amount and timing of billings; •the amount and timing of operating expenses and capital expenditures; •the length of sales cycles; •significant security breaches, technical difficulties or unforeseen interruptions to the functionality of our software; •the number of new employees added; •the amount and timing of billing for professional services engagements; •the timing and success of new products, features, enhancements or functionalities introduced by us or our competitors; •changes in our pricing policies or those of our competitors; •changes in the competitive dynamics of our industry, including consolidation among competitors; •the timing of expenses related to the development or acquisition of technology; •any future charges for impairment of goodwill from acquired companies; •extraordinary expenses such as litigation or other dispute-related settlement payments; •the impact of new accounting pronouncements; and •general economic conditions. Our quarterly financial results and key metrics may fluctuate as a result of a variety of factors including: •seasonal variations in customer purchasing patterns; •our ability to retain and/or increase sales to existing customers at various times; •our ability to attract new customers; •the addition or loss of large customers, including through their acquisitions or industry consolidations; •the timing of recognition of revenues; •the amount and timing of billings; •the amount and timing of operating expenses and capital expenditures; •the length of sales cycles; •significant security breaches, technical difficulties or unforeseen interruptions to the functionality of our software; •the number of new employees added; •the amount and timing of billing for professional services engagements; •the timing and success of new products, features, enhancements or functionalities introduced by us or our competitors; •changes in our pricing policies or those of our competitors; •changes in the competitive dynamics of our industry, including consolidation among competitors; •the timing of expenses related to the development or acquisition of technology; •any future charges for impairment of goodwill from acquired companies; •extraordinary expenses such as litigation or other dispute-related settlement payments; •the impact of new accounting pronouncements; and •general economic conditions. Billings have historically been highest in the first and fourth quarters of any calendar year and may vary in future quarters. 21 Table of Contents Billings have historically been highest in the first and fourth quarters of any calendar year and may vary in future quarters. This seasonality or the occurrence of any of the factors above may cause our results of operations to vary and our financial statements may not fully reflect the underlying performance of our business. In addition, we may choose to grow our business for the long-term rather than to optimize for profitability or cash flows for a particular shorter-term period. If our quarterly results of operations fall below the expectations of investors or securities analysts, the price of our Class A common stock could decline and we could face lawsuits, including securities class action suits. Fluctuations in foreign currency exchange rates could result in declines in our reported revenue and operating results. As a result of our international activities, we have revenue, expenses, cash, accounts receivable and payment obligations denominated in foreign currencies including Euros, British Pounds Sterling, Indian Rupees, Japanese Yen, and Chinese Yuan. Foreign currency risk arises primarily from the net difference between non-United States dollar receipts from customers and non-United States dollar operating expenses. The value of foreign currencies against the United States dollar can fluctuate significantly, and those fluctuations may occur quickly. We cannot predict the impact of future foreign currency fluctuations. Strengthening of the United States dollar could cause our software to become relatively more expensive to some of our customers leading to decreased dollar sales and a reduction in billings and revenue not denominated in United States dollars. Weakening of the United States dollar could result in an increase of foreign denominated expenses when reported in United States dollars. A reduction in revenue or an increase in operating expenses due to economic volatility or fluctuations in foreign currency exchange rates could have an adverse effect on our financial condition and operating results. Such foreign currency exchange rate fluctuations may make it more difficult to detect underlying trends in our business and operating results. We do not currently engage in currency hedging activities to limit the risk of exchange rate fluctuations. In the future, we may use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. The use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place, and the cost of those hedging techniques may have a significant negative impact on our operating results. The use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments. If we are not able to successfully manage or hedge against the risks associated with currency fluctuations, our financial condition and operating results could be adversely affected. 21 Table of Contents If we fail to attract new or retain existing third-party independent software vendors to participate in the APA, we may not be able to grow the APA program. If we fail to attract new or retain existing third-party independent software vendors to participate in the APA, we may not be able to grow the APA program. Our APA program allows our customers to use third-party software that may be unrelated to our software, without the need to enter into additional license agreements. The APA program results in increased revenues through revenue sharing and encourages users to stay within the Altair software ecosystem. If third-party software providers are unwilling to join the APA on appropriate terms, including agreeing with our revenue share allocations, or if we are unable to retain our current APA participants, we may not be able to grow the APA program. Licensing of our software is dependent, in part, on performance of our distributors and resellers. We have historically licensed our software primarily through our direct sales force. We have enhanced our units licensing model such that it is able to be licensed through a network of distributors and resellers. If these distributors and resellers are unable to successfully adjust their sales methods to support our annual recurring licensing model, or become unstable, financially insolvent, or otherwise do not perform as we expect, our revenue growth derived from the distributor and reseller channels could be negatively impacted. If we fail to adapt to technology changes our software may become less marketable, less competitive, or obsolete. Our success depends in part on our ability to: •anticipate customer needs; •foresee changes in technology, including to cloud-enabled hardware, software, networking, browser and database technologies; •differentiate our software; •maintain operability of our software with changing technology standards; and •develop or acquire additional or complementary technologies. We may not be able to develop or market new or enhanced software in a timely manner, which could result in our software becoming less marketable, less competitive, or obsolete. We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our profitability in the near term. Part of our business strategy is to focus on our long-term growth. As a result, our profitability may be lower in the near term than it would be if our strategy were to maximize short-term profitability. Expanding our research and development efforts, sales and marketing efforts, infrastructure and other such investments may not ultimately grow our business or cause higher long-term profitability. If we are ultimately unable to achieve greater profitability at the level anticipated by analysts and our stockholders, our Class A common stock price may decline. Our research and development may not generate revenue or yield expected benefits. A key element of our strategy is to focus on innovation and invest significantly in research and development to create new software and enhance our existing software to address additional applications and serve new markets, both