What changed in this filing

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Item 1A. Risk Factors

2020-11-04 compared with 2020-08-10 · 86 added, 78 removed, 554 unchanged (23% of the section changed)

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On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.

The spread of COVID-19 has resulted in authorities imposing, and businesses and individuals implementing, numerous unprecedented measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, and shutdowns.

The spread of COVID-19 has resulted in authorities imposing, and businesses and individuals implementing, numerous unprecedented measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, and shutdowns.

These measures have impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners.

The pandemic has significantly increased economic and demand uncertainty.

It is likely that the current outbreak and continued spread of COVID-19 will cause an economic slowdown, and it is possible that it could cause a global recession, which could decrease demand for our solutions and negatively impact our operating results.

It is likely that the current outbreak and continued spread of COVID-19 will cause an economic slowdown, and it is possible that it could cause a global recession, which could decrease demand for our solutions and negatively impact our operating results.

There is a significant degree of uncertainty and lack of visibility as to the extent and duration of any such slowdown or recession.

The ultimate extent of the impact of COVID-19 on our business, financial position, results of operations and cash flows will depend on future developments, which are highly uncertain and cannot be predicted at this time.

The ultimate extent of the impact of COVID-19 on our business, financial position, results of operations and cash flows will depend on future developments, which are highly uncertain and cannot be predicted at this time.

These impacts, individually or in the aggregate, could have a material and adverse effect on our business, financial position, results of operations and cash flows.

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Subscriptions to our Vulnerability Management solutions generate most of our revenues, and if we are unable to continue to renew and grow subscriptions for these solutions, our operating results would suffer.

We derived approximately 72% and 73% of our revenues from subscriptions to our VM solutions for the six months ended June 30, 2020 and 2019, respectively.

We derived approximately 72% and 73% of our revenues from subscriptions to our VM solutions for the nine months ended September 30, 2020 and 2019, respectively.

We expect to continue to derive a significant majority of our revenues from subscriptions to our VM solutions.

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Further, the interpretation and application of international laws and regulations in many cases is uncertain, and our legal and regulatory obligations in foreign jurisdictions are subject to frequent and unexpected changes, including the potential for various regulatory or other governmental bodies to enact new or additional laws or regulations or to issue rulings that invalidate prior laws or regulations.

For example, a Data Protection Act that substantially implements the European Union’s General Data Protection Regulation ("GDPR") was implemented in the United Kingdom in May 2018, and "Brexit" could also lead to further legislative and regulatory changes.

It is unclear, however, how United Kingdom data protection laws or regulations will develop in the medium to longer term, and how data transfers to and from the United Kingdom will be regulated.

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We will need to increase the revenues that we derive from our current and future solutions for our business and revenues to grow as we expect.

Revenues from our other solutions such as Policy Compliance, PCI Compliance, Web Application Scanning, Web Application Firewall, CMDB Sync, Security Assessment Questionnaire, File Integrity Monitoring, Indication of Compromise, Global IT Asset Inventory, Security Configuration Assessment, Cloud Security Assessment, Certificate Inventory, Container Security and Patch Management have been relatively modest compared to revenues from our VM solutions.

Revenues from our other solutions such as Policy Compliance, PCI Compliance, Web Application Scanning, Web Application Firewall, CMDB Sync, Security Assessment Questionnaire, File Integrity Monitoring, Indication of Compromise, Global IT Asset Inventory, Security Configuration Assessment, Cloud Security Assessment, Certificate Inventory, Container Security, Patch Management and Multi-Vector Endpoint Detection and Response have been relatively modest compared to revenues from our VM solutions.

Our future success depends in part on our ability to sell subscriptions to these additional solutions to existing and new customers.

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Our platform, website and internal systems may be subject to intentional disruption or other security incidents that could result in liability and adversely impact our reputation and future sales.

We and our service providers face threats from a variety of sources, including attacks on our networks and systems from numerous sources, including traditional “hackers,” sophisticated nation-state and nation-state supported actors, other sources of malicious code (such as viruses and worms), and phishing attempts.

