Content analysis
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H.S. sophomore Good
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Financial report summary
?Competition
Cisco Systems • Netscout Systems • ServiceNow • New Relic • Freshworks Inc - Ordinary Shares • Datadog Inc - Ordinary Shares • Atlassian Corporation - Ordinary Shares • Broadcom • DynatraceRisks
- Risks Related to Our Technology, Cybersecurity and the Cyber Incident
- Risks Related to Our Business and Industry
- Risks Related to Regulatory, Compliance and Legal Matters
- Risks Related to Our Intellectual Property
- Risks Related to Our Indebtedness
- Risks Related to Ownership of Our Common Stock
- Risks Related to Our Organizational Structure
- Risks Related to Our Technology, Cybersecurity and the Cyber Incident
- Cyberattacks, including the Cyber Incident, and other security incidents have resulted, and in the future may result, in compromises or breaches of our and our customers’ systems, the insertion of malicious code, malware, ransomware or other vulnerabilities into our systems and products and in our customers’ systems, the exploitation of vulnerabilities in our and our customers’ environments, theft or misappropriation of our and our customers’ proprietary and confidential information, interference with our and our customers’ operations, exposure to legal and other liabilities, higher customer, employee and partner attrition, negative impacts to our sales, renewals and upgrades and reputational harm and other serious negative consequences, any or all of which could materially harm our business.
- As a result of the Cyber Incident, we are subject to pending litigation with the SEC, which has and may continue to result in additional costs and expenses, the diversion of management’s attention, unfavorable publicity and a negative impact on employee morale, and in the future could result in significant penalties, an adverse effect on our business, reputation, financial condition, results of operations and/or stock price, as well as a bar against our Chief Information Security Officer from serving as an officer or director of a publicly traded company.
- Interruptions or performance problems associated with our internal infrastructure, and its reliance on technologies from third parties, may adversely affect our ability to manage our business and meet reporting obligations.
- Interruptions or performance problems associated with our products, including disruptions at any third-party data centers or public cloud providers upon which we rely, may impair our ability to support our customers.
- The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer, employee and partner relations, results of operations, financial condition and cash flows.
- Risks Related to Our Business and Industry
- Our quarterly revenue and operating results may fluctuate from time to time because of a number of factors, which makes our periodic results difficult to predict and could cause our operating results to fall below expectations or the guidance we may provide.
- If we are unable to capture significant volumes of high-quality sales leads from our digital marketing initiatives, account-based marketing and our outbound sales motion, it could adversely affect our revenue growth and operating results.
- If we are unable to sell products to new customers or to sell additional products or upgrades to our existing customers, it could adversely affect our revenue growth and operating results.
- If we fail to successfully manage the evolution of our solutions, our financial results could be negatively impacted.
- Our business depends on customers renewing their maintenance or subscription agreements. Any decline in renewal or net retention rates could harm our future operating results.
- Because our long-term success depends on our ability to operate our business internationally and increase sales of our products to customers located outside of the United States, our business has been and continues to be susceptible to risks associated with international operations and global macroeconomic conditions.
- We operate in highly competitive markets, which could make it difficult for us to acquire and retain customers at historic rates.
- The ability to recruit, retain and develop key employees and management personnel is critical to our success and growth, and our inability to attract and retain qualified personnel could harm our business.
- We have experienced changes in our growth in recent years, and if we fail to manage such changes effectively, we may be unable to execute our business plan, maintain high levels of customer satisfaction or adequately address competitive challenges, and our financial performance may be adversely affected.
- Our actual operating results may differ significantly from information we may provide in the future regarding our financial outlook.
- We depend on the U.S. federal government in certain calendar quarters for a meaningful portion of our on-premises license sales, including maintenance renewals associated with such products, as well as our time-based subscription offerings, and orders from the U.S. federal government are often unpredictable and subject to certain challenges. The delay, disruption or loss of these sales may harm our operating results.
- Our operating margins and cash flows from operations could fluctuate as we make further expenditures to expand our product offerings and sales motion and continue our increased investments in our Secure by Design initiatives and our Customer Success motion.
- Our success depends on our ability to maintain a product portfolio that responds to the needs of technology professionals and leaders and the evolving observability, IT management and service management markets.
- If we are unable to develop and maintain successful relationships with channel partners, our business, results of operations and financial condition could be harmed.
- If we fail to develop and maintain our brands cost-effectively, our financial condition and operating results might suffer.
- Adverse global macroeconomic conditions, including as a result of the wars in Ukraine and Israel, may negatively affect our business.
- Adverse developments affecting the financial services industry could have an adverse impact on our business, financial condition or results of operations.