internally and through acquisitions. Research and development projects can be technically challenging and expensive, and there may be delays between the time we incur expenses and the time we are able to generate revenue, if any. 23 Table of Contents Research and development projects can be technically challenging and expensive, and there may be delays between the time we incur expenses and the time we are able to generate revenue, if any. Anticipated customer demand for any software we may develop could decrease after the development cycle has commenced, and we could be unable to avoid costs associated with the development of any such software. If we expend a significant amount of resources on research and development and our efforts do not lead to the timely introduction or improvement of software that is competitive in our current or future markets, it could harm our business. Our development could be limited by government regulations affecting who we can hire, and what markets we can serve. If we lose our senior executives, we may be unable to achieve our business objectives. We currently depend on the continued services and performance of James Scapa, our chief executive officer, and other senior executives. Many members of this executive team have served the Company for more than 15 years, with Mr. Scapa having served since our founding in 1985. Loss of Mr. Scapa’s services or those of other senior executives could delay or prevent the achievement of our business objectives. 22 Table of Contents Acquisitions may dilute our stockholders, disrupt our core business, divert our resources, or require significant management attention. Acquisitions may dilute our stockholders, disrupt our core business, divert our resources, or require significant management attention. Most of our software has been developed internally with acquisitions used to augment our capabilities. We may not effectively identify, evaluate, integrate, or use acquired technology or personnel from prior or future acquisitions, or accurately forecast the financial impact of an acquisition, including accounting charges. After the completion of an acquisition, it is possible that our valuation of such acquisition for purchase price allocation purposes may change compared to initial expectations and result in unanticipated write-offs or charges, impairment of our goodwill, or a material change to the fair value of the assets and liabilities associated with a particular acquisition. We may pay cash, incur debt, or issue equity securities to fund an acquisition. The payment of cash will decrease available cash. The incurrence of debt would likely increase our fixed obligations and could subject us to restrictive covenants or obligations. The issuance of equity securities would likely be dilutive to our stockholders. We may also incur unanticipated liabilities as a result of acquiring companies. Future acquisition activity may disrupt our core business, divert our resources, or require significant management attention. International operations expose us to risks inherent in international activities. Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic and political risks that are different from those in the United States. We face risks in doing business internationally that could adversely affect our business, including: •the need to localize and adapt our software for specific countries, including translation into foreign languages and associated expenses; •foreign exchange risk; •import, export and sanctions restrictions and changes in trade regulation and agreements, including increased government limitations concerning sharing technology, end use , and end users and possible foreign government retaliation; •sales and customer service challenges associated with operating in different countries; •enhanced difficulties of integrating foreign acquisitions; •difficulties in staffing and managing foreign operations and working with foreign partners; •different pricing environments, longer sales cycles, longer accounts receivable payment cycles, and collections issues; •compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including the Committee on Foreign Investment in the United States (CFIUS), the Foreign Corrupt Practices Act of 1977 (FCPA), employment, ownership, trade, tax, privacy and data protection and artificial intelligence laws and regulations; •limitations on enforcement of intellectual property rights; •more restrictive or otherwise unfavorable government regulations affecting U. We face risks in doing business internationally that could adversely affect our business, including: •the need to localize and adapt our software for specific countries, including translation into foreign languages and associated expenses; •foreign exchange risk; •import and export restrictions and changes in trade regulation, including uncertainty regarding renegotiation of international trade agreements and partnerships; •sales and customer service challenges associated with operating in different countries; •enhanced difficulties of integrating foreign acquisitions; •difficulties in staffing and managing foreign operations and working with foreign partners; •different pricing environments, longer sales cycles, longer accounts receivable payment cycles, and collections issues; •compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including the Foreign Corrupt Practices Act of 1977, or the FCPA, employment, ownership, trade, tax, privacy and data protection laws and regulations; •limitations on enforcement of intellectual property rights; •more restrictive or otherwise unfavorable government regulations; •increased financial accounting and reporting burdens and complexities; •restrictions on the transfer of funds; 24 Table of Contents •withholding and other tax obligations on remittance and other payments made by our subsidiaries; and •unstable regional, economic and political conditions. S. entities; •increased financial accounting and reporting burdens and complexities; •restrictions on the transfer of funds; •withholding and other tax obligations on remittance and other payments made by our subsidiaries; and •unstable regional, economic and political conditions. Our inability to manage any of these risks successfully, or to comply with these laws and regulations, could reduce our sales, affect our innovation and development and harm our business. Our inability to manage any of these risks successfully, or to comply with these laws and regulations, could reduce our sales and harm our business. If we are unable to match engineers to open positions in our CES business or are otherwise unable to grow our CES business, our revenue could be adversely affected. We operate our client engineering services business by hiring engineers and data scientists for placement at a customer site for specific customer-directed assignments and pay them only for the duration of the placement. The success of this business is dependent upon our ability to recruit and retain highly skilled, CES staff to meet the requirements of our customers and to maintain ongoing 23 Table of Contents relationships with these customers. The success of this business is dependent upon our ability to recruit and retain highly skilled, CES staff to meet the requirements of our customers and to maintain ongoing relationships with these customers. Our CES business constituted approximately 5% of our total revenues for each of the years ended December 31, 2023 and 2022. Our CES business constituted approximately 5% and 7% of our total revenues for the year ended December 31, 2022 and 2021, respectively. Some of our customers satisfy their engineering personnel needs through managed service providers, or MSPs. A significant percentage of the engineers we place, either directly or through MSPs, are with U.S.