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The list is not exhaustive, and you should carefully consider these risks and uncertainties before investing in our common stock.
−Removed: RISKS RELATED TO THE PROPOSED MERGER
−Removed: We may fail to consummate the Proposed Merger with Avast plc, may not consummate the Proposed Merger on the expected terms, or may not achieve the anticipated benefits.
−Removed: It is currently anticipated that the Proposed Merger will be consummated in late calendar year 2022.
−Removed: Completion of the Proposed Merger is subject to, among other things, approval from the U.K.
−Removed: Competition and Markets Authority (the CMA) and other customary closing conditions for the acquisition of a UK public company, including the sanction of the UK’s High Court.
−Removed: All necessary regulatory approvals have been satisfied, with the exception of final approval required from the CMA, which has provisionally cleared the Proposed Merger on August 3, 2022.
−Removed: As a result, the possible timing and likelihood of completion are uncertain, and, accordingly, there can be no assurance that the Proposed Merger will be completed on the expected terms, on the anticipated schedule or at all.
−Removed: In addition, the CMA may require, in connection with granting its approval of the transaction, divestitures or ongoing restrictions on the operation of the combined business, each of which could have a material impact on the anticipated strategic benefits and synergies from the combination.
−Removed: Any delay in consummation of the Proposed Merger will result in greater transaction costs and professional fees and continue to expose us to market risk.
−Removed: If we fail to receive final approval from the CMA and cannot consummate the Proposed Merger, we may be required to pay Avast a break fee of up to $200 million under the Co-operation Agreement.
−Removed: If consummated, the success of the Proposed Merger will depend, in significant part, on our ability to successfully integrate Avast and its subsidiaries, grow the revenue of the combined company and realize the anticipated strategic benefits and synergies from the combination.
−Removed: We believe that the addition of Avast and its subsidiaries represents an attractive opportunity to create a new, industry leading consumer Cyber Safety business, leveraging the established brands, technical expertise and innovation of both groups to deliver substantial benefits to consumers, shareholders and other stakeholders.
−Removed: Achieving these goals requires growth of the revenue of the combined company and realization of the targeted synergies expected from the Proposed Merger.
−Removed: This growth and the anticipated benefits of the Proposed Merger may not be realized fully or at all, or may take longer to realize than we expect.
−Removed: Actual operating, technological, strategic and revenue opportunities, if achieved at all, may be less significant than we expect or may take longer to achieve than anticipated.
−Removed: If we are not able to achieve these objectives and realize the anticipated benefits and synergies expected from the Proposed Merger within a reasonable time, our business, financial condition and operating results may be adversely affected.
−Removed: Litigation filed against us could prevent or delay the completion of the Proposed Merger or result in the payment of damages following completion of the Proposed Merger.
−Removed: As previously reported in our Form 8-K dated October 29, 2021, we received letters on behalf of our purported stockholders, in each case stating the stockholder’s belief that the proxy statement filed by us on October 4, 2021 omitted material information with respect to the Merger and demanding that we make additional and supplemental disclosures regarding the Merger.
−Removed: Additionally, six complaints have been filed by our purported stockholders in connection with the Merger (collectively, the Merger Complaints).
−Removed: The Merger Complaints were brought by the plaintiffs individually and also allege that the proxy statement omitted material information with respect to the Merger.
−Removed: After the Company issued its October 29, 2021 Form 8-K, the plaintiffs in the Merger Complaints dismissed their actions as moot while reserving the right to seek a fee in connection with their respective litigations.
−Removed: RISKS RELATED TO COVID-19
−Removed: The COVID-19 pandemic has affected how we are operating our business, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain.
−Removed: The COVID-19 pandemic has had widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices.
−Removed: At the onset of the pandemic, to protect the health and well-being of our employees, partners and third-party service providers, we facilitated a work-from-home requirement for most employees and established site-specific COVID-19 prevention protocols.
−Removed: We continue to monitor the situation and over the past several months have adjusted our policies and protocols to reflect changes to public health regulations and guidance.
−Removed: Our offices are now open to employees on a voluntary basis.
−Removed: To date, we have not seen any meaningful negative impact on our customer success efforts, sales and marketing efforts, or employee productivity.
−Removed: Nevertheless, as more employees, partners or third-party services providers return to work during the COVID-19 pandemic, the risk of inadvertent transmission of COVID-19 through human contact could still occur and result in litigation.
−Removed: While the COVID-19 pandemic has negatively impacted many sectors of the U.S.
−Removed: and global economies, the consumer Cyber Safety market experienced increased demand as the pandemic greatly accelerated the digital lives of people around the world.
−Removed: However, with the extended duration of the pandemic and the easing of prevention protocols and restrictions, we are seeing decreasing demand and increased competition.
−Removed: In addition, should the negative macroeconomic impacts of the COVID-19 pandemic persist or worsen, we may experience continued slowdowns in our business activity and an increase in cancellations
−Removed: by customers or a material reduction in our retention rate in the future, especially in the event of a prolonged recession.
−Removed: A prolonged recession could adversely affect demand for our offerings, retention rates and harm our business and results of operations, particularly in light of the fact that our solutions are discretionary purchases and thus may be more susceptible to macroeconomic pressures, as well impact the value of our common stock, ability to refinance our debt and our access to capital.
−Removed: The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately forecasted at this time, such as the severity and transmission rate of new variants of the disease, the extent, effectiveness and acceptance of containment actions, such as vaccination programs, and the impact of these and other factors on our employees, customers and the overall demand for our products, partners and third-party service providers.