We and our service providers face threats from a variety of sources, including attacks on our networks and systems from numerous sources, including traditional “hackers,”

sophisticated nation-state and nation-state supported actors, other sources of malicious code (such as viruses and worms), and phishing attempts.

We and our service providers could be a target of cyber-attacks or other malfeasance designed to impede the performance of our solutions, penetrate our network security or the security of our cloud platform or our internal systems, misappropriate proprietary information and/or cause interruptions to our services.

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A breach in our data security or an attack against our service availability, or that of our third-party service providers, could impact our networks or networks secured by our solutions, creating system disruptions or slowdowns and exploiting security vulnerabilities of our solutions, and the information stored on our networks or those of our third-party service providers could be accessed, publicly disclosed, altered, lost, or stolen, which could subject us to liability and cause us financial harm.

If an actual or perceived disruption in the availability of our solutions or the breach of our security measures or those of our service providers occurs, it could adversely affect the market perception of our solutions, result in a loss of competitive advantage, have a negative impact on our reputation, or result in the loss of customers, channel partners and sales, and it may expose us to the loss or alteration of information, litigation, regulatory actions and investigations and

possible liability.

Any such actual or perceived security breach or disruption could also divert the efforts of our technical and management personnel.

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As a result, our ability to grow depends in part on customers renewing their existing subscriptions and purchasing additional subscriptions and solutions.

Our customers may choose not to renew their subscriptions to our solutions or purchase additional solutions due to a number of factors, including their satisfaction or dissatisfaction with our solutions, the prices of our solutions, the prices of products or services offered by our competitors, reductions in our customers’ spending levels due to the macroeconomic environment or other factors.

spending levels due to the macroeconomic environment or other factors.

If our customers do not renew their subscriptions to our solutions, renew on less favorable terms, or do not purchase additional solutions or subscriptions, our revenues may grow more slowly than expected or decline and our results of operations may be harmed.

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Our business depends on the overall demand for IT and on the economic health of our current and prospective customers.

Economic weakness, customer financial difficulties, and constrained spending on IT security may result

in decreased revenue and earnings.

Economic weakness, customer financial difficulties, and constrained spending on IT security may result in decreased revenue and earnings.

Such factors could make it difficult to accurately forecast our sales and operating results and could negatively affect our ability to provide accurate forecasts to our contract manufacturers.

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Future or continued economic weakness for us or our customers, failure of our customers and markets to recover from such weakness, customer financial difficulties, and reductions in spending on IT security could have a material adverse effect on demand for our platform and consequently on our business, financial condition and results of operations.

Our IT, security and compliance solutions are delivered from six data centers, and any disruption of service at these facilities would interrupt or delay our ability to deliver our solutions to our customers which could reduce our revenues and harm our operating results.

Our IT, security and compliance solutions are delivered from seven data centers, and any disruption of service at these facilities would interrupt or delay our ability to deliver our solutions to our customers which could reduce our revenues and harm our operating results.

We currently host substantially all of our solutions from third-party data centers located in the United States, Canada, Switzerland, the Netherlands and India.

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If we are unable to renew our agreements with the facilities providers on commercially reasonable terms or if in the future we add additional data center facility providers, we may experience costs or downtime in connection with the loss of an existing facility or the transfer to, or addition of, new data center facilities.

Any disruptions or other performance problems with our solutions could harm our reputation and business and may damage our customers’ businesses.

Any disruptions or other performance problems with our solutions could harm our reputation and business and may damage our customers’

Interruptions in our service delivery might reduce our revenues, cause us to issue credits to customers, subject us to potential liability and cause customers to terminate their subscriptions or not renew their subscriptions.

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We have a limited operating history, particularly in certain markets and solution offerings, and we believe that we need to continue to develop market awareness in the IT, security and compliance market.

Market awareness of our capabilities and solutions is essential to our continued growth and success in all of our markets, particularly for

the large enterprise, service provider and government markets.