-based customers and are citizens of countries other than the United States. In the event these engineers are unable to enter into, or remain in, the United States legally, we may be unable to match engineers with the appropriate skill sets matched to open customer positions. If we are unable to attract highly skilled, qualified CES staff because of competitive factors, export controls or immigration laws, or otherwise fail to match CES staff to open customer positions, our revenue may be adversely affected. If we are unable to attract highly skilled, qualified CES staff because of competitive factors or immigration laws, or otherwise fail to match CES staff to open customer positions, our revenue may be adversely affected. Our sales to government agencies and their suppliers may be subject to reporting and compliance requirements. Our customers include agencies of the various governments, including, but not limited to the United States, and their suppliers of products and services. These customers may procure our software and services through various governments’ mandated procurement regulations. Because of governmental reporting and compliance requirements, we may incur unexpected costs or required supply chain changes and limitations. Because of governmental reporting and compliance requirements, we may incur unexpected costs. Government agencies and their suppliers may have statutory, contractual or other legal rights to terminate contracts for convenience or due to a default, and any such termination may adversely affect our future operating results. Our revenue mix may vary over time, which could harm our gross margin and operating results. Our revenue mix may vary over time due to a number of factors, including the mix of term-based licenses and perpetual licenses. Due to the differing revenue recognition policies applicable to our term-based licenses, perpetual licenses and professional services, shifts in the mix between subscription and perpetual licenses from quarter to quarter, or increases or decreases in revenue derived from our professional engineering services, which have lower gross margins than our software services, could produce substantial variation in revenues recognized even if our billings remain consistent. Our gross margins and operating results could be impacted by changes in revenue mix and costs, together with other factors, including entry into new markets or growth in lower margin markets; entry into markets with different pricing and cost structures; pricing discounts; and increased price competition. Any one of these factors or the cumulative effects of certain of these factors may result in significant fluctuations in our gross margin and operating results. This variability and unpredictability could result in our failure to meet internal expectations or those of securities analysts or investors for a particular period. If we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could decline. If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings, which could harm our business. Under the Generally Accepted Accounting Principles ("GAAP"), we review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. As of December 31, 2023 and 2022, respectively, we had $458. As of December 31, 2022 and 2021, respectively, we had $449. 1 million and $449.6 million and $99. 0 million of goodwill and $83.2 million of goodwill and $107. 6 million and $107.6 million and $99. 6 million of other intangible assets—net. An adverse change in market conditions, particularly if such change has the effect of changing one of our critical assumptions or estimates, could result in a change to the estimation of fair value that could result in an impairment charge. In addition to our software, we source, distribute and sell products, which may expose us to product liability claims, product recalls, and warranty claims that could be expensive and harm our business. We source, distribute and sell products, in part, through certain of our wholly owned subsidiaries. To the extent these products do not perform as expected, cause injury or death or are otherwise unsuitable for usage, we may be held liable for claims, including product liability and other claims. To the extent these products do not perform as expected, cause injury or death or are otherwise unsuitable for usage, we may be held liable for claims, including product 25 Table of Contents liability and other claims. A product liability claim, any product recalls or an excessive warranty claim, whether arising from defects in design or failure in our supply chains could negatively affect our sales or require a change in the design process or our product sourcing, any of which may harm our reputation and business. Issues in the development and use of AI and machine learning in our offerings, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse effects to our business and operating results. If we fail to maintain an effective system of internal controls, our business and operating results could be harmed, and we could fail to meet our reporting obligations, which could have a material adverse effect on our business and our share price. We incorporate machine learning and AI technologies in our offerings and business, and we are making investments in expanding our AI capabilities in our products, services, and tools, including ongoing deployment and improvement of existing machine learning and AI technologies. AI technologies are complex and rapidly evolving. We face significant competition from other companies as well as an evolving and uncertain regulatory landscape in relation to these technologies and “big data.” For example, our machine learning, big data, and AI-related initiatives may give rise to risks related to harmful content, accuracy, bias, discrimination, toxicity, intellectual property infringement or misappropriation, defamation, data privacy, and cybersecurity, among others. The development, 24 Table of Contents adoption, introduction, and use of AI technologies in new or existing products may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns, or other complications that could adversely affect our business, reputation, or financial results. There are operational risks as well. For example, the algorithms that we or our licensors use may be flawed or may be based on datasets that are biased or insufficient. Similarly, any latency, disruption, or failure in our machine learning and AI technologies or infrastructure could result in delays or errors in our offerings. Uncertainty around new and emerging AI technologies may require additional investment and increase our costs in the development, testing, deployment, and maintenance of machine learning models, development of new approaches and processes, and development of appropriate policies, procedures, protections and safeguards, which may be costly and could impact our expenses. Our customers or others may rely on or use content generated by AI models (e.g., images, text, and language translation) to their detriment, which may expose us to brand or reputational harm, competitive harm, and/or legal liability. The development, marketing, and use of AI technologies presents emerging ethical and social issues, and if we enable or offer solutions that draw scrutiny or controversy due to their perceived or actual impact on customers, employees, content owners, or on society as a whole, we may experience brand or reputational harm, competitive harm, and/or legal liability. Risks related to our intellectual property Defects or errors in our software could result in loss of revenue or harm to our reputation. Our software is complex and, despite extensive testing and quality control, may contain undetected or perceived bugs, defects, errors, or failures. From time to time we have found defects or errors in our software and we may discover additional defects in the future. We may not find defects or errors in new or enhanced software before release and these defects or errors may not be discovered by us or our customers until after they have used the software. We have in the past issued, and may in the future need to issue, corrective releases or updates of our software to remedy bugs, defects and errors or failures. The occurrence of any real or perceived bugs, defects, errors, or failures could result in: •lost or delayed market acceptance of our software; •delays in payment to us by customers; •injury to our reputation; •diversion of our resources; •loss of competitive position; •claims by customers for losses sustained by them; •breach of contract claims or related liabilities; •increased customer support expenses or financial concessions; and •increased insurance costs. Any of these problems could harm our business. Failure to protect and enforce our proprietary technology and intellectual property rights could substantially harm our business. The success of our business depends, in part, on our ability to protect and enforce our proprietary