−Removed: If we are not able to respond to and manage the impact of such events effectively and if the macroeconomic conditions of the general economy or the industries in which we operate do not improve, or deteriorate further, our business, operating results, financial condition and cash flows could be adversely affected.
RISKS RELATED TO OUR BUSINESS STRATEGY AND INDUSTRY
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Many of these competitors offer solutions or are currently developing solutions that directly compete with our offerings.
−Removed: growing competition from other technology companies, as well as from companies in the identity threat protection space such as credit bureaus.
−Removed: Further, many of our competitors are increasingly developing and incorporating into their products data protection software and other competing Cyber Safety products such as antivirus protection or VPN, often free of charge, that compete with our offerings.
+Added: We also face growing competition from other technology companies, as well as from companies in the identity threat protection space such as credit bureaus.
+Added: Further, many of our competitors are increasingly developing and incorporating into their products data protection software and other competing Cyber Safety products such as antivirus protection or VPN, often free of charge, that compete with
+Added: our offerings.
Our competitive position could be adversely affected by the functionality incorporated into these products rendering our existing solutions obsolete.
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In the future, further product development by these vendors could cause our solutions to become redundant, which could significantly impact our sales and operating results.
+Added: Our acquisitions and divestitures create special risks and challenges that could adversely affect our financial results.
+Added: As part of our business strategy, we may acquire or divest businesses or assets.
+Added: For example, in 2019, we completed the sale of certain of our enterprise security assets to Broadcom Inc.
+Added: (the Broadcom sale), in January 2021, we completed the acquisition of Avira, and in September 2022, we completed the Merger with Avast.
+Added: These activities can involve a number of risks and challenges, including:
+Added: • Complexity, time and costs associated with managing these transactions, including the integration of acquired and the winding down of divested business operations, workforce, products, IT systems and technologies;
+Added: • Challenges in retaining customers of acquired businesses, or providing the same level of service to existing customers with reduced resources;
+Added: • Diversion of management time and attention;
+Added: • Loss or termination of employees, including costs associated with the termination or replacement of those employees;
+Added: • Assumption of liabilities of the acquired and divested business or assets, including pending or future litigation, investigations or claims related to the acquired business or assets;
+Added: • Addition of acquisition-related debt;
+Added: • Difficulty in entering into or expanding in new markets or geographies;
+Added: • Increased or unexpected costs and working capital requirements;
+Added: • Dilution of stock ownership of existing stockholders;
+Added: • Unanticipated delays or failure to meet contractual obligations;
+Added: • Substantial accounting charges for acquisition-related costs, asset impairments, amortization of intangible assets and higher levels of stock-based compensation expense;
+Added: • Difficulty in realizing potential benefits, including cost savings and operational efficiencies, synergies and growth prospects from integrating acquired businesses.
+Added: Moreover, to be successful, large complex acquisitions depend on large-scale product, technology, and sales force integrations that are difficult to complete on a timely basis or at all and may be more susceptible to the special risks and challenges described above.
+Added: Any of the foregoing, and other factors, could harm our ability to achieve anticipated levels of profitability or other financial benefits from our acquired or divested businesses, product lines or assets or to realize other anticipated benefits of divestitures or acquisitions.
+Added: Our revenue and operating results depend significantly on our ability to retain our existing customers, convert existing non-paying customers to paying customers and add new customers.
+Added: We generally sell our solutions to our customers on a monthly or annual subscription basis.
+Added: Customers may choose not to renew their membership with us at any time.
+Added: Renewing customers may require additional incentives to renew, may not renew for the same contract period, or may change their subscriptions.
+Added: We therefore may be unable to retain our existing customers on the same or on more profitable terms, if at all.
+Added: In addition, we may not be able to accurately predict or anticipate future trends in customer retention or effectively respond to such trends.
+Added: Our customer retention rates may decline or fluctuate due to a variety of factors, including the following:
+Added: • Our customers’ levels of satisfaction or dissatisfaction with our solutions and the value they place on our solutions;
+Added: • The quality, breadth, and prices of our solutions;
+Added: • Our general reputation and events impacting that reputation;
+Added: • The services and related pricing offered by our competitors;
+Added: including increasing availability and efficacy of free solutions;
+Added: • Disruption by new services or changes in law or regulations that impact the need for efficacy of our products and services;
+Added: • Changes in auto-renewal regulations;
+Added: • Our customers’ dissatisfaction with our efforts to market additional products and services;
+Added: • Our customer service and responsiveness to the needs of our customers;
+Added: • Changes in our target customers’ spending levels as a result of general economic conditions, inflationary pressures or other factors;
+Added: • The quality and efficacy of our third party partners who assist us in renewing customers’ subscriptions.
+Added: Declining customer retention rates could cause our revenue to grow more slowly than expected or decline, and our operating results, gross margins and business will be harmed.
We may need to change our pricing models to compete successfully.
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Our solutions are discretionary purchases, and customers may reduce or eliminate their discretionary spending on our solutions during a difficult macroeconomic environment.
−Removed: Although we did not experience a material increase in cancellations by customers or a material reduction in our retention rate in fiscal 2022 or in the first quarter of fiscal 2023, we may experience such an increase or reduction in the future, especially in the event of a prolonged recession or a worsening of current conditions as a result of the COVID-19 pandemic.
+Added: Although we did not experience a material increase in cancellations by customers or a material reduction in our retention rate in fiscal 2022 or in the first two quarters of fiscal 2023, we may experience such an increase or reduction in the future, especially in the event of a prolonged recession or a worsening of current conditions as a result of the COVID-19 pandemic.