- Acquisitions present many risks that could have an adverse effect on our business and results of operations.
- Businesses that we acquire may have greater than expected liabilities for which we become responsible.
- Charges to earnings resulting from acquisitions may adversely affect our operating results.
- Potential indemnification liabilities pursuant to the 2021 separation of the N-able business (the “Separation”) could materially affect our business and financial statements.
- Climate change may have a long-term negative impact on our business.
- If we fail to integrate our products with a variety of operating systems, software applications, platforms and hardware that are developed by others or ourselves, our products may become less competitive or obsolete and our results of operations would be harmed.
- Material defects or errors in our products could harm our reputation, result in significant costs to us and impair our ability to sell our products.
- Risks Related to Regulatory, Compliance and Legal Matters
- We are subject to various global data privacy and security regulations, which have and could continue to result in additional costs and liabilities to us.
- We are subject to governmental export controls and economic sanctions laws that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.
- Government regulation of the internet and e-commerce is evolving, and unfavorable changes or our failure to comply with regulations could harm our operating results.
- Future litigation could result in material adverse consequences, including judgments or settlements.
- Risks Related to Our Intellectual Property
- The success of our business depends on our ability to obtain, maintain, protect and enforce our intellectual property rights.
- Exposure related to any disputes and litigation with respect to intellectual property could adversely affect our results of operations, profitability and cash flows.
- Our use of open-source software could negatively affect our ability to sell our products and subject us to possible litigation.
- Our products use third-party software that may be difficult to replace or cause errors or failures of our products that could lead to a loss of customers or harm to our reputation and our operating results.
- Risks Related to Our Indebtedness
- We have substantial indebtedness, which could adversely affect our financial health and our ability to obtain financing in the future, react to changes in our business and meet our obligations with respect to our indebtedness.
- Despite our current indebtedness level, we and our restricted subsidiaries may be able to incur substantially more indebtedness, which could further exacerbate the risks associated with our substantial indebtedness.
- The agreements governing our indebtedness contain restrictions and limitations that may restrict our business and financing activities and expose us to risks that could adversely affect our liquidity and financial condition.
- Certain of our indebtedness may be denominated in foreign currencies, which subjects us to foreign exchange risk, which could cause our debt service obligations to increase significantly.
- We are subject to fluctuations in interest rates.
- Risks Related to Accounting and Taxation
- Failure to maintain proper and effective internal controls could have a material adverse effect on our business, operating results and stock price.
- Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations.
- Our business and financial performance could be negatively impacted by changes in tax laws or regulations or changes in our effective tax rates.
- Additional liabilities related to taxes or potential tax adjustments could adversely impact our business and financial performance.
- Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our operating results.
- Risks Related to Ownership of Our Common Stock
- The trading price of our common stock has been and may continue to be volatile, which could cause the value of your investment to decline.
- We have incurred and will continue to incur increased costs and administrative burden by being a public company, including costs to maintain adequate internal controls over our financial and management systems, which could have an adverse effect on our operations and financial results.
- If securities analysts or industry analysts were to downgrade our stock, publish negative research or reports or fail to publish reports about our business, our competitive position could suffer, and our stock price and trading volume could decline.
- Sales of substantial amounts of our common stock in the public markets, or the perception that such sales could occur, could reduce the market price of our common stock.
- Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans or otherwise will dilute all other stockholders.
- We have not paid a cash dividend on our common stock since the spin-off of N-able and any future dividend payments are at the discretion of our board of directors.
- Risks Related to Our Organizational Structure
- Our restated charter and restated bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.
- The Lead Sponsors have a controlling influence over matters requiring stockholder approval, which could delay or prevent a change of control.
- Certain of our current and former directors have relationships with the Lead Sponsors which may cause conflicts of interest with respect to our business.
- The Sponsors and their affiliated funds may pursue corporate opportunities independent of us that could present conflicts with our and our stockholders’ interests.
- We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
- Our restated charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
- We are a controlled company within the meaning of the NYSE rules and, as a result, may rely on exemptions from certain corporate governance requirements.
Management Discussion
- Total revenue increased $39.4 million, or 5.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, due to an increase in recurring revenue, primarily driven by an increase in subscription revenue, partially offset by a decrease in license revenue, as we continue to transition to a subscription
- model. Revenue from North America was approximately 69% of total revenue for both the years ended December 31, 2023 and 2022. Other than the United States, no single country accounted for 10% or more of our total revenue during these periods. We expect our international total revenue to increase slightly as a percentage of total revenue as we expand our international sales and marketing efforts.