technology and intellectual property rights, including our trade secrets, patents, trademarks, copyrights, and other intellectual property. We attempt to protect our intellectual property under trade secret, patent, trademark, and copyright laws. Despite our efforts, we may not be able to protect our proprietary technology and intellectual property rights, if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Further, the risk of cyberattacks or other privacy or data security incidents may be heightened due to common, external attempts to attack our information technology systems and data, using means such as phishing. It may be possible for unauthorized third parties to copy our technology and use information that we regard as proprietary to create products and services that compete with ours. Provisions in our license agreements protect against unauthorized use, copying, transfer and disclosure of our technology, but such provisions may be difficult to enforce or are unenforceable under the laws of certain jurisdictions and countries. The laws of some countries do not protect proprietary rights to the same extent as the laws of the United States. Our international activities expose us to unauthorized copying and use of our technology and proprietary information. We primarily rely on our unpatented proprietary technology and trade secrets. Despite our efforts to protect our proprietary technology and trade secrets, unauthorized parties may attempt to misappropriate, reverse engineer or otherwise obtain and use them. The 25 Table of Contents contractual provisions that we enter into with employees, consultants, partners, vendors and customers may not be sufficient to prevent unauthorized use or disclosure of our proprietary technology or trade secrets and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or trade secrets. The contractual provisions that we enter into with employees, consultants, partners, vendors and customers may not be sufficient to prevent unauthorized use or disclosure of our proprietary technology or trade secrets and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or trade secrets. Policing unauthorized use of our technologies, software and intellectual property is difficult, expensive and time-consuming, particularly in countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak. We may be unable to detect or determine the extent of any unauthorized use or infringement of our software, technologies or intellectual property rights. From time to time, we may need to engage in litigation or other administrative proceedings to protect our intellectual property rights or to defend against allegations by third parties that we have infringed or misappropriated their intellectual property rights, including in connection with requests for indemnification by our customers who may face such claims. From time to time, we may need to engage in litigation or other administrative proceedings to protect our intellectual property rights or to defend against allegations by third parties that we have infringed or misappropriated their intellectual property rights, including 26 Table of Contents in connection with requests for indemnification by our customers who may face such claims. We have been approached and may be approached in the future by certain of our customers to indemnify them against third-party intellectual property claims. Litigation and/or any requests for indemnification by our customers could result in substantial costs and diversion of resources and could negatively affect our business and revenue. If we are unable to protect and enforce our intellectual property rights, our business may be harmed. Intellectual property disputes could result in significant costs and harm our business. Intellectual property disputes may occur in the markets in which we compete. Many of our competitors are large companies with significant intellectual property portfolios, which they may use to assert claims of infringement, misappropriation or other violations of intellectual property rights against us or our customers. Any allegation of infringement, misappropriation or other violation of intellectual property rights by a third-party, even those without merit, could cause us to incur substantial costs defending against the claim, could distract our management from our business, and could cause uncertainty among our customers or prospective customers, all of which could have an adverse effect on our business or revenue. Our agreements may include provisions that require us to indemnify others for losses suffered or incurred as a result of our infringement of a third-party’s intellectual property rights infringement, including certain of our employees and customers. An adverse outcome of a dispute or an indemnity claim may require us to: •pay substantial damages; •cease licensing our software or portions of it; •develop non-infringing technologies; •acquire or license non-infringing technologies; and •make substantial indemnification payments. Any of the foregoing or other damages could harm our business, decrease our revenue, increase our expenses or negatively impact our cash flow. Security breaches, computer malware, computer hacking, cyberattacks and other security incidents could harm our business, reputation, brand and operating results. Security incidents have become more prevalent across industries and may occur on our systems. Security incidents may be caused by, or result in but are not limited to, security breaches, computer malware or malicious software, computer hacking, cyberattacks on our information systems, unauthorized access to confidential information, denial of service attacks, security system control failures in our own systems or from vendors we use, email phishing, software vulnerabilities, social engineering, sabotage and drive-by downloads. Such security incidents, whether intentional or otherwise, may result from actions of hackers, criminals, nation states, vendors, employees or customers. Our company is a highly automated business which relies on our network infrastructure and enterprise applications, third-party providers of cloud-based services, internal technology systems and website for development, marketing, operational, support and sales activities. A disruption or failure of these systems or in those of our external service providers, in the event of a major storm, earthquake, fire, telecommunications failure, cyberattack, government intervention, terrorist attack or other catastrophic event could cause system interruptions, reputational harm, delays in our product development and loss of critical data and could materially and adversely affect our ability to operate our business. A disruption or failure of these systems or in those of our external service providers, in the event of a major storm, earthquake, fire, telecommunications failure, cyber-attack, terrorist attack or other catastrophic event could cause system interruptions, reputational harm, delays in our product development and loss of critical data and could materially and adversely affect our ability to operate our business. 26 Table of Contents We may experience disruptions, data loss, outages and other performance problems on our systems due to service attacks, unauthorized access or other security related incidents. We may experience disruptions, data loss, outages and other performance problems on our systems due to service attacks, unauthorized access or other security related incidents. Any security breach or loss of system control caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss, modification or corruption of data, software, hardware or other computer equipment and the inadvertent transmission of computer malware could harm our business. A cybersecurity incident may occur on our systems, or third-party systems upon which we rely, which could disrupt Altair materially in the future. In addition, some of our software may store and transmit customers’ confidential business information in our facilities and on our equipment, networks, corporate systems and in the cloud. Security incidents could expose us to litigation, remediation costs, increased costs for security measures, loss of revenue, damage to our reputation and potential liability. Our customer data, corporate systems, and security measures may be compromised due to the actions of outside parties, employee error, malfeasance, third-party software, capacity constraints, a combination of these or otherwise and, as a result, an unauthorized party may obtain access to our data or our customers’ data. Our customer data, corporate systems, and security measures may be compromised due to the actions of outside parties, employee error, malfeasance, third-party software, 27 Table of Contents capacity constraints, a combination of these or otherwise and, as a result, an unauthorized party may obtain access to our data or our customers’ data. Outside parties may attempt to fraudulently induce our employees to disclose sensitive information in order to gain access to our customers’ data or our information. We must continuously examine and modify our security controls and business policies to address new threats, the use of new devices and technologies, and these efforts may be costly or distracting. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement sufficient control measures to defend against these techniques. Though it is difficult to determine what harm may directly result from any specific incident or breach, any failure to maintain confidentiality, availability, integrity, performance and reliability of our systems and infrastructure may harm our reputation and our ability to retain existing customers and attract new customers. If an actual or perceived security incident occurs, the market perception of the effectiveness of our security controls could be harmed, our brand and reputation could be damaged, we could lose customers, and we could suffer financial exposure due to such events or in connection with remediation efforts, investigation costs, regulatory fines and changed security control, system architecture and system protection measures. We may lose customers if our software does not work seamlessly with our customers’ existing software. Our customers may use our software, which in many instances has been designed to seamlessly interface with software from some of our competitors, together with their own software and software they license from third parties. If our software ceases to work seamlessly with our customers’ existing software applications, we may lose customers. Many of our customers use our software and services to design and develop their products, which when built and used may expose us to claims. Many of our customers use our software and services, together with software and services from other third parties and their own resources, to assist in the design and development of products intended to be used in a commercial setting. To the extent our customers design or develop a product that results in potential liability, including product liability, we may be included in resulting litigation. We may be subject to litigation defense costs or be subject to potential judgments or settlement costs for which we may not be fully covered by insurance, which would result in an increase of our expenses. We also license certain of our software on Altair branded computer hardware, which we acquire from original equipment manufacturers, which we refer to as OEMs, exposing us to potential liability for the hardware, such as product liability. To the extent this liability is greater than the warranty and liability protection from our OEM, we may incur additional expenses, which may be significant. 27 Table of Contents If we fail to educate and train our users regarding the use and benefits of our software, we may not generate additional revenue. If we fail to educate and train our users regarding the use and benefits of our software, we may not generate additional revenue. Our software is complex and highly technical. We continually educate and train our existing and potential users regarding the depth, breadth, and benefits of our software including through classroom and online training. If these users do not receive education and training regarding the use and benefits of our software, or the education and training is ineffective, they may not increase their usage of our software. We may incur costs of training directly related to this activity prior to generating additional revenue. We currently open source certain of our software and may open source other software in the future, which could have an adverse effect on our revenues and expenses and our use of open source technology could impose limitations on our ability to commercialize our software. We offer our open matrix language, or OML, source code and a portion of our Altair PBS workload management software in an open source version to generate additional usage and broaden user-community development and enhancement of the software. We offer related software and services on a paid basis. We believe increased usage of open source software leads to increased purchases of these related paid offerings. We may offer additional software on an open source basis in the future. There is no assurance that the incremental revenues from related paid offerings will outweigh the lost revenues and incurred expenses attributable to the open sourced software. We use open source software in some of our software and expect to continue to use open source software in the future. Although we monitor our use of open source software to avoid subjecting our software to conditions we do not intend, we may face allegations from others alleging ownership of, or seeking to enforce the terms of, an open source license, including by demanding release of the open source software, derivative works, or our proprietary source code that was developed using such software. These allegations could also result in litigation. The terms of many open source licenses have not been interpreted by United States courts. There is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our software. There is a 28 Table of Contents risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our software. In such an event, we may be required to seek licenses from third parties to continue commercially offering our software, to make our proprietary code generally available in source code form, to re-engineer our software or to discontinue the sale of our software if re-engineering could not be accomplished on a timely basis, any of which could adversely affect our business and revenue. The use of open source software subjects us to a number of other risks and challenges. Open source software is subject to further development or modification by anyone. Others may develop such software to be competitive with or no longer useful by us. It is also possible for competitors to develop their own solutions using open source software, potentially reducing the demand for our software. If we are unable to successfully address these challenges, our business and operating results may be adversely affected, and our development costs may increase. Risks related to legal or regulatory matters We operate internationally and must comply with employment and related laws in various countries, which may, in turn, result in unexpected expenses. We are subject to a variety of domestic and foreign employment laws, including those related to safety, discrimination, whistle-blower, privacy and data protection, employment of unauthorized or undocumented employees, classification of employees, wages, statutory benefits, and severance payments. Such laws are subject to change as a result of judicial decisions or otherwise, and there can be no assurance that we will not be found to have violated any such laws in the future. Such violations could lead to the assessment of significant fines against us by federal, state or foreign regulatory authorities or to the award of damages claims, including severance payments, against us in judicial or administrative proceedings by employees or former employees, any of which would reduce our net income or increase our net loss. Changes in government trade, immigration or currency policies may harm our business. We operate our business globally in multiple countries that have policies and regulations relating to trade, immigration and currency, which may change. Governments may change their trade policies by withdrawing from negotiations on new trade policies, renegotiating existing trade agreements, imposing tariffs or imposing other trade restrictions or barriers. Any such changes may result in: •changes in currency exchange rates; •changes in political or economic conditions; •import, sanctions