In addition, during a recession, consumers may experience a decline in their credit or disposable income, which may result in less demand for our solutions.
As a result, we may have to lower our prices or make other changes to our pricing model to address these dynamics, any of which could adversely affect our business and financial results.
−Removed: In addition, in January 2021, we acquired Germany-based Avira.
−Removed: Many of Avira’s users are freemium subscribers, meaning they do not pay for its basic services.
−Removed: Much of our anticipated growth in connection with the Avira acquisition is attributable to attracting and converting Avira’s freemium users to a paid subscription option.
−Removed: Numerous factors, however, may impede our ability to attract, retain and convert these users into paying customers.
+Added: In addition, in January 2021, we acquired Germany-based Avira and in September 2022, we completed our Merger with Avast.
+Added: Many of Avira’s and Avast’s users are freemium subscribers, meaning they do not pay for its basic services.
+Added: Much of our anticipated growth in connection with the Avira acquisition and the Avast Merger is attributable to attracting and converting Avira’s and Avast’s freemium users to a paid subscription option.
+Added: Numerous factors, however, may impede our ability to attract free users, convert these users into paying customers and retain them.
If we fail to manage our sales and distribution channels effectively, or if our partners choose not to market and sell our solutions to their customers, our operating results could be adversely affected.
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If we fail to manage our sales and distribution channels successfully, these channels may conflict with one another or otherwise fail to perform as we anticipate, which could reduce our sales and increase our expenses as well as weaken our competitive position.
−Removed: Our revenue and operating results depend significantly on our ability to retain our existing customers, convert existing non-paying customers to paying customers, and add new customers.
−Removed: We generally sell our solutions to our customers on a monthly or annual subscription basis.
−Removed: Customers may choose not to renew their membership with us at any time.
−Removed: Renewing customers may require additional incentives to renew, may not renew for the same contract period, or may change their subscriptions.
−Removed: We therefore may be unable to retain our existing customers on the same or on more profitable terms, if at all.
−Removed: In addition, we may not be able to accurately predict or anticipate future trends in customer retention or effectively respond to such trends.
−Removed: Our customer retention rates may decline or fluctuate due to a variety of factors, including the following:
−Removed: • Our customers’ levels of satisfaction or dissatisfaction with our solutions and the value they place on our solutions;
−Removed: • The quality, breadth, and prices of our solutions;
−Removed: • Our general reputation and events impacting that reputation;
−Removed: • The services and related pricing offered by our competitors;
−Removed: including increasing availability and efficacy of free solutions;
−Removed: • Disruption by new services or changes in law or regulations that impact the need for efficacy of our products and services;
−Removed: • Changes in auto-renewal regulations;
−Removed: • Our customers’ dissatisfaction with our efforts to market additional products and services;
−Removed: • Our customer service and responsiveness to the needs of our customers;
−Removed: • Changes in our target customers’ spending levels as a result of general economic conditions, inflationary pressures or other factors.
−Removed: Declining customer retention rates could cause our revenue to grow more slowly than expected or decline;
−Removed: and our operating results, gross margins and business will be harmed.
−Removed: Our acquisitions and divestitures create special risks and challenges that could adversely affect our financial results.
−Removed: As part of our business strategy, we may acquire or divest businesses or assets.
−Removed: For example, in 2019 we completed the sale of certain of our enterprise security assets to Broadcom Inc.
−Removed: (the Broadcom sale) and in January 2021, we completed the acquisition of Avira.
−Removed: These activities can involve a number of risks and challenges, including:
−Removed: • Complexity, time, and costs associated with managing these transactions, including the integration of acquired and the winding down of divested business operations, workforce, products, IT systems, and technologies;
−Removed: • Challenges in retaining customers of acquired businesses, or providing the same level of service to existing customers with reduced resources;
−Removed: • Diversion of management time and attention;
−Removed: • Loss or termination of employees, including costs associated with the termination or replacement of those employees;
−Removed: • Assumption of liabilities of the acquired and divested business or assets, including pending or future litigation, investigations or claims related to the acquired business or assets;
−Removed: • The addition of acquisition-related debt;
−Removed: • Difficulty in entering into or expanding in new markets or geographies;
−Removed: • Increased or unexpected costs and working capital requirements;
−Removed: • Dilution of stock ownership of existing stockholders;
−Removed: • Unanticipated delays or failure to meet contractual obligations;
−Removed: • Substantial accounting charges for acquisition-related costs, asset impairments, amortization of intangible assets, and higher levels of stock-based compensation expense;
−Removed: • Difficulty in realizing potential benefits, including cost savings and operational efficiencies, synergies and growth prospects from integrating acquired businesses.
−Removed: Moreover, to be successful, large complex acquisitions depend on large-scale product, technology, and sales force integrations that are difficult to complete on a timely basis or at all and may be more susceptible to the special risks and challenges described above.
−Removed: Any of the foregoing, and other factors, could harm our ability to achieve anticipated levels of profitability or other financial benefits from our acquired or divested businesses, product lines or assets or to realize other anticipated benefits of divestitures or acquisitions.
Changes in industry structure and market conditions could lead to charges related to discontinuance of certain of our products or businesses and asset impairments.
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RISKS RELATED TO OUR OPERATIONS
−Removed: We are dependent upon Broadcom for certain engineering and threat response services, which are critical to our products and business.
−Removed: Our endpoint security solution has historically relied upon certain threat analytics software engines and other software (the Engine-Related Services) that have been developed and provided by engineering teams that have transferred to Broadcom as part of the Broadcom sale.