Market awareness of our capabilities and solutions is essential to our continued growth and success in all of our markets, particularly for the large enterprise, service provider and government markets.

If our marketing programs are not successful in creating market awareness of our company and our full suite of solutions, our business, financial condition and results of operations may be adversely affected, and we may not be able to achieve our expected growth.

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We face significant competition for each of our solutions from companies with broad product suites and greater name recognition and resources than we have, as well as from small companies focused on specialized security solutions.

We compete with large and small public companies, such as Belden (Tripwire), Broadcom (Symantec Enterprise Security), CrowdStrike, F5 Networks, FireEye, Forescout Technologies, International Business Machines, Micro Focus International, Rapid7, Palo Alto Networks, Tenable Holdings and VMware, as well as privately held security providers including Barracuda Networks, BeyondTrust Software, Flexera, Imperva, McAfee, Tanium, Trustwave Holdings, Venafi, and Veracode.

We also seek to replace IT, security and compliance solutions that organizations have developed internally.

As we continue to extend our cloud platform’s functionality by further developing IT, security and compliance solutions, such as web application scanning and firewalls, we expect to face additional competition in these new markets.

Our competitors may also attempt to further expand their presence in the IT, security and compliance market and compete more directly against one or more of our solutions.

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In addition, current or potential competitors may be acquired by third parties with greater available resources.

As a result of such relationships and acquisitions, our current or potential competitors might be able to adapt more quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their products and services, initiate or withstand substantial price competition, take advantage of other opportunities

more readily or develop and expand their product and service offerings more quickly than we do.

For all of these reasons, we may not be able to compete successfully against our current or future competitors.

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Governments may also adopt new laws or regulations, or make changes to existing laws or regulations, that could impact the demand for or value of our solutions.

If we are unable to adapt our solutions to changing regulatory standards in a timely manner, or if our solutions fail to assist with or expedite our customers’ compliance initiatives, our customers may lose confidence in our solutions and could switch to products offered by our competitors.

If we are unable to adapt our solutions to changing regulatory standards in a timely manner, or if our solutions fail to assist with or expedite our customers’

compliance initiatives, our customers may lose confidence in our solutions and could switch to products offered by our competitors.

In addition, if regulations and standards related to data security, vulnerability management and other IT, security and compliance requirements are relaxed or the penalties for non-compliance are changed in a manner that makes them less onerous, our customers may view government and industry regulatory compliance as less critical to their businesses, and our customers may be less willing to purchase our solutions.

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If our solutions fail to detect vulnerabilities or incorrectly detect vulnerabilities, our brand and reputation could be harmed, which could have an adverse effect on our business and results of operations.

If our solutions fail to detect vulnerabilities in our customers’ IT infrastructures, or if our solutions fail to identify and respond to new and increasingly complex methods of attacks, our business and reputation may suffer.

If our solutions fail to detect vulnerabilities in our customers’

IT infrastructures, or if our solutions fail to identify and respond to new and increasingly complex methods of attacks, our business and reputation may suffer.

There is no guarantee that our solutions will detect all vulnerabilities.

Additionally, our IT, security and compliance solutions may falsely detect vulnerabilities or threats that do not actually exist.

For example, some of our solutions rely on

information on attack sources aggregated from third-party data providers who monitor global malicious activity originating from a variety of sources, including anonymous proxies, specific IP addresses, botnets and phishing sites.

For example, some of our solutions rely on information on attack sources aggregated from third-party data providers who monitor global malicious activity originating from a variety of sources, including anonymous proxies, specific IP addresses, botnets and phishing sites.

If the information from these data providers is inaccurate, the potential for false indications of security vulnerabilities increases.

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In addition, our solutions do not currently extend to cover mobile devices or personal devices that employees may bring into an organization.

As such, our solutions would not identify or address vulnerabilities in mobile devices, such as mobile phones or tablets, or personal devices, and our customers’ IT infrastructures may be compromised by attacks that infiltrate their networks through such devices.

An actual or perceived security breach or theft of the sensitive data of one of our customers, regardless of whether the breach is attributable to the failure of our solutions, could adversely affect the market’s perception of our security solutions.

