1. Description of Business and Summary of Significant Accounting Policies

Description of Business

Mandiant, Inc., formerly known as FireEye, Inc., with principal executive offices located in ~~Milpitas, California,~~Reston, Virginia, was incorporated as NetForts, Inc. on February 18, 2004, under the laws of the State of Delaware, and changed its name to FireEye, Inc. on September 7, 2005. On October 4, 2021, the Company changed its name to Mandiant, Inc.

~~FireEye,~~Mandiant, Inc. and its wholly owned subsidiaries (collectively, the “Company”, “Mandiant”, “we”, “us” or “our”) provide ~~comprehensive~~ intelligence-based cybersecurity solutions and services that allow organizations to prepare for, prevent, investigate, respond to and remediate ~~cyber attacks,~~cyber-attacks, including attacks that target on-premise, cloud and critical infrastructure environments.

Unless otherwise noted, discussion in these Notes to Condensed Consolidated Financial Statements refers to our continuing operations. Refer to Note 2, “Discontinued Operations,” for further information.

Our portfolio of cybersecurity ~~products~~solutions and services ~~helps~~is comprised of the following:

•Mandiant Advantage software-as-a-service (SaaS) platform with integrated modules for threat intelligence, security validation, attack surface management and security automation, managed services, and consulting services. Our solutions and services help customers minimize the risk of costly cybersecurity breaches by:

•detecting and preventing advanced, targeted and evasive attacks missed by other security control solutions,

•automating the investigation and triage of security alerts generated by Mandiant solutions, as well as security control solutions from other vendors,

•providing visibility into the latest threats and the tools and techniques used by threat actors,

•validating the effectiveness of existing cybersecurity controls against attacks before an attack occurs,

•~~detecting~~providing visibility and ~~preventing advanced, targeted and other evasive attacks missed by other security controls,~~

•~~enabling more efficient management of security operations, including alert management, investigations and response when a breach occurs,~~defensive insight into the attack surface an adversary may target, and

•providing assessment, training and other strategic security consulting services that help organizations improve their resilience to attack.

Our portfolio of cybersecurity solutions includes threat detection and prevention products that include appliance-based, virtual and cloud solutions for web security, email security and endpoint security. These products are complemented by our cloud-based threat intelligence, security analytics and security automation and orchestration technologies, as well as our managed security services, cybersecurity consulting and incident response offerings. In combination, our solutions and services enable a proactive approach to cybersecurity that extends across the threat management lifecycle to minimize the risk of costly cybersecurity breaches.

We have organized our cybersecurity solutions in a hub and spokes model designed to integrate machine-generated threat data from our detection and prevention products with our analytics, response and orchestration technologies delivered through our Helix cybersecurity operations platform. Helix is designed to enable more efficient security operations by correlating security and event data across an organization’s environment to determine which threats present the greatest risk, automate repetitive security processes, and provide tools and workflows to investigate and respond to attacks. The Helix cloud-based interface presents a unified view of an organization’s attack surface, including on-premise and cloud environments, and provides the contextual threat intelligence and threat management tools to enable a rapid response.

The majority of our ~~products, subscriptions~~solutions and services are sold to end-customers ~~through distributors, resellers, and strategic partners,~~directly, with a lesser percentage of sales ~~directly~~ to our ~~end-customers.~~end-customers sold through distributors, resellers, and strategic partners.

On March 7, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Google LLC (“Google”) and Dupin Inc., a wholly owned subsidiary of Google (“Merger Sub”), pursuant to which and subject to the terms and conditions of which, Google has agreed to acquire us in an all-cash transaction by way of a merger of Merger Sub with and into Mandiant, Inc. (the “Merger”), with Mandiant, Inc. surviving the merger as a wholly owned subsidiary of Google.

Under the Merger Agreement, subject to the terms and conditions thereof, at the effective time of the Merger, each issued and outstanding share of Mandiant’s common stock (except as otherwise set forth in the Merger Agreement) will be canceled and automatically converted into the right to receive $23.00 in cash, without interest and less any applicable withholding taxes.

Completion of the Merger is subject to the satisfaction (or waiver where permissible pursuant to applicable law) of certain terms and conditions set forth in the Merger Agreement, including (i) adoption of the Merger Agreement by the holders of our common stock and convertible preferred stock (on an as-converted to common stock basis), voting together as a single class; (ii) the absence of an injunction, judgment, order or other legal restraint, law or any action of any governmental authority preventing, materially restraining or materially impairing the consummation of the Merger or the conversion of our convertible preferred stock into common stock in connection with the Merger; and (iii) the expiration or termination of the waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and clearance under the regulatory laws of certain non-United States jurisdictions. The Merger is expected to close in calendar year 2022, subject to the satisfaction (or waiver where permissible pursuant to applicable law) of certain conditions. Upon consummation of the Merger, Mandiant’s common stock will no longer be listed on any public market.

~~In November 2020,~~The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is filed as Exhibit 2.1 of our Current Report on Form 8-K filed on March 9, 2022 and incorporated by reference herein.

On August 4, 2021, we acquired ~~Respond Software, Inc. ("Respond Software"~~Intrigue Corp. (“Intrigue”), a ~~cybersecurity investigation automation company. In connection with this acquisition, we paid~~privately-held company, for cash consideration of ~~$116.1~~approximately $12.3 million. Intrigue's attack surface management technology will be integrated into the Mandiant Advantage platform, enabling organizations to discover, monitor and manage risk across their entire attack surface.

On June 2, 2021, we announced a stock repurchase program for the repurchase of up to $500 million of our common stock. There is no expiration date on this authorization, and ~~issued 4,931,862~~we may suspend, amend or discontinue the repurchase program at any time. We did not repurchase any of our common stock during the three months ended March 31, 2022. As of March 31, 2022, we had cumulatively repurchased 16.8 million shares of our common stock for $300.0 million, at an average repurchase price of ~~which 694,768 shares~~approximately $17.81 per share. The repurchases were recorded to additional paid-in capital as we are subject to vesting conditions. The estimated fair value of the common stock issued and not subject to vesting conditions was $60.3 million. We also assumed unvested stock options, which are now exercisable for our common stock, of which $1.2 million of the fair value has been accounted for as consideration for assumed awards pertaining to pre-combination service prior to acquisition. Based on the above, total purchase consideration for Respond Software was $177.6 million. We are currently in ~~the process of completing the preliminary purchase price allocation.~~an accumulated net deficit position.

~~In November 2020,~~On May 29, 2021, we entered into ~~a Securities~~an Asset Purchase Agreement with BTO Delta Holdings DE L.P., an investment vehicle of funds affiliated with The Blackstone Group Inc., and a Securities Purchase Agreement with ClearSky Security Fund I LLC and ClearSky Power & Technology Fund II LLC (together, the “Series A Securities Financing Agreements”). Pursuant to the Series A Securities Financing Agreements, in December 2020 we issued and sold 400,000 shares of a newly designated 4.5% Series A Convertible Preferred Stock, par value $0.0001 per share, at a price of $1,000 per share, for an aggregate purchase price of $400.0 million. We intend to use the net proceeds from the issuance and sale to fund acquisitions, buybacks of our common stock, and for working capital purposes.

~~In January 2020, we acquired Cloudvisory LLC ("Cloudvisory"~~(the “Purchase Agreement”), pursuant to which we agreed to sell the FireEye Products business to Magenta Buyer LLC (“Trellix”), which is backed by a ~~provider~~consortium led by Symphony Technology Group (“STG”), in exchange for total cash consideration of ~~cloud visibility~~$1.2 billion and ~~control solutions.~~assumption of certain assets and liabilities of the FireEye Products business as specified in the Purchase Agreement. As ~~consideration~~a result, the FireEye Products business was classified as discontinued operations in our condensed consolidated financial statements and excluded from continuing operations for ~~the acquisition, we paid approximately $13.2 million in cash and assumed $0.3 million in net tangible liabilities.~~all historical periods presented. The transaction closed on October 8, 2021.

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of ~~FireEye,~~Mandiant, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and following the requirements of the Securities and Exchange Commission (“SEC”), for interim reporting. As permitted under those rules, certain footnotes or other financial information

that are normally required by U.S. GAAP can be condensed or omitted. These unaudited condensed consolidated financial statements have been prepared on the same basis as our annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of our financial information. The results of operations for the three months ended March 31, ~~2021~~2022 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2021~~2022 or for any other interim period or for any other future year. The balance sheet as of December 31, ~~2020~~2021 has been derived from audited consolidated financial statements at that date but does not include all information required by U.S. GAAP for annual consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, ~~2020~~2021 included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such management estimates include, but are not limited to, determining the nature and timing of satisfaction of performance obligations, useful life of our security appliances that are dependent on intelligence and assessing the material rights associated with it, determining the standalone selling price of performance obligations, subscriptions and services, commissions expense including the period of benefit of customer acquisition cost, bonus expense, future taxable income, contract manufacturer liabilities, litigation and settlement costs and other loss contingencies, fair value of our equity awards, achievement of targets for performance stock units, fair value of the liability and equity components of the Convertible Senior Notes (as defined in Note 9)10), results of operations of the Company’s discontinued operations, and the purchase price allocation of acquired businesses. We base our estimates on historical experience and on assumptions that we believe are reasonable. Changes in facts or circumstances may cause us to change our assumptions and estimates in future periods, and it is possible that actual results could differ from current or revised future estimates.

Summary of Significant Accounting Policies

~~There have been no significant changes to our significant~~Our accounting policies ~~as of and for the three months ended March 31, 2021, as compared~~are set forth in Note 1 to ~~the significant accounting policies described~~Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. We include herein certain updates to those policies.

~~Recently Adopted Accounting Pronouncements~~Discontinued Operations

~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~

~~In August 2018,~~If the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard requires capitalizationdisposal of the implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Further, the standard also requires the Company to expense the capitalized implementation costs of a hosting arrangement over the term of the hosting arrangement. We adopted the standard effective January 1, 2020. The standard did not have a significant impact on our unaudited condensed consolidated financial statements.

~~Simplifying the Test for Goodwill Impairment~~

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (i.e. Step 2 of the current guidance), instead measuring the impairment charge as the excess of the reporting unit's carrying amount over its fair value (i.e. Step 1 of the current guidance). We adopted the standard effective January 1, 2020. The standard did not have a significant impact on our unaudited condensed consolidated financial statements.

~~Measurement of Credit Losses on Financial Instruments~~

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard changes the impairment model for most financial assets and certain other instruments by introducing a current expected credit loss ("CECL") model. The CECL model is a more forward-looking approach based on expected losses rather than incurred losses, requiring entities to estimate and record losses expected over the remaining contractual lifecomponent of an ~~asset.~~entity (or group of components) represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results, it meets the criteria for discontinued operations. The ~~guidance was effective for the Company beginning in the first quarter~~results of ~~2020. We adopted the standard effective January 1, 2020. The standard did not have a significant impact on our unaudited condensed consolidated financial statements.~~

~~Simplifying Accounting for Income Taxes~~

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to thediscontinued

~~approach~~operations, as well as any gain or loss on the disposal transaction, are presented separately, net of tax, from the results of continuing operations for ~~intra-period tax allocation,~~all historical periods presented. The revenue and expenses included in the ~~methodology for calculating income taxes in an interim period~~results of discontinued operations are the revenue and direct operating expenses incurred by the ~~recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects~~discontinued component that may be reasonably segregated from the revenue and costs of the ~~accounting for franchise taxes and enacted changes~~ongoing operations of the Company. The operating results from discontinued operations have been included in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax. ASU 2019-12 is effective for annual and interim periods in fiscal years beginning after December 15, 2020. We adopted ASU 2019-12 as of January 1, 2020. The adoption did not have a significant impact on our ~~unaudited~~ condensed consolidated financial statements. The condensed consolidated statement of cash flows presents cash flows from continuing operations along with cash flows from discontinued operations within each cash flow statement category.

~~Recent Legislation~~

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 pandemic. Changes in tax laws or rates are accounted forSee Note 2, “Discontinued Operations,” contained in the ~~period~~“Notes to Condensed Consolidated Financial Statements” in Part I, Item I of ~~enactment. The income tax provisions of the CARES Act do not have a significant impact~~this Quarterly Report on ~~our current taxes, deferred taxes, or uncertain tax positions.~~Form 10-Q for additional information.

~~Recent~~Recently Adopted Accounting Pronouncements ~~Not Yet Adopted~~

In August 2020, the FASB issued ~~ASU No.~~Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06):. This standard simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ~~ASC~~Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change is expected to reduce reported interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities as it relates to the ~~Company’s convertible senior notes.~~Convertible Senior Notes. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS)~~, which is~~ and includes the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards.