−Removed: The technology, including source code, at issue is shared, and pursuant to the terms of the Broadcom sale, we retain rights to use, modify, enhance and create derivative works from such technology.
−Removed: Broadcom has committed to provide these Engine-Related Services substantially to the same extent and in substantially the same manner, as has been historically provided under a license agreement with a limited term.
−Removed: As a result, we are dependent on Broadcom for services and technology that are critical to our Norton business, and if Broadcom fails to deliver these Engine-Related Services it would result in significant business disruption, and our business and operating results and financial condition could be materially and adversely affected.
−Removed: Furthermore, if our current sources become unavailable, and if we are unable to develop or obtain alternatives to integrate or deploy them in time, our ability to compete effectively could be impacted and have a material adverse effect on our business.
−Removed: Additionally, in connection with the Broadcom sale, we lost other capabilities, including certain threat intelligence data which were historically provided by our former Enterprise Security business, the lack of which could have a negative impact on our business and products.
+Added: Our international operations involve risks that could increase our expenses, adversely affect our operating results and require increased time and attention of our management.
+Added: Following the Merger with Avast, we derive a significant portion of our revenues from customers located outside of the U.S., and we have substantial operations outside of the U.S., including engineering, finance, sales and customer support.
+Added: Our international operations are subject to risks in addition to those faced by our domestic operations, including:
+Added: • Difficulties in staffing, managing, and coordinating the activities of our geographically dispersed and culturally diverse operations;
+Added: • Potential loss of proprietary information due to misappropriation or laws that may be less protective of our intellectual property rights than U.S.
+Added: laws or that may not be adequately enforced;
+Added: • Requirements of foreign laws and other governmental controls, including tariffs, trade barriers and labor restrictions, and related laws that reduce the flexibility of our business operations;
+Added: • Fluctuations in currency exchange rates, economic instability, and inflationary conditions could make our solutions more expensive or could increase our costs of doing business in certain countries;
+Added: • Potential changes in trade relations arising from policy initiatives or other political factors;
+Added: • Regulations or restrictions on the use, import, or export of encryption technologies that could delay or prevent the acceptance and use of encryption products and public networks for secure communications;
+Added: • Local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations;
+Added: • Central bank and other restrictions on our ability to repatriate cash from our international subsidiaries or to exchange cash in international subsidiaries into cash available for use in the U.S.;
+Added: • Limitations on future growth or inability to maintain current levels of revenues from international sales if we do not invest sufficiently in our international operations;
+Added: • Difficulties in staffing, managing, and operating our international operations;
+Added: • Costs and delays associated with developing software and providing support in multiple languages;
+Added: • Political, social or economic unrest, war, or terrorism, or regional natural disasters, particularly in areas in which we have facilities;
+Added: • Multiple and possibly overlapping tax regimes.
+Added: The expansion of our existing international operations and entry into additional international markets has required and will continue to require significant management attention and financial resources.
+Added: These increased costs may increase our cost of acquiring international customers, which may delay our ability to achieve profitability or reduce our profitability in the future.
+Added: We may also face pressure to lower our prices in order to compete in emerging markets, which could adversely affect revenue derived from our international operations.
+Added: Our business has not been materially impacted to date by the ongoing military conflict between Russia and Ukraine;
+Added: however, it is not possible to predict the broader consequences of this conflict or other conflicts that may arise in the future, which could include geopolitical instability and uncertainty;
+Added: adverse impacts on global and regional economic conditions and financial
+Added: markets, including significant volatility in credit, capital, and currency markets;
+Added: reduced economic activity;
+Added: changes in laws and regulations affecting our business, including further sanctions or counter-sanctions which may be enacted;
+Added: and increased cybersecurity threats and concerns.
+Added: The ultimate extent to which the Russia-Ukraine conflict or other future conflicts may negatively impact our business, financial condition and results of operations will depend on future developments, which are highly uncertain, difficult to predict and subject to change.
Our future success depends on our ability to attract and retain personnel in a competitive marketplace.
Our future success depends upon our ability to recruit and retain key management, technical (including cyber security experts), sales, marketing, e-commerce, finance, and other personnel.
+Added: As a result of our Merger with Avast, we have expanded our leadership team to lead the combined company.
Our officers and other key personnel are “at will” employees and we generally do not have employment or non-compete agreements with our employees.
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From time to time, key personnel leave our company and the frequency and number of such departures have widely varied and have, in the past, resulted in significant changes to our executive leadership team.
−Removed: The loss of any key employee could result in significant
−Removed: disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of company initiatives, our internal control over financial reporting, and our results of operations.
+Added: The loss of any key employee could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of company initiatives, our internal control over financial reporting, and our results of operations.
In addition, hiring, training, and successfully integrating replacement personnel can be time consuming and expensive, may cause additional disruptions to our operations, and may be unsuccessful, which could negatively impact future financial results.
−Removed: Our inability to successfully recover from a disaster or other business continuity event could impair our ability to deliver our products and services and harm our business.
−Removed: We are heavily reliant on our technology and infrastructure to provide our products and services to our customers.
−Removed: For example, we host many of our products using third-party data center facilities, and while we require them to maintain formal service level agreements around availability, we do not control the operation of these facilities.
−Removed: These facilities are vulnerable to damage, interruption, or performance problems from earthquakes, hurricanes, floods, fires, power loss, telecommunications failures, pandemics and similar events.
−Removed: They are also subject to break-ins, computer viruses, sabotage, intentional acts of vandalism, and other misconduct.