As such, our solutions would not identify or address vulnerabilities in mobile devices, such as mobile phones or tablets, or personal devices, and our customers’

IT infrastructures may be compromised by attacks that infiltrate their networks through such devices.

Incorrect or improper implementation or use of our solutions could result in customer dissatisfaction and harm our business and reputation.

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Our customers have in the past inadvertently misused our solutions, which triggered downtime in their internal infrastructure until the problem was resolved.

Additionally, any failure to implement and configure our solutions correctly may result in our solutions failing to detect vulnerabilities or compliance issues, or otherwise to perform effectively, and may result in disruptions to our customers’ IT environments and businesses.

Any misuse of our solutions, including any failure to implement and configure them appropriately, could result in disruption to our customers’ businesses, customer dissatisfaction, negative impacts on the perceived reliability or effectiveness of our solutions, and claims and litigation, and may result in negative press coverage, negative effects on our reputation and competitive position, a loss of sales, customers, and channel partners, and harm our financial results.

IT environments and businesses.

Any misuse of our solutions, including any failure to implement and configure them appropriately, could result in disruption to our customers’

businesses, customer dissatisfaction, negative impacts on the perceived reliability or effectiveness of our solutions, and claims and litigation, and may result in negative press coverage, negative effects on our reputation and competitive position, a loss of sales, customers, and channel partners, and harm our financial results.

Undetected software errors or flaws in our solutions could harm our reputation, decrease market acceptance of our solutions or result in liability.

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The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material and adverse effect on our business, including our financial condition, operating results and reputation.

Our solutions could be used to collect and store personal information of our customers’ employees or customers, and therefore privacy and other data handling concerns could result in additional cost and liability to us or inhibit sales of our solutions.

Our solutions could be used to collect and store personal information of our customers’

employees or customers, and therefore privacy and other data handling concerns could result in additional cost and liability to us or inhibit sales of our solutions.

We collect the names and email addresses of our customers in connection with subscriptions to our solutions.

Additionally, the data that our solutions collect to help secure and protect the IT infrastructure of our customers may include additional personal or confidential information of our customers’ employees and their customers.

Additionally, the data that our solutions collect to help secure and protect the IT infrastructure of our customers may include additional personal or confidential information of our customers’

employees and their customers.

Personal privacy has become a significant issue in the United States and in many other countries where we offer our solutions.

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The GDPR may be subject to new or changing interpretations by courts, and our interpretation of the law and efforts to comply with the rules and regulations of the law may be ruled invalid.

Noncompliance with the GDPR can trigger fines of up to €20 million or 4% of global annual revenues, whichever is higher.

Similarly, California recently enacted the California Consumer Privacy Act (“CCPA”), which, among other things, requires covered companies to provide new disclosures to California consumers and afford such consumers new rights to opt-out of certain sales of personal information.

Noncompliance with the GDPR can trigger fines of up to €20 million or 4% of global annual revenues, whichever is higher.

The CCPA creates a private right of action for statutory damages for certain breaches of information.

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The privacy, data protection, and information security laws and regulations we must comply with also are subject to change.

For example, the United Kingdom enacted a Data Protection Act in May 2018 that substantially implements the GDPR, but the United Kingdom's exit from the European Union, commonly referred to as “Brexit,” could lead to further legislative and regulatory changes.

could lead to further legislative and regulatory changes.

It remains unclear how United Kingdom data protection laws or regulations will develop in the medium to longer term and how data transfers to and from the United Kingdom will be regulated.

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Privacy Shield Framework and a related program, the Swiss-U.S.

Privacy Shield Framework, and make use of certain model clauses approved by the European Commission (the “SCCs”), with regard to certain transfers of personal data from the European Economic Area (“EEA”) to the U.S.

Both the EU-U.S.

Privacy Shield Framework and SCCs have been subject to legal challenge, however, and on July 16, 2020, the Court of Justice of the European Union (“CJEU”) issued a decision that invalidated the EU-U.S.