The Company adopted ASU 2020-06 on January 1, 2022, using the modified retrospective basis. Adoption resulted in a $202.3 million decrease to the opening balance of accumulated deficit, $271.5 million decrease to the opening balance of additional paid-in capital, and $69.1 million increase to the opening balance of the Convertible Senior Notes, net on the condensed consolidated balance sheet.

Recent Accounting Pronouncements Not Yet Adopted

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This standard requires an acquiring entity to apply Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities in a business combination in a manner consistent with how the ~~Company’s accounting treatment under the current standard.~~acquiree recognized and measured them in its preacquisition financial statements. ASU ~~2020-06~~2021-08 is effective for fiscal years beginning after December 15, ~~2021, with early~~2022, including interim periods within those fiscal years. Early adoption of the amendments is permitted, ~~for fiscal years beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis.~~including adoption in an interim period. We are currently evaluating the timing ~~method of adoption~~ and overall impact of this standard on our condensed consolidated financial statements.

2. Discontinued Operations

On May 29, 2021, we entered into the Purchase Agreement, pursuant to which we agreed to sell the FireEye Products business to Trellix in exchange for total cash consideration of $1.2 billion. The transaction closed on October 8, 2021.

The following table summarizes the results of the discontinued operations for the three months ended March 31, 2021 (in thousands):


	Three Months Ended March 31, 2021

MAJOR LINE ITEMS CONSTITUTING NET INCOME
Revenue from discontinued operations	$	131,659
Cost of revenue	27,801
Research and development	27,421
Sales and marketing	37,644


Other expense, net	2,660
Net income from discontinued operations before income taxes	$	36,133
Provision for income taxes	324
Net income from discontinued operations, net of income taxes	$	35,809

At the closing of the sale of the FireEye Products business on October 8, 2021, we entered into a Transition Services Agreement (“TSA”) with Trellix. The TSA is designed to ensure and facilitate an orderly transfer of business operations. The services provided by us under the TSA will run up to 18 months following the closing, subject to the ability of Trellix to earlier terminate any such services. Income for the TSA was $13.3 million and expenses were $11.9 million for the three months ended March 31, 2022 and was recorded as part of other income, net, in our condensed consolidated statements of operations. No revenues or expenses were incurred for the TSA for the three months ended March 31, 2021, as the TSA was not in effect during this period.

3. Fair Value Measurements

The accounting guidance for fair value measurements provides a framework for measuring fair value on either a recurring or nonrecurring basis, whereby the inputs used in our valuation techniques are assigned a hierarchical level. The following are the three levels of inputs to measure fair value:

•Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2: Inputs that reflect quoted prices for identical assets or liabilities in less active markets; quoted prices for similar assets or liabilities in active markets; benchmark yields, reported trades, broker/dealer quotes, inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

•Level 3: Unobservable inputs that reflect our own assumptions incorporated in valuation techniques used to measure fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and consider an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, our own or the counterparty’s non-performance risk is considered in measuring the fair values of assets.

The following table presents our assets ~~and liabilities~~ measured at fair value on a recurring basis using the above input categories (in thousands):


		As of March 31, 2021								As of December 31, 2020									As of March 31, 2022								As of December 31, 2021
Description	Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	Assets																	Assets
Cash equivalents:	Cash equivalents:																	Cash equivalents:
Money market funds	Money market funds	$	223,910	$	0	$	0	$	223,910	$	32,954	$	0	$	0	$	32,954	Money market funds	$	90,902	$	—	$	—	$	90,902	$	309,468	$	—	$	—	$	309,468

Commercial Paper																		Commercial Paper	—		210,572		—		210,572		—		179,964		—		179,964
Corporate notes and bonds																		Corporate notes and bonds	—		6,001		—		6,001		—		8,194		—		8,194
U.S. Treasuries																		U.S. Treasuries	—		9,999		—		9,999		—		149,998		—		149,998
Total cash equivalents	Total cash equivalents	223,910		0		0		223,910		32,954		0		0		32,954		Total cash equivalents	90,902		226,572		—		317,474		309,468		338,156		—		647,624
Short-term investments:	Short-term investments:																	Short-term investments:
Certificates of deposit	Certificates of deposit	0		2,982		0		2,982		0		2,752		0		2,752		Certificates of deposit	—		6,939		—		6,939		—		6,814		—		6,814
Commercial paper	Commercial paper	0		4,999		0		4,999		0		19,994		0		19,994		Commercial paper	—		80,583		—		80,583		—		9,994		—		9,994
Corporate notes and bonds	Corporate notes and bonds	0		529,773		0		529,773		0		437,652		0		437,652		Corporate notes and bonds	—		686,665		—		686,665		—		649,408		—		649,408
U.S. Treasuries	U.S. Treasuries	0		72,087		0		72,087		0		74,934		0		74,934		U.S. Treasuries	—		337,779		—		337,779		—		157,342		—		157,342
U.S. Government agencies	U.S. Government agencies	0		173,848		0		173,848		0		89,492		0		89,492		U.S. Government agencies	—		247,139		—		247,139		—		215,781		—		215,781
Total short-term investments	Total short-term investments	0		783,689		0		783,689		0		624,824		0		624,824		Total short-term investments	—		1,359,105		—		1,359,105		—		1,039,339		—		1,039,339
Total assets measured at fair value	Total assets measured at fair value	$	223,910	$	783,689	$	0	$	1,007,599	$	32,954	$	624,824	$	0	$	657,778	Total assets measured at fair value	$	90,902	$	1,585,677	$	—	$	1,676,579	$	309,468	$	1,377,495	$	—	$	1,686,963

•governments may require certain products purchased by it to be manufactured in the United States and other relatively high-cost manufacturing locations, and we may not manufacture all products in locations that meet these requirements, affecting our ability to sell these products to governmental agencies.

Our ability to maintain customer satisfaction depends in part on the quality of our professional service organization and technical and other support services, including the quality of the support provided on our behalf by certain channel partners. Failure to maintain high-quality customer support could have a material adverse effect on our business, financial condition and results of operations.

Once our platform is deployed within our customers’ networks, our customers depend on our technical and other support services, as well as the support of our channel partners, to resolve any issues relating to the implementation and maintenance of our platform. If we or our channel partners do not effectively assist our customers in deploying our platform, succeed in helping our customers quickly resolve post-deployment issues, or provide effective ongoing support, our ability to sell additional ~~products,~~solutions, subscriptions or services as part of our platform to existing customers would be adversely affected and our reputation with potential customers could be damaged. Many larger organizations have more complex networks and require higher levels of support than smaller customers. If we fail to meet the requirements of our larger customers, it may be more difficult to execute on our strategy of upselling and cross selling with these customers. Additionally, if our channel partners do not effectively provide support to the satisfaction of our customers, we may be required to provide this level of support to those customers, which would require us to hire additional personnel and to invest in additional resources. It can take significant time and resources to recruit, hire, and train qualified technical support employees. We may not be able to hire such resources fast enough to keep up with demand. To the extent that we or our channel partners are unsuccessful in hiring, training, and retaining adequate support resources, our ability and the ability of our channel partners to provide adequate and timely support to our customers will be negatively impacted, and our customers’ satisfaction with our platform will be adversely affected. Additionally, to the extent that we need to rely on our sales engineers to provide post-sales support, our sales productivity will be negatively impacted, which would harm our results of operations.

We may not have visibility into particular transactions affecting our financial position and results of operations.

We may, from time to time, change our pricing models.For example, we may offer some of our solutions and services on a consumption-based pricing model. In such event, we will generally recognize revenue on consumption. Because our customers will have flexibility in the timing of their consumption, we will not have the visibility into the timing of revenue recognition that would be the case under a subscription-based pricing model. There is a risk that customers will consume our solutions and services more slowly than we expect, and our actual results may differ from our forecasts. If our ~~products do not effectively interoperate with our customers’ IT infrastructure, installations could be delayed or cancelled, which would harm our business.~~

Our products must effectively interoperate with our customers’ existing or future IT infrastructure, which often has different specifications, utilizes multiple protocol standards, deploys products from multiple vendors, and contains multiple generations of products that have been added over time. As a result, when problems occur in a network, it may be difficult to identify the sources of these problems. If we find errors in the existing software or defects in the hardware used in our customers’ infrastructure or problematic network configurations or settings, we may have to modify our software or hardware so that our products will interoperate with our customers’ infrastructure. In such cases, our products may be unable to provide significant performance improvements for applications deployed in our customers’ infrastructure. These issues could cause longer installation times for our products and could cause order cancellations, either of which would adversely affect our business,quarterly results of operations fall below the expectations of investors and ~~financial condition. In addition, government~~securities analysts who follow our stock, the price of our common stock could decline substantially, and other customers may require our products to comply with certain security or other certifications and standards. If our products are late in achieving or fail to achieve compliance with these certifications and standards, or our competitors achieve compliance with these certifications and standards, we may be disqualified from selling our products to such customers, or may otherwise be at a competitive disadvantage, either of which would harm our business, results of operations, and financial condition.

could face costly lawsuits, including securities class actions.

Risks Related to Intellectual Property and Technology Licensing

Claims by others that we infringe their proprietary technology or other rights could harm our business.

Technology companies frequently enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. In addition, patent holding companies seek to monetize patents they have purchased or otherwise obtained. As we face increasing competition and gain an increasingly higher profile, the possibility of intellectual property rights claims against us grows. From time to time, third parties have asserted, and we expect that third parties will continue to assert, claims of infringement of intellectual property rights against us. For example, on December 29, 2017, we executed Confidential Patent License Agreements with Finjan Holdings, Inc. (“Finjan”), whereby we resolved all pending litigation matters. Under the terms of the settlement agreement, we paid Finjan a one-time net cash settlement amount of $12.5 million in December 2017, in exchange for the resolution and settlement of all claims between ~~FireEye~~Mandiant and Finjan and for cross-licenses between the companies of certain issued patents and patent applications. Other security companies have paid amounts to the same plaintiff to license some of the patents asserted against us. Third parties may in the future also assert claims against our customers or channel partners, whom our standard license and other agreements obligate us to indemnify against claims that our ~~products~~solutions infringe the intellectual property rights of third parties. Many of our competitors and others may now and in the future have significantly larger and more mature patent portfolios than we have. In addition, future litigation may involve patent holding companies or other patent owners who have no relevant product offerings or revenue and against whom our own patents may therefore provide little or no deterrence or protection. Any claim of intellectual property infringement by a third party, even a claim without merit, could cause us to incur substantial costs defending against such claim, could distract our management from our business and could require us to cease use of such intellectual property. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by the discovery process.

Although third parties may offer a license to their technology or other intellectual property, the terms of any offered license may not be acceptable, and the failure to obtain a license or the costs associated with any license could cause our business, financial condition and results of operations to be materially and adversely affected. We may also be subject to additional fees or be required to obtain new licenses if any of our licensors allege that we have not properly paid for such licenses or that we have improperly used the technologies under such licenses. In addition, some licenses may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. If a third party does not offer us a license to its technology or

other intellectual property on reasonable terms, or at all, we could be enjoined from continued use of such intellectual property. As a result, we may be required to develop alternative, non-infringing technology, which could require significant time (during which we could be unable to continue to offer our affected ~~products,~~solutions, subscriptions or services), effort, and expense and may ultimately not be successful. Furthermore, a successful claimant could secure a judgment or we may agree to a settlement that prevents us from distributing certain ~~products,~~solutions, providing certain subscriptions or performing certain services or that requires us to pay substantial damages, royalties or other fees. Any of these events could harm our business, financial condition and results of operations.

Our technology alliance partnerships expose us to a range of business risks and uncertainties that could have a material adverse impact on our business and financial results.

We have entered, and intend to continue to enter, into technology alliance partnerships with third parties to support our future growth plans. Such relationships include technology licensing, joint technology development and integration, research cooperation, co-marketing activities and sell-through arrangements. We face a number of risks relating to our technology alliance partnerships that could prevent us from realizing the desired benefits from such partnerships on a timely basis or at all, which, in turn, could have a negative impact on our business and financial results.

Technology alliance partnerships require significant coordination between the parties involved, particularly if a partner requires that we integrate its ~~products~~solutions with our ~~products.~~solutions. This could involve a significant commitment of time and resources by our technical staff and their counterparts within our technology alliance partner. The integration of ~~products~~solutions from different companies may be more difficult than we anticipate, and the risk of integration difficulties, incompatible ~~products~~solutions and undetected programming errors or defects may be higher than the risks normally associated with the introduction of new ~~products.~~solutions. It may also be more difficult to market and sell ~~products~~solutions developed through technology alliance partnerships than it would be to market and sell ~~products~~solutions that we develop on our own. Sales and marketing personnel may require special training, as the new ~~products~~solutions may be more complex than our other ~~products.~~

solutions.