−Removed: The occurrence of a natural disaster, an act of terrorism, a pandemic, and similar events could result in a decision to close the facilities without adequate notice or other unanticipated problems, which in turn, could result in lengthy interruptions in the delivery of our products and services, which could negatively impact our sales and operating results.
−Removed: Furthermore, our business administration, human resources, compliance efforts, and finance services depend on the proper functioning of our computer, telecommunication, and other related systems and operations.
−Removed: A disruption or failure of these systems or operations because of a disaster, cyber-attack or other business continuity event, such as the COVID-19 pandemic, could cause data to be lost or otherwise delay our ability to complete sales and provide the highest level of service to our customers.
−Removed: In addition, we could have difficulty producing accurate financial statements on a timely basis, and deficiencies may arise in our internal control over financial reporting, which may impact our ability to certify our financial results, all of which could adversely affect the trading value of our stock.
−Removed: Although we endeavor to ensure there is redundancy in these systems and that they are regularly backed-up, there are no assurances that data recovery in the event of a disaster would be effective or occur in an efficient manner.
−Removed: If these systems or their functionality do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.
−Removed: If we fail to offer high-quality customer support, our customer satisfaction may suffer and have a negative impact on our business and reputation.
−Removed: Many of our customers rely on our customer support services to resolve issues, including technical support, billing and subscription issues, that may arise.
−Removed: If demand increases, or our resources decrease, we may be unable to offer the level of support our customers expect.
−Removed: Any failure by us to maintain the expected level of support could reduce customer satisfaction and negatively impact our customer retention and our business.
−Removed: Our international operations involve risks that could increase our expenses, adversely affect our operating results and require increased time and attention of our management.
−Removed: We derive a portion of our revenues from customers located outside of the U.S., and we have significant operations outside of the U.S., including engineering, finance, sales and customer support.
−Removed: Our international operations are subject to risks in addition to those faced by our domestic operations, including:
−Removed: • Potential loss of proprietary information due to misappropriation or laws that may be less protective of our intellectual property rights than U.S.
−Removed: laws or that may not be adequately enforced;
−Removed: • Requirements of foreign laws and other governmental controls, including tariffs, trade barriers and labor restrictions, and related laws that reduce the flexibility of our business operations;
−Removed: • Potential changes in trade relations arising from policy initiatives or other political factors;
−Removed: • Regulations or restrictions on the use, import, or export of encryption technologies that could delay or prevent the acceptance and use of encryption products and public networks for secure communications;
−Removed: • Local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations;
−Removed: • Central bank and other restrictions on our ability to repatriate cash from our international subsidiaries or to exchange cash in international subsidiaries into cash available for use in the U.S.;
−Removed: • Fluctuations in currency exchange rates, economic instability, and inflationary conditions could make our solutions more expensive or could increase our costs of doing business in certain countries;
−Removed: • Limitations on future growth or inability to maintain current levels of revenues from international sales if we do not invest sufficiently in our international operations;
−Removed: • Difficulties in staffing, managing, and operating our international operations;
−Removed: • Difficulties in coordinating the activities of our geographically dispersed and culturally diverse operations;
−Removed: • Costs and delays associated with developing software and providing support in multiple languages;
−Removed: • Political unrest, war, or terrorism, or regional natural disasters, particularly in areas in which we have facilities.
−Removed: RISKS RELATED TO OUR SOLUTIONS
Our solutions, systems, websites and the data on these sources may be subject to intentional disruption that could materially harm to our reputation and future sales.
9 unchanged sentences
Several recent, highly publicized data security breaches, including a large-scale attack on SolarWinds customers by a foreign nation state actor and a significant uptick in ransomware/extortion attacks at other companies have heightened consumer awareness of this issue and may embolden individuals or groups to target our systems or those of our strategic partners or enterprise customers.
−Removed: In December 2021, a critical remote code execution (RCE) vulnerability was identified in the Apache Software Foundation’s Log4j software library (Log4j), which if exploited could result in unauthorized access to Company systems and data, and acquisition of the same.
+Added: In December 2021, a critical remote code execution (RCE) vulnerability was identified in the Apache Software Foundation’s Log4j software library (Log4j), which if exploited could result in unauthorized access to our systems and data, and
+Added: acquisition of the same.
We are taking, and have taken, steps to remediate all known Log4j vulnerabilities within our environment, deployed compensating controls, and implemented additional changes to protect against an exploit of those vulnerabilities.
A threat actor could exploit a Log4j vulnerability or newly discovered vulnerabilities before we complete our remediation work or identify a vulnerability that we did not effectively remediate.
−Removed: If that happens, there could be unauthorized access to, or acquisition of, data we maintain, and damage to Company systems.
+Added: If that happens, there could be unauthorized access to, or acquisition of, data we maintain, and damage to our systems.
We could also face legal action from individuals, business partners, and regulators in connection with exploitation of those vulnerabilities, which would result in increased costs and fees incurred in our defense against those proceedings.
−Removed: Our solutions are complex and operate in a wide variety of environments, systems and configurations, which could result in failures of our solutions to function as designed.
−Removed: Because we offer very complex solutions, errors, defects, disruptions, or other performance problems with our solutions may and have occurred.
−Removed: For example, we may experience disruptions, outages, and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of users accessing our websites simultaneously, fraud, or security attacks.
−Removed: In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time.
−Removed: Interruptions in our solutions, could impact our revenues or cause customers to cease doing business with us.
−Removed: Our operations are dependent upon our ability to protect our technology infrastructure against damage from business continuity events that could have a significant disruptive effect on our operations.
−Removed: We could potentially lose customer data or experience material adverse interruptions to our operations or delivery of solutions to our clients in a disaster recovery scenario.
