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Neustar Inc – IPO: ‘S-1/A’ on 6/28/05

On:  Tuesday, 6/28/05, at 5:00pm ET   ·   Accession #:  1047469-5-18239   ·   File #:  333-123635

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/28/05  Neustar Inc                       S-1/A                 14:31M                                    Merrill Corp/New/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Pre-Effective Amendment to Registration Statement   HTML   1.47M 
                          (General Form)                                         
 2: EX-1.1      Underwriting Agreement                              HTML    163K 
 3: EX-3.1      Articles of Incorporation/Organization or By-Laws   HTML     92K 
 4: EX-3.2      Articles of Incorporation/Organization or By-Laws   HTML     70K 
 5: EX-4.1      Instrument Defining the Rights of Security Holders  HTML     15K 
 6: EX-4.2      Instrument Defining the Rights of Security Holders  HTML     15K 
 7: EX-5.1      Opinion re: Legality                                HTML     13K 
 8: EX-9.1      Voting Trust Agreement                              HTML    110K 
 9: EX-10.1     Material Contract                                   HTML  12.06M 
10: EX-10.4     Material Contract                                   HTML   4.97M 
11: EX-10.5     Material Contract                                   HTML   2.37M 
12: EX-10.7     Material Contract                                   HTML    260K 
13: EX-21.1     Subsidiaries of the Registrant                      HTML      9K 
14: EX-23.1     Consent of Experts or Counsel                       HTML     10K 

As filed with the Securities and Exchange Commission on June 28, 2005

Registration No. 333-123635

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 7
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

NeuStar, Inc.
(Exact Name of Registrant as Specified in Its Charter)

46000 Center Oak Plaza
Sterling, Virginia 20166
(571) 434-5400
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

Jeffrey E. Ganek
Chairman and Chief Executive Officer
NeuStar, Inc.
46000 Center Oak Plaza
Sterling, Virginia 20166
(571) 434-5400
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)

Copies to:

        Approximate date of commencement of proposed sale to the public:    As soon as practicable after this registration statement becomes effective.

        If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

        The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), shall determine.

Subject to Completion. Dated June 28, 2005.

The information in this preliminary prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and the selling stockholders are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS

25,000,000 Shares

Class A Common Stock

This is the initial public offering of our common stock. All of the shares of Class A common stock being sold in this offering are being sold by the selling stockholders. We will not receive any of the proceeds from the sale of shares by the selling stockholders. We anticipate that the initial public offering price will be between $18.00 and $20.00 per share.

Prior to this offering, there has been no public market for our common stock. Our Class A common stock has been approved for listing on the New York Stock Exchange under the symbol "NSR."

Investing in our Class A common stock involves risks. See "Risk Factors" beginning on page 9 to read about factors you should consider before buying shares of our Class A common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The selling stockholders have granted the underwriters an option to purchase up to an additional 3,750,000 shares of Class A common stock from them to cover over-allotments at the initial public offering price less underwriting discounts and commissions.

The underwriters expect to deliver the shares to purchasers on                , 2005.

The date of this prospectus is                , 2005.

TABLE OF CONTENTS

        You should rely only on the information contained in this prospectus. We have not, and the selling stockholders and the underwriters have not, authorized anyone to provide you with information different from that contained in this prospectus. The selling stockholders are offering to sell, and seeking offers to buy, shares of our Class A common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our Class A common stock.

        No action is being taken in any jurisdiction outside the United States to permit a public offering of the Class A common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to those jurisdictions.

        This offering is only being made to persons in the United Kingdom whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995 or the UK Financial Services and Markets Act 2000, or FSMA, and each underwriter has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received by it in connection with the sale of the shares of Class A common stock in circumstances in which section 21(1) of FSMA does not apply to us or the selling stockholders. Each of the underwriters agrees and acknowledges that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the shares of Class A common stock in, from or otherwise involving the United Kingdom.

        The shares of Class A common stock offered by this prospectus may not be offered, transferred, sold or delivered to any individual or legal entity other than to persons who trade or invest in securities in the conduct of their profession or trade (which includes banks, securities intermediaries (including dealers and brokers), insurance companies, pension funds, other institutional investors and commercial enterprises which as an ancillary activity regularly invest in securities) in the Netherlands.

        Through and including                , 2005 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus. You should read this entire prospectus carefully, especially the risks of investing in our Class A common stock discussed under "Risk Factors" beginning on page 9 and our consolidated financial statements and related notes, before making an investment decision. Unless otherwise indicated, the information set forth in this prospectus assumes that the underwriters will not exercise their over-allotment option to purchase up to an additional 3,750,000 shares of Class A common stock, assumes an initial public offering price of our Class A common stock of $19.00 per share, the midpoint of the range shown on the cover page of this prospectus, and assumes completion of the recapitalization transactions described below.

Overview

        We provide the North American communications industry with essential clearinghouse services. We operate the authoritative directories that manage virtually all telephone area codes and numbers, and enable the dynamic routing of calls among thousands of competing communications service providers in the United States and Canada. All communications service providers, or CSPs, that offer telecommunications services to the public at large, or telecommunications service providers, such as Verizon Communications Inc., Sprint Corporation, AT&T Corp. and Cingular Wireless LLC, must access our clearinghouse as one of our customers to properly route virtually all of their customers' calls. We also provide clearinghouse services to emerging CSPs, including Internet service providers, cable television operators, and voice over Internet protocol, or VoIP, service providers. In addition, we manage the authoritative directories for the .us and ..biz Internet domains, as well as for Common Short Codes, part of the short messaging service relied upon by the U.S. wireless industry. We are in a unique position with respect to many of the services we offer in that there are no other providers currently providing the services we offer. See "Business—Competition." With respect to these services, the databases we maintain are the definitive resource for the communications industry, which requires that there be one authoritative source for the information in these databases.

        We provide our services from our clearinghouse, which includes unique databases and systems for workflow and transaction processing. Our customers access our clearinghouse databases through standard connections, which we believe is the most efficient and cost-effective way for CSPs to exchange operationally essential data in a secure environment that does not favor any particular customer or technology. In addition, we believe that our clearinghouse positions us well to meet the complex needs of the communications industry going forward. Today, our services allow our customers to manage competitive turnover of their customers, subscriber growth, technology change, network optimization, and industry consolidation. Furthermore, we believe our services are essential to the growth of new CSPs and new end-user services as the industry shifts from conventional circuit-switched communications to Internet protocol, or IP, and third generation wireless technology.

        We provide the communications industry in North America with critical technology services that solve the addressing, interoperability and infrastructure needs of CSPs. These services are used by CSPs to manage a range of their technical and operating requirements, including:

•

Addressing.  We enable CSPs to use critical, shared addressing resources, such as telephone numbers, Internet top-level domain names, and Common Short Codes.



•

Interoperability. We enable CSPs to exchange and share critical operating data so that communications originating on one provider's network can be delivered and received on the network of another CSP.



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Infrastructure and Other. We enable CSPs to more efficiently manage changes in their own networks by centrally managing certain critical data they use to route communications over their own networks.

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Demand Drivers for Our Clearinghouse Services

        A number of trends in the communications industry are driving growth in the demand for our clearinghouse services. These trends include:

        Emergence of IP services.    VoIP service providers are rapidly expanding their operations. The total number of U.S. VoIP customers is expected to grow from 1.1 million in 2004 to 17.7 million in 2007, representing a compound annual growth rate of 155.4%, according to International Data Corporation. The need of VoIP service providers to have access to an inventory of telephone numbers, manage their network architecture and route traffic between traditional voice networks and new IP networks will drive the use of clearinghouse services.