limitations, or export licensing requirements or other restrictions on technology imports and exports; •laws and business practices favoring local companies; 28 Table of Contents •changes in diplomatic and trade relationships; •modification of existing or implementation of new tariffs; •imposition or increase of trade barriers; or •establishment of new trade or currency restrictions. Any such changes may result in: •changes in currency exchange rates; •changes in political or economic conditions; •import or export licensing requirements or other restrictions on technology imports and exports; •laws and business practices favoring local companies; •changes in diplomatic and trade relationships; •modification of existing or implementation of new tariffs; •imposition or increase of trade barriers; or •establishment of new trade or currency restrictions. Any of these changes, changes in immigration policies, government intervention in currency valuation, geopolitical actions or other domestic or foreign government policy changes may adversely impact our ability to sell software and services, hire foreign workers or conduct business in particular countries, which could, in turn, harm our revenues and our business. Any of these changes, changes in immigration policies, government intervention in currency valuation or other government policy changes may adversely impact our ability to sell software and services, which could, in turn, harm our revenues and our business. We are headquartered in the United States and may be particularly impacted by changes affecting the United States and United States persons wherever located in the world. We are headquartered in the United States and may be particularly impacted by changes affecting the United States. We are subject to governmental sanctions, export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws. We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws. Our software, services and hardware are subject to sanctions, export control and import laws and regulations. Our software, services and hardware are subject to export control and import laws and regulations. As a company headquartered in the United States, we are subject to U.S. regulations wherever we operate in the world, including the International Traffic in Arms Regulations, or ITAR, and Export Administration Regulations, or EAR, United States Customs regulations and various economic and trade sanctions regulations administered by the United States Treasury Department’s Office of Foreign Assets Control, presenting further risk of unexpected reporting and compliance costs. As a company headquartered in the United States, we are subject to regulations, including the International Traffic in Arms Regulations, or ITAR, and Export Administration Regulations, or EAR, United States Customs regulations and various economic and trade sanctions regulations administered by the United States Treasury Department’s Office of Foreign Assets Control, presenting further risk of unexpected reporting and compliance costs. Compliance with these regulations may also prevent and restrict us from deriving revenue from potential customers in certain geographic locations for certain of our technologies or preventing employment or business activities. Compliance with these regulations may also prevent and restrict us from deriving revenue from potential customers in certain geographic locations for certain of our technologies. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including jail time, the possible loss of export or import privileges, loss of government contracts, fines which may be imposed on us and responsible employees or managers. Some of these violations are strict liability offenses meaning we can violate the requirements without knowledge of the violation. Obtaining the necessary authorizations, including any required license, for a particular sale may be time-consuming, is not guaranteed and may result in the delay or loss of sales opportunities. These laws and regulations change on an ongoing basis and we could be affected by third country similar requirements where we do business as well as related foreign country retaliation or geopolitical actions. In addition, changes in our software or changes in applicable sanctions, export or import regulations may create delays in the introduction and sale of our software in international markets, prevent our customers with international operations from deploying our software or, in some cases, prevent the export or import of our software to certain countries, governments or persons altogether. In addition, changes in our software or changes in applicable export or import regulations may create delays in the introduction and sale of our software in international markets, prevent our customers with international operations from deploying our software or, in some cases, prevent the export or import of our software to certain countries, governments or persons altogether. We incorporate encryption technology into portions of our software. Various countries regulate the import of certain encryption technology, including through import permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our software or could limit our customers’ ability to implement our software in those countries. Encrypted software and the underlying technology may also be subject to export control restrictions. Governmental regulation of encryption technology and regulation of imports or exports of encryption products, or our failure to obtain required import or export approval for our software, when applicable, could harm our international sales and adversely affect our revenue. Compliance with applicable regulatory requirements regarding the export of our software, including with respect to new releases of our software, may create delays in the introduction of our software in international markets, prevent our customers with international operations from deploying our software throughout their globally-distributed systems or, in some cases, prevent the export of our software to some countries altogether. United States export control laws and economic sanction programs prohibit the shipment of certain software and services to countries, governments and persons that are subject to United States economic embargoes and trade sanctions, including, but not limited to, Iran, Cuba, North Korea, Syria and the Crimea, Donetsk, and Luhansk regions of Ukraine. Any violations of such economic embargoes and trade sanction regulations could have negative consequences, including government investigations, civil and criminal penalties and reputational harm. In addition to the embargo absolute prohibitions, there are other country programs, sectoral sanctions and export requirements that limit our ability to do business in certain countries and regions such as Russia, Venezuela, China and Hong Kong. The prohibitions are continually changing. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our software by, or in our decreased ability to export or license our software to, existing or potential customers with international operations. Any decreased use of our software or limitation on our ability to export or license our software could adversely affect our business. 29 Table of Contents Our business is subject to a wide range of laws and regulations, and our failure to comply with those laws and regulations could harm our business. Our business is subject to a wide range of laws and regulations, and our failure to comply with those laws and regulations could harm our business. Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety and environmental laws, privacy and data protection laws, artificial intelligence, financial services laws, anti-bribery laws, sanctions, national security, import and export controls, anti-boycott, federal securities laws and tax laws and regulations. Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety and environmental laws, privacy and data protection laws, financial services laws, anti-bribery laws, import and export controls, federal securities laws and tax laws and regulations. In certain foreign jurisdictions, these regulatory requirements may be more stringent than those in the United States. These laws and regulations are subject to change over time and thus we must continue to monitor and dedicate resources to ensure continued compliance. Non-compliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions and jail time for responsible employees and managers. Non-compliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, operating results, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, operating results and financial condition. If we or any of our employees violate the FCPA, the U.K. Bribery Act or similar anti-bribery laws we could be adversely affected. The FCPA, the U.K. Bribery Act and similar anti-bribery laws generally prohibit companies and their intermediaries from authorizing, offering or providing, directly or indirectly, improper payments or benefits for the purpose of obtaining or retaining business to government officials, political parties and private-sector recipients. United States based companies are required to maintain records that accurately and fairly represent their transactions and have an adequate system of internal accounting controls. We operate in areas of the world that potentially experience corruption by government officials to some degree and, in certain circumstances, compliance with anti-bribery laws may conflict with local customs and practices. We cannot assure that our employees, resellers or distributors will not engage in prohibited conduct. If we are found to be in violation of the FCPA, the U.K. Bribery Act or other anti-bribery laws, we could suffer criminal or civil penalties or other sanctions. We have significant deferred tax assets primarily in the United States, which we may not use in future taxable periods. 30 Table of Contents We have significant deferred tax assets primarily in the United States, which we may not use in future taxable periods. As of December 31, 2023 and 2022, we had gross deferred tax assets, or DTAs, of $208.5 million and $179.6 million and $99. 8 million, respectively, primarily related to capitalized research and development expenses, net operating loss carryforwards, tax credits and share-based compensation.7 million, respectively, primarily related to capitalized research and development expenses, net operating loss carryforwards, tax credits, share-based compensation, lease obligations and employee benefits. We are entitled to a United States federal tax deduction when non-qualified stock options, or NSOs, are exercised. For the 2023 tax year, we recorded a net increase in the valuation allowance of $29. For the 2022 tax year, we recorded an increase in the valuation allowance by $29. 9 million for the gross DTAs. Our ability to utilize any net operating losses or tax credits may be limited under provisions of the Internal Revenue Code of 1986, as amended, or the Code, if we undergo an ownership change (generally defined as a greater than 50-percentage-point cumulative change, by value, in the equity ownership of certain stockholders over a rolling three-year period). Our ability to utilize any net operating losses or tax credits may be limited under provisions of the Internal Revenue Code of 1986, or the Code, if we undergo an ownership change after our IPO (generally defined as a greater than 50-percentage-point cumulative change, by value, in the equity ownership of certain stockholders over a rolling three-year period). We also inherited net operating losses, or NOLs, from the acquisitions of Univa and RapidMiner, which are subject to specific limitations on usage. We also inherited net operating losses, or NOLs, from the acquisitions of Datawatch, Univa, and RapidMiner, which are subject to specific limitations on usage. We may or may not be able to realize the benefits of the acquired NOLs due to a number of factors, including those enumerated above. We may also be unable to realize our tax credit carryforwards prior to their expiration. Our NOLs may also be impaired under state laws. In addition, under the 2017 Tax Cuts and Jobs Act, or Tax Act, tax losses generated in taxable years beginning after December 31, 2017 may be utilized to offset no more than 80% of taxable income annually. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. For tax years beginning on or after January 1, 2022, the Tax Act eliminates the option to currently deduct certain qualifying research and development expenses and requires taxpayers to capitalize and amortize such expenses over five years for research activities performed in the United States and 15 years for research activities performed outside the United States pursuant to Section 174 of the Code. For tax years beginning on or after January 1, 2022, the Tax Act eliminates the option to currently deduct research and development expenses and requires taxpayers to capitalize and amortize them over five years for research activities performed in the United States and 15 years for research activities performed outside the United States pursuant to Section 174 of the Code. Although Congress is considering legislation that would repeal or defer this capitalization and amortization requirement, it is not certain that this provision will be repealed or otherwise modified. If the requirement is not repealed or replaced, it will increase our U.S. federal and state cash taxes and reduce cash flows in fiscal year 2024 and future years. If our global tax methodology is challenged, our tax expense may increase. As a global business headquartered in the United States, we are required to pay tax in a number of different countries, exposing us to transfer pricing and other adjustments. Transfer pricing refers to the methodology of allocating revenue and expenses for tax purposes to particular countries. Taxing authorities may challenge our transfer pricing methodology, which if successful could increase our 30 Table of Contents professional expenses and result in one-time or recurring tax charges, a higher worldwide effective tax rate, reduced cash flows, and lower overall profitability of our operations. Taxing authorities may challenge our transfer pricing methodology, which if successful could increase our professional expenses and result in one-time or recurring tax charges, a higher worldwide effective tax rate, reduced cash flows, and lower overall profitability of our operations. Our tax expense could be impacted depending on the applicability of withholding and other taxes including taxes on software licenses and related intercompany transactions under the tax laws of jurisdictions in which we have business operations. Our future income taxes may fluctuate if there is a change in the mix of income in the applicable tax jurisdictions in which we operate. We are subject to review and audit by the United States and other taxing authorities. Any review or audit could increase our professional expenses and, if determined adversely, could result in unexpected costs. Sales and use, value-added and similar tax laws and rates vary by jurisdiction. Any of these jurisdictions may assert that such taxes are applicable, which could result in tax assessments, penalties and interest. We could be subject to adverse changes in tax laws, regulations and interpretations or challenges to our tax positions. We are subject to tax laws and regulations of the U.S. federal, state and local governments as well as various non-U.S. jurisdictions. Potential changes in existing tax laws, including future regulatory guidance, may impact our effective income tax rate and tax payments. There can be no assurance that changes in tax laws or regulations, both within the U.S. and the other jurisdictions in which we operate, will not materially and adversely affect our effective income tax rate, tax payments, financial condition and results of operations. Similarly, changes in tax laws and regulations that impact our customers and counterparties or the economy generally may also impact our financial condition and results of operations. In addition, tax laws and regulations are complex and subject to varying interpretations, and any significant failure to comply with applicable tax laws and regulations in all relevant jurisdictions could give rise to substantial penalties and liabilities. Any changes in enacted tax laws, rules or regulatory or judicial interpretations; any adverse outcome in connection with tax audits in any jurisdiction; or any change in the pronouncements relating to accounting for income taxes could materially and adversely impact our effective income tax rate, tax payments, financial condition and results of operations. Any changes in enacted tax laws, rules