−Removed: Negative publicity regarding our brand, solutions and business could harm our competitive position.
−Removed: Our brand recognition and reputation as a trusted service provider are critical aspects of our business and key to retaining existing customers and attracting new customers.
−Removed: Our business could be harmed due to errors, defects, disruptions or other performance problems with our solutions causing our customers and potential customers to believe our solutions are unreliable.
−Removed: Furthermore, negative publicity, whether or not justified, including intentional brand misappropriation, relating to events or activities attributed to us, our employees, our strategic partners, our affiliates, or others associated with any of these parties, may tarnish our reputation and reduce the value of our brands.
−Removed: In addition, the rapid rise and use of social media has the potential to harm our brand and reputation.
−Removed: We may be unable to timely respond to and resolve negative and inaccurate social media posts regarding our company, solutions and business in an appropriate manner.
−Removed: Damage to our reputation and loss of brand equity may reduce demand for our solutions and have an adverse effect on our business, operating results, and financial condition.
−Removed: Moreover, any attempts to rebuild our reputation and restore the value of our brands may be costly and time consuming, and such efforts may not ultimately be successful.
We collect, use, disclose, store or otherwise process personal information, which subjects us to privacy and data security laws and contractual commitments.
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This could have an adverse effect on our reputation and business.
+Added: Our inability to successfully recover from a disaster or other business continuity event could impair our ability to deliver our products and services and harm our business.
+Added: We are heavily reliant on our technology and infrastructure to provide our products and services to our customers.
+Added: For example, we host many of our products using third-party data center facilities, and while we require them to maintain formal service level agreements around availability, we do not control the operation of these facilities.
+Added: These facilities are vulnerable to damage, interruption, or performance problems from earthquakes, hurricanes, floods, fires, power loss, telecommunications failures, pandemics and similar events.
+Added: They are also subject to break-ins, computer viruses, sabotage, intentional acts of vandalism, and other misconduct.
+Added: The occurrence of a natural disaster, an act of terrorism, a pandemic, and similar events could result in a decision to close the facilities without adequate notice or other unanticipated problems, which in turn, could result in lengthy interruptions in the delivery of our products and services, which could negatively impact our sales and operating results.
+Added: Furthermore, our business administration, human resources, compliance efforts, and finance services depend on the proper functioning of our computer, telecommunication, and other related systems and operations.
+Added: A disruption or failure of these systems or operations because of a disaster, cyber-attack or other business continuity event, such as the COVID-19 pandemic, could cause data to be lost or otherwise delay our ability to complete sales and provide the highest level of service to our customers.
+Added: In addition, we could have difficulty producing accurate financial statements on a timely basis, and deficiencies may arise in our internal control over financial reporting, which may impact our ability to certify our financial results, all of which could adversely affect the trading value of our stock.
+Added: Although we endeavor to ensure there is redundancy in these systems and that
+Added: they are regularly backed-up, there are no assurances that data recovery in the event of a disaster would be effective or occur in an efficient manner.
+Added: If these systems or their functionality do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.
+Added: We are dependent upon Broadcom for certain engineering and threat response services, which are critical to our products and business.
+Added: Our endpoint security solution has historically relied upon certain threat analytics software engines and other software (the Engine-Related Services) that have been developed and provided by engineering teams that have transferred to Broadcom as part of the Broadcom sale.
+Added: The technology, including source code, at issue is shared, and pursuant to the terms of the Broadcom sale, we retain rights to use, modify, enhance and create derivative works from such technology.
+Added: Broadcom has committed to provide these Engine-Related Services substantially to the same extent and in substantially the same manner, as has been historically provided under a license agreement with a limited term.
+Added: As a result, we are dependent on Broadcom for services and technology that are critical to our Norton business, and if Broadcom fails to deliver these Engine-Related Services it would result in significant business disruption, and our business and operating results and financial condition could be materially and adversely affected.
+Added: Furthermore, if our current sources become unavailable, and if we are unable to develop or obtain alternatives to integrate or deploy them in time, our ability to compete effectively could be impacted and have a material adverse effect on our business.
+Added: Additionally, in connection with the Broadcom sale, we lost other capabilities, including certain threat intelligence data which were historically provided by our former Enterprise Security business, the lack of which could have a negative impact on our business and products.
+Added: If we fail to offer high-quality customer support, our customer satisfaction may suffer and have a negative impact on our business and reputation.
+Added: Many of our customers rely on our customer support services to resolve issues, including technical support, billing and subscription issues, that may arise.
+Added: If demand increases, or our resources decrease, we may be unable to offer the level of support our customers expect.
+Added: Any failure by us to maintain the expected level of support could reduce customer satisfaction and negatively impact our customer retention and our business.
+Added: Our solutions are complex and operate in a wide variety of environments, systems and configurations, which could result in failures of our solutions to function as designed.
+Added: Because we offer very complex solutions, errors, defects, disruptions, or other performance problems with our solutions may and have occurred.
+Added: For example, we may experience disruptions, outages, and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of users accessing our websites simultaneously, fraud, or security attacks.
+Added: In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time.
+Added: Interruptions in our solutions, could impact our revenues or cause customers to cease doing business with us.
+Added: Our operations are dependent upon our ability to protect our technology infrastructure against damage from business continuity events that could have a significant disruptive effect on our operations.
+Added: We could potentially lose customer data or experience material adverse interruptions to our operations or delivery of solutions to our clients in a disaster recovery scenario.
+Added: Negative publicity regarding our brand, solutions and business could harm our competitive position.
