Research: Periodic Review Announcement: Moody’s Announces Completion of Periodic Review for Group of Software Vendors

New York, November 09, 2022 — Moody’s Investors Service (“Moody’s”) has performed a periodic review of ratings and other ratings associated with the same analytical units for the rated entity or entities listed below.

The review was conducted as part of a portfolio review discussion held on November 2, 2022 during which Moody’s reassessed the relevance of the ratings in the context of the main relevant methodology(ies), recent developments and a comparison of the financial and operational profile with similar ratings. peers. One possible outcome of periodic reviews is the referral of a rating to a ratings committee.

This publication does not announce any credit rating action or indicate whether or not credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed during a portfolio review and are therefore not impacted by this announcement.

Key Scoring Considerations

The primary methodology used for the rated entities listed below is Software released June 2022. Please see the Rating Methodologies page at https://ratings.moodys.com for a copy of this methodology.

Key rating considerations on a forward-looking basis may include, but are not limited to, the following items summarized below.

Software

Scale: Scale tends to be an indicator of success in developing customer breadth and overall depth of business. It also generally confers economies of scale in research, engineering and development and corporate overhead. Large companies with strong cash flows also generally have better access to capital markets and greater options for making acquisitions. Software vendors often rely on acquisitions to obtain key technologies or promising product lines. Scale is measured by revenue and free cash flow.

Company Profile: The Company Profile factor provides an indication of a company’s qualitative strength on several measures of diversification and our market share assessment. The company profile provides an indication of the likely stability and sustainability of the company’s cash flows. To score high on the overall factor, a company must demonstrate significant product diversity, geographic diversity, end-market diversity, and strong market share. A strong position in one of these areas with a weakness in the other can limit the long-term stability of cash flows.

Profitability: Profitability is taken into account because it generates sustainable cash flows and a strong competitive position. We measure this using return on assets.

Leverage and hedging: Leverage and hedging measures are indicators of a company’s financial flexibility and long-term viability. Financial flexibility is essential for software companies to adapt to changing technology and trends. Software companies need resources to invest in research and development as well as to make strategic acquisitions both to acquire critical technologies and to expand product suites to meet changing customer demands. Ratios such as Debt/EBITDA, EBITDA less Capex/Interest expense, Free Cash Flow/Debt and Cash and Marketable Securities/Debt are indicators of leverage and hedging.

Financial policy: The tolerance of management and the board of directors for financial risk is a determinant of the rating because it directly affects debt levels, credit quality and the risk of adverse changes in the financing and structure of the capital. Our assessment of financial policies includes the perceived tolerance of a company’s board and management for financial risk and the future direction of the company’s capital structure. Considerations include a company’s public commitments in this area, its track record of meeting commitments, and our views on the company’s ability to achieve its goals. Financial risk tolerance serves as a benchmark for investment and capital allocation.

Other Factors: Other factors may include, but are not limited to, financial controls, quality of financial reporting, legal structure of the business, quality and experience of management, assessment of corporate governance as well as environmental and social considerations, exposure to uncertain licensing regimes and possible governmental interference in certain countries. Regulatory, litigation, liquidity, technology and reputational risks, as well as changes in consumer and business spending habits, competitor strategies and macroeconomic trends are also considered. .

• AG Parent Holdings, LLC

• Aptéan, Inc.

• Athenahealth Group Inc.

• Autodesk, Inc.

• Brave Parent Holdings, Inc.

• Cadence Design Systems, Inc.

• CE Intermediate I, LLC

• Certara Holdco, Inc.

• Cloudera, Inc.

• ConnectWise, LLC

• Cornerstone OnDemand, Inc. (Clearlake)

• E2open, LLC

• ECi Macola/Max Holding, LLC (LGP)

• Elastic NV

• Flexera Software LLC

• Greenway Health, LLC

• Buyer HS, LLC

• Imprivata, Inc.

• Ivanti Software, Inc.

• Matrix Parent, Inc.

• Maverick Bidco, Inc.

• Microsoft Corporation

• Mitnick Corporate Buyer, Inc.

• Motus Group, LLC

• N-able International Holdings II, LLC

• OceanKey (United States) II Corp.

• Perforce Software, Inc.

• Precisely embedded software

• Project Alpha Intermediate Holding, Inc.

• Project Leopard Holdings, Inc.

• Quartz holding company

• Quest Identity Intermediate Limited

• Rocket Software, Inc.

• Acquisition borrower S2P, Inc.

• SonicWALL Holdings Limited

• WatchGuard Technologies, Inc.

The primary methodology used for the rated entity below is that for Business and Consumer Services published in November 2021. Please see the Rating Methodologies page at https://ratings.moodys.com for a copy of this methodology.

Key rating considerations on a forward-looking basis may include, but are not limited to, the following items summarized below.

Business and consumer services

Scale: scale is considered because greater scale can be an indicator of a company’s ability to influence business trends and pricing in its service segments and support a stable or growing market position . Scale can also be an indicator of greater resilience to changes in demand, geographic diversity, cost absorption, R&D capabilities, and greater bargaining power with customers, labor and suppliers. Turnover is a scale indicator.

Business Profile: A company’s business profile is considered because it greatly influences its ability to generate sustainable profits and operating cash flow. The business and consumer services industry comprises a wide range of business models encompassing a multitude of identifiable customer bases around the world. We consider the underlying demand characteristics of a company’s service offerings and their relative magnitude, strength and endurance. Companies that have established a long history of strong demand for a diverse range of service offerings critical to customer needs are generally less risky than those that offer a single range of services that are less critical to customer needs. customers or have a limited history of success.

Profitability: Profits are important because they are necessary to maintain a company’s competitive position, including sufficient reinvestment in marketing, research, facilities and human capital. High and sustained profitability is generally a strong indicator of substantial competitive advantages, especially if combined with evidence of stable or increasing market share. The EBITA margin is an indicator of profitability.

Leverage and hedging: Leverage and hedging measures are indicators of a company’s financial flexibility and long-term viability, including its ability to adapt to changes in the economic environment and commercial in the segments in which it operates. Leverage and hedging indicators include ratios such as: debt/EBITDA, EBITA/interest expense and retained cash flow/net debt.

Financial Policy: Management and board tolerance for financial risk is a consideration as it directly affects debt levels, credit quality and the risk of adverse changes in funding and capital structure. Our assessment of financial policies includes the perceived tolerance of a company’s board and management for financial risk and the future direction of the company’s capital structure. Considerations include a company’s public commitments in this area, its track record of meeting commitments, and our views on the company’s ability to achieve its goals. Financial risk tolerance serves as a benchmark for investment and capital allocation.

Other Rating Considerations: Other considerations may include, but are not limited to, financial controls and quality of financial reporting; legal structure of the company; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology and reputational risks, as well as changes in consumer and business spending habits, competitor strategies and macroeconomic trends also affect ratings.

• Dodge Construction Network LLC

This announcement only applies to rated entities with EU rated, UK rated, EU approved and UK approved ratings. Rated entities, with non-EU rated, non-UK rated, non-EU approved and non-UK approved ratings may be referenced here to the extent necessary, if they are part of the same analytical unit.

Please see the issuer’s page on https://ratings.moodys.com for each of the ratings covered, the most recent credit rating action, rating history and press release on the credit rating action, including the rationale for the rating and factors that may cause an improvement or a deterioration in the rating.

This publication does not announce a credit rating action.

For any credit ratings referenced in this publication, please see the issuer/transaction page at https://ratings.moodys.com

for the most up-to-date information on credit rating actions and rating history.

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