We invest significant time, money and resources to establish and maintain relationships with our technology alliance partners, but we have no assurance that any particular relationship will continue for any specific period of time. In addition, our technology alliance partners may currently or in the future have offerings that compete with our offerings in certain markets, which may make it difficult to establish long-term or effective relationships with them. Generally, our agreements with ~~these~~ technology alliance partners are terminable without cause with no or minimal notice or penalties. If we lose a significant technology alliance partner, we could lose the benefit of our investment of time, money and resources in the relationship. In addition, we could be required to incur significant expenses to develop a new strategic alliance or to determine and implement an alternative plan to pursue the opportunity that we targeted with the former partner.

We may be unable to protect our intellectual property adequately, which could harm our business, financial condition and results of operations.

We believe that our intellectual property is an essential asset of our business. We rely on a combination of patent, copyright, trademark, database rights, and trade secret laws, as well as confidentiality procedures and contractual provisions, to establish and protect our intellectual property rights in the United States and abroad. The efforts we have taken to protect our intellectual property may not be sufficient or effective, and our trademarks, copyrights and patents may be held invalid or unenforceable. Any U.S. or other patents issued to us may not be sufficiently broad to protect our proprietary technologies, and given the costs of obtaining patent protection, we may choose not to seek patent protection for certain of our proprietary technologies. We may not be effective in policing unauthorized use of our intellectual property, and even if we do detect violations, litigation may be necessary to enforce our intellectual property rights. Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive, could divert management’s attention and may result in a court determining that our intellectual property rights are unenforceable. If we are not successful in cost-effectively protecting our intellectual property rights, our business, financial condition and results of operations could be harmed.

We incorporate technology from third parties into our ~~products,~~solutions, and our inability to obtain or maintain rights to the technology could harm our business.

We incorporate technology from third parties into our ~~products.~~solutions. We cannot be certain that our suppliers and licensors are not infringing the intellectual property rights of third parties or that the suppliers and licensors have sufficient rights to the technology in all jurisdictions in which we may sell our ~~products.~~solutions. Some of our agreements with our suppliers and licensors may be terminated for convenience by them. If we are unable to obtain or maintain rights to any of this technology because of intellectual property infringement claims brought by third parties against our suppliers and licensors or against us, or if we are unable to continue to obtain such technology or enter into new agreements on commercially reasonable terms, our ability to develop and sell ~~products,~~solutions, subscriptions and services containing such technology could be severely limited, and our business could be harmed. Additionally, if we are unable to obtain necessary technology from third parties, including certain sole suppliers, we may be forced to acquire or develop alternative technology, which may require significant time, cost and effort and may be of lower quality or performance

standards. This would limit and delay our ability to offer new or competitive ~~products~~solutions and increase our costs of ~~production.~~development. If alternative technology cannot be obtained or developed, we may not be able to offer certain functionality as part of our ~~products,~~solutions, subscriptions and services. As a result, our margins, market share and results of operations could be significantly harmed.

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

Our ~~products~~solutions and subscriptions contain software modules licensed to us by third-party authors under “open source” licenses. The use and distribution of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar ~~products~~solutions with lower development effort and time and ultimately could result in a loss of sales for us.

Although we monitor our use of open source software to try to avoid subjecting our ~~products~~solutions and subscriptions to conditions, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that these licenses could be construed in ways that could impose unanticipated conditions or restrictions on our ability to commercialize ~~products~~solutions and subscriptions incorporating such software. Moreover, we cannot assure you that our processes for controlling our use of open source software in our ~~products~~solutions and subscriptions will be effective. From time to time, we may face claims from third parties asserting ownership of, or demanding release of, the open source software or derivative works that we developed using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation. If we are held to have breached the terms of an open source software license, we could be required to seek licenses from third parties to continue offering our ~~products~~solutions on terms that are not economically feasible, to re-engineer our ~~products,~~solutions, to discontinue the sale of our ~~products~~solutions if re-engineering could not be accomplished on a timely or cost-effective basis, or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, results of operations and financial condition.

~~Risks Related to Our Supply Chain~~

Because we depend on a limited number of manufacturers to build our appliance products, we are susceptible to manufacturing delays and pricing fluctuations that could prevent us from shipping customer orders on time, or on a cost-effective basis, which may result in the loss of sales and customers.

We depend on a limited number of third-party manufacturers, primarily Flextronics Telecom Systems, Ltd., as sole source manufacturers for our appliance products. Our reliance on third-party manufacturers reduces our control over the manufacturing process and exposes us to risks, including reduced control over quality assurance, product costs, product supply, upgrades and expansions and timing. Any manufacturing disruption by these third-party manufacturers could severely impair our ability to fulfill orders on time. If we are unable to manage our relationships with these third-party manufacturers effectively, or if these manufacturers suffer delays or disruptions for any reason, experience increased manufacturing lead-times, capacity constraints or quality control problems in their manufacturing operations, or fail to meet our future requirements for timely delivery, our ability to ship products to our customers would be severely impaired, and our business and results of operations would be harmed.

Further, the portion of our appliances that are sourced outside the United States may be subject to additional logistical risks or risks associated with complying with local rules and regulations in foreign countries. Significant changes to existing international trade agreements could lead to sourcing or logistics disruption resulting from import delays or the imposition of increased tariffs on our sourcing partners. For example, the United States and Chinese governments have each enacted, and discussed more potential, import tariffs. These tariffs, depending on their ultimate scope and how they are implemented, could negatively impact our business by increasing our costs and impair our ability to fulfill orders.

In addition, our reliance on third-party manufacturers exposes us to the risk that certain minerals, known as “conflict minerals,” that are contained in our products have originated in the Democratic Republic of the Congo or an adjoining country. As a result of the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted disclosure requirements for public companies whose products contain conflict minerals that are necessary to the functionality or production of such products. Although the SEC has provided guidance with respect to a portion of the conflict minerals filing requirements that somewhat reduced the reporting required, we have incurred and expect to incur additional costs to comply with the disclosure requirements, including costs related to determining the source of the conflict minerals used in our products. Moreover, the implementation of these requirements could adversely affect the sourcing, availability and pricing of materials used in the manufacture of our products to the extent that there may be only a limited number of suppliers offering “conflict free” minerals that can be used in our products. There can be no assurance that we will be able to obtain such minerals in sufficient quantities or at competitive prices. We may also encounter customers who require that all of the components of our products be certified as conflict free. If we are not able to meet customer requirements, such customers may choose to not purchase our products, which could impact our sales.

Our third-party manufacturers typically fulfill our supply requirements on the basis of individual orders. We are subject to a risk of supply shortages and changes in pricing terms because we do not have long-term contracts with our third-party manufacturers that guarantee capacity, the continuation of particular pricing terms or the extension of credit limits. Our contract with our primary manufacturer permits it to terminate such contract at its convenience, subject to prior notice requirements. Any production interruptions for any reason, such as a natural disaster, epidemic, capacity shortages, or quality problems at one of our manufacturing partners would negatively affect sales of our products and adversely impact our business and results of operations.

Managing the supply of our appliance products and their components is complex. Insufficient supply and inventory may result in lost sales opportunities or delayed revenue, while excess inventory may harm our gross margins.

Our third-party manufacturers procure components and build our appliance products based on our forecasts, and we generally do not hold inventory for a prolonged period of time. These forecasts are based on estimates of future demand for our products, which are in turn based on historical trends and analyses from our sales and marketing organizations, adjusted for overall market conditions. In order to reduce manufacturing lead times and plan for adequate component supply, from time to time we may issue forecasts for components and products that are non-cancelable and non-returnable.

Our inventory management systems and related supply chain visibility tools may be inadequate to enable us to make accurate forecasts and effectively manage the supply of our products and product components. Supply management remains an area of increasing focus as we balance the need to maintain supply levels that are sufficient to ensure competitive lead times against the risk of obsolescence because of rapidly changing technology and customer requirements. If we ultimately determine that we have excess supply, we may have to reduce our prices and write-down inventory, which in turn could result in lower gross margins. Alternatively, insufficient supply levels may lead to shortages that result in delayed revenue or loss of sales opportunities altogether as potential customers turn to competitors’ products that may be readily available. Additionally, any increases in the

time required to manufacture or ship our products could result in supply shortfalls. If we are unable to effectively manage our supply and inventory, our results of operations could be adversely affected.

Because some of the key components in our appliance products come from limited sources of supply, we are susceptible to supply shortages or supply changes, which could disrupt or delay our scheduled product deliveries to our customers and may result in the loss of sales and customers.

Our appliance products rely on key components, including a motherboard and chassis, which our third-party manufacturers purchase on our behalf from a sole source provider. The manufacturing operations of some of our component suppliers are geographically concentrated in Asia, which makes our supply chain vulnerable to regional disruptions. A localized health risk affecting employees at these facilities, such as the current COVID-19 pandemic, or the spread of a pandemic influenza, could impair the total volume of components that we are able to obtain, which could result in substantial harm to our results of operations. Similarly, a fire, flood, earthquake, tsunami or other disaster, condition or event such as political instability, terrorist act, civil unrest or a power outage that adversely affects any of these component suppliers’ facilities could significantly affect our ability to obtain the components needed for our products, which could result in a substantial loss of sales and revenue and a substantial harm to our results of operations.

We do not have volume purchase contracts with any of our component suppliers, and they could cease selling to us at any time. In addition, our component suppliers change their selling prices frequently in response to market trends, including industry-wide increases in demand, and because we do not have contracts with these suppliers, we are susceptible to price fluctuations related to raw materials and components. If we are unable to pass component price increases along to our customers or maintain stable pricing, our gross margins and results of operations could be negatively impacted. If we are unable to obtain a sufficient quantity of these components in a timely manner for any reason, sales of our products could be delayed or halted or we could be forced to expedite shipment of such components or our products at dramatically increased costs, which would negatively impact our revenue and gross margins. Additionally, poor quality in any of the sole-sourced components in our products could result in lost sales or lost sales opportunities. If the quality of the components does not meet our or our customers’ requirements, if we are unable to obtain components from our existing suppliers on commercially reasonable terms, or if any of our sole source providers cease to remain in business or continue to manufacture such components, we could be forced to redesign our products and qualify new components from alternate suppliers. The resulting stoppage or delay in selling our products and the expense of redesigning our products could result in lost sales opportunities and damage to customer relationships, which would adversely affect our business and results of operations.

~~Reliance on shipments at the end of each quarter could cause our revenue for the applicable period to fall below expected levels.~~

As a result of customer buying patterns and the efforts of our sales force and channel partners to meet or exceed their sales objectives, we have historically received a substantial portion of sales orders and generated a substantial portion of revenue during the last few weeks and days of each quarter. A significant interruption in our IT systems, which manage critical functions such as order processing, revenue recognition, financial forecasts, inventory and supply chain management, and trade compliance reviews, or our supply chain could result in delayed order fulfillment and decreased revenue for that quarter. If expected revenue at the end of any quarter is delayed for any reason, including the failure of anticipated purchase orders to materialize, our logistics or channel partners’ inability to ship products prior to quarter-end to fulfill purchase orders received near the end of the quarter, our failure to manage inventory to meet demand, our inability to release new products on schedule, any failure of our systems related to order review, processing and licensing, or any delays in shipments based on trade compliance requirements (including new compliance requirements imposed by new or renegotiated trade agreements), our revenue for that quarter could fall below our expectations and the estimates of market analysts, which could adversely impact our business and results of operations and cause a decline in the trading price of our common stock.

Risks Related to Operations Outside the United States

We generate a significant amount of revenue from sales through resellers, distributors and end customers outside of the United States, and we are therefore subject to a number of risks associated with international sales and operations.

We have a limited history of marketing, selling, and supporting our platform internationally. As a result, we must hire and train experienced personnel to staff and manage our foreign operations. To the extent that we experience difficulties in recruiting, training, managing, and retaining international employees, particularly managers and other members of our international sales team, we may experience difficulties in sales productivity in, or market penetration of, foreign markets. We also enter into strategic distributor and reseller relationships with companies in certain international markets where we do not have a local presence. If we

are not able to maintain successful strategic distributor relationships with our international channel partners or recruit additional channel partners, our future success in these international markets could be limited. Business practices in the international markets that we serve may differ from those in the United States and may require us to include non-standard terms in customer contracts, such as extended payment or warranty terms. To the extent that we enter into customer contracts in the future that include non-standard terms related to payment, warranties, or performance obligations, our results of operations may be adversely impacted.