        Dynamic growth in wireless.    The use of wireless services continues to grow. Not only are more people using wireless phones, but there are entirely new kinds of wireless service providers entering the market, such as mobile virtual network operators. Demand for advanced services, such as third generation wireless technology, is projected to grow at a compound annual rate of 37% from 67 million users in 2004 to 174 million in 2007, according to International Data Corporation. These changes in the wireless industry drive increased demand for clearinghouse services.

        Consolidations in the industry, such as Cingular-AT&T Wireless and SBC-AT&T.    Consolidation is resulting in significant demand for clearinghouse services. As large, traditional CSPs integrate disparate systems after mergers, they face two critical challenges. First, consolidating CSPs update network addressing information to associate end-users with the consolidated network. This update requires them to employ our addressing and interoperability services. Second, consolidating CSPs optimize their consolidated networks by changing the routing of traffic among their switches. CSPs use our interoperability and infrastructure services to accomplish this change.

        Pressure on carriers to reduce costs.    Competition has placed significant pressure on CSPs to reduce costs. At the same time, the complexity of back office operations has increased as CSPs work to manage the proliferation of new technologies and new, complex end-user services provided across a large number of independent networks. Clearinghouse services assist CSPs in equipping their back office systems to manage the added complexity of sharing essential data with other CSPs in this environment.

Our Strengths

        We believe that we are well positioned to continue to benefit from the ongoing changes in the communications industry that are driving the need for a trusted, neutral clearinghouse. Our competitive strengths include:

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Authoritative provider of essential services.  We are the authoritative provider for many clearinghouse services, including the addressing and routing functions that are required for the ongoing operation of our customers' networks and real-time delivery of services to their end-customers.



•

Proven, adaptable clearinghouse.  We believe that our clearinghouse databases and their open accessibility to CSPs are an efficient and cost-effective means of delivering a broad set of services. We designed our clearinghouse to meet the demanding functional, quality, capacity and security requirements of the changing communications industry.



•

High degree of integration with our customers.  Because our clearinghouse services are integrated into the network operations and service delivery functions of virtually all CSPs, we have an unmatched ability to deliver clearinghouse services to the entire communications industry. We also have the ability to introduce new services to our customers in a cost-effective manner because they already interface with our clearinghouse.

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•

Strong customer relationships. We believe we have excellent relationships with our customers. We strive to maintain a position of trust with our customers by delivering high quality and reliable service; neutral application of all operational methods and procedures; open, honest and timely communications at all levels; and a clear understanding of, and responsiveness to, our customers' business and needs.



•

Long-term contracts.  We provide most of our services under long-term contracts and, in most cases, there are no other providers of these services. Under our contracts, we provide number portability services, serve as the North American Numbering Plan Administrator and National Pooling Administrator, and maintain the authoritative directory for Common Short Codes and the .us and .biz Internet domains. We were awarded each of these contracts through a competitive process.



•

Industry leadership and innovation.  We have demonstrated our ability to innovate and create new business opportunities. We led the industry effort to design the architecture that enables local number portability, and we worked with the industry, the FCC and state regulators to establish standards and implement this solution. Through our broad expertise and leadership of industry forums, we have been instrumental in the establishment of standards and technologies that drive additional demand for clearinghouse services.



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Predictable revenue, profitability and strong cash flows. As the provider of essential services, we enjoy predictable, transaction-based revenue supported by industry trends. We have been able to introduce new services economically. As a result, we have generated strong operating cash flows.

Our Strategy

        Our goal is to strengthen our position as the leading provider of clearinghouse services to the communications industry. We intend to serve our growing market through the following strategies:

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Deliver increasing volumes of our existing services to our customers.  We believe that customer demand for existing services will continue to grow. We will continue to deliver these services in a highly reliable, neutral, and trusted manner.



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Extend the value of our clearinghouse to address the needs for IP, wireless and advanced communications services. We believe that there will be a large and growing demand for clearinghouse services with the growth in IP, wireless and advanced services. We will continue to innovate and promote the adoption of open industry standards to meet those demands.



•

Expand our customer base beyond CSPs. We believe IP technology will drive the emergence of complex end-user services that combine data, entertainment and multi-media services, financial transactions and communications. We believe that clearinghouse services will be required to manage the interoperability among data and entertainment providers, transaction providers and CSPs.



•

Expand our customer base internationally.  We believe there is growing demand for clearinghouse services outside of North America. We intend to leverage our established capabilities and operating expertise to add customers around the world. For example, we were recently selected to develop a number portability solution in Taiwan. We believe similar opportunities for our clearinghouse services exist in other Asian markets as well as in Europe.



•

Expand the scope of our clearinghouse services and customers through acquisitions. We believe there are opportunities to acquire businesses and technologies that can expand our presence in a customer market segment, or augment our clearinghouse services. For example, we intend to acquire companies that provide software solutions that can be favorably transitioned to a clearinghouse.

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Background

        Our business was started in 1996 as an operating division of Lockheed Martin Corporation called the Communications Industry Services group. In 1999, our business was acquired from Lockheed Martin by certain members of our senior management team and an investor group led by affiliates of Warburg Pincus LLC.

Company Information

        We were incorporated in Delaware in 1998 to acquire our business from Lockheed Martin. This acquisition was completed in November 1999. Our principal executive offices are located at 46000 Center Oak Plaza, Sterling, Virginia 20166. The telephone number of our principal executive offices is (571) 434-5400, and we maintain a website at www.neustar.biz. Information contained on our website, or that can be accessed through our website, does not constitute a part of this prospectus.

        The "NeuStar" family of related marks, images and symbols are our properties, trademarks and service marks. All other trade names, trademarks and service marks appearing in this prospectus are the property of their respective owners.

Recapitalization Transactions

        Prior to this offering, we had only one class of common stock. All of our outstanding preferred stock has been converted into shares of our common stock, we have amended our certificate of incorporation to provide for Class A common stock and Class B common stock, we have split each share of our common stock into 1.4 shares, and we have reclassified our common stock into shares of Class B common stock. Each share of Class B common stock is convertible at the option of the holder into one share of Class A common stock. Our Class A common stock is not convertible. Our Class A common stock and Class B common stock are otherwise identical, except that our Class B common stock will not be registered and will therefore have no public market. The reclassification has been structured to impose the restrictions on ownership and transfer of our capital stock contained in our certificate of incorporation.

        All of the shares sold in this offering will be Class A common stock. As a result, prior to the closing of this offering, we anticipate that we will receive conversion elections from all of the selling stockholders, whose collective ownership represents approximately 94% of our outstanding common stock (based on our outstanding shares of common stock as of March 31, 2005 and assuming conversion of all of our outstanding preferred stock into common stock), to convert their shares of Class B common stock into shares of Class A common stock, which conversions will be effected prior to the closing of this offering. We anticipate that all holders of Class B common stock will ultimately convert their shares to Class A common stock in order to access the public markets, after which no shares of Class B common stock will be outstanding.

        Unless otherwise indicated, the information set forth in this prospectus:

•

reflects the conversion of all of our outstanding preferred stock into shares of our common stock and payment of the accrued and unpaid dividend in cash to holders of our preferred stock prior to conversion;



•

reflects the effectiveness of the amendments to our certificate of incorporation and bylaws, with the terms that will be in effect following the closing of this offering;



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reflects the split of each share of our common stock into 1.4 shares and the reclassification of our common stock into shares of Class B common stock; and



•

assumes the conversion of all outstanding shares of Class B common stock into shares of Class A common stock.

        We refer to these events collectively as the "Recapitalization."

        The dividend paid on our preferred shares in the Recapitalization was $6.3 million in the aggregate.

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Summary of the Offering

        The number of shares of Class A common stock to be sold in this offering represents 41.8% of our outstanding capital stock, or 48.1% if the underwriters exercise their over-allotment option in full, based on the number of our shares outstanding as of March 31, 2005, as described in the following paragraph.

