N-able (NABL) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01Our quarterly revenue and operating results may fluctuate in the future because of a number of factors, which makes our future results difficult to predict or could cause our operating results or the guidance we provide to fall below expectations
2. 02Our quarterly revenue and operating results may vary significantly in the future. As a result, you should not rely on the results of any one quarter as an indication of future performance and period-to-period comparisons of our revenue and operating results may not be meaningful
3. 03Because we recognize revenue from our longer-term subscriptions and term licenses over the subscription or license term, downturns or upturns in new sales and renewals may not be immediately reflected in our operating results and may be difficult to discern
4. 04We report certain market opportunity estimates, forecasts of market growth, and other metrics, which could prove to be inaccurate, and any real or perceived inaccuracies may negatively affect our reputation and our business
5. 05If we are unable to sell subscriptions to new customers, to sell additional solutions to our existing customers or to increase the usage of our solutions by our existing customers, our revenue growth and operating results may be adversely effected
6. 06If we do not effectively hire, integrate, train, manage, and retain additional sales personnel, and expand our sales and marketing capabilities, we may be unable to increase our customer base and increase sales to our existing customers
7. 07Our business depends on customers renewing their subscription agreements. If our subscription-based business model fails to yield the benefits that we expect, our results of operations could be negatively impacted
8. 08We may not have visibility into a portion of our revenue that is consumption-based, which may result in our financial position and results of operations falling below internal or external expectations, which could negatively impact the price of our common stock
9. 09We operate in highly competitive markets, which could make it difficult for us to acquire and retain customers at our historic rates
10. 10relationships with other competitive providers. As a result, these organizations may prefer to purchase from their existing suppliers rather than to add or switch to a new supplier using our solutions and services, regardless of solution performance, features or greater services offerings
11. 11Our success depends on our ability to adapt to the rapidly changing needs of IT services providers and their SMB and mid-market customers
12. 12If we fail to integrate our solutions with a variety of operating systems, software applications, platforms and hardware that are developed by others or ourselves, our solutions may become less competitive or obsolete and our results of operations would be harmed
13. 13Acquisitions present many risks that could have an adverse effect on our business and results of operations
14. 14We may expand our business in part through future acquisitions, but we may not be able to identify or complete suitable acquisitions, which could harm our financial performance
15. 15We may not be able to achieve or sustain the same level of cash flows in the future
16. 16Our operating income could fluctuate as we make future expenditures to expand our operations in order to support growth in our business, or if we fail to see the expected benefits of prior expenditures
17. 17Because our long-term success depends on our ability to operate our business internationally and increase sales of our solutions to our customers located outside of the United States, our business is susceptible to risks associated with international operations
18. 18We have faced, and may continue to face, exposure to foreign currency exchange rate fluctuations
19. 19We resell third-party software and integrate third-party software into our solutions that may be difficult to replace or that could cause errors or failures of our solutions and lead to a loss of customers or harm to our reputation and our operating results
20. 20Interruptions or performance problems associated with our internal infrastructure and its reliance on third-party technologies may adversely affect our ability to manage our business and meet reporting obligations
21. 21Interruptions or performance problems associated with third-party cloud-based systems that we depend on for development or distribution of our solutions may adversely affect our business, operating results, and financial condition
22. 22Interruptions or performance problems associated with our solutions, including disruptions at any third-party data centers upon which we rely, may impair our ability to support our IT services provider customers
23. 23Material defects, errors or vulnerabilities in our solutions, the failure of our solutions to block malware or prevent a security breach, misuse of our solutions, or risks of product liability claims could harm our reputation, result in significant costs to us and impair our ability to sell our solutions
24. 24increase expenses and customer relations issues, and expose us to investigations, liabilities and other costs and negative consequences, all of which would adversely affect our business, financial condition, and operating results
25. 25Any inability to maintain a high-quality customer support organization could lead to a lack of customer satisfaction, which could hurt our customer relationships and adversely affect our business, operating results, and financial condition
26. 26If we fail to maintain or grow our brands, our financial condition and operating results might suffer
27. 27If we are unable to capture significant volumes of high quality sales opportunities from our digital marketing initiatives, it could adversely affect our revenue growth and operating results
28. 28We may need to reduce or change our pricing model to remain competitive
29. 29We have benefited from growth in the market for SMB and mid-market IT spending, and lack of continued growth or contraction in this market could have an adverse effect on our results of operations and financial condition
30. 30The 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
31. 31Our results of operations can be adversely affected by labor shortages, turnover and labor cost increases
32. 32If we cannot maintain our corporate culture as we grow, our business may be harmed
33. 33Adverse economic conditions may negatively affect our business
34. 34Climate change may have a long-term negative impact on our business
35. 35Exposure related to any future litigation could adversely affect our results of operations, profitability and cash flows
36. 36Our actual operating results may differ significantly from information we may provide regarding our financial outlook
37. 37A pandemic, epidemic or outbreak of an infectious disease, such as the COVID-19 pandemic, may materially affect how we and our customers are operating our businesses and our financial results