Additionally, our international sales and operations are subject to a number of risks, including the following:

•greater difficulty in enforcing contracts and managing collections, as well as longer collection ~~periods;~~

periods

•higher costs of doing business internationally, including incremental regulatory compliance costs, taxes and employee benefit costs, as well as costs incurred in establishing and maintaining office space and equipment for our international operations;

•fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business, such as the British Pound Sterling, which experienced a sharp decline in value compared to the U.S. dollar and other currencies;

•management communication and integration problems resulting from cultural and geographic dispersion;

•risks associated with trade restrictions and foreign legal requirements, including any importation, certification, and localization of our platform that may be required in foreign countries and any changes in trade relations and restrictions;

•greater risk of unexpected changes in foreign and domestic regulatory practices, tariffs and tax laws and treaties, including regulatory and trade policy changes;

•compliance with anti-bribery laws, including, without limitation, compliance with the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. Travel Act and the U.K. Bribery Act 2010, violations of which could lead to significant fines, penalties and collateral consequences for our Company;

•heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;

•the uncertainty of protection for intellectual property rights in some countries;

•foreign exchange controls or tax regulations that might prevent us from repatriating cash earned outside the United States;

•general economic, political and social conditions in these foreign markets, including the perception of doing business with U.S. based companies and changes in regulatory requirements that impact our operating strategies, access to global markets or hiring;

•political and economic instability in some countries, such as those caused by the 2016 U.S. presidential election, ~~and~~ the withdrawal of the United Kingdom from the European Union, commonly referred to as ~~"Brexit";~~

“Brexit,” and the Russian invasion of Ukraine;

•increased exposure to public health issues such as the current COVID-19 pandemic, and related industry and governmental actions to address these issues; and

•double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the foreign jurisdictions in which we operate.

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, Brexit could also lead to further legislative and regulatory changes. A Data Protection Act that substantially implements the GDPR has been implemented in the ~~United Kingdom,~~U.K., effective in May 2018 and subject to additional statutory amendments in 2019 to further align such Data Protection Act with the GDPR. It is unclear, however, how ~~United Kingdom~~U.K. data protection laws or regulations will develop in the medium to longer term, and how data transfers to and from the ~~United Kingdom~~U.K. will be regulated. In particular, the ~~United Kingdom’s~~U.K.’s exit from the EU to effectuate Brexit could require us to make additional changes to the way we conduct our business and transmit data from the EU into the ~~United Kingdom.~~

U.K.

These and other factors could harm our ability to generate future international revenue and, consequently, materially impact our business, results of operations and financial condition.

We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and results of operations.

Our sales contracts are denominated in U.S. dollars, and therefore our revenue is not subject to foreign currency risk. However, strengthening of the U.S. dollar increases the real cost of our ~~products,~~solutions, subscriptions and services to our customers outside of the United States, which could lead to delays in the purchase of our ~~products~~solutions and services and the lengthening of our sales cycle. In addition, we are incurring an increasing portion of our operating expenses outside the United States. These expenses are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates.

Additionally, Brexit resulted in an adverse impact to currency exchange rates, notably the British Pound Sterling which experienced a sharp decline in value compared to the U.S. dollar and other currencies. A significantly weaker British Pound Sterling compared to the U.S. dollar could have a significantly negative effect on our financial condition and results of operations.

We do not currently hedge against the risks associated with currency fluctuations but may do so in the future.

We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.

Our ~~products~~solutions are subject to U.S. export controls and trade and economic sanctions, specifically the Commerce Department Export Administration Regulations (“EAR”) and ~~economic sanctions~~regulations enforced by the Office of Foreign Assets Control. We incorporate standard encryption algorithms into many of our ~~products,~~solutions, which, along with the underlying technology, may be exported outside of the U.S. only with the required export authorizations, including by license, license exception or other appropriate government authorizations, which may require the filing of a classification request and/or annual and semi-annual reporting. Additionally, our

current or future solutions may be classified under the EAR or as defense articles subject to the United States International Traffic in Arms Regulations (“ITAR”).Most of our solutions have been classified under the EAR and are generally exportable without needing a specific license, under an EAR exception for encryption ~~registration~~software. If a solution, or component of a solution, is classified under the ITAR, or is ineligible for the EAR encryption exception, then those solutions could be exported outside the United States only if we obtain the applicable export license or qualify for a different license exception. In certain contexts, the services we provide might be classified as defense services subject to the ITAR separately from the solutions we provide. Compliance with the EAR, ITAR, and ~~classification request. Furthermore,~~other applicable regulatory requirements regarding the export of our solutions, including new releases of our solutions and/or the performance of services, may create delays in the introduction of our solutions in non-U.S. markets, prevent our customers with non-U.S. operations from deploying our solutions throughout their global systems or, in some cases, prevent the export of our solutions to some countries altogether. Violations of U.S. sanctions or export control ~~laws~~regulations can result in significant fines or penalties and ~~economic sanctions prohibit~~possible incarceration for responsible employees and managers. If our channel partners fail to obtain appropriate import, export, or re-export licenses or permits, we may also be adversely affected through reputational harm, as well as other negative consequences, including government investigations and penalties.

In addition, proposed regulations have been released in the ~~shipment of certain products~~United States which may subject additional solutions, technology, and services to ~~countries, governments,~~control under the EAR. If those regulations go into effect as currently written, we may need to apply for and ~~persons targeted by U.S. sanctions. While we have taken precautions~~obtain licenses prior to ~~prevent our products~~exporting these items to certain destinations and end-users. This licensing requirement could increase the time between order and delivery for these items and also could result in us not being able to provide solutions and services ~~from being exported~~to particular customers if any license request is denied, which could adversely affect our business, financial condition and results of operations.

Also, various countries, in ~~violation of these laws, in certain instances in~~addition to the past we shipped our encryption products prior to obtaining the required export authorizations and/or submitting the required requests, including a classification request and request for an encryption registration number, resulting in an inadvertent violation of U.S. export control laws. As a result, in February 2013, we filed a Voluntary Self Disclosure with the U.S. Department of Commerce’s Bureau of Industry and Security, or BIS, concerning these potential violations. In June 2013, BIS notified us that it had completed its review of this matter and closed its review with the issuance of a warning letter. No monetary penalties were assessed. Even though we take precautions to ensure that our channel partners comply with all relevant regulations, any failure by our channel partners to comply with such regulations could have negative consequences, including reputational harm, government investigations and penalties.

~~In addition, various countries~~United States, regulate the import and export of certain cybersecurity, encryption and other solutions, technology and services, including through export and import permit and ~~license~~licensing requirements, and have enacted laws that could limit our ability to distribute our ~~products or~~solutions, could limit our customers’ ability to implement our ~~products~~solutions or could limit our ability to provide services to our customers in those countries. Changes in our ~~products~~solutions or changes in export and import regulations may create delays in the introduction of our ~~products~~solutions into international markets, prevent our customers with international operations from deploying our ~~products~~solutions globally or, in some cases, prevent the export or import of our ~~products~~solutions to certain countries, governments or persons altogether. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our ~~products~~solutions by, or in our decreased ability to export or sell our ~~products~~solutions to, existing or potential customers with international operations. Any decreased use of our ~~products~~solutions or limitation on our ability to export to or sell our ~~products~~solutions in international markets would likely adversely affect our business, financial condition and results of operations.

Risks Related to Our Convertible Senior Notes

We are leveraged financially, which could adversely affect our ability to adjust our business to respond to competitive pressures and to obtain sufficient funds to satisfy our future growth, business needs and development plans.

We have substantial existing indebtedness. In June 2015, we issued $460.0 million principal amount of 1.000% Convertible Senior Notes due 2035 (the ~~"Series~~“Series A ~~Notes"~~Notes”) and $460.0 million principal amount of 1.625% Convertible Senior Notes due 2035 (the ~~"Series~~“Series B ~~Notes"~~Notes” and, together with the Series A Notes, the ~~"2035 Notes"~~“2035 Notes”). During the three months ended June 30, 2018, we issued $600.0 million aggregate principal amount of 0.875% Convertible Senior Notes due 2024 (the ~~"2024 Notes"~~“2024 Notes” and, together with the 2035 Notes, the ~~"convertible notes"~~“convertible notes”) and repurchased approximately $340.2 million aggregate principal amount of the Series A Notes. During the three months ended June 30, 2020, we repurchased approximately $96.4 million aggregate principal amount of the Series A Notes. As a result, as of ~~March~~December 31, 2021, we had approximately $1.1 billion aggregate principal amount of convertible notes outstanding.

The degree to which we are leveraged could have negative consequences, including, but not limited to, the following:

•we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing business and economic conditions;

•our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes may be limited;

•a substantial portion of our cash flows from operations in the future may be required for the payment of the principal amount of our existing indebtedness when it becomes due; and

•we may elect to make cash payments upon any conversion of the convertible notes, which would reduce our cash on hand.

Our ability to meet our payment obligations under our convertible notes depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as

well as other factors that are beyond our control. There can be no assurance that our business will generate cash flow from operations, or that additional capital will be available to us, in an amount sufficient to enable us to meet our debt payment obligations and to fund other liquidity needs. If we are unable to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we were unable to implement one or more of these alternatives, we may be unable to meet our debt payment obligations, which could have a material adverse effect on our business, results of operations, or financial condition.

If holders of the 2035 Notes require us to repurchase their notes on any repurchase date, our financial condition and operating results could be adversely affected.

Holders of the Series A Notes have the right to require us to repurchase their notes on each of June 1, 2025 and June 1, 2030, and holders of the Series B Notes will have the right to require us to repurchase their notes on each of June 1, 2022, June 1, 2025 and June 1, 2030 at a repurchase price equal to 100% of the principal amount of the notes of the relevant series to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the relevant repurchase date pursuant to the applicable indenture governing such series of notes. With respect to the upcoming June 1, 2022 repurchase date for the Series B Notes, in light of the recent trading price of our common stock and the Series B Notes, we expect that holders of the Series B Notes will likely require us to repurchase their Series B Notes on such June 1, 2022 repurchase date. If holders require us to repurchase their notes of an applicable series on an applicable repurchase date, our financial condition and operating results could be adversely affected.

The conditional conversion feature of each series of convertible notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of a series of convertible notes is triggered, holders of such series of convertible notes will be entitled to convert their convertible notes at any time during specified periods at their option. If one or more holders of such convertible notes elect to convert their convertible notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders of such series of convertible notes do not elect to convert their convertible notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of such series of convertible notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The accounting method for convertible debt securities that may be settled in cash, such as the convertible notes, is subject to changes that could have a material effect on our reported financial results.

Prior to January 1, 2022, the accounting method for reflecting the convertible notes on our balance sheet, accruing interest expense for the convertible notes and reflecting the shares of our common stock underlying the convertible notes in our reported diluted earnings per share, may have adversely affected our reported earnings and financial condition. Under the former accounting principles, the initial liability carrying amount of the convertible notes was the fair value of a similar debt instrument that does not have a conversion feature, valued using our cost of capital for straight, unconvertible debt.

In ~~May 2008, the Financial Accounting Standards Board, which we refer to as~~August 2020, FASB issued ~~FASB Staff Position~~ASU No. ~~APB 14-1,~~2020-06, Accounting for Convertible ~~Debt~~ Instruments ~~That May Be Settled~~and Contracts in ~~Cash Upon Conversion (Including Partial Cash Settlement)~~an Entity’s Own Equity (ASU 2020-06), which has subsequently been codified as Accounting Standards Codification 470-20, Debt with Conversion and Other Options, which we refer to as ASC 470-20. Under ASC 470-20, an entity must separately accounteliminating the separate accounting for the ~~liability~~debt and equity components as described above. The company adopted ASU 2020-06 effective January 1, 2022.

Adoption of ASU 2020-06 has eliminated the separate accounting for the debt and equity components of our convertible notes described above which reduced the interest expense we recognized for the notes for accounting purposes. In addition, ASU 2020-06 eliminated the use of the treasury stock method for convertible instruments that can be settled in whole or in part with equity, and now requires application of the “if-converted” method. Our adoption of ASU 2020-06 has reduced reported interest expense, increased reported net income, and resulted in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities as it relates to the convertible ~~debt instruments (such as~~notes. Furthermore, if any of the ~~convertible notes) that may be settled entirely or partially in cash upon conversion in~~conditions to the convertibility for a ~~manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for each~~ series of convertible notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet and the value of the equity component would be treated as original issue discount for purposes of accounting for the debt component of such series of convertible notes. As a result,satisfied, then we ~~will~~may be required under applicable accounting standards to ~~record a greater amount of non-cash interest expense in current periods presented as a result of~~reclassify the ~~amortization of the discounted~~liability carrying value of the convertible notes to their face amount over the term of the convertible notes. We will report lower net income in our financial results because ASC 470-20 will require interest to include both the current period’s amortization of the debt discount and the instrument’s non-convertible coupon interest for such series of convertible notes, which could adversely affect our reported or future financial results and the trading price of our common stock.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). This standard clarifies how certain cash receipts and payments should be classified in the statement of cash flows, including the cash settlement for each series of our convertible notes. Upon cash settlement, repayment of the principal amount will be bifurcated between cash outflows for operating activities for the portion related to accreted interest attributable to debt discounts arising from the difference between the coupon interest rate and the effective interest rate, and financing activities for the remainder. This will require us to classify the $310.4 million of accreted interest as cash used in operating activities in our consolidated financial statements upon cash settlement, which could adversely affect our future cash flow from operations.