Privacy Shield and imposed additional obligations on companies when relying on the SCCs.

This CJEU decision may result in European data protection regulators applying differing standards for, and requiring ad hoc verification of, transfers of personal data from Europe to the U.S.

We are analyzing the impacts of

this decision, and we may find it necessary or appropriate to take different or additional steps with respect to transfers of personal data, which may result in increased costs of compliance and limitations on our customers and us We may be unsuccessful in maintaining legitimate means for our transfer and receipt of personal data from the EEA or Switzerland.

We are analyzing the impacts of this decision, and we may find it necessary or appropriate to take different or additional steps with respect to transfers of personal data, which may result in increased costs of compliance and limitations on our customers and us We may be unsuccessful in maintaining legitimate means for our transfer and receipt of personal data from the EEA or Switzerland.

We may experience reluctance or refusal by current or prospective European customers to use our products, and we and our customers may face a risk of enforcement actions by data protection authorities in the EEA relating to personal data transfers to us and by us from the EEA.

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If we are unable to successfully manage the challenges of international operations, our business and operating results could be adversely affected.

In addition, as of June 30, 2020, approximately 71% of our employees were located outside of the United States, and 62% of our employees were located in Pune, India.

In addition, as of September 30, 2020, approximately 72% of our employees were located outside of the United States, of which 62% of our employees were located in Pune, India.

Accordingly, we are exposed to changes in laws governing our employee relationships in various U.S.

and foreign jurisdictions, including laws and regulations regarding wage and hour requirements, fair labor standards, employee data privacy, unemployment tax rates, workers’ compensation rates, citizenship requirements and payroll and other taxes which may have a direct impact on our operating costs.

and foreign jurisdictions, including laws and regulations regarding wage and hour requirements, fair labor standards, employee data privacy, unemployment tax rates, workers’

compensation rates, citizenship requirements and payroll and other taxes which may have a direct impact on our operating costs.

We may continue to expand our international operations and international sales and marketing activities.

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We have experienced significant growth over the last several years.

From 2017 to 2019, our revenues grew from $230.8 million to $321.6 million and our headcount increased from 684 employees at the beginning of 2017 to 1,386 employees as of June 30, 2020.

We rely on information technology systems to help manage critical functions such as or der processing, revenue recognition and financial forecasts.

From 2017 to 2019, our revenues grew from $230.8 million to $321.6 million and our headcount increased from 684 employees at the beginning of 2017 to 1,459 employees as of September 30, 2020.

We rely on information technology systems to help manage critical functions such as order processing, revenue recognition and financial forecasts.

To manage any future growth effectively we must continue to improve and expand our IT systems, financial infrastructure, and operating and administrative systems and controls, and continue to manage headcount, capital and processes in an efficient manner.

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Our success significantly depends upon establishing and maintaining relationships with a variety of channel partners, and we anticipate that we will continue to depend on these partners in order to grow our business.

For the six months ended June 30, 2020, we derived approximately 42% of our revenues from sales of subscriptions for our solutions through channel partners, and the percentage of revenues derived from channel partners may increase in future periods.

For the nine months ended September 30, 2020, we derived approximately 42% of our revenues from sales of subscriptions for our solutions through channel partners, and the percentage of revenues derived from channel partners may increase in future periods.

Our agreements with our channel partners are generally non-exclusive and do not prohibit them from working with our competitors or offering competing solutions, and many of our channel partners have more established relationships with our competitors.

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In addition, the financial health of our channel partners and our continuing relationships with them are important to our success.

Some of these channel partners may be unable to withstand adverse changes in economic conditions, which could result in insolvency and/or the inability of such distributors to obtain credit to finance purchases of our products and services.

In addition, weakness in the end-user market could negatively affect the cash flows of our channel partners who could, in turn, delay paying their obligations to us, which would

increase our credit risk exposure.

In addition, weakness in the end-user market could negatively affect the cash flows of our channel partners who could, in turn, delay paying their obligations to us, which would increase our credit risk exposure.