        The number of shares of our Class A common stock to be outstanding following this offering is based on the number of our shares outstanding as of March 31, 2005 and assumes that the Recapitalization had occurred on that date, but gives effect to the conversions from Class B common stock to Class A common stock only with respect to shares held by the selling stockholders. This number excludes:

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6,361,383 shares underlying warrants exercisable as of March 31, 2005, with an exercise price of $0.0667 per share;



•

up to 1,052,631 shares (equal to $20 million in value, based on the midpoint of the range set forth on the cover page of this prospectus), that may be purchased from us by Melbourne IT Limited, which holds a 10% interest in our 90% owned subsidiary, NeuLevel, Inc., within 30 days of completion of this offering at a purchase price per share equal to the public offering price in this offering. See "Certain Relationships and Related Party Transactions."



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8,985,394 shares subject to options exercisable as of March 31, 2005, with a weighted average exercise price of $1.81 per share;



•

5,441,481 shares subject to options outstanding but not exercisable as of March 31, 2005, with a weighted average exercise price of $6.20 per share;



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632,032 additional shares reserved as of March 31, 2005 for future issuance under our stock-based compensation plans;



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6,044,715 additional shares reserved for issuance under our 2005 Stock Incentive Plan; and



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350,000 shares to be issued to an employee on December 18, 2008, provided the employee provides continuous service through the vesting date.

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SUMMARY CONSOLIDATED FINANCIAL DATA

        The tables below summarize our consolidated statements of operations data for each of the three years ended December 31, 2004 and the three months ended March 31, 2004 and 2005, and our consolidated balance sheet data as of December 31, 2002, 2003 and 2004 and March 31, 2005. The summary consolidated statements of operations data for each of the three years ended December 31, 2002, 2003 and 2004, and the summary consolidated balance sheet data as of December 31, 2003 and 2004, have been derived from, and should be read together with, our audited consolidated financial statements and related notes appearing elsewhere in this prospectus. The summary consolidated balance sheet data as of December 31, 2002 have been derived from our audited consolidated financial statements and related notes not included in this prospectus.

        The summary consolidated statements of operations data for the three months ended March 31, 2004 and 2005 and the summary consolidated balance sheet data as of March 31, 2005, have been derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus. The share and per share data included in the summary consolidated statements of operations data for the years ended December 31, 2002, 2003 and 2004, and the three months ended March 31, 2004 and 2005, reflect the 1.4-for-1 split of our common stock as part of the Recapitalization, but do not reflect other aspects of the Recapitalization.

        The pro forma consolidated statements of operations data, including share and per share data, for the year ended December 31, 2004 and the three months ended March 31, 2005 give effect to all aspects of the Recapitalization as though it had occurred on January 1, 2004, except for the conversion of all outstanding shares of Class B common stock into shares of Class A common stock.

        The pro forma consolidated balance sheet data as of March 31, 2005 give effect to all aspects of the Recapitalization as though it had occurred on March 31, 2005, except for the conversion of all outstanding shares of Class B common stock into shares of Class A common stock. The pro forma as adjusted consolidated balance sheet data as of March 31, 2005 reflect all aspects of the Recapitalization and our payment of offering costs, excluding underwriting discounts and commissions, of approximately $3.9 million as if they had occurred on March 31, 2005.

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        The following information should be read together with, and is qualified in its entirety by reference to, the more detailed information contained in "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included in this prospectus.

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RISK FACTORS

        An investment in our Class A common stock involves risks. You should carefully consider the risks described below as well as the other information contained in this prospectus before investing in our Class A common stock.

Risks Related to Our Business

Failures or interruptions of our clearinghouse could materially harm our revenues and impair our ability to conduct our operations.

        We provide addressing, interoperability and infrastructure services that are critical to the operations of our customers. Notably, our clearinghouse is essential to the orderly operation of the national telecommunications system because it enables CSPs to ensure that telephone calls are routed to the appropriate destinations. Our system architecture is integral to our ability to process a high volume of transactions in a timely and effective manner. We could experience failures or interruptions of our systems and services, or other problems in connection with our operations, as a result of:

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damage to or failure of our computer software or hardware or our connections and outsourced service arrangements with third parties;



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errors in the processing of data by our system;



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computer viruses or software defects;



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physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events;



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increased capacity demands or changes in systems requirements of our customers; or



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errors by our employees or third-party service providers.

        If we cannot adequately protect the ability of our clearinghouse to perform consistently at a high level or otherwise fail to meet our customers' expectations:

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we may experience damage to our reputation, which may adversely affect our ability to attract or retain customers for our existing services, and may also make it more difficult for us to market our services;



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we may be subject to significant damages claims, under our contracts or otherwise, including the requirement to pay substantial penalties related to service level requirements in our contracts;



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our operating expenses or capital expenditures may increase as a result of corrective efforts that we must perform;



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our customers may postpone or cancel subsequently scheduled work or reduce their use of our services; or



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one or more of our significant contracts may be terminated early, or may not be renewed.

        Any of these consequences would adversely affect our revenues and performance.

Security breaches could result in an interruption of service or reduced quality of service, which could increase our costs or result in a reduction in the use of our services by our customers.

        Our systems may be vulnerable to physical break-ins, computer viruses, attacks by computer hackers or similar disruptive problems. If unauthorized users gain access to our databases, they may be able to steal, publish, delete or modify sensitive information that is stored or transmitted on our networks and that we are required by our contracts and FCC rules to keep confidential. A security or privacy breach could result in an interruption of service or reduced quality of service and we may be

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required to make significant expenditures in connection with corrective efforts we are required to perform. In addition, a security or privacy breach may harm our reputation and cause our customers to reduce their use of our services, which could harm our revenues and business prospects.

The loss of, or damage to, a data center could interrupt our operations and materially harm our revenues and growth.

        Because telecommunications service providers must query a copy of our continuously updated databases to route virtually every telephone call in North America, the integrity of our data centers is essential to our business. We may not have sufficient redundant systems or back up facilities to allow us to receive and process data in the event of a loss of, or damage to, a data center. We could lose, or suffer damage to, a data center in the event of power loss, natural disasters such as fires, earthquakes, floods and tornadoes, telecommunications failures, such as transmission cable cuts, or other similar events that could adversely affect our customers' ability to access our clearinghouse. We may be required to make significant expenditures to repair or replace a data center. Any interruption to our operations due to the loss of, or damage to, a data center could harm our reputation and cause our customers to reduce their use of our services, which could harm our revenues and business prospects.

The failure of the third-party software and equipment we use in our clearinghouse could cause interruptions or failures of our systems.

        We incorporate hardware, software and equipment developed by third parties in our clearinghouse. Our third-party vendors include, among others, International Business Machines Corporation, or IBM, and Oracle Corporation for database systems and software, and EMC Corporation and Hewlett-Packard Company for equipment. As a result, our ability to provide clearinghouse services depends in part on the continued performance and support of the third-party products on which we rely. If these products experience failures or have defects and the third parties that supply the products fail to provide adequate support, this could result in or exacerbate an interruption or failure of our systems or services.

Our seven contracts with North American Portability Management, LLC represent in the aggregate a substantial portion of our revenues, are not exclusive and could be terminated or modified in ways unfavorable to us, and we may be unable to renew these contracts at the end of their term.