+Added: Our brand recognition and reputation as a trusted service provider are critical aspects of our business and key to retaining existing customers and attracting new customers.
+Added: Our business could be harmed due to errors, defects, disruptions or other performance problems with our solutions causing our customers and potential customers to believe our solutions are unreliable.
+Added: Furthermore, negative publicity, whether or not justified, including intentional brand misappropriation, relating to events or activities attributed to us, our employees, our strategic partners, our affiliates, or others associated with any of these parties, may tarnish our reputation and reduce the value of our brands.
+Added: In addition, the rapid rise and use of social media has the potential to harm our brand and reputation.
+Added: We may be unable to timely respond to and resolve negative and inaccurate social media posts regarding our company, solutions and business in an appropriate manner.
+Added: Damage to our reputation and loss of brand equity may reduce demand for our solutions and have an adverse effect on our business, operating results, and financial condition.
+Added: Moreover, any attempts to rebuild our reputation and restore the value of our brands may be costly and time consuming, and such efforts may not ultimately be successful.
LEGAL AND COMPLIANCE RISKS
−Removed: Matters relating to or arising from our completed Audit Committee Investigation, including litigation matters, and potential additional expenses, may adversely affect our business and results of operations.
−Removed: As previously disclosed in our public filings, the Audit Committee completed its internal investigation in September 2018.
−Removed: In connection with the Audit Committee Investigation, we voluntarily self-reported to the SEC.
−Removed: The SEC commenced a formal investigation with which we cooperated.
−Removed: In April 2022, the SEC Staff informed the Company that it concluded its investigation and does not intend to recommend an enforcement action by the Commission against us.
−Removed: We have incurred, and may continue to incur, significant expenses related to legal and other professional services in connection with or relating to the SEC investigation, which may continue to adversely affect our business and financial condition.
−Removed: In addition, securities class actions and other lawsuits have been filed against us, certain current and former directors, and former officers.
−Removed: The outcome of the securities class actions and other litigation is difficult to predict, and the cost to defend, settle, or otherwise resolve these matters may be significant.
−Removed: Plaintiffs in these matters may seek recovery of very large or indeterminate amounts.
−Removed: The monetary and other impact of these litigations, proceedings, or actions may remain unknown for substantial periods of time.
−Removed: Further, an unfavorable resolution of litigations, proceedings or actions could have a material adverse effect on our business, financial condition, and results of operations and cash flows.
−Removed: Any future investigations or additional lawsuits may also adversely affect our business, financial condition, results of operations, and cash flows.
Our solutions are highly regulated, which could impede our ability to market and provide our solutions or adversely affect our business, financial position, and results of operations.
−Removed: Our solutions are subject to a high degree of regulation, including a wide variety of federal, state, and local laws and regulations, such as the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the Federal Trade Commission Act (FTC Act), and comparable state laws that are patterned after the FTC Act.
−Removed: LifeLock has previously entered into consent decrees and similar arrangements with the FTC and the attorney generals of 35 states as well as a settlement with the FTC relating to allegations that certain of LifeLock’s advertising, marketing and security practices constituted deceptive acts or practices in
−Removed: violation of the FTC Act, which impose additional restrictions on our business, including prohibitions against making any misrepresentation of “the means, methods, procedures, effects, effectiveness, coverage, or scope of” our solutions.
−Removed: NortonLifeLock signed an Undertaking, effective June 14, 2021, with the United Kingdom’s Competition and Markets Authority (CMA) requiring NortonLifeLock to make certain changes to its policies and practices related to automatically renewing subscriptions in the United Kingdom as part of the CMA’s investigation into auto-renewal practices in the antivirus sector it launched in December 2018.
+Added: Our solutions are subject to a high degree of regulation, including a wide variety of federal, state, and local laws and regulations, such as the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the Federal Trade Commission Act (the FTC Act), and comparable state laws that are patterned after the FTC Act.
+Added: We have previously entered into consent decrees and similar arrangements with the FTC and the attorney generals of 35 states as well as a settlement with the FTC relating to allegations that certain of LifeLock’s advertising, marketing and security practices constituted deceptive acts or practices in violation of the FTC Act, which impose additional restrictions on our business, including prohibitions against making any misrepresentation of “the means, methods, procedures, effects, effectiveness, coverage, or scope of” our solutions.
+Added: We signed an Undertaking, effective June 14, 2021, with the United Kingdom’s Competition and Markets Authority (CMA) requiring our NortonLifeLock Ireland Limited and NortonLifeLock UK entities to make certain changes to our policies and practices related to automatically renewing subscriptions in the United Kingdom as part of the CMA’s investigation into auto-renewal practices in the
+Added: antivirus sector it launched in December 2018.
Any of the laws and regulations that apply to our business are subject to revision or new or changed interpretations, and we cannot predict the impact of such changes on our business.
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Some of these licenses contain requirements that we make available source code for modifications or derivative works we create based upon the open source software and that we license such modifications or derivative works under the terms of a particular open source license or other license granting third parties certain rights of further use.
−Removed: By the terms of certain open source licenses, we could be required to release the source code of our proprietary software if we combine our proprietary software with open source software in a certain manner.
+Added: terms of certain open source licenses, we could be required to release the source code of our proprietary software if we combine our proprietary software with open source software in a certain manner.
In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on origin of the software.
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There are risks associated with our outstanding and future indebtedness that could adversely affect our financial condition.
−Removed: As of July 1, 2022, we had an aggregate of $3,336 million of outstanding indebtedness that will mature in calendar years 2022 through 2030, and $1,000 million available for borrowing under our revolving credit facility.