Our business could be harmed if the financial condition of some of these channel partners substantially weakened and we were unable to timely secure replacement channel partners.

Our solutions contain third-party open source software components, and our failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our solutions.

Our solutions contain software licensed to us by third-parties under so-called “open source” licenses, including the GNU General Public License, the GNU Lesser General Public License, the BSD License, the Apache License and others.

From time to time, there have been claims against companies that distribute or use open source software in their products and services, asserting that such open source software infringes the claimants’ intellectual property rights.

Our solutions contain software licensed to us by third-parties under so-called “open source”

licenses, including the GNU General Public License, the GNU Lesser General Public License, the BSD License, the Apache License and others.

intellectual property rights.

We could be subject to suits by parties claiming that what we believe to be licensed open source software infringes their intellectual property rights.

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courts, and 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 solutions.

In this event, we could be required to seek l icenses from third parties to continue offering our solutions, to make our proprietary code generally available in source code form, to re-engineer our solutions or to discontinue the sale of our solutions if re-engineering could not be accomplished on a timely basis, any of which could adversely affect our business, operating results and financial condition.

In this event, we could be required to seek licenses from third parties to continue offering our solutions, to make our proprietary code generally available in source code form, to re-engineer our solutions or to discontinue the sale of our solutions if re-engineering could not be accomplished on a timely basis, any of which could adversely affect our business, operating results and financial condition.

We rely on software-as-a-service vendors to operate certain functions of our business and any failure of such vendors to provide services to us could adversely impact our business and operations.

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Delays or interruptions in the manufacturing and delivery of our physical scanner appliances by our sole source manufacturer may harm our business.

Upon customer request, we provide physical or virtual scanner appliances on a subscription basis as an additional capability to the customer’s subscription for use during their subscription term.

Our physical scanner appliances are built by a single manufacturer.

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In addition, replacing this manufacturer may be difficult and could result in an inability or delay in deploying our solutions to customers that request physical scanner appliances as part of their subscriptions.

Furthermore, our manufacturer’s ability to timely manufacture and ship our physical scanner appliances depends on a variety of factors, such as the availability of hardware components, supply shortages or contractual restrictions.

In the event of an interruption from this manufacturer, we may not be able to develop alternate or secondary sources in a timely manner.

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dollar and we generate a majority of our revenues in U.S.

However, for the six months ended June 30, 2020, we incurred approximately 26% of our expenses in foreign currencies, primarily Euros, GBP, and INR, principally with respect to salaries and relat ed personnel expenses associated with our European and Indian operations.

Additionally, for the six months ended June 30, 2020, approximately 20% of our revenues were generated in foreign currencies.

However, for the nine months ended September 30, 2020, we incurred approximately 27% of our expenses in foreign currencies, primarily Euros, GBP, and INR, principally with respect to salaries and related personnel expenses associated with our European and Indian operations.

Additionally, for the nine months ended September 30, 2020, approximately 20% of our revenues were generated in foreign currencies.

Accordingly, changes in exchange rates may have a material adverse effect on our business, operating results and financial condition.

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The contractual provisions that we enter into with employees, consultants, partners, vendors and customers may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or intellectual property rights.

Moreover, policing unauthorized use of our technologies,

solutions and intellectual property is difficult, expensive and time-consuming, particularly in foreign 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.

Moreover, policing unauthorized use of our technologies, solutions and intellectual property is difficult, expensive and time-consuming, particularly in foreign 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 determine the extent of any unauthorized use or infringement of our solutions, technologies or intellectual property rights.

As of June 30, 2020, we had 20 issued patents and several pending U.S.

patent applications, and we may file additional patent applications in the future.

Additionally, we have an exclusive license to four third-party patents.

The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner, if at all.

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An adverse outcome of a dispute may require us to:

• pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights;

pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights;

cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others;

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GAAP to recognize compensation expense in our operating results for employee stock-based compensation under our equity grant programs, which may negatively impact our operating results and may increase the pressure to limit stock-based compensation that we might otherwise offer to current or potential employees, thereby potentially harming our ability to attract or retain highly skilled personnel.