        Our seven contracts with North American Portability Management, LLC, an industry group that represents all telecommunications service providers in the United States, to provide telephone number portability and other clearinghouse services are not exclusive and could be terminated or modified in ways unfavorable to us. These seven separate contracts, each of which represented between 8.2% and 14.0% of our total revenues in 2004, represented in the aggregate approximately 73.1% of our total revenues in 2004. North American Portability Management, LLC could, at any time, solicit or receive proposals from other providers to provide services that are the same as or similar to ours. In addition, these contracts have finite terms and are currently scheduled to expire in May 2011. Furthermore, any of these contracts could be terminated in advance of its scheduled expiration date in limited circumstances, most notably if we are in default of these agreements. Although these contracts do not contain cross default provisions, conditions leading to a default by us under one of our contracts could lead to a default under others, or all seven.

        We may be unable to renew these contracts on acceptable terms when they are being considered for renewal if we fail to meet our customers' expectations, including for performance and other reasons, or if another provider offers to provide the same or similar services at a lower cost. In addition, competitive forces resulting from the possible entrance of a competitive provider could create significant pricing pressure, which could then cause us to reduce the selling price of our services under our contracts. If these contracts are terminated or modified in a manner that is adverse to us, or if we

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are unable to renew these contracts on acceptable terms upon their expiration, it would have a material adverse effect on our business, prospects, financial condition and results of operations. See "Business—Contracts."

Our contracts with North American Portability Management, LLC contain provisions that may restrict our ability to use data that we administer in our clearinghouse, which may limit our ability to offer services that we currently, or intend to, offer.

        In addition to offering telephone number portability and other clearinghouse services under our contracts with North American Portability Management, LLC, some of our service offerings not related to these contracts require that we use certain data from our clearinghouse. We have been informed by North American Portability Management, LLC that they believe that use of this data, which is unrelated to our performance under these contracts, may not be permissible under the current agreements. Although in 2004 less than 1% of our revenues came from the provision of these unrelated services, if we are subject to adverse terms of access or not permitted to use this data, our ability to offer new services requiring the use of this data may be limited.

Certain of our other contracts may be terminated or we may be unable to renew these contracts, which may reduce the number of services we can offer and damage our reputation.

        In addition to our contracts with North American Portability Management, LLC, we rely on other contracts to provide some of the services that we offer, including the contracts that appoint us to serve as the:

•

North American Numbering Plan Administrator, under which we maintain the authoritative database of telephone numbering resources in North America;



•

National Pooling Administrator, under which we perform the administrative functions associated with the administration and management of telephone number inventory and allocation of pooled blocks of unassigned telephone numbers;



•

provider of number portability services in Canada;



•

operator of the .us registry; and



•

operator of the .biz registry.

        Each of these contracts provides for early termination in limited circumstances, most notably if we are in default. In addition, our contracts to serve as the North American Numbering Plan Administrator and as the National Pooling Administrator and to operate the .us registry, each of which is with the U.S. government, may be terminated by the government at will. If we fail to meet the expectations of the FCC, the U.S. Department of Commerce or our customers, as the case may be, for any reason, including for performance-related or other reasons, or if another provider offers to perform the same or similar services for a lower price, we may be unable to extend or renew these contracts. In that event, the number of services we are able to offer may be reduced, which would adversely affect our revenues from the provision of these services. In addition, although these contracts in the aggregate constitute less than 9.7% of our revenues, and no single one of these contracts constitutes more than 6.1% of our revenues, each of these contracts establishes us as the sole provider of the particular services covered by that contract during its term. If one of these contracts were terminated, or if we were unable to renew or extend the term of any particular contract, we would no longer be able to provide the services covered by that contract and could suffer a loss of prestige that would make it more difficult for us to compete for contracts to provide similar services in the future.

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Failure to comply with neutrality requirements could result in loss of significant contracts.

        Pursuant to orders and regulations of the U.S. government and provisions contained in our material contracts, we must continue to comply with certain neutrality requirements, meaning generally that we cannot favor any particular telecommunications service provider, telecommunications industry segment or technology or group of telecommunications consumers over any other telecommunications service provider, industry segment, technology or group of consumers in the conduct of our business. See "Business—Regulatory Environment—Telephone Numbering—Neutrality." The FCC oversees our compliance with the neutrality requirements applicable to us in connection with some of the services we provide. We provide to the FCC and the North American Numbering Council, a federal advisory committee established by the FCC to advise and make recommendations on telephone numbering issues, regular certifications relating to our compliance with these requirements. Our ability to comply with the neutrality requirements to which we are subject may be affected by the activities of our stockholders or other parties. For example, if the ownership of our capital stock subjects us to undue influence by parties with a vested interest in the outcome of numbering administration, the FCC could determine that we are not in compliance with our neutrality obligations. Our failure to continue to comply with the neutrality requirements to which we are subject under applicable orders and regulations of the U.S. government and commercial contracts may result in fines, corrective measures or termination of our contracts, any one of which could have a material adverse effect on our results of operations.

Regulatory and statutory changes that affect us or the communications industry in general may increase our costs or impair our growth.

        The FCC has regulatory authority over certain aspects of our operations, most notably our compliance with our neutrality requirements. We are also affected by business risks specific to the regulated communications industry. Moreover, the business of our customers is subject to regulation that indirectly affects our business. As communications technologies and the communications industry continue to evolve, the statutes governing the communications industry or the regulatory policies of the FCC may change. If this were to occur, the demand for our clearinghouse services could change in ways that we cannot easily predict and our revenues could decline. These risks include the ability of the federal government, most notably the FCC, to:

•

increase regulatory oversight over the services we provide;



•

adopt or modify statutes, regulations, policies, procedures or programs that are disadvantageous to the services we provide, or that are inconsistent with our current or future plans, or that require modification of the terms of our existing contracts;



•

prohibit us from entering into new contracts or extending existing contracts to provide services to the communications industry based on actual or suspected violations of our neutrality requirements, business performance concerns, or other reasons;



•

adopt or modify statutes, regulations, policies, procedures or programs in a way that could cause changes to our operations or costs or the operations of our customers;



•

appoint, or cause others to appoint, substitute or add additional parties to perform the services that we currently provide; and



•

prohibit or restrict the provision or export of new or expanded services under our contracts, or prevent the introduction of other services not under the contracts based upon restrictions within the contracts or in FCC policies.

        In addition, we are subject to risks arising out of the delegation of the Department of Commerce's responsibilities for the domain name system to the International Corporation for Assigned Names and

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Numbers, or ICANN. Changes in the regulations or statutes to which our customers are subject could cause our customers to alter or decrease the services they purchase from us. We cannot predict when, or upon what terms and conditions, further regulation or deregulation might occur or the effect future regulation or deregulation may have on our business.

If we do not adapt to rapid technological change in the communications industry, we could lose customers or market share.

        Our industry is characterized by rapid technological change and frequent new service offerings. Significant technological changes could make our technology and services obsolete. We must adapt to our rapidly changing market by continually improving the features, functionality, reliability and responsiveness of our addressing, interoperability and infrastructure services, and by developing new features, services and applications to meet changing customer needs. We cannot ensure that we will be able to adapt to these challenges or respond successfully or in a cost-effective way. Our failure to do so would adversely affect our ability to compete and retain customers or market share. Although we currently provide our services primarily to traditional telecommunications companies, many existing and emerging companies are providing, or propose to provide, IP-based voice services. Our future revenues and profits will depend, in part, on our ability to provide services to IP-based service providers.

The market for certain of our addressing, interoperability, and infrastructure services is competitive, which could result in fewer customer orders, reduced revenues or margins or loss of market share.

        Our services most frequently compete against the legacy in-house systems of our customers. In addition, although we are not a telecommunications service provider, we compete in some areas against communications service companies, communications software companies and system integrators that provide systems and services used by CSPs to manage their networks and internal operations in connection with telephone number portability and other telecommunications transactions. We face competition from large, well-funded providers of addressing, interoperability and infrastructure services. Moreover, we are aware of other companies that are focusing significant resources on developing and marketing services that will compete with us. We anticipate continued growth of competition. Some of our current and potential competitors have significantly more employees and greater financial, technical, marketing and other resources than we have. Our competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements than we can. Also, many of our current and potential competitors have greater name recognition that they can use to their advantage. Increased competition could result in fewer customer orders, reduced revenues, reduced gross margins and loss of market share, any of which could harm our business.