or regulatory or judicial interpretations; any adverse outcome in connection with tax audits in any jurisdiction; 31 Table of Contents or any change in the pronouncements relating to accounting for income taxes could materially and adversely impact our effective income tax rate, tax payments, financial condition and results of operations. Our business may collect personal information and is subject to data protection laws. Companies that collect or process personal information may be regulated by data protection laws adopted by the United States, various states including California, Nevada, Virginia, Colorado, Connecticut and Utah, and foreign jurisdictions, including the European Union, the United Kingdom, Canada, Brazil and China. Companies that collect or process personal information may be regulated by data protection laws adopted by the United States, various states including California, Nevada, Virginia and Colorado, and foreign jurisdictions, including the European Union, the United Kingdom, Canada, Brazil and China. The European Union General Data Protection Regulation and implementing legislation adopted by member states of the European Economic Area (“GDPR”) in 2018, and the United Kingdom Data Protection Act 2018 (the “UK GDPR”) frequently serve as a model for other countries. All of these data protection laws regulate the collection, use, storage, disclosure and security of personal information, such as names, email addresses, Internet Protocol addresses and other online identifiers, business contact data, and customer profiles, that may be used to identify or locate an individual, including customers, employees, business contracts, website visitors and users of mobile apps. The legal, financial and business impact of these data protection laws and regulations is far-reaching and may require us to modify our data processing practices and policies and incur substantial costs and expenses in an effort to comply. We may be required to implement privacy and security policies, permit individuals to access and correct their own personal information that is collected, stored or maintained by us, and require us to transfer, delete or return their personal information. It may also be necessary for us to obtain individuals’ affirmative consent to collect, use or disclose their personal information for certain purposes. Governmental authorities could prohibit any personal information collected in a country from being transferred or disclosed outside of that country or condition such transfer or disclosure on compliance with specific requirements or written agreements. We also may find it necessary or desirable to join industry or other self-regulatory bodies or other information security, or data protection, related organizations that require compliance with their rules pertaining to information security and data protection. We may agree to be bound by additional contractual obligations relating to our collection, use and disclosure of personal, financial and other data. Our failure to comply with these data protection laws may result in governmental actions, fines and non-monetary penalties, or civil actions, and reputational damage, which may harm our business. 31 Table of Contents Proposed or new legislation and regulations could significantly affect our business. The GDPR, which became effective in May 2018, applies to all our business conducted in the European Economic Area (the “EEA”). In the post-Brexit area, our business in the United Kingdom is regulated by the U.K. GDPR. New data protection laws have just come into effect in Brazil and China, and a new Indian law has been passed in 2023 and is expected to come into effect soon. New data protection laws have just come into effect in Brazil and China, and a new Indian law is pending. In the US, state-specific data protection laws are in effect in California, Virginia, Colorado, Nevada, Connecticut and Utah, and new data protection laws will become effective during 2024 in the states of Texas, Florida, Oregon, and Montana. Similar laws will become effective in the next two years in another five states and are pending in many more states. These data protection laws and regulations impose many obligations, and we will need to continue dedicating financial resources and management time to compliance and training in the coming years. Data protection laws, for example, may require, that regulated entities expand disclosures about how personal data is used, mechanisms for obtaining consent from data subjects, controls for data subjects with respect to their personal data (including by enabling them to exercise rights to erasure and data portability), limitations on retention of personal data and mandatory data breach notifications. There are also restrictions on data transfers and the security of the personal data, frequently with substantial fines and penalties associated with violations. The GDPR, for example, provides that supervisory authorities in the European Union may impose administrative fines for certain infringements of the GDPR (up to EUR 20,000,000, or 4% of an undertaking’s total, worldwide, annual revenue, whichever is higher). Individuals who sustain damages because a regulated entity fails to comply with the GDPR have the right to seek compensation from such entity directly. Compliance with data protection laws, the rapid pace of adopting new and amended laws, and necessary monitoring and training will require significant expenditure of resources on an ongoing basis, and there can be no assurance that the measures we have taken for the purposes of compliance will be successful in preventing violations of such laws, cyberattacks, governmental actions or civil proceedings. Given the potential fines, liabilities and damage to our reputation in the event of an actual or perceived violation of data protection laws, any violation may have an adverse effect on our business and operations. As the number of jurisdictions with data privacy regulations increase and our global footprint expands, we anticipate that it will be necessary for us to increase the amount we expend on compliance and training in this area. Risks related to ownership of our Class A common stock An active public trading market for our Class A common stock may not be sustained. 32 Table of Contents Risks related to ownership of our Class A common stock An active public trading market for our Class A common stock may not be sustained. Our Class A common stock is listed on the Nasdaq Global Select Market under the symbol “ALTR.” However, we cannot assure you that an active trading market will be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the price of shares of Class A common stock. An inactive market may impair our ability to raise capital by selling shares and our ability to use our capital stock to acquire other companies or technologies. We cannot predict the prices at which our Class A common stock will trade. The market price of our Class A common stock can be volatile. The market price of our Class A common stock has and may continue to fluctuate from time to time. Our market price may continue to fluctuate substantially depending on a number of factors, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our Class A common stock, since you might not be able to sell your shares at or above the price you paid for our Class A common stock. Factors that could cause fluctuations in the market price of our Class A common stock include the following: •price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the economy as a whole; •volatility in the market prices and trading volumes of technology stocks; •changes in operating performance and stock market valuations of other technology companies generally, or those in our industries in particular; •the volume of shares of our Class A common stock available for public sale; •sales of shares of our Class A common stock; •additional shares of our Class A common stock being sold into the market by our existing stockholders, or the anticipation of such sales, including sales of our Class A common stock upon exercise of outstanding options or upon conversion of our Class B common stock into shares of Class A common stock; •failure of financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors; 32 Table of Contents •the financial projections we may provide to the public, any changes in these projections or our fai