In addition, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or divulged proprietary or other confidential information, which could result in a diversion of management’s time and our resources.

Changes in laws or regulations related to the Internet may diminish the demand for our solutions and could have a negative impact on our business.

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Government entities may have contractual or other legal rights to terminate contracts with our channel partners for convenience or due to a default, and any such termination may adversely impact our future results of operations.

Governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our solutions, a reduction of revenues or fines or civil or criminal liability if the audit uncovers improper or illegal activities.

Governments routinely investigate and audit government contractors’

administrative processes, and any unfavorable audit could result in the government refusing to continue buying our solutions, a reduction of revenues or fines or civil or criminal liability if the audit uncovers improper or illegal activities.

Any such penalties could adversely impact our results of operations in a material way.

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Compliance with applicable regulatory requirements regarding the export of our solutions, including with respect to new releases of our solutions, may create delays in the introduction of our solutions in international markets, prevent our customers with international operations from deploying our solutions throughout their globally-distributed systems or, in some cases, prevent the export of our solutions to some countries altogether.

In addition, various countries regulate the import of our appliance-based solutions and have enacted laws that could limit our ability to distribute solutions or could limit our customers’ ability to implement our solutions in those countries.

In addition, various countries regulate the import of our appliance-based solutions and have enacted laws that could limit our ability to distribute solutions or could limit our customers’

ability to implement our solutions in those countries.

Any new export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or in the countries, persons or technologies targeted by such regulations, could result in decreased use of our solutions by existing customers with international operations, declining adoption of our solutions by new customers with international operations and decreased revenues.

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For example, we acquired 1Mobility on April 1, 2018, Layered Insight on October 16, 2018, Adya on January 10, 2019, and certain intellectual property of Spell Security on July 24, 2020.

The environment for acquisitions in our industry is very competitive and acquisition candidate purchase

prices may exceed what we would prefer to pay.

The environment for acquisitions in our industry is very competitive and acquisition candidate purchase prices may exceed what we would prefer to pay.

Moreover, achieving the anticipated benefits of future acquisitions will depend in part upon whether we can integrate acquired operations, products and technology in a timely and cost-effective manner, and even if we achieve benefits from acquisitions, such acquisitions may still be viewed negatively by customers, financial markets or investors.

The acquisition and integration process is complex, expensive and time-consuming, and may cause an interruption of, or loss of momentum in, product development and sales activities and operations of both companies, as well as divert the attention of management, and we may incur substantial cost and expense.

We may issue equity securities which could dilute current stockholders’ ownership, incur debt, assume contingent or other liabilities and expend cash in acquisitions, which could negatively impact our financial position, stockholder equity and stock price.

We may issue equity securities which could dilute current stockholders’

ownership, incur debt, assume contingent or other liabilities and expend cash in acquisitions, which could negatively impact our financial position, stockholder equity and stock price.

We may not find suitable acquisition candidates, and acquisitions we complete may be unsuccessful.

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GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenues and expenses that are not readily apparent from other sources.

the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenues and expenses that are not readily apparent from other sources.

Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in our stock price.

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Our corporate headquarters and a significant portion of our operations are located in the San Francisco Bay Area, a region known for seismic activity.

In addition, natural disasters could affect our business partners’ ability to perform services for us on a timely basis.

In addition, natural disasters could affect our business partners’

ability to perform services for us on a timely basis.

In the event we or our business partners are hindered by any of the events discussed above, our ability to provide our solutions to customers could be delayed, resulting in our missing financial targets, such as revenues and net income, for a particular quarter.

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While we were able to assert in our Annual Report on Form 10-K that our internal control over financial reporting was effective as of December 31, 2019, we cannot predict the outcome of our testing in future periods.

If we are unable to assert in any future reporting period that our internal control over financial reporting is effective (or if our independent registered public

accounting firm is unable to express an opinion on the effectiveness of our internal controls), investors may lose confidence in our operating results and our stock price could decline.

