Content analysis
?Positive | ||
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Uncertain | ||
Constraining | ||
Legalese | ||
Litigous | ||
Readability |
H.S. junior Good
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New words:
Antitrust, arbitrary, assumption, award, Clover, consummate, consummated, consummation, contemplated, departure, enjoin, fee, FTC, German, HSR, midnight, Naik, Overview, par, pendency, Plumley, rescind, settlement, Shirley, Silverberg, slight, Smith, Southern, surviving, tender, tendered, thereto, unilateral, validly, waiver, winding, withdrawn
Removed:
Classic, configure, demonstrating, depended, edge, goal, innovate, interface, logistic, newest, obtained, percent, relate, switch, telecom, timeline, troubleshoot, VPN
Financial report summary
?Risks
- The announcement and pendency of our agreement to be acquired by Extreme may have an adverse effect on our business and operating results.
- The failure to complete our pending acquisition by Extreme may adversely affect our business, financial condition, operating results, and stock price.
- The Merger Agreement with Extreme limits our ability to pursue alternative transactions, which could deter a third party from proposing an alternative transaction.
- We have a history of losses and we may not achieve profitability in the future.
- Our operating results may fluctuate significantly from period to period, which makes our future operating results difficult to predict and could cause our operating results in any particular period or over an extended period to fall below expectations of investors or analysts.
- Our results are subject to seasonal variances, which make it difficult to compare or forecast our financial results on a quarter-by-quarter basis.
- The market and demand for our products and services may not develop as we expect.
- A significant portion of our sales is concentrated in the education vertical, which may cause us to have longer sales cycles, and be subject to program funding uncertainties and constraints.
- Our sales cycles often require significant time, effort and investment and are subject to risks relating to our operating performance.
- We need to develop new products and continue to make enhancements to our existing products to remain competitive in a rapidly changing market.
- Our gross margin will vary over time and may decline in the future.
- As a result of being a public company, we need to further develop and maintain our internal control over financial reporting. If our internal control over financial reporting is not effective, it may adversely affect investor confidence in our company.
- In order to generate revenue growth, we must service our existing customers while also continuing to identify and secure revenue from new customers.
- Our products utilize cloud-managed solutions, and our future growth relies in significant part in continued demand for cloud-managed solutions and our ability to develop and deliver such services.
- We plan to target new industry verticals and geographies to diversify our end customer base and expand our channel relationships, which could result in higher research and development and sales and marketing expenses, and which may not be successful and could reduce our operating margin.
- We base our inventory purchasing decisions on our forecasts of customers’ demand, and if these forecasts are inaccurate our revenue, gross margin and liquidity could be harmed.
- Demand for our products is unpredictable and a change in any quarter in inventory levels at our channel partners could have a material effect on our operating results and the revenue we recognize in any quarter.
- Some of our distributors stock inventory of our products, and are entitled in certain circumstances to stock rotation rights, which could cause us to accept the return of products and expose us to the risks of higher costs.
- We outsource the manufacturing of our products to third parties, and we therefore do not have the ability to completely control quality over the manufacturing process. In addition, if our contract manufacturers refuse or are unable to manufacturer our products, we may be unable to qualify new manufacturers in a timely manner, which would result in our being unable to sell our products.
- Our manufacturing partners purchase component parts for our products based on estimates we provide, which may not be accurate. In addition, our manufacturing partners purchase some of the components and technologies used in our products from a single source or a limited number of sources. If our estimates were to be inaccurate, or if our manufacturing partners were to lose any of these sources as suppliers, we might incur additional transition costs, resulting in delays in the manufacturing and delivery of our products, excess or obsolete inventory, or the need to redesign our products.
- We rely upon third parties for the warehousing and delivery of our products, and we therefore have less control over these functions than we otherwise would.
- We rely significantly on channel partners to sell and support our products, and the failure of this channel to be effective could materially reduce our revenue.
- Our products are subject to U.S. export controls; where we fail to comply with these laws, we could suffer monetary or other penalties.
- Regulations related to conflict minerals may cause us to incur additional expenses and could limit the supply and increase the costs of certain metals used in the manufacturing of our products.
- Our products incorporate complex technology and may contain defects or errors. We may become subject to warranty claims, product returns, product liability and product recalls as a result, any of which could cause harm to our reputation, impose costs and increase expenses, expose us to liability and adversely affect our business.
- The loss of key personnel or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business and issuing equity to attract and retain key personnel may dilute the value of our stock.
- Our ability to sell our products is highly dependent on the quality of our support offerings, and our failure to offer high quality support would have a material adverse effect on our sales and results of operations.
- We are subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection and other matters and violations of these complex and dynamic laws, rules and regulations may result in claims, changes to our business practices, monetary penalties, increased costs of operations, and/or other harms to our business.
- Our international operations expose us to additional business risks and failure to manage these risks may adversely affect our international revenue.
- Our operations in certain emerging markets expose us to political, economic and regulatory risks.
- International trade disputes and other protectionist measures that could adversely affect our business.
- We conduct R&D operations in China; risks associated with a business presence in China could negatively affect our business and results of operations.
- We could be subject to additional income tax liabilities.
- Our international operations and corporate structure subject us to potential adverse tax consequences.
- Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.
- Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value-added or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our results of operations.
- We must improve our infrastructure to manage our growth, which could involve significant costs and could, if not properly managed, harm our operating results.
- Our business and operating results could be adversely affected by unfavorable economic and market conditions.