Risks Related to Our Indebtedness

1. 38We 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
2. 39Despite 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
3. 40The credit agreement governing our indebtedness contains 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

Risks Related to Our Intellectual Property

1. 41The success of our business depends on our ability to obtain, maintain, protect and enforce our intellectual property rights
2. 42Our use of open source software could negatively affect our ability to sell our offerings and subject us to possible litigation

Risks Related to Cybersecurity

1. 43The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer and employee relations, results of operations, financial condition or cash flows
2. 44or former employees and customers. SolarWinds has notified us that it has identified all personal information contained in the emails of these accounts, and has informed us that it has provided notices to any impacted individuals and other parties as required

Risks Related to Accounting and Taxation

1. 45Failure to maintain proper and effective internal controls could have a material adverse effect on our business, operating results and stock price
2. 46Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations
3. 47Our revenue recognition policy and other factors may distort our financial results in any given period and make them difficult to predict
4. 48Our business and financial performance could be negatively impacted by changes in tax laws or regulations
5. 49Additional liabilities related to taxes or potential tax adjustments could adversely impact our business and financial performance
6. 50Our 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
7. 51Our operating results may be negatively impacted by the loss of certain tax benefits provided to companies in our industry predominately by the governments of countries in which we have research and development personnel

Risks Related to Governmental Regulation

1. 52We are subject to various global data privacy and security regulations, which could result in additional costs and liabilities to us
2. 53SMB and mid-market customers face the potential for regulators in the EEA to apply different standards to the transfer of personal data from the EEA to the United States, and to block, or require ad hoc verification of measures taken with respect to, certain data flows from the EEA to the United States
3. 54We 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
4. 55Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or our failure to comply with regulations could harm our operating results

Risks Related to the Separation and Distribution

1. 56The Separation and Distribution may not achieve some or all of the anticipated benefits, which may disrupt or adversely affect our business, results of operations and financial condition
2. 57We could incur significant liability if the Separation and Distribution is determined to be a taxable transaction, and, in certain circumstances, we could be required to indemnify SolarWinds for material taxes and other related amounts pursuant to indemnification obligations under the tax matters agreement
3. 58We may not be able to engage in desirable strategic or capital-raising transactions following the Distribution
4. 59SolarWinds has agreed to indemnify us, and we have agreed to indemnify SolarWinds, for certain liabilities. Claims for indemnification by SolarWinds, or a failure by SolarWinds to provide sufficient indemnification to us, could negatively impact our business, results of operations and financial position

Risks Related to Ownership of Our Common Stock and Our Organizational Structure

1. 60The trading price of our common stock has been and may continue to be volatile, which could cause the value of your investment to decline
2. 61If securities or industry analysts were to downgrade our stock, publish misleading or unfavorable research about our business or fail to publish reports on our business, our stock price and trading volume could decline
3. 62Sales 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
4. 63Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans or otherwise will dilute all other stockholders
5. 64We currently do not intend to pay dividends on our common stock, and consequently, stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock
6. 65Our restated charter and restated bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable
7. 66The Sponsors have a controlling influence over matters requiring stockholder approval
8. 67Certain of our directors have relationships with the Sponsors, which may cause conflicts of interest with respect to our business
9. 68The Sponsors and their affiliated funds may pursue corporate opportunities independent of us that could present conflicts with our and our stockholders’ interests
10. 69We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock
11. 70We are a controlled company within the meaning of the NYSE rules and, as a result, qualify for and may rely on exemptions from certain corporate governance requirements