If we are unable to assert in any future reporting period that our internal control over financial reporting is effective (or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal controls), investors may lose confidence in our operating results and our stock price could decline.

In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NASDAQ Stock Market.

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variations in our operating results, or the operating results of our competitors;

• changes in our financial guidance or securities analysts’ estimates of our financial performance;

changes in our financial guidance or securities analysts’

estimates of our financial performance;

changes in accounting principles;

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We may become involved in this type of litigation in the future.

Any securities litigation claims brought against us could result in substantial expenses and the diversion of our management’s attention from our business.

Our actual operating results may differ significantly from our guidance.

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In light of the foregoing, investors are urged not to rely upon our guidance in making an investment decision regarding our common stock.

Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in this “Risk Factors” section in this Quarterly Report on Form 10-Q could result in our actual operating results being different from our guidance, and the differences may be adverse and material.

Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in this “Risk Factors”

section in this Quarterly Report on Form 10-Q could result in our actual operating results being different from our guidance, and the differences may be adverse and material.

Concentration of ownership among our existing executive officers, directors and holders of 10% or more of our outstanding common stock may prevent new investors from influencing significant corporate decisions.

As of June 30, 2020, our e xecutive officers, directors and holders of 10% or more of our outstanding common stock beneficially owned, in the aggregate, approximately 29% of our outstanding common stock.

As of September 30, 2020, our executive officers, directors and holders of 10% or more of our outstanding common stock beneficially owned, in the aggregate, approximately 29% of our outstanding common stock.

As a result, such persons, acting together, have significant ability to control our management and affairs and substantially all matters submitted to our stockholders for approval, including the election and removal of directors and approval of any significant transaction.

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The market price of shares of our common stock could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers, employees and significant stockholders, a large number of shares of our common stock becoming available for sale, or the perception in the market that holders of a large number of shares intend to sell their shares.

As of June 30, 2020, we had approximately 39.3 million shares of our common stock outstanding.

In addition, as of June 30, 2020, there were approximately 0.9 million restricted stock units and options to purchase approximately 2.4 million shares of our common stock outstanding.

As of September 30, 2020, we had approximately 39.1 million shares of our common stock outstanding.

In addition, as of September 30, 2020, there were approximately 0.9 million restricted stock units and options to purchase approximately 2.4 million shares of our common stock outstanding.

If such options are exercised and restricted stock units are released, these additional shares will become available for sale.

As of June 30, 2020, we had an aggregate of 7.2 million shares of our common stock reserved for future issuance under our 2012 Equity Incentive Plan, which can be freely sold in the public market upon issuance.

As of September 30, 2020, we had an aggregate of 7.2 million shares of our common stock reserved for future issuance under our 2012 Equity Incentive Plan, which can be freely sold in the public market upon issuance.

If a large number of these shares are sold in the public market, the sales could reduce the trading price of our common stock.

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In addition, it may be suspended or terminated at any time, which may result in a decrease in the price of our common stock.

In the three and six months ended June 30, 2020, we repurchased 242,500 and 588,750 shares of our common stock, respectively, for an aggregate purch ase price of approximately $25.3 million and $54.2 million, respectively.

As of June 30, 2020, approximately $174.4 million remained available for share repurchases pursuant to our stock repurchase program.

In the three and nine months ended September 30, 2020, we repurchased 352,000 and 940,750 shares of our common stock, respectively, for an aggregate purchase price of approximately $37.7 million and $91.9 million, respectively.

As of September 30, 2020, approximately $136.7 million remained available for share repurchases pursuant to our stock repurchase program.

We do not intend to pay dividends on our common stock and therefore any returns will be limited to the value of our stock.

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These provisions include:

• authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock, which would increase the number of outstanding shares and could thwart a takeover attempt;

authorizing “blank check”

preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock, which would increase the number of outstanding shares and could thwart a takeover attempt;

a classified board of directors whose members can only be dismissed for cause;

7 unchanged sentences

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.

What changed 10-Q

Item 1A. Risk Factors