Risk Factors Update Summary

• Income before taxes decreased from $67,103 in 2022 to $(28,105) in 2023.
• Enhanced cybersecurity measures include a structured ERM process, incident response team, and strengthened disaster recovery procedures.
• Customers delaying projects due to labor shortages and budget constraints may lead to decreased revenues.
• Net cash provided by operating activities increased from $77.8 million in 2022 to $181.1 million in 2023, driven by adjustments to reconcile net income and changes in operating assets and liabilities.
• Provision for income taxes changed from a benefit of $8.1 million in 2022 to a benefit of $3.7 million in 2023, impacting the effective tax rate.
• Sales of $7.9 million in 2023 decreased from $8.1 million in 2022.
• Interest and other income (expense), net changed by $14.9 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, driven by a $14.6 million decrease in other expenses and a $5.3 million increase in other income.
• Workforce reduction initiatives updated to include efficiencies from reducing workforce across initiatives.
• Amended and Restated Credit Agreement entered into, increasing revolving credit facility from $500.0 million to $350.0 million.
• The Prior A & R Credit Agreement was superseded by the Second A & R Credit Agreement, providing for a $350.0 million revolving credit facility and an uncommitted incremental loan facility.
• Reconciliation of cash balance increased significantly from $330.4 million in 2022 to $467.0 million in 2023.
• Added a new section on "Policy on Recoupment of Incentive Compensation" effective from October 2, 2023.
• Recent ransomware incident led to delayed invoicing impacting cash flow and customer implementation delays.
• Detailed the recoupment process for erroneously awarded Incentive-Based Compensation following a Financial Restatement.
• The maximum dollar value of shares repurchased decreased from $6.8 million to $5.7 million.
• Cyber incident learnings led to cybersecurity defense enhancements, security awareness training, and incident containment measures.
• Total net investment in sales-type leases increased from $31.4 million to $50.8 million.
• Future amortization expenses for intangible assets decreased from $35.2 million to $31.6 million.
• Cash, cash equivalents, and restricted cash at the end of the period rose from $352.8 million in 2022 to $500.9 million in 2023.
• Fluctuations in installation timeframes for systems, ranging from weeks to over a year.
• The ratio of current assets to current liabilities decreased from 2.1:1 at December 31, 2022, to 1.5:1 at December 31, 2023.
• Cash and cash equivalents increased from $330.4 million at December 31, 2022, to $468.0 million at December 31, 2023.
• Working capital improved from a deficit of $95.5 million in 2022 to $559.8 million in 2023.
• Deferred revenues from product sales increased from $112.2 million in 2022 to $121.7 million in 2023.
• Transition to selling Advanced Services presents risks, including competition and customer acceptance.
• Clarified that the Company will not indemnify Executives or pay for insurance related to the Policy.
• Employee headcount decreased by approximately 580 employees since December 31, 2022, reflecting restructuring initiatives.
• Operating lease liabilities increased from $44.2 million to $50.8 million.
• Amortization expense of intangible assets decreased from $35.2 million to $31.6 million.
• Stock-based compensation expense decreased from $68.2 million to $55.3 million.
• Bookings decreased by 19%, from $1.054 billion in 2022 to $854 million in 2023, primarily due to lower-than-expected orders for connected devices.
• Increased delays in shipments due to semiconductor chip shortage impacting production and costs.
• Deferred revenues from service contracts rose from $20.2 million in 2022 to $22.4 million in 2023.
• Cost of product revenues decreased by $194.7 million, primarily due to lower volumes from automated dispensing systems business.
• Weighted-average remaining lease term for operating leases decreased from 5 years to 4 years.
• Future impairment of goodwill and intangible assets could affect financial position.
• Net income per share increased from $0.13 in 2022 to $0.45 in 2023.
• Potential impact of new EU laws on business, assessing scope, impact, and risk moving forward.
• Amortization expense of property and equipment increased from $22.8 million in 2022 to $27.0 million in 2023.
• Research and development expenses decreased by $7.3 million, attributed to consulting and employee-related expense reductions.
• Gross carrying amount of customer relationships decreased from $307.1 million in 2022 to $307.0 million in 2023.