+Added: As of September 30, 2022, we had an aggregate of $10,207 million of outstanding indebtedness that will mature in calendar years 2022 through 2030, and $1,000 million available for borrowing under our revolving credit facility.
See Note 10 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information on our outstanding debt.
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• We may be unable to refinance our indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions, or general corporate purposes;
−Removed: • We are exposed to fluctuations in interest rates because borrowings under our senior secured credit facilities bear interest at variable rates;
+Added: • We have significant exposure to fluctuations in interest rates because borrowings under our senior secured credit facilities bear interest at variable rates;
• Our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions;
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• Changes by any rating agency to our outlook or credit rating could negatively affect the value of our debt and/or our common stock, adversely affect our access to debt markets, and increase the interest we pay on outstanding or future debt.
−Removed: • Conversion of our convertible note could result in significant dilution of our common stock, which could result in significant dilution to our existing stockholders and cause the market price of our common stock to decline.
There can be no assurance that we will be able to manage any of these risks successfully.
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In the event that we do not receive distributions from our subsidiaries, we may be unable to make the required principal and interest payments on our indebtedness.
−Removed: The elimination of LIBOR after June 2023 may affect our financial results.
−Removed: All LIBOR tenors relevant to us will cease to be published or will no longer be representative after June 30, 2023.
−Removed: This means that any of our LIBOR-based borrowings that extend beyond June 30, 2023 will need to be converted to a replacement rate.
−Removed: In the U.S., the Alternative Reference Rates Committee, a committee of private sector entities convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has recommended the Secured Overnight Financing Rate (SOFR) plus a recommended spread adjustment as LIBOR's replacement.
−Removed: There are significant differences between LIBOR and SOFR, such as LIBOR being an unsecured lending rate while SOFR is a secured lending rate, and SOFR is an overnight rate while LIBOR reflects term rates at different maturities.
−Removed: If our LIBOR-based borrowings are converted to SOFR, the differences between LIBOR and SOFR, plus the recommended spread adjustment, could result in interest costs that are higher than if LIBOR remained
−Removed: available, which could have a material adverse effect on our operating results.
−Removed: Although SOFR is the ARRC's recommended replacement rate, it is also possible that lenders may instead choose alternative replacement rates that may differ from LIBOR in ways similar to SOFR or in other ways that would result in higher interest costs for us.
−Removed: It is not yet possible to predict the magnitude of LIBOR's end on our borrowing costs given the remaining uncertainty about which rates will replace LIBOR.
Our term loan and revolving credit facility agreement impose operating and financial restrictions on us.
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GENERAL RISKS
+Added: The COVID-19 pandemic has affected how we are operating our business, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain.
+Added: The COVID-19 pandemic has had widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices.
+Added: At the onset of the pandemic, to protect the health and well-being of our employees, partners and third-party service providers, we facilitated a work-from-home requirement for most employees and established site-specific COVID-19 prevention protocols.
+Added: We continue to monitor the situation and over the past several months have adjusted our policies and protocols to reflect changes to public health regulations and guidance.
+Added: Our offices are now open to employees on a voluntary basis.
+Added: To date, we have not seen any meaningful negative impact on our customer success efforts, sales and marketing efforts, or employee productivity.
+Added: Nevertheless, as more employees, partners or third-party services providers return to work during the COVID-19 pandemic, the risk of inadvertent transmission of COVID-19 through human contact could still occur and result in litigation.
+Added: While the COVID-19 pandemic has negatively impacted many sectors of the U.S.
+Added: and global economies, the consumer Cyber Safety market experienced increased demand as the pandemic greatly accelerated the digital lives of people around the world.
+Added: However, with the extended duration of the pandemic and the easing of prevention protocols and restrictions, we are seeing decreasing demand and increased competition.
+Added: In addition, should the negative macroeconomic impacts of the COVID-19 pandemic persist or worsen, we may experience continued slowdowns in our business activity and an increase in cancellations by customers or a material reduction in our retention rate in the future, especially in the event of a prolonged recession.
+Added: A prolonged recession could adversely affect demand for our offerings, retention rates and harm our business and results of operations, particularly in light of the fact that our solutions are discretionary purchases and thus may be more susceptible to macroeconomic pressures, as well impact the value of our common stock, ability to refinance our debt and our access to capital.
+Added: The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately forecasted at this time, such as the severity and transmission rate of new variants of the disease, the extent, effectiveness and acceptance of containment actions, such as vaccination programs, and the impact of these and other factors on our employees, customers and the overall demand for our products, partners and third-party service providers.
+Added: If we are not able to respond to and manage the impact of such events effectively and if the macroeconomic conditions of the general economy or the industries in which we operate do not improve, or deteriorate further, our business, operating results, financial condition and cash flows could be adversely affected.
+Added: Government efforts to combat inflation, along with other interest rate pressures arising from an inflationary economic environment, could lead to higher financing costs.
+Added: Inflation has risen on a global basis, the United States has been experiencing historically high levels of inflation, and government entities have taken various actions to combat inflation, such as raising interest rate benchmarks.
+Added: Government entities may continue their efforts, or implement additional efforts, to combat inflation, which could include among other things continuing to raise interest rate benchmarks or maintaining interest rate benchmarks at elevated levels.
+Added: Such government efforts, along with other interest rate pressures arising from an inflationary economic environment, could lead to higher financing costs and have material adverse effect on our business, financial condition and results of operations.
Fluctuations in our quarterly financial results have affected the trading price of our outstanding securities in the past and could affect the trading price of our outstanding securities in the future.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.