- U.S. and global political, credit and financial market conditions may negatively impact or impair the value of our current portfolio of cash, cash equivalents and short-term investments, including U.S. treasury securities and U.S.-backed investment vehicles.
- System security risks, data security incidents and cyber-attacks could compromise our or our end customers’ information including proprietary information and end customer information and disrupt our internal operations, which could cause our business and reputation to suffer and adversely affect our stock price.
- Undetected software errors or flaws in our cloud platform could harm our reputation or decrease market acceptance of our solution, which would harm our operating results.
- Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, and interruptions by man-made problems, such as network data-security incidents, computer viruses or terrorism.
- We may acquire other businesses or form partnerships or joint ventures that could require significant management attention, disrupt our business and dilute stockholder value.
- We periodically assess the value of our assets, and may determine to reduce the value of such assets we report on our balance sheet.
- Our future capital needs are uncertain, and we may need to raise additional funds in the future. If we require additional funds in the future, those funds may not be available on acceptable terms, or at all.
- The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified members of our board of directors.
- An increasing volume of our business is being delivered through our channel partners and distributors, thus increasing our credit exposure to those partners.
- Our debt obligations contain restrictions that impact our business and expose us to risks that could adversely affect our liquidity and financial conditions.
- We compete in highly competitive markets, and competitive pressures from existing and new companies may harm our business, revenue, growth rates and prospects. In addition, many of our current or potential competitors have longer operating histories, greater brand recognition, larger customer bases and significantly greater resources than we do, and we may lack sufficient financial or other resources to maintain or improve our competitive position.
- Industry consolidation and strategic partnerships lead to increased competition and may harm our operating results.
- Demand for our products and services depends in part on the continued growth of the industries in which we participate, as well as our ability to diversify into other verticals, and the failure of these industries to expand or of our ability to diversify our revenue opportunities, could harm our operating results.
- If functionality similar to that offered by our products is incorporated into existing network infrastructure products, enterprises may decide against adding our products to their network, which would have an adverse effect on our business.
- We rely on revenue from subscription and support services that may decline. Because we recognize revenue from subscriptions and support over the term of the relevant service period, downturns or upturns in sales are not immediately reflected in full in our operating results.
- If we fail to comply with environmental requirements, our business, financial condition, operating results, and reputation could be adversely affected.
- New regulations or standards or changes in existing regulations or standards in the United States or internationally related to our products may result in unanticipated costs or liabilities, which could have a material adverse effect on our business, results of operations and future sales, and could place additional burdens on the operations of our business.
- If we are unable to protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce our rights.
- Claims by others that we infringe their intellectual property rights could harm our business.
- Our use of open-source software could impose limitations on our ability to commercialize our products.
- We rely on the availability of third-party licenses. If these licenses are available to us only on less favorable terms or not at all in the future, our business and operating results would be harmed.
- We have experienced significant volatility in the price of our common stock, and you could lose all or part of your investment.
- A small number of stockholders hold a substantial share of our common stock and their sales could increase the volatility of our stock price.
- Certain provisions in our charter documents and under Delaware law could limit attempts by our stockholders to replace or remove members of our board of directors or current management and may adversely affect the market price of our common stock.
- If financial or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our common stock, our stock price and trading volume could decline.
- We have a share repurchase program, but we cannot guarantee that in fact that our repurchase of shares will enhance long-term stockholder value. Our share repurchases could also increase the volatility of the price of our common stock and could diminish our cash reserves.
- We do not intend to pay dividends and under our loan agreements with our lenders we are not permitted to pay dividends. As a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
- We are an “Emerging Growth Company,” and any decision on our part to comply only with certain reduced disclosure requirements applicable to Emerging Growth Companies could make our common stock less attractive to investors.
Management Discussion
- We derive revenue from the sales of our products and services, and we recognize revenue when we have identified the contract with the customer, identified the performance obligations in the contract, determined the transaction price, allocated the price to the performance obligations, and the performance obligations have been satisfied.
- Product Revenue. We derive product revenue primarily from sales of our hardware products, which include wireless access points, SD-WAN branch routers, and switches, the majority of which are embedded with our proprietary operating system, HiveOS, and perpetual licenses for our unified network management system, HiveManager and other software applications, as well as related accessories. We recognize product revenue at the time of shipment, provided that all other revenue recognition criteria have been met.
- Subscription and Support Revenue. We derive subscription and support revenue primarily from sales of our software subscription and support offerings that we deliver over a specified term. These offerings primarily include post-contract customer support ("PCS") related to our perpetual software licenses and subscriptions to HiveManager and other software applications delivered as SaaS, including related customer support, and from subsequent renewals of those contracts. To benefit fully from potential contract renewals, we plan to continue to invest in systems to better track existing customer support commitments and renewal opportunities and provide offerings which continue to be attractive to our customers. Our PCS includes tiered maintenance and support services under renewable, fee-based maintenance and support contracts, which include technical support, bug fixes, access to priority hardware replacement services and unspecified upgrades on a when-and-if available basis. Our SaaS subscriptions include comparable maintenance and support services. The higher the percentage of our end-customers that purchase SaaS subscriptions, as opposed to HiveManager and perpetual licenses, the higher our subscription and support revenue will be as a percentage of our total revenue over time. We recognize subscription and support revenue ratably over the term of the contract, which is typically one, three or five years. As a result, our recognition of subscription and support revenue lags our recognition of related product revenue.