Our failure to achieve or sustain market acceptance at desired pricing levels could impact our ability to maintain profitability or positive cash flow.

        Our competitors and customers may cause us to reduce the prices we charge for services. The primary sources of pricing pressure include:

•

competitors offering our customers services at reduced prices, or bundling and pricing services in a manner that makes it difficult for us to compete. For example, a competing provider of interoperability services might offer its services at lower rates than we do, or a competing domain name registry provider may reduce its prices for domain name registration;



•

customers with a significant volume of transactions may have enhanced leverage in pricing negotiations with us; and



•

if our prices are too high, potential customers may find it economically advantageous to handle certain functions internally instead of using us.

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        We may not be able to offset the effects of any price reductions by increasing the number of transactions we handle or the number of customers we serve, by generating higher revenues from enhanced services or by reducing our costs.

A decline in the volume of transactions we handle could have a material adverse effect on our results of operations.

        We earn revenues for the vast majority of the services that we provide on a per transaction basis. There are no minimum revenue requirements in our contracts, which means that there is no limit to the potential adverse effect on our revenues from a decrease in our transaction volumes. As a result, if industry participants reduce their usage of our services from their current levels, our revenues and results of operations will suffer. For example, if customer churn between CSPs in the industry stabilizes, or if CSPs do not compete vigorously to lure customers away from their competitors, use of our telephone number portability and other services may decline. In addition, if CSPs develop internal systems to address their infrastructure needs, or if the cost of such transactions makes it impractical for a given carrier to use our services for these purposes, we may experience a reduction in transaction volumes. Finally, the trends that we believe will drive the future demand for our clearinghouse services, such as the emergence of IP services, growth of wireless services, consolidation in the industry, and pressure on carriers to reduce costs, may not actually result in increased demand for our services, which would harm our future revenues and growth prospects.

If we are unable to manage our growth, our revenues and profits could be adversely affected.

        Sustaining our growth has placed significant demands on our management as well as on our administrative, operational and financial resources. For us to continue to manage our growth, we must continue to improve our operational, financial and management information systems and expand, motivate and manage our workforce. If we are unable to successfully manage our growth without compromising our quality of service and our profit margins, or if new systems that we implement to assist in managing our growth do not produce the expected benefits, our revenues and profits could be adversely affected.

We may be unable to complete suitable acquisitions, or we may undertake acquisitions that could increase our costs or liabilities or be disruptive to our business.

        One of our strategies is to pursue acquisitions selectively. Although we do not currently have any commitments, contracts or understandings to acquire any specific businesses or other material operations, we have made a number of acquisitions in the past and will consider other acquisitions in the future. We may not be able to locate suitable acquisition candidates at prices that we consider appropriate or to finance acquisitions on terms that are satisfactory to us. If we do identify an appropriate acquisition candidate, we may not be able to successfully negotiate the terms of an acquisition, finance the acquisition or, if the acquisition occurs, integrate the acquired business into our existing business. Acquisitions of businesses or other material operations may require additional debt or equity financing, resulting in additional leverage or dilution of ownership. Integration of acquired business operations could disrupt our business by diverting management away from day-to-day operations. The difficulties of integration may be increased by the necessity of coordinating geographically dispersed organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures. We also may not realize cost efficiencies or synergies or other benefits that we anticipated when selecting our acquisition candidates. In addition, we may need to record write downs from future impairments of intangible assets, which could reduce our future reported earnings. At times, acquisition candidates may have liabilities, neutrality-related risks or adverse operating issues that we fail to discover through due diligence prior to the acquisition. The

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failure to discover such issues prior to such acquisition could have a material adverse effect on our business and results of operations.

Our potential expansion into international markets may be subject to uncertainties that could increase our costs to comply with regulatory requirements in foreign jurisdictions, disrupt our operations, and require increased focus from our management.

        Our growth strategy could involve the growth of our operations in foreign jurisdictions. International operations and business expansion plans are subject to numerous additional risks, including economic and political risks in foreign jurisdictions in which we operate or seek to operate, the difficulty of enforcing contracts and collecting receivables through some foreign legal systems, unexpected changes in regulatory requirements and the difficulties associated with managing a large organization spread throughout various countries. If we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. However, any of these factors could adversely affect our international operations and, consequently, our operating results.

We may need additional capital in the future and it may not be available on acceptable terms.

        We have historically relied on outside financing and cash flow from operations to fund our operations, capital expenditures and expansion. However, we may require additional capital in the future to fund our operations, finance investments in equipment or infrastructure, or respond to competitive pressures or strategic opportunities. We cannot assure you that additional financing will be available on terms favorable to us, or at all. In addition, the terms of available financing may place limits on our financial and operating flexibility. If we are unable to obtain sufficient capital in the future, we may face the following risks:

•

we may not be able to continue to meet customer demand for service quality, availability and competitive pricing;



•

we may be forced to reduce our operations;



•

we may not be able to expand or acquire complementary businesses; and



•

we may not be able to develop new services or otherwise respond to changing business conditions or competitive pressures.

Our senior management is important to our customer relationships, and the loss of one or more of our senior managers could have a negative impact on our business.

        We believe that our success depends in part on the continued contributions of our Chief Executive Officer, Jeffrey Ganek, and other members of our senior management. We rely on our executive officers and senior management to generate business and execute programs successfully. In addition, the relationships and reputation that members of our management team have established and maintain with our customers and our regulators contribute to our ability to maintain good customer relations. Although we intend to enter into employment contracts with some of our executive officers prior to the closing of this offering, these contracts will not prevent them from terminating their employment. The loss of Jeffrey Ganek or any other members of senior management could impair our ability to identify and secure new contracts and otherwise to manage our business.

We must recruit and retain skilled employees to succeed in our business, and our failure to recruit and retain qualified employees could harm our ability to maintain and grow our business.

        We believe that an integral part of our success is our ability to recruit and retain employees who have advanced skills in the addressing, interoperability and infrastructure services that we provide and

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who work well with our customers in the regulated environment in which we operate. In particular, we must hire and retain employees with the technical expertise and industry knowledge necessary to maintain and continue to develop our operations and must effectively manage our growing sales and marketing organization to ensure the growth of our operations. Our future success depends on the ability of our sales and marketing organization to establish direct sales channels and to develop multiple distribution channels with Internet service providers and other third parties. The employees with the skills we require are in great demand and are likely to remain a limited resource in the foreseeable future. If we are unable to recruit and retain a sufficient number of these employees at all levels, our ability to maintain and grow our business could be negatively impacted.

We will incur increased costs as a public company as a result of recently enacted and proposed changes in laws and regulations.

        Recently enacted and proposed changes in the laws and regulations affecting public companies, including the provisions of the Sarbanes-Oxley Act of 2002 and rules of the Securities and Exchange Commission and the New York Stock Exchange, will result in increased costs to us, including those related to corporate governance and the costs to operate as a public company. Section 404 of the Sarbanes-Oxley Act requires companies to perform a comprehensive and costly evaluation and audit of their internal controls. The new rules could also make it more difficult or more costly for us to obtain certain types of insurance, including directors' and officers' liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

Risks Related to Our Common Stock and this Offering

Our common stock price may be volatile.