In addition, under certain circumstances, convertible debt instruments (such as the convertible notes) that may be settled entirely or partly in cash are currently accounted for utilizing the treasury stock method, the effect of which is that any shares issuable upon conversion of any series of convertible notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of such series of convertible notes ~~exceeds their principal amount~~as a current, rather than a long-term, liability. This reclassification could be required even if no holders of ~~such~~the applicable series of convertible notes. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stock that would be necessary to settle such excess conversion value, if we elected to settle such excess in shares, are issued. We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the shares issuable upon conversion of the convertible notes ~~then~~convert their notes and could materially reduce our ~~diluted earnings per share would be adversely affected.~~

reported working capital and have a material effect on our reported financial results.

Transactions related to our convertible notes may affect the market price of our common stock.

The conversion of any of our series of convertible notes, if such conversion occurs, will dilute the ownership interests of then-existing stockholders to the extent we deliver shares upon conversion of any of the convertible notes. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the convertible notes may encourage short selling by market participants because any conversion of the convertible notes could be used to satisfy short positions, or anticipated conversion of the convertible notes into shares of our common stock could depress the price of our common stock.

In addition, in connection with our issuance of the 2024 Notes, we entered into capped call transactions (the “capped call transactions”) with certain financial institutions (the “option counterparties”). The capped call transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of the 2024 Notes and/or offset any cash payments we are required to make in excess of the principal amount of such 2024 Notes converted, as the case may be, with such reduction and/or offset subject to a cap. From time to time, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2024 Notes. This activity could cause a decrease in the market price of our common stock.

We are subject to counterparty risk with respect to the capped call transactions.

The option counterparties to our capped call transactions are financial institutions, and we will be subject to the risk that one or more of the counterparties may default or otherwise fail to perform, or may exercise certain rights to terminate, their obligations

under the capped call transactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. Adverse global economic conditions may result in the actual or perceived failure or financial difficulties for financial institutions, including one or more of our option counterparties. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that option counterparty. Our exposure will depend on many factors but, generally, our exposure will increase if the market price or the volatility of our common stock increases. In addition, upon a default or other failure to perform, or a termination of obligations, by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of the option counterparties.

Risks Related to ~~Ownership of~~ Our Series A Convertible Preferred Stock

The holders of Series A Convertible Preferred Stock may exercise influence over us, including through their ability to designate a member of our board of directors

The holders of Series A Convertible Preferred Stock are generally entitled to vote with the holders of the shares of common stock on all matters submitted for a vote of holders of shares of common stock (voting together with the holders of shares of common stock as one class) on an as-converted basis, subject to certain Nasdaq voting limitations, if applicable. Additionally, the consent of the holders of a majority of the outstanding shares of Series A Convertible Preferred Stock is required for so long as any shares of the Series A Convertible Preferred Stock remain outstanding for (i) amendments to our organizational documents that have an adverse effect on the holders of Series A Convertible Preferred Stock and (ii) issuances by us of securities that are senior to, or equal in priority with, the Series A Convertible Preferred Stock. In addition, for so long as 25% of the Series A Convertible Preferred Stock issued in connection with the Securities Purchase Agreement with BTO Delta Holdings DE L.P., an investment vehicle of funds affiliated with The Blackstone Group Inc. (“Blackstone”), and the Securities Purchase Agreement with ClearSky Security Fund I LLC and ClearSky Power & Technology Fund II LLC (together, the “Series A Securities Financing Agreements”) remains outstanding, consent of the holders of a majority of the outstanding shares of Series A Convertible Preferred Stock will be required for (A) any change to the size of our board of directors, (B) any voluntary dissolution, liquidation, bankruptcy, winding up or deregistration or delisting, and (C) incurrence by us of net debt in excess of $350,000,000.

Additionally, pursuant to the applicable Series A Securities Financing Agreement, Blackstone has the right to nominate for election one member to our board of directors for so long as Blackstone holds 65% of the Series A Convertible Preferred Stock. The director designated by Blackstone is entitled to serve on committees of our board of directors, subject to applicable law and Nasdaq rules. Notwithstanding the fact that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the director designated by Blackstone may differ from the interests of our security holders as a whole or of our other directors.

As a result, the holders of Series A Convertible Preferred Stock have the ability to influence the outcome of certain matters affecting our governance and capitalization. The sponsors of the holders of Series A Convertible Preferred Stock are in the business of making or advising on investments in companies, including businesses that may directly or indirectly compete with certain portions of our business, and they may have interests that diverge from, or even conflict with, those of our other shareholders. They may also pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. Our obligations to the holders of Series A Convertible Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.

Our Series A Convertible Preferred Stock has rights, preferences, and privileges that are not held by, and are preferential to, the rights of holders of our ~~Common Stock,~~common stock, which could adversely affect our liquidity and financial condition.

The holders have the right under the Series A Certificate of Designation to receive a liquidation preference entitling them to be paid an amount per share equal to the greater of (i) $1,000 per share, plus all accrued and unpaid dividends and (ii) the amount that the holder of Series A Convertible Preferred Stock would have been entitled to receive at such time if the Series A Convertible Preferred Stock were converted into common stock. In addition, the holders are entitled to dividends on the original purchase price

of $1,000 per share at a rate of 4.5% per annum, that (i) for the first three years after December 11, 2020, or the Series A closing date, will be paid in-kind, and (ii) after the third anniversary of the Series A closing date, will, at ~~the Company’s~~our election either be paid in cash, or, if not, will accrue and accumulate, in each case, accruing daily and paid quarterly in arrears. The holders are also entitled to participate in dividends declared or paid on the common stock on an as-converted basis.

There may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock or the Series A Convertible Preferred Stock and may negatively impact the holders’ investment.

Except in certain circumstances, we are not restricted from issuing additional shares of common stock or preferred stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock or preferred stock or any substantially similar securities. The market price of our common stock or Series A Convertible Preferred

Stock could decline as a result of sales of a large number of shares of common stock or Series A Convertible Preferred Stock or similar securities in the market or the perception that such sales could occur. For example, if we issue preferred stock in the future that has a preference over our common stock with respect to the payment of dividends or upon our liquidation, dissolution or winding-up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the rights of holders of our common stock or the market price of our common stock could be adversely affected.

In addition, each share of Series A Convertible Preferred Stock will initially be convertible at the option of the holder thereof into shares of our common stock. The conversion of some or all of the Series A Convertible Preferred Stock will dilute the ownership interest of our existing common stockholders. Any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of the outstanding shares of our common stock and Series A Convertible Preferred Stock. In addition, the existence of our Series A Convertible Preferred Stock may encourage short selling or arbitrage trading activity by market participants because the conversion of our Series A Convertible Preferred Stock could depress the price of our equity securities. As noted above, a decline in the market price of the common stock may negatively impact the market price for the Series A Convertible Preferred Stock.

~~The Series A Convertible Preferred Stock is subject to conversion at our option in certain circumstances after December 11, 2023 based on the trading price of our common stock.~~

At any time after the third anniversary of the Series A closing date, if the closing price of the common stock is at least 175% of the conversion price for at least 20 trading days during the 30 consecutive trading days immediately preceding the date we notify the holders of our election to convert, we will be entitled, but not required, to convert the Series A Convertible Preferred Stock, in whole but not in part, into common stock. Following any such conversion, a holder will no longer be entitled to the dividend or other rights associated with the Series A Convertible Preferred Stock.

~~The Series A Convertible Preferred Stock has not been rated.~~

~~The Series A Convertible Preferred Stock has not been rated by any nationally recognized statistical rating organization. This may affect the market price of the Series A Convertible Preferred Stock.~~

~~The Series A Convertible Preferred Stock may only be redeemed at the option of the holder in limited circumstances.~~

The shares of Series A Convertible Preferred Stock, unlike indebtedness, will not give rise to a claim for payment of a principal amount at a particular date. As a result, holders of the Series A Convertible Preferred Stock may be required to bear the financial risks of an investment in the Series A Convertible Preferred Stock for an extended period of time. Holders have limited rights to require us to redeem the Series A Convertible Preferred Stock. Therefore, holders should be aware that they may be required to bear the financial risks of an investment in the Series A Convertible Preferred Stock for an extended period of time.

The conversion rate of the Series A Convertible Preferred Stock may not be adjusted for all dilutive events that may adversely affect the market price of the Series A Convertible Preferred Stock or the common stock issuable upon conversion of the Series A Convertible Preferred Stock.

The number of shares of our common stock that holders are entitled to receive upon conversion of a share of Series A Convertible Preferred Stock is subject to adjustment for certain events arising from increases in dividends or distributions in common stock, subdivisions, splits, and combinations of the common stock, certain issuances of stock purchase rights, options or warrants distributed in connection with a stockholder rights plan, self-tender offers and exchange offers, cash dividends or distributions, and certain other actions by us that modify our capital structure. See “~~Description of Capital Stock — Series A Convertible Preferred Stock~~.” We will not adjust the conversion rate for other events, including the issuance of common stock pursuant to plans for reinvestment of dividends or interest, options or rights to purchase such shares pursuant to benefit plans or employee agreements, any option, warrant, right, or exercisable, exchangeable or convertible security or for a change in the par value of the common stock. There can be no assurance that an event that adversely affects the value of the Series A Convertible Preferred Stock, but does not result in an adjustment to the conversion rate, will not occur. Further, if any of these other events adversely affects the market price of our common stock, it may also adversely affect the market price of the Series A Convertible Preferred Stock. In addition, we are not restricted from offering common stock in the future or engaging in other transactions that may dilute our common stock.

If our common stock is delisted, your ability to transfer or sell your shares of the Series A Convertible Preferred Stock, or common stock upon conversion, may be limited and the market value of the Series A Convertible Preferred Stock will be materially adversely affected.

The terms of the Series A Convertible Preferred Stock do not protect you if our common stock is delisted. Because the Series A Convertible Preferred Stock has no stated maturity date, holders may be forced to elect between converting their shares of the Series A Convertible Preferred Stock into illiquid shares of our common stock or holding their shares of the Series A Convertible Preferred Stock and receiving stated dividends on the stock when, as and if authorized by the board of directors and declared by us

with no assurance as to ever receiving the liquidation preference. Accordingly, if the common stock is delisted, the holders’ ability to transfer or sell their shares of the Series A Convertible Preferred Stock, or common stock upon conversion, may be limited and the market value of the Series A Convertible Preferred Stock will be materially adversely affected.

Risks Related to Ownership of Our Common Stock

If securities or industry analysts do not publish research or reports about our business, or publish inaccurate or unfavorable research reports about our business, our share price and trading volume could decline.

The trading market for our common stock, to some extent, depends on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us should downgrade our shares or change their opinion of our shares, industry sector or ~~products,~~solutions, our share price would likely decline. If one or more of these analysts ceases coverage of ~~our Company~~us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which would cause our stock price to decline.

We have provided and may continue to provide guidance about our business and future operating results. In developing this guidance, our management must make certain assumptions and judgments about our future performance. Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance. Our business results may vary significantly from such guidance or that consensus due to a number of factors, many of which are outside of our control, and which could adversely affect our operations and operating results. Such factors may include the possibility that interpretation, industry practice, and accounting guidance may continue to evolve during the early stages of adoption of Accounting Standard Update 2014-09, Revenue from Contracts with Customers (Topic 606). Furthermore, if we make downward revisions of our previously announced guidance, or if our publicly announced guidance of future operating results fails to meet expectations of securities analysts, investors or other interested parties, the price of our common stock would decline.

The price of our common stock has been and may continue to be volatile, and the value of your investment could decline.

The trading price of our common stock has been volatile since our initial public offering, and is likely to continue to be volatile. The trading price of our common stock may fluctuate widely in response to various factors, some of which are beyond our control. These factors include:

•whether our results of operations, and in particular, our revenue growth rates, meet the expectations of securities analysts or investors;

•actual or anticipated changes in the expectations of investors or securities analysts, whether as a result of our forward-looking statements, our failure to meet such expectation or otherwise;

•announcements of new ~~products,~~solutions, services or technologies, commercial relationships, acquisitions or other events by us or our competitors;

•changes in how customers perceive the effectiveness of our platform in protecting against advanced ~~cyber attacks~~cyber-attacks or other reputational harm;

•publicity concerning ~~cyber attacks~~cyber-attacks in general or high profile ~~cyber attacks~~cyber-attacks against specific organizations;

•price and volume fluctuations in the overall stock market from time to time;

•significant volatility in the market price and trading volume of technology and/or growth companies in general and of companies in the IT security industry in particular;

•fluctuations in the trading volume of our shares or the size of our public float;

•actual or anticipated changes or fluctuations in our results of operations;

•litigation involving us, our industry, or both;

•regulatory developments in the United States, foreign countries or both;

•general economic conditions and trends;

•natural disasters or other catastrophic events;

•public health crises and related measures to protect the public health, such as the COVID-19 pandemic;

•actual or perceived security breaches or incidents that we or our service providers may suffer;

•sales of large blocks of our common stock or substantial future sales by our directors, executive officers, employees and significant stockholders; and

•departures of key personnel.

In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, results of operations or financial condition. The trading price of our common stock might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. The price of our common stock has been highly volatile since our IPO in September 2013, and ~~beginning in June 2014,~~ several lawsuits alleging violations of securities laws were filed against us and certain of our current and former directors and executive ~~officers.~~officers in 2014 and 2015. Any securities litigation could result in substantial costs and divert our management’s attention and resources from our business. This could have a material adverse effect on our business, results of operations and financial condition.

Sales of substantial amounts of our common stock in the public markets, or sales of our common stock by our executive officers and directors under Rule 10b5-1 plans, could adversely affect the market price of our common stock.

Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could adversely affect the market price of our common stock and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate. In addition, certain of our executive officers and directors have adopted, and other executive officers and directors may in the future adopt, written plans, known as “Rule 10b5-1 Plans,” under which they have contracted, or may in the future contract, with a broker to sell shares of our common stock on a periodic basis to diversify their assets and investments. Sales made by our executive officers and directors pursuant to Rule 10b5-1, regardless of the amount of such sales, could adversely affect the market price of our common stock.

The issuance of additional stock in connection with financings, acquisitions, investments, our stock incentive plans, conversion of our convertible notes, conversion of the Series A Convertible Preferred Stock or otherwise will dilute all other stockholders.

Our amended and restated certificate of incorporation authorizes us to issue up to 1,000,000,000 shares of common stock and up to 100,000,000 shares of preferred stock with such rights and preferences as may be determined by our board of directors. Subject to compliance with applicable rules and regulations, we may issue shares of common stock or securities convertible into our common stock from time to time in connection with a financing, acquisition, investment, our stock incentive plans, the conversion of our convertible notes or otherwise. For example, in October 2017, we issued 259,425 shares of common stock in connection with our acquisition of The Email Laundry; in January 2018, we issued 1,016,334 shares of common stock in

connection with our acquisition of X15; in May 2019, we issued 8,404,609 shares of common stock in connection with our acquisition of Verodin, in November 2020, we issued 4,931,862 shares of common stock in connection with our acquisition of Respond Software. In addition, we issued $920.0 million aggregate principal amount of 2035 Notes, of which approximately $483.4 million aggregate principal remains outstanding, and we issued $600.0 million aggregate principal amount of the 2024 Notes during the three months ended June 30, 2018. In December 2020, we issued 400,000 shares of Series A Convertible Preferred Stock. Any future issuances could result in substantial dilution to our existing stockholders and cause the trading price of our common stock to decline.

We do not intend to pay dividends for the foreseeable future.

We have never declared or paid any dividends on our common stock. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the future. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases.

Our charter documents and Delaware law, as well as certain provisions of our convertible notes, could discourage takeover attempts and lead to management entrenchment, which could also reduce the market price of our common stock.

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent a change in control of ~~our Company.~~us. These provisions could also make it difficult for stockholders to elect directors who are not nominated by the current members of our board of directors or take other corporate actions, including effecting changes in our management. These provisions include:

•a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;

•the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror;

•the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

•a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

•the requirement that a special meeting of stockholders may be called only by our board of directors, the chairperson of our board of directors, our Chief Executive Officer or our President (in the absence of a Chief Executive Officer), which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

•the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our amended and restated certificate of incorporation relating to the management of our business (including our classified board structure) or certain provisions of our amended and restated bylaws, which may inhibit the ability of an acquiror to effect such amendments to facilitate an unsolicited takeover attempt;

•the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquiror to amend the bylaws to facilitate an unsolicited takeover attempt; and

•advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.

In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law, which may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a specified period of time. Additionally, certain provisions of our convertible notes could make it more difficult or more expensive for a third party to acquire us. The application of Section 203 or certain provisions of our convertible notes also could

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have the effect of discouraging, delaying or preventing a transaction involving a change in control of us. Any of these provisions could, under certain circumstances, depress the market price of our common stock.

We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term stockholder value.

In June 2021, our board of directors approved a stock repurchase program for the repurchase of up to $500 million of the currently outstanding shares of our common stock. As of December 31, 2021, approximately $200 million remained available under the stock repurchase program.The repurchase program has no termination date and may be suspended for periods, amended or discontinued at any time. We are not obligated to repurchase a specified number or dollar value of shares. Share repurchases under the program will be made from time to time in private transactions or open market purchases, as permitted by securities laws and other legal requirements. There can be no guarantee around the timing of our share repurchases, or that the volume of such repurchases will increase. The stock repurchase program could affect the price of our common stock, increase volatility, diminish our cash reserves, and even if fully implemented may not enhance long-term stockholder value.

Risks Related to Potential Catastrophic Events

The global COVID-19 pandemic, and government imposed COVID-19 vaccination mandates or testing requirements, could harm our business and results of operations.

~~In March 2020, the World Health Organization declared~~This COVID-19 ~~a global pandemic. This contagious disease outbreak~~pandemic has continued to spread across the globe and is impacting worldwide economic activity and financial markets. In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, including the occurrence of breakthrough cases and COVID-19 variants, we have taken precautionary measures intended to minimize the risk of the virus to our employees, our customers, and the communities in which we operate, which could negatively impact our business. Although we continue to monitor the situation and may adjust our current policies as more information and public health guidance become available, precautionary measures that have been adopted could negatively affect our customer success efforts, sales and marketing efforts, delay and lengthen our sales cycles, or create operational or other challenges, any of which could harm our business and results of operations. In addition, the COVID-19 pandemic may disrupt the operations of our customers and partners for an indefinite period of time, including as a result of travel restrictions and/or business shutdowns, all of which could negatively impact our business and results of operations, including cash flows. More generally, the COVID-19 pandemic could adversely affect economies and financial markets globally, potentially leading to an economic downturn, which could decrease technology spending and adversely affect demand for our offerings and harm our business and results of operations. It is not possible at this time to estimate the impact that the COVID-19 pandemic could have on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted.

In addition, in January 2022, the U.S. Supreme Court struck down the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”) Emergency Temporary Standard (the “ETS”) requiring that all employers with at least 100 employees ensure that their U.S. employees are fully vaccinated for COVID-19. Following that ruling, OSHA chose to withdraw the vaccine ETS altogether. In addition, the federal district court in Georgia stayed the enforcement of the mandatory employee COVID-19 vaccination requirement found in President Biden’s Executive Order for U.S. government contractors and their subcontractors (the “Executive Order”). As a result, we revised our COVID-19 policy to only require COVID-19 vaccination for employees or visitors that will be entering any of Mandiant’s U.S. office locations. We are also complying with the other aspects of the Executive Order for federal government contractors at our covered contractor workplaces that have not been stayed by the federal courts. Our implementation and enforcement of vaccination requirements could be difficult, costly, and potentially result in employee attrition, including attrition of key employees, disruptions in workforce performance, and difficulty securing future labor needs, any of which could have a material adverse effect on our business, financial condition, and results of operations.

Our business is subject to the risks of earthquakes, fire, power outages, floods and other catastrophic events, and to interruption by man-made problems such as terrorism or armed conflicts.

Natural disasters or other catastrophic events, including earthquakes, fires, floods, significant power outages, telecommunications failures, outbreak of pandemic or contagious diseases (including, but not limited to, the current COVID-19 pandemic) and ~~cyber attacks,~~cyber-attacks, may cause damage or disruption to our operations, international commerce and the global economy, and thus could have a material adverse impact on our business, results of operations, and financial condition. ~~Our corporate headquarters and some~~Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems at our facilities or the facilities of our ~~servers hosting our~~public cloud ~~services are located~~providers could result in ~~California, a region known for seismic activity.~~disruptions, outages, and other performance and quality problems. Customer data could be lost, significant recovery time could be required to resume operations and our financial condition and operating results could be adversely affected in the event of a natural disaster or other catastrophic event. In addition, ~~natural disasters~~computer malware, viruses and ~~other catastrophic events could affect~~computer hacking, fraudulent use attempts, and phishing attacks have become more prevalent in our ~~supply chain, manufacturing vendors, or logistics providers’ ability to provide materials~~industry, and ~~perform services~~our internal systems may be victimized by such ~~as manufacturing products or assisting with shipments on a timely basis. In~~attacks. Although we maintain incident management and disaster response plans, in the event ~~that~~of a major disruption caused by a natural disaster or man-made problem, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our development activities, lengthy interruptions in service, breaches of data security and loss of critical data, and our insurance may not cover such events or ~~our service providers’ information technology systems or manufacturing or logistics abilities are hindered by any of~~may be insufficient to compensate us for the ~~events discussed above, shipments could be delayed, resulting in missed financial targets, such as revenue and shipment targets, for a particular quarter. In addition,~~

potentially significant losses we may incur. Furthermore, acts of terrorism, armed conflicts and other geo-political unrest could cause disruptions in our business or the business of our ~~supply chain, manufacturers, logistics~~public cloud providers, partners, or customers or the economy as a whole. Any disruption in the business of our ~~supply chain, manufacturers, logistics~~public cloud providers, partners or end-customers that impacts sales ~~at the end of a fiscal quarter~~ could have a significant adverse impact on our financial results. All of the aforementioned risks may be further increased if the disaster recovery plans for us and our ~~suppliers~~public cloud providers prove to be inadequate. To the extent that any of the above should result in delays or cancellations of customer orders or the loss of customers, ~~or the delay in the manufacture, deployment or shipment of our products,~~ our business, financial condition and results of operations would be adversely affected.

General Risk Factors

Fluctuating economic conditions make it difficult to predict revenue for a particular period, and a shortfall in revenue may harm our business and operating results.

Our revenue depends significantly on general economic conditions and the demand for ~~products~~solutions and services in the IT security market. 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 and manage our inventory purchases, contract manufacturer relationships and other costs and expenses.

~~In addition, concerns~~Concerns regarding the effects of ~~the U.K.'s decision to exit the EU, commonly referred to as "Brexit",~~Brexit, uncertainties related to changes in public policies such as domestic and international regulations, taxes, or international trade agreements, international trade disputes, government shutdowns, geopolitical turmoil and other disruptions to global and regional

economies and markets in many parts of the world, have and may continue to put pressure on global economic conditions and overall spending on IT security. General economic weakness may also lead to longer collection cycles for payments due from our customers, an increase in customer bad debt, restructuring initiatives and associated expenses, and impairment of investments. Furthermore, the continued uncertainty in worldwide credit markets, including the sovereign debt situation in certain countries in the EU may adversely impact the ability of our customers to adequately fund their expected capital expenditures, which could lead to delays or cancellations of planned purchases of our platform.

The COVID-19 pandemic has created significant uncertainty in the global economy. The COVID-19 pandemic and health measures taken by governments and private industry in response to the pandemic, including stay-at-home orders and travel restrictions, have had significant negative effects on the economy. Continued uncertainty about the pandemic, associated economic consequences, and potential relief measures may have a long-term adverse effect on the economy, our customers, partners, suppliers, and our business.

Uncertainty about future economic conditions also makes it difficult to forecast operating results and to make decisions about future investments. 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~~solutions, subscriptions and services and consequently on our business, financial condition and results of operations.

If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in our stock price.