        The initial price of our Class A common stock to be sold in this offering will be determined through negotiations among us, the selling stockholders and the representatives of the underwriters and may not be indicative of prices that will prevail in the trading market. Before this offering, no public market existed for our Class A common stock. An active public market for our Class A common stock may not develop or be sustained after this offering, which could affect your ability to sell your shares or depress the market price of your shares. The market price of your shares may fall below the initial public offering price.

        Fluctuations in the market price of our Class A common stock could be caused by many things, including:

•

our perceived prospects and the prospects of the telephone and Internet industries in general;



•

differences between our actual financial and operating results and those expected by investors and analysts;



•

changes in analysts' recommendations or projections;



•

changes in general valuations for communications companies;



•

adoption or modification of regulations, policies, procedures or programs applicable to our business;



•

sales of our Class A common stock by our officers, directors or principal stockholders;

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•

sales of our Class A common stock due to a required divestiture under the terms of our certificate of incorporation, see "Description of Capital Stock—Ownership and Transfer Restrictions;" or



•

changes in general economic or market conditions and broad market fluctuations.

        Each of these factors, among others, could have a material adverse effect on your investment in our Class A common stock. Some companies that have had volatile market price for their securities have had securities class action suits filed against them. If a suit were to be filed against us, regardless of the outcome, it could result in substantial costs and a diversion of our management's attention and resources. This could have a material adverse effect on our business, prospects, financial condition and results of operations.

You will experience immediate and substantial dilution.

        The initial public offering price per share will significantly exceed the current net tangible book value per share of our stock that was outstanding prior to this offering. As a result, investors purchasing Class A common stock in this offering will experience immediate and substantial dilution in the amount of $17.91 per share, assuming an offering price of $19.00 (representing the mid-point of the range on the cover page of this prospectus). In addition, we have issued options to acquire Class A common stock at prices below the initial public offering price. The exercise of these employee and director stock options will result in further dilution to new investors.

One of our stockholders is expected to hold a significant block of shares in our company after completion of this offering and, as a result, will continue to have significant influence over our company.

        Upon completion of this offering, two representatives of Warburg Pincus will serve on our seven-member board of directors and, pursuant to an agreement between us and certain holders of our Class A common stock, we anticipate that representatives of Warburg Pincus will continue to serve on our board of directors in the future. See "Certain Relationships and Related Party Transactions—Stockholders Agreement." In addition, we expect affiliates of Warburg Pincus to own or control approximately 35.5%, or 31.9% if the underwriters' over-allotment option is exercised in full, of the outstanding shares of Class A common stock. Although a substantial portion of the shares owned by these stockholders will continue to be held in a voting trust that controls the voting rights with respect to some actions that are subject to the approval of our stockholders under applicable law (see "Certain Relationships and Related Party Transactions—Voting Trust"), these stockholders will retain full voting power over any shares of Class A common stock that they own up to 9.9% of the voting power of our outstanding shares of capital stock, as such shares are not required to be held in a voting trust. In addition, they will have the right to direct the voting trust as to how to vote their shares held in trust with respect to, among other things, any merger, sale or similar transaction involving NeuStar, the issuance of capital stock and the incurrence of substantial indebtedness. As a result of their substantial ownership interest, these affiliates of Warburg Pincus may have the ability to significantly influence the outcome of a vote by our stockholders in respect of these matters and their interests could conflict with your interests. Additionally, they and their affiliates are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete or could in the future compete, directly or indirectly, with us. For example, another Warburg Pincus fund has a significant investment in Telcordia Technologies, Inc., which has competed (and may compete in the future) with us. Warburg Pincus and its affiliates 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.

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Holders of our options may have rescission rights against us, and we may be subject to fines and sanctions under federal and state securities laws.

        We did not supply the holders of options granted under our 1999 Equity Incentive Plan with our financial statements or information about the risks associated with investment in our securities, as required to comply with Rule 701 under the Securities Act. Shares issued upon exercise of options granted during this time were issued in violation of Section 5 of the Securities Act of 1933. In addition, we did not make certain required filings in California and Maryland or comply with other requirements in California, including requirements to deliver similar financial information, to qualify the issuance of our options under the securities laws in those states. As a result, regulators could impose monetary fines or other sanctions as provided under these federal and state laws. In addition, holders of those options and shares acquired upon exercise of such options may have rescission rights against us. We believe that the number of outstanding shares of Class A common stock for which the holders may seek rescission from us is 412,106 on a post-Recapitalization basis, which shares are held by approximately 31 different individuals. We received aggregate proceeds of approximately $117,000 from the exercise of the options pursuant to which these shares were issued, at a weighted average exercise price of $0.28 per share on a post-Recapitalization basis. Further, we believe that the outstanding options for which the holders may seek rescission from us cover approximately 1,366,500 shares of Class A common stock on a post-Recapitalization basis, which options are held by approximately 75 different individuals. The aggregate exercise price of these options is approximately $9,354,500, at a weighted average exercise price of approximately $6.85 per share on a post-Recapitalization basis. If we are required, or elect to, make rescission offers to the holders of these shares and options, and if such offers are accepted, in general we would be required to make payments to the holders equal to the purchase price of such shares issued and the value of options granted in violation of applicable federal and state securities laws plus statutory interest. Moreover, our financial exposure could be higher if so determined by courts or regulators. See "Potential Claims Related to Our Options."

Shares eligible for future sale may cause our stock price to decline.

        Sales of substantial amounts of our Class A common stock in the public market following this offering, or the perception that these sales may occur, could cause the market price of our Class A common stock to decline. Based on shares outstanding as of March 31, 2005, upon completion of the Recapitalization and this offering, we will have 59,763,933 shares of Class A common stock outstanding (including 236,366 shares held in treasury), excluding 21,138,258 shares of Class A common stock issuable upon the exercise of outstanding options issued under our stock incentive plans and outstanding warrants.

        Subject to the restrictions on ownership and transfer set forth in our certificate of incorporation, which generally prohibit any telecommunications service provider or affiliate of a telecommunications service provider from beneficially owning, directly or indirectly, 5% or more of our outstanding capital stock following this offering, all of the shares of our Class A common stock sold in this offering will be freely tradable in the public market, without restriction, subject to compliance with the volume limitations and other conditions of Rule 144 in the case of shares sold by persons deemed to be our affiliates. These shares will represent approximately 41.8% of our outstanding Class A common stock upon completion of this offering. Of the remaining shares:

•

28,590,566 shares held by our institutional investors that are selling stockholders in this offering will be eligible for sale in the public market after the 180-day lock-up period expires, subject to the restrictions on ownership and transfer set forth in our certificate of incorporation, and subject to compliance with the volume limitations and other conditions of Rule 144;



•

1,750,000 shares held by two of our institutional investors that are not selling stockholders in this offering will be eligible for sale in the public market after the 75-day lock-up period expires,

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subject to the restrictions on ownership and transfer set forth in our certificate of incorporation, and subject to compliance with the volume limitations and other conditions of Rule 144;

•

3,761,901 shares held by our directors and current and former employees will be eligible for sale in the public market after the 180-day lock-up period expires, subject to the restrictions on ownership and transfer set forth in our certificate of incorporation, and subject to compliance with the volume limitations and other conditions of Rule 144;



•

119,721 shares held by employees and former employees who are not affiliates will be eligible for sale in the public market 90 days following completion of this offering, subject to the restrictions on ownership and transfer set forth in our certificate of incorporation, and subject to the manner of sale requirements in Rule 144; and



•

291,675 shares that have been outstanding for at least two years will be eligible for sale to the public immediately and an additional 13,704 shares will become eligible for sale in the public market during the 90-day period following completion of this offering.