The preparation of financial statements in conformity with 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 entitled “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, revenue and expenses that are not readily apparent from other sources. In general, if our estimates, judgments or assumptions related to our critical accounting policies change or if actual circumstances differ from our estimates, judgments or assumptions, our results of operations may be adversely affected and could fall below our publicly announced guidance or the expectations of securities analysts and investors, which may result in a decline in our stock price. Significant assumptions and estimates used in preparing our condensed consolidated financial statements include those related to assets, liabilities, revenue, expenses and related disclosures.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the ~~"Code"~~“Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset future taxable income. Our existing NOLs may be subject to limitations arising from previous ownership changes. Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code and adversely affect our ability to utilize our NOLs in the future. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to federal or state regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. For example, the Tax Act, as modified by the CARES Act, changed certain limitations on our ability

to use our federal ~~NOLs, and California recently enacted legislation limiting our ability to use our state NOLs for taxable years 2020, 2021, and 2022.~~NOLs. For these reasons, we may not be able to utilize a material portion of the NOLs reflected on our balance sheet, even if we attain profitability.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the ~~"Exchange Act"~~“Exchange Act”), the listing requirements of ~~the NASDAQ Stock Market~~Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations has increased and will continue to increase our legal, administrative and financial compliance costs, has made and will continue to make some activities more difficult, time-consuming or costly, and has increased and will continue to increase demand on our systems and resources. Among other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and results of operations and maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could harm our business and

results of operations. Although we have already hired additional employees to comply with these requirements, we may need to hire even more employees in the future, which will increase our costs and expenses.

We are subject to the independent auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act ("(“Section ~~404"~~404”), enhanced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. While we were able to determine in our management's report for fiscal ~~2020~~2021 that our internal control over financial reporting is effective, as well as provide an unqualified attestation report from our independent registered public accounting firm to that effect, we have and will continue to consume management resources and incur significant expenses for Section 404 compliance on an ongoing basis. Changes to our business applications, processes and IT infrastructure to support our business needs, including the implementation of our planned new ERP system, may require the design of new controls subject to attestation. In the event that our Chief Executive Officer, Chief Financial Officer, or independent registered public accounting firm determines in the future that our internal control over financial reporting is not effective as defined under Section 404, we could be subject to one or more investigations or enforcement actions by state or federal regulatory agencies, stockholder lawsuits or other adverse actions requiring us to incur defense costs, pay fines, settlements or judgments and causing investor perceptions to be adversely affected and potentially resulting in a decline in the market price of our common stock.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations, and standards, and this investment will increase our general and administrative expense and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations, and standards are unsuccessful, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

We also expect that these new rules and regulations will make it more expensive for us to obtain and maintain director and officer liability insurance, and in the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit committee and compensation committee.

In addition, as a result of our disclosure obligations as a public company, we have reduced strategic flexibility and are under pressure to focus on short-term results, which may adversely impact our ability to achieve long-term profitability.

We are obligated to maintain proper and effective internal control over financial reporting. We may not complete our analysis of our internal control over financial reporting in a timely manner, or this internal control may not be determined to be effective, which may adversely affect investor confidence in our Company and, as a result, the value of our common stock.

We are required, pursuant to the Exchange Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting, as well as a statement that our auditors have issued an attestation report on our internal controls.

While we were able to determine in our management's report for fiscal ~~2020~~2021 that our internal control over financial reporting is effective, as well as provide an unqualified attestation report from our independent registered public accounting firm to that effect, we may not be able to complete our evaluation, testing, and any required remediation in a timely fashion or our independent registered public accounting firm may not be able to formally attest to the effectiveness of our internal control over financial

reporting in the future. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting that we are unable to remediate before the end of the same fiscal year in which the material weakness is identified, we will be unable to assert that our internal controls are effective. If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to attest to the effectiveness of our internal controls or determine we have a material weakness in our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline.

Increased scrutiny of our environmental, social or governance responsibilities may result in additional costs and risks, and may adversely impact our reputation, employee retention, and willingness of customers and suppliers to do business with us.

Investor advocacy groups, institutional investors, investment funds, proxy advisory services, stockholders, and customers are increasingly focused on environmental, social and governance (“ESG”) practices of companies. Additionally, public interest and legislative pressure related to public companies’ ESG practices continues to grow. If our ESG practices fail to meet regulatory requirements or investor or other industry stakeholders' evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, board of director and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, corporate governance and transparency and employing ESG strategies in our operations, our brand, reputation and employee retention may be negatively impacted and customers and suppliers may be unwilling to do business with us. In addition, as we work to align our ESG practices with industry standards, we will likely continue to expand our disclosures in these areas and doing so may result in additional costs and require additional resources to monitor, report, and comply with our various ESG practices. If we fail to adopt ESG standards or practices as quickly as stakeholders desire, report on our ESG efforts or practices accurately, or satisfy the expectations of stakeholders, our reputation, business, financial performance and growth may be adversely impacted.

8685

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

~~Exhibit No.~~

Incorporated by reference herein

Exhibit No.

Description of Exhibit

Form

File No.

Filing Date

Exhibit No.

2.1+

Agreement and Plan of Merger, dated March 7, 2022, between Google LLC, Dupin Inc. and Mandiant, Inc

8-K

001-36067

March 9, 2022

2.1

3.1

Amendment to Mandiant, Inc. Amended and Restated Bylaws

8-K

001-36067

March 9, 2022

3.1

10.1

Lease, dated as of December 4, 2020, by and between the Registrant and One Freedom Square, L.L.C.

10-K

001-36067

March 1, 2022

10.28

10.2

Mandiant Voting Agreement with Kevin R. Mandia.

8-K

001-36067

March 9, 2022

10.1

10.3

Mandiant Voting Agreement with Blackstone Delta Lower Holdings DE L.P. and BTO FD Delta Holdings DE L.P.

8-K

001-36067

March 9, 2022

10.2

10.4

Mandiant Voting Agreement with ClearSky Security Fund I LLC and ClearSky Power & Technology Fund II LLC.

8-K

001-36067

March 9, 2022

10.3

31.1*

Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Executive Officer

31.2*

Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Financial Officer

32.1*

Section 1350 Certifications

101.INS*

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*

Inline XBRL Taxonomy Extension Schema Document

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request. The Registrant may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished.

Furnished herewith.

~~Description of Exhibit~~

~~10.1~~†

~~Outside Director Compensation Policy, as amended and currently in effect~~

~~31.1~~

~~Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Executive Officer~~

~~31.2~~

~~Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Financial Officer~~

32.1*

~~Section 1350 Certifications~~

~~101.INS~~

~~Inline XBRL Instance Document -~~ ~~the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document~~

~~101.SCH~~

~~Inline XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~

~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~

~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~

~~Inline XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~

~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~

~~104~~

~~Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)~~

†

~~Indicates a management contract or compensatory plan or arrangement.~~

~~Furnished herewith.~~

8786

~~SIGNATURE~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~FIREEYE,~~MANDIANT, INC.

Dated: ~~April~~May 6 ~~30, 2021~~, 2022

By:

/s/ Frank E. Verdecanna

Frank E. Verdecanna

Executive Vice President and Chief Financial Officer
(Principal Financial Officer and duly authorized signatory)

Dated: May 6, 2022

By:

/s/ James Medina

James Medina

Senior Vice President, Finance, Corporate Controller, and Chief Accounting Officer
(Principal ~~Financial and~~ Accounting Officer and duly authorized signatory)

8887


Delaware						20-1548921
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	~~FEYE~~MNDT	The NASDAQ Global Select Market


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	516,972	$	676,454
Short-term investments	783,689		624,824
Accounts receivable, net of allowance for doubtful accounts of $2,101 and $2,559 at March 31, 2021 and December 31, 2020, respectively	109,213		153,575
Inventories	5,432		4,023

Prepaid expenses and other current assets	103,027		103,368
Total current assets	1,518,333		1,562,244
Property and equipment, net	79,550		79,770
Operating lease right-of-use assets, net	39,238		38,251
Goodwill	1,364,837		1,364,886
Intangible assets, net	114,222		126,067

Deposits and other long-term assets	68,764		74,664
TOTAL ASSETS	$	3,184,944	$	3,245,882

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	13,076	$	5,107
Operating lease liabilities, current	13,843		16,024
Accrued and other current liabilities	24,804		23,239
Accrued compensation	70,342		95,664

Deferred revenue, current	587,933		613,709
Total current liabilities	709,998		753,743
Convertible senior notes, non-current, net	972,280		960,896
Deferred revenue, non-current	322,765		342,748
Operating lease liabilities, non-current	54,710		42,202

Other long-term liabilities	4,498		$	12,339
Total liabilities	2,064,251		2,111,928
Commitments and contingencies (NOTE 10)	0		0
Series A convertible preferred stock, par value of $0.0001 per share; 400 shares authorized, issued and outstanding as of March 31, 2021 and December 31, 2020	$	405,562	$	401,050
Stockholders' equity:
Common stock, par value of $0.0001 per share; 1,000,000 shares authorized, 238,440 shares and 235,690 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	24		24
Additional paid-in capital	3,657,910		3,623,244
Treasury stock, at cost; 1,778 shares as of March 31, 2021 and December 31, 2020, respectively	(80,000)		(80,000)
Accumulated other comprehensive income	2,039		3,834
Accumulated deficit	(2,864,842)		(2,814,198)
Total stockholders’ equity	715,131		732,904
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY	$	3,184,944	$	3,245,882


	March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	771,967	$	1,154,458
Short-term investments	1,359,105		1,039,339
Accounts receivable, net of allowance for doubtful accounts of $1,015 and $806 at March 31, 2022 and December 31, 2021, respectively	104,066		146,460


Prepaid expenses and other current assets	76,145		73,079

Total current assets	2,311,283		2,413,336
Property and equipment, net	52,790		46,329
Operating lease right-of-use assets, net	28,462		25,768
Goodwill	1,060,023		1,060,023
Intangible assets, net	70,818		79,511

Deposits and other long-term assets	25,021		26,220

TOTAL ASSETS	$	3,548,397	$	3,651,187

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	25,779	$	32,585
Operating lease liabilities, current	14,928		13,306
Accrued and other current liabilities	102,555		105,886
Accrued compensation	52,743		71,660
Convertible senior notes, current, net	459,717		451,030
Deferred revenue, current	302,857		307,611

Total current liabilities	958,579		982,078
Convertible senior notes, non-current, net	617,775		556,240
Deferred revenue, non-current	97,132		102,717
Operating lease liabilities, non-current	53,993		52,132

Other long-term liabilities	7,366		7,376

TOTAL LIABILITIES	1,734,845		1,700,543
Commitments and contingencies (NOTE 11)	0		0
Series A Convertible Preferred Stock, par value of $0.0001 per share; 400 shares authorized, issued and outstanding as of March 31, 2022 and December 31, 2021	424,122		419,404
Stockholders' equity:
Common stock, par value of $0.0001 per share; 1,000,000 shares authorized, 233,958 shares and 231,166 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	23		23
Additional paid-in capital	3,271,041		3,511,444
Treasury stock, at cost; 1,778 shares as of March 31, 2022 and December 31, 2021	(80,000)		(80,000)
Accumulated other comprehensive loss	(13,873)		(2,172)
Accumulated deficit	(1,787,761)		(1,898,055)
Total stockholders’ equity	1,389,430		1,531,240
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY	$	3,548,397	$	3,651,187


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31,
		2021		2020
Revenue:
Product, subscription and support		$	183,017	$	174,083
Professional services		63,331		50,639
Total revenue		246,348		224,722
Cost of revenue:
Product, subscription and support		51,968		53,136
Professional services		32,602		28,450
Total cost of revenue		84,570		81,586
Total gross profit		161,778		143,136
Operating expenses:
Research and development		72,420		67,503
Sales and marketing		99,601		100,200
General and administrative		26,489		27,429
Restructuring charges		0		10,974
Total operating expenses		198,510		206,106
Operating loss		(36,732)		(62,970)
Interest income		1,644		4,424
Interest expense		(14,624)		(15,846)
Other income (expense), net		571		(989)
Loss before income taxes		(49,141)		(75,381)
Provision for income taxes		1,503		925
Net loss		$	(50,644)	$	(76,306)
Dividend on series A convertible preferred stock		(4,512)		0
Accretion of series A convertible preferred stock		(82)		0
Net loss attributable to common stockholders, basic and diluted		$	(55,238)	$	(76,306)
Net loss per share attributable to common stockholders, basic and diluted		$	(0.24)	$	(0.35)
Weighted average shares used in computing net loss per share, basic and diluted		234,740		217,789


	Three Months Ended March 31,
	2022		2021
Revenue:
Platform, cloud subscription and managed services	$	57,629	$	55,999
Professional services	72,515		58,689
Total revenue	130,144		114,688
Cost of revenue:
Platform, cloud subscription and managed services	30,121		26,613
Professional services	42,081		32,472
Total cost of revenue	72,202		59,085
Total gross profit	57,942		55,603
Operating expenses:
Research and development	44,461		41,905
Sales and marketing	69,409		61,213
General and administrative	32,413		25,351
Restructuring charges	1,040		—
Total operating expenses	147,323		128,469
Operating loss	(89,381)		(72,866)
Interest income	1,751		1,644
Interest expense	(4,314)		(14,624)
Other income, net	719		571
Loss before income taxes from continuing operations	(91,225)		(85,275)
Provision for income taxes	789		1,180
Loss from continuing operations	$	(92,014)	$	(86,455)
Net income from discontinued operations, net of income taxes	—		35,809
Net loss	$	(92,014)	$	(50,646)
Dividend on series A convertible preferred stock	(4,718)		(4,512)
Accretion of series A convertible preferred stock	—		(82)
Net loss attributable to common stockholders	$	(96,732)	$	(55,240)
Net loss per share attributable to common stockholders, basic and diluted:
Continuing operations	$	(0.42)	$	(0.39)
Discontinued operations	—		0.15
Net loss per share attributable to common stockholders, basic and diluted	$	(0.42)	$	(0.24)
Weighted average shares used in computing net loss per share, basic and diluted	230,584		234,740


		As of March 31, 2021								As of March 31, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value				Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cash and Cash Equivalent		Short-Term Investments
Certificates of deposit	Certificates of deposit	$	2,922	$	60	$	0	$	2,982		Certificates of deposit	$	7,057	$	9	$	(127)	$	6,939	$	—	$	6,939
Commercial paper	Commercial paper	4,999		0		0		4,999			Commercial paper	291,409		—		(254)		291,155		210,572		80,583
Corporate notes and bonds	Corporate notes and bonds	527,173		2,885		(285)		529,773			Corporate notes and bonds	699,403		89		(6,826)		692,666		6,001		686,665
U.S. Treasuries	U.S. Treasuries	72,077		16		(6)		72,087			U.S. Treasuries	349,803		2		(2,027)		347,778		9,999		337,779
U.S. Government agencies	U.S. Government agencies	173,971		2		(125)		173,848			U.S. Government agencies	251,370		2		(4,233)		247,139		—		247,139
Total	Total	$	781,142	$	2,963	$	(416)	$	783,689		Total	$	1,599,042	$	102	$	(13,467)	$	1,585,677	$	226,572	$	1,359,105


		As of March 31, 2021													As of March 31, 2022
		Less Than 12 Months				Greater Than 12 Months				Total					Less Than 12 Months				Greater Than 12 Months				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss

Certificates of deposit														Certificates of deposit	$	4,984	$	(127)	$	—	$	—	$	4,984	$	(127)
Commercial paper	Commercial paper	$	4,999	$	0	$	0	$	0	$	4,999	$	0	Commercial paper	291,155		(254)		—		—		291,155		(254)
Corporate notes and bonds	Corporate notes and bonds	224,706		(285)		3,362		0		228,068		(285)		Corporate notes and bonds	489,487		(6,124)		101,712		(702)		591,199		(6,826)
U.S. Treasuries	U.S. Treasuries	22,792		(6)		0		0		22,792		(6)		U.S. Treasuries	287,789		(2,024)		4,998		(3)		292,787		(2,027)
U.S. Government agencies	U.S. Government agencies	147,146		(125)		1,700		0		148,846		(125)		U.S. Government agencies	152,680		(3,369)		79,418		(864)		232,098		(4,233)
Total	Total	$	399,643	$	(416)	$	5,062	$	0	$	404,705	$	(416)	Total	$	1,226,095	$	(11,898)	$	186,128	$	(1,569)	$	1,412,223	$	(13,467)


	As of March 31, 2021		As of December 31, 2020
Computer equipment and software	$	228,594	$	220,870
Leasehold improvements	64,094		62,249
Furniture and fixtures	15,298		15,203
Machinery and equipment	465		465
Total property and equipment	308,451		298,787
Less: accumulated depreciation	(228,901)		(219,017)
Total property and equipment, net	$	79,550	$	79,770


	Amount
Net tangible ~~liabilities assumed~~assets acquired	$	~~(288)~~143
Intangible assets	~~5,650~~3,400
Deferred tax liability	(513)
Goodwill	~~7,846~~9,230
Total preliminary purchase price allocation	$	~~13,208~~12,260


		Estimated Useful Life (in years)	Amount			Estimated Useful Life (in years)	Amount
Developed technology	Developed technology	3	$	5,500	Developed technology	3	$	3,400
Trade name		1	150

Total identifiable intangible assets	Total identifiable intangible assets		$	5,650	Total identifiable intangible assets		$	3,400


	~~Amount~~
~~Net tangible assets assumed~~	~~(4,551)~~
~~Intangible assets~~	~~31,880~~
~~Deferred tax liability~~	~~(1,120)~~
~~Goodwill~~	~~151,388~~
~~Total purchase price allocation~~	$	~~177,597~~


Years Ending December 31,	Years Ending December 31,	Amount		Years Ending December 31,	Amount
2021 (remaining nine months)		$	35,046
2022		35,575
2022 (remaining nine months)				2022 (remaining nine months)	$	25,746
2023	2023	28,444		2023	29,421
2024	2024	9,985		2024	10,566
2025 and thereafter		5,172

2025				2025	5,085

Total	Total	$	114,222	Total	$	70,818


		Severance and related costs		Facilities costs		Total costs			Severance and related costs		Facilities costs		Total costs
Balance, December 31, 2020		$	570	$	478	$	1,048
Balance, December 31, 2021								Balance, December 31, 2021	$	479	$	4,228	$	4,707
Provision for restructuring charges	Provision for restructuring charges	0		0		0		Provision for restructuring charges	—		502		502
Cash payments	Cash payments	(443)		(321)		(764)		Cash payments	(449)		(941)		(1,390)
Other adjustments	Other adjustments	(110)		9		(101)		Other adjustments	(21)		(57)		(78)
Balance, March 31, 2021		$	17	$	166	$	183
Balance, March 31, 2022								Balance, March 31, 2022	$	9	$	3,732	$	3,741


	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Operating lease costs	$	4,099	$	4,418
Short-term lease costs	298		527
Sublease income	(223)		(274)
Total net lease costs	$	4,174	$	4,671



	~~As of March 31, 2021~~
~~Operating leases:~~
~~Operating lease right-of-use assets, net~~	$	~~39,238~~

~~Operating lease liabilities, current~~	$	~~13,843~~
~~Operating lease liabilities, non-current~~	~~54,710~~
~~Total operating lease liabilities~~	$	~~68,553~~

~~Weighted average remaining lease term (in years)~~	~~6.7~~
~~Weighted average discount rate~~	~~6.2~~		%



	As of March 31, 2022			As of December 31, 2021
Operating leases:
Operating lease right-of-use assets, net	$	28,462		$	25,768

Operating lease liabilities, current	$	14,928		$	13,306
Operating lease liabilities, non-current	53,993			52,132
Total operating lease liabilities	$	68,921		$	65,438

Weighted average remaining lease term (in years)	6.6			6.8
Weighted average discount rate	5.9		%	6.0		%


		Total	Less than 1 year	1-2 years	2-3 years	More than 3 years		Total	Less than 1 year	1-2 years	2-3 years	More than 3 years
Deferred revenue	Deferred revenue	100%	65%	22%	10%	3%	Deferred revenue	100%	76%	16%	7%	1%
Backlog	Backlog	100%	56%	25%	17%	2%	Backlog	100%	48%	31%	20%	1%


	Three Months Ended March 31, 2022
	Series A Notes			Series B Notes
Coupon interest	$	59		$	1,869
Amortization of 2035 Notes discount and issuance costs	—			424
Total interest expense recognized	$	59		$	2,293

Effective interest rate on the liability component	1.0		%	2.0		%


	Options Outstanding
	Number of Shares	Weighted- Average Exercise Price (per share)		Weighted- Average Contractual Life (years)	Aggregate Intrinsic Value
Balance — December 31, 2020	3,485	$	8.33	5.3	$	60,679
Exercised	(287)	3.82			4,855
Cancelled	(45)	22.42

Balance — March 31, 2021	3,153	$	8.54	5.2	$	44,456
Options exercisable — March 31, 2021	1,965	$	12.30	3.4	$	23,982


		Number of Shares	Weighted- Average Grant Date Fair Value (per share)		Weighted- Average Contractual Life (years)	Aggregate Intrinsic Value			Number of Shares	Weighted- Average Grant Date Fair Value (per share)		Weighted- Average Contractual Life (years)	Aggregate Intrinsic Value
Unvested balance — December 31, 2020		20,400	$	15.35	1.4	$	470,424
Unvested balance — December 31, 2021								Unvested balance — December 31, 2021	19,023	$	18.48	1.4	$	333,674
Granted	Granted	11,956	20.98					Granted	6,866	16.39
Vested	Vested	(3,124)	14.12					Vested	(2,755)	17.23
Cancelled	Cancelled	(814)	16.23					Cancelled	(1,021)	18.18
Unvested balance — March 31, 2021		28,418	$	17.89	1.6	$	556,141
Unvested awards for which the requisite service period has not been rendered and vesting is subject to the achievement of a performance condition — March 31, 2021		1,883	$	19.41	1.6	$	36,842
Unvested balance — March 31, 2022								Unvested balance — March 31, 2022	22,113	17.87		1.9	439,340
Unvested awards for which the requisite service period has not been rendered and vesting is subject to the achievement of a performance condition — March 31, 2022								Unvested awards for which the requisite service period has not been rendered and vesting is subject to the achievement of a performance condition — March 31, 2022	1,758	$	18.19	1.9	$	39,220


	Three Months Ended March 31, 2021	Three Months Ended March 31, 2020
Fair value of common stock	$13.06 - $15.03	$14.59 - $16.35
Risk-free interest rate	0.09% - 0.18%	1.6% - 2.35%
Expected term (in years)	0.5 - 1.0	0.5 - 1.0
Volatility	48% - 68%	29% - 39%
Dividend yield	0%	0%


		As of March 31,			As of March 31,
		2021	2020		2022	2021
Options to purchase common stock	Options to purchase common stock	3,153	3,964	Options to purchase common stock	1,568	3,153

Unvested restricted stock awards and units	Unvested restricted stock awards and units	28,418	24,899	Unvested restricted stock awards and units	22,113	28,418
Convertible preferred stock	Convertible preferred stock	23,511	0	Convertible preferred stock	24,587	23,511
Convertible senior notes	Convertible senior notes	33,856	35,442	Convertible senior notes	33,856	33,856
ESPP shares	ESPP shares	669	966	ESPP shares	490	669


		Three Months Ended or as of						Three Months Ended or as of
		March 31,						March 31,
		2021			2020					2022			2021
Product, subscription and support revenue		$	183,017		$	174,083
Platform, cloud subscription and managed services revenue									Platform, cloud subscription and managed services revenue	$	57,629		$	55,999
Professional services revenue	Professional services revenue	63,331			50,639				Professional services revenue	72,515			58,689
Total revenue	Total revenue	$	246,348		$	224,722			Total revenue	$	130,144		$	114,688
Year-over-year percentage increase	Year-over-year percentage increase	10		%	7		%		Year-over-year percentage increase	13		%	24		%
Gross margin percentage	Gross margin percentage	66		%	64		%		Gross margin percentage	45		%	48		%
Deferred revenue, (current and non-current)		$	910,698		$	919,856
Deferred revenue (current and non-current)									Deferred revenue (current and non-current)	$	399,989		$	280,291
Annualized recurring revenue	Annualized recurring revenue	$	642,963		$	590,099			Annualized recurring revenue	$	287,041		$	236,062
Billings (non-GAAP)	Billings (non-GAAP)	$	200,589		$	170,011			Billings (non-GAAP)	$	119,805		$	110,726
Net cash used in operating activities - continuing operations									Net cash used in operating activities - continuing operations	$	(23,335)		$	(15,572)
Net cash provided by operating activities - discontinued operations									Net cash provided by operating activities - discontinued operations	—			36,433
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	20,860		$	(24,456)			Net cash provided by (used in) operating activities	$	(23,335)		$	20,861
Free cash flow (non-GAAP)		$	10,837		$	(36,136)
Free cash flow (non-GAAP) - continuing operations									Free cash flow (non-GAAP) - continuing operations	$	(32,337)		$	(21,199)


	Three Months Ended March 31,				Change
	2021		2020		Amount		%
	(Dollars in thousands)
Interest income	$	1,644	$	4,424	$	(2,780)	(63)	%


							As of
		As of March 31, 2021		As of December 31, 2020			March 31, 2022		December 31, 2021
		(In thousands)					(In thousands)
Cash and cash equivalents	Cash and cash equivalents	$	516,972	$	676,454	Cash and cash equivalents	$	771,967	$	1,154,458
Short-term investments	Short-term investments	$	783,689	$	624,824	Short-term investments	$	1,359,105	$	1,039,339