        Furthermore, an additional 21,453,622 shares may be issued in the future upon exercise of options granted, options to be granted or equity awards to be granted under our existing stock option and incentive compensation plans. We expect to register these shares under the Securities Act of 1933, and therefore the shares will be freely tradable when issued, subject to the restrictions on ownership and transfer set forth in our certificate of incorporation, and subject to compliance with the volume limitations and other conditions of Rule 144 in the case of shares sold by persons deemed to be our affiliates.

        Upon its exercise of the option granted by us in 2001, we may issue up to 1,052,631 shares of Class A common stock (equal to $20 million in value, based on the midpoint of the range set forth on the cover page of this prospectus) to Melbourne IT Limited, which holds a 10% interest in our 90% owned subsidiary, NeuLevel, Inc., within 30 days of completion of this offering at a purchase price per share equal to the public offering price in this offering. If Melbourne IT Limited exercises this right, we will issue these shares to Melbourne IT Limited in a private placement transaction outside of this offering.

        Our principal stockholders, including affiliates of Warburg Pincus LLC, MidOcean Capital Investors, L.P., affiliates of ABS Capital Partners, as well as Melbourne IT Limited, have certain registration rights. See "Certain Relationships and Related Party Transactions."

        We, all of our directors and management, the selling stockholders and Melbourne IT Limited will agree that, until at least 180 days from the date of the final prospectus, we and they, subject to limited exceptions, will not dispose of or otherwise transfer any shares of our Class A common stock or any securities convertible into or exchangeable for our Class A common stock. Two of our institutional investors that are not selling stockholders in this offering will agree to such restrictions for a period of 75 days from the date of the final prospectus. With the consent of the underwriters, any of the securities subject to these lock-up agreements may be released at any time without notice. For more information, see "Underwriting."

Delaware law and provisions in our certificate of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, and the market price of our Class A common stock may be lower as a result.

        We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. For more information, see "Description of Capital Stock—Anti-takeover Effects of Provisions of Our Certificate of Incorporation and Bylaws." In addition, our certificate of incorporation

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and bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Our certificate of incorporation and bylaws:

•

authorize the issuance of "blank check" preferred stock that could be issued by our board of directors to thwart a takeover attempt;



•

prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of the stock to elect some directors;



•

establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following election;



•

require that directors only be removed from office for cause;



•

provide that vacancies on the board of directors, including newly-created directorships, may be filled only by a majority vote of directors then in office;



•

disqualify any individual from serving on our board if such individual's service as a director would cause us to violate our neutrality requirements;



•

limit who may call special meetings of stockholders;



•

prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders; and



•

establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

In order to comply with our neutrality requirements, our certificate of incorporation contains ownership and transfer restrictions relating to telecommunications service providers and their affiliates, which may inhibit potential acquisition bids that you and other stockholders may consider favorable, and the market price of our Class A common stock may be lower as a result.

        In order to comply with neutrality requirements imposed by the FCC in its orders and rules, no entity that qualifies as a "telecommunications service provider" or affiliate of a telecommunications service provider, as such terms are defined under the Communications Act of 1934 and FCC rules and orders, may beneficially own, following this offering, 5% or more of our capital stock. As a result, subject to limited exceptions, our certificate of incorporation prohibits any telecommunications service provider or affiliate of a telecommunications service provider from beneficially owning, directly or indirectly, 5% or more of our outstanding capital stock following this offering. Among other things, our certificate of incorporation provides that:

•

if one of our stockholders experiences a change in status or other event that results in the stockholder violating this restriction, or if any transfer of our stock occurs that, if effective, would violate the 5% restriction, we may elect to purchase the excess shares (i.e., the shares that cause the violation of the restriction) or require that the excess shares be sold to a third party whose ownership will not violate the restriction;



•

pending a required divestiture of these excess shares, the holder whose beneficial ownership violates the 5% restriction may not vote the shares in excess of the 5% threshold; and



•

if our board of directors, or its permitted designee, determines that a transfer, attempted transfer or other event violating this restriction has taken place, we must take whatever action we deem advisable to prevent or refuse to give effect to the transfer, including refusal to register

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the transfer, disregard of any vote of the shares by the prohibited owner, or the institution of proceedings to enjoin the transfer.

        See "Description of Capital Stock—Ownership and Transfer Restrictions."

        Our board of directors has the authority to make determinations as to whether any particular holder of our capital stock is a telecommunications service provider or an affiliate of a telecommunications service provider. Any person who acquires, or attempts or intends to acquire, beneficial ownership of our stock that will or may violate this restriction must notify us as provided in our certificate of incorporation. In addition, following this offering, any person who becomes the beneficial owner of 5% or more of our stock must notify us and certify that such person is not a telecommunications service provider or an affiliate of a telecommunications service provider. If a 5% stockholder fails to supply the required certification, we are authorized to treat that stockholder as a prohibited owner—meaning, among other things, that we may elect to purchase the excess shares or require that the excess shares be sold to a third party whose ownership will not violate the restriction. We may request additional information from our stockholders to ensure compliance with this restriction. Our board will treat any "group," as that term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as a single person for purposes of applying the ownership and transfer restrictions in our certificate of incorporation.

        Nothing in our certificate of incorporation restricts our ability to purchase shares of our capital stock. If a purchase by us of shares of our capital stock results in a stockholder's percentage interest in our outstanding capital stock increasing to over the 5% threshold, such stockholder must deliver the required certification regarding such stockholder's status as a telecommunications service provider or affiliate of a telecommunications service provider. In addition, to the extent that a repurchase by us of shares of our capital stock causes any stockholder to violate the restrictions on ownership and transfer contained in our certificate of incorporation, that stockholder will be subject to all of the provisions applicable to prohibited owners, including required divestiture and loss of voting rights.

        These restrictions and requirements may:

•

discourage industry participants that might have otherwise been interested in acquiring us from making a tender offer or proposing some other form of transaction that could involve a premium price for our shares or otherwise be in the best interests of our stockholders; and



•

discourage investment in us by other investors who are telecommunications service providers or who may be deemed to be affiliates of a telecommunications service provider.

        The standards for determining whether an entity is a "telecommunications service provider" are established by the FCC. In general, a telecommunications service provider is an entity that offers telecommunications services to the public at large, and is, therefore, providing telecommunications services on a common carrier basis. Moreover, a party will be deemed to be an affiliate of a telecommunications service provider if that party controls, is controlled by, or is under common control with, a telecommunications service provider. A party is deemed to control another if that party, directly or indirectly:

•

owns 10% or more of the total outstanding equity of the other party;



•

has the power to vote 10% or more of the securities having ordinary voting power for the election of the directors or management of the other party; or



•

has the power to direct or cause the direction of the management and policies of the other party.

        The standards for determining whether an entity is a telecommunications service provider or an affiliate of a telecommunications service provider and the rules applicable to telecommunications service providers and their affiliates are complex and may be subject to change. Each stockholder will be responsible for notifying us if it is a telecommunications service provider or an affiliate of a telecommunications service provider.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Many of these risks are beyond our ability to control or predict. These risks and other factors include those listed under "Risk Factors" and elsewhere in this prospectus and include:

•

failures or interruptions of our systems and services;



•

security or privacy breaches;



•

loss of, or damage to, a data center;



•

termination, modification or non-renewal of our contracts to provide telephone number portability and other clearinghouse services;



•

adverse changes in statutes or regulations affecting the communications industry;



•

our failure to adapt to rapid technological change in the communications industry;



•

competition from our customers' in-house systems or from other providers of addressing, interoperability or infrastructure services;



•

our failure to achieve or sustain market acceptance at desired pricing levels;



•

a decline in the volume of transactions we handle;



•

inability to manage our growth;



•

economic, political, regulatory and other risks associated with our potential expansion into international markets;



•

inability to obtain sufficient capital to fund our operations, capital expenditures and expansion;



•

loss of members of senior management, or inability to recruit and retain skilled employees; and



•

increased costs to operate as a public company.

        Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We caution you not to place undue reliance on forward-looking statements, which reflect only our expectations as of the date of this prospectus. We undertake no obligation to publicly update the forward-looking statements to reflect subsequent events or circumstances. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements contained throughout this prospectus.

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MARKET AND OTHER DATA

        This prospectus includes market and other data from industry sources. We have not independently verified the data obtained from outside sources, and we cannot assure you of the accuracy or completeness of the data. In this prospectus, information relating to the number of U.S. VoIP customers has been derived from research reports from International Data Corporation dated March 2005 and September 2004. Information relating to the number of users of advanced wireless services has been derived from research reports from International Data Corporation dated March 2005. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus.

USE OF PROCEEDS

        We will not receive any of the proceeds from the sale of shares of our Class A common stock by the selling stockholders in this offering.

DIVIDEND POLICY

        We do not expect to pay any cash dividends on our common stock for the foreseeable future following this offering. We currently intend to retain any future earnings to finance our operations and growth. Any future determination to pay cash dividends will be at the discretion of our board of directors and will depend on earnings, financial condition, operating results, capital requirements, any contractual restrictions and other factors that our board of directors deems relevant.

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CAPITALIZATION

        The following table sets forth our cash, cash equivalents and short-term investments and capitalization as of March 31, 2005:

•

on an actual basis;



•

on a pro forma basis to reflect all aspects of the Recapitalization as though it had occurred on March 31, 2005, except for the conversion of all outstanding shares of Class B common stock into shares of Class A common stock; and



•

on a pro forma as adjusted basis to reflect all aspects of the Recapitalization and our payment of offering costs, excluding underwriting discounts and commissions, of approximately $3.9 million as if they had occurred on March 31, 2005.

        You should read this information in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes appearing elsewhere in this prospectus.

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        The table above excludes the following shares, which are reflected below as if the Recapitalization had occurred on March 31, 2005:

•

6,361,383 shares underlying warrants exercisable as of March 31, 2005, with an exercise price of $0.0667 per share;



•

up to 1,052,631 shares (equal to $20 million in value, based on the midpoint of the range set forth on the cover page of this prospectus), that may be purchased from us by Melbourne IT Limited, which holds a 10% interest in our 90% owned subsidiary, NeuLevel, Inc., within 30 days of completion of this offering at a purchase price per share equal to the public offering price in this offering;



•

8,985,394 shares subject to options exercisable as of March 31, 2005, with a weighted average exercise price of $1.81 per share;



•

5,441,481 shares subject to options outstanding but not exercisable as of March 31, 2005, with a weighted average exercise price of $6.20 per share;



•

632,032 additional shares reserved as of March 31, 2005 for future issuance under our stock-based compensation plans;



•

6,044,715 additional shares reserved for issuance under our 2005 Stock Incentive Plan; and



•

350,000 shares to be issued to an employee on December 18, 2008, provided the employee provides continuous service through the vesting date.

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DILUTION

        If you invest in our Class A common stock through this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of our Class A common stock and the as adjusted net tangible book value per share of Class A common stock upon the completion of this offering.

        Our as adjusted net tangible book value as of March 31, 2005, assuming the completion of the Recapitalization and our payment of offering costs, excluding underwriting discounts and commissions, of approximately $3.9 million, equaled approximately $64.9 million, or approximately $1.09 per share of Class A common stock. This represents an immediate dilution in net tangible book value of $17.91 per share to new investors of Class A common stock in this offering, including any shares sold upon exercise of the underwriters' over-allotment option, if any, based on an assumed initial public offering price of $19.00 per share. If the initial public offering price is higher or lower, the dilution to new investors will be greater or less, respectively. As adjusted net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares of Class A common stock outstanding, assuming the completion of the Recapitalization.

        The following table summarizes this per share dilution:

        The weighted average price per share at which our existing stockholders purchased shares of our capital stock was $2.39, as compared to a purchase price per share of $19.00 for new investors, based on the midpoint of the range shown on the cover page of this prospectus.

        We based the foregoing discussions and tables on the number of shares of stock outstanding as of March 31, 2005, assuming the Recapitalization had occurred on that date, and excluding:

•

6,361,383 shares underlying warrants exercisable as of March 31, 2005, with an exercise price of $0.0667 per share;



•

up to 1,052,631 shares (equal to $20 million in value, based on the midpoint of the range set forth on the cover page of this prospectus), that may be purchased from us by Melbourne IT Limited, which holds a 10% interest in our 90% owned subsidiary, NeuLevel, Inc., within 30 days of completion of this offering at a purchase price per share equal to the public offering price in this offering;



•

8,985,394 shares subject to options exercisable as of March 31, 2005, with a weighted average exercise price of $1.81 per share;



•

5,441,481 shares subject to options outstanding but not exercisable as of March 31, 2005, with a weighted average exercise price of $6.20 per share;



•

632,032 additional shares reserved as of March 31, 2005 for future issuance under our stock-based compensation plans;



•

6,044,715 additional shares reserved for issuance under our 2005 Stock Incentive Plan; and



•

350,000 shares to be issued to an employee on December 18, 2008, provided the employee provides continuous service through the vesting date.

        If all outstanding options and warrants as of March 31, 2005 were exercised on that date, the dilution to new investors of Class A common stock in this offering, including any shares sold upon exercise of the underwriters' over-allotment option, if any, would be $17.35, based on an assumed initial public offering price of $19.00 per share. In addition, to the extent that options or warrants we may issue in the future with exercise prices below the initial public offering price are exercised, there will be further dilution to new public investors.

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SELECTED CONSOLIDATED FINANCIAL DATA

        The tables below present selected consolidated statements of operation data for each of the five years ended December 31, 2004 and the three months ended March 31, 2004 and 2005 and selected consolidated balance sheet data as of December 31, 2000, 2001, 2002, 2003 and 2004 and March 31, 2005. The selected consolidated statements of operations data for each of the three years ended December 31, 2002, 2003 and 2004, and the selected consolidated balance sheet data as of December 31, 2003 and 2004, have been derived from, and should be read together with, our audited consolidated financial statements and related notes, appearing elsewhere in this prospectus. The selected consolidated statements of operations data for each of the two years ended December 31, 2000 and 2001 and the selected consolidated balance sheet data as of December 31, 2000, 2001 and 2002, have been derived from our audited consolidated financial statements and related notes not included in this prospectus. The selected consolidated statements of operations data for the three months ended March 31, 2004 and 2005 and the selected consolidated balance sheet data as of March 31, 2005, have been derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus. The share and per share data included in the selected consolidated statements of operations data for the years ended December 31, 2000, 2001, 2002, 2003 and 2004 and the three months ended March 31, 2004 and 2005 reflect the 1.4-for-1 split of our common stock as part of the Recapitalization, but do not reflect other aspects of the Recapitalization.

        The pro forma consolidated statements of operations data, including share and per share data, for the year ended December 31, 2004 and the three months ended March 31, 2005 give effect to all aspects of the Recapitalization as though it had occurred on January 1, 2004, except for the conversion of all outstanding shares of Class B common stock into shares of Class A common stock.

        The pro forma consolidated balance sheet data as of March 31, 2005 give effect to all aspects of the Recapitalization as though it had occurred on March 31, 2005, except for the conversion of all outstanding shares of Class B common stock into shares of Class A common stock. The pro forma as adjusted consolidated balance sheet data as of March 31, 2005 reflect all aspects of the Recapitalization and our payment of offering costs, excluding underwriting discounts and commissions, of approximately $3.9 million as if they had occurred on March 31, 2005.

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        The following information should be read together with, and is qualified in its entirety by reference to, the more detailed information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included in this prospectus.