Filed On 3/22/07 5:15pm ET · SEC File 333-141522 · Accession Number 950135-7-1814
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
3/22/07 Netezza Corp S-1 16:456 Bowne of Boston I..01/FA
Document/Exhibit Description Pages Size
1: S-1 Netezza Corporation HTML 1,249K
2: EX-3.3 EX-3.3 Form of Amended and Restated Certificate of 18 68K
Incorporation
3: EX-10.1 EX-10.1 2000 Stock Incentive Plan, As Amended 12 41K
4: EX-10.2 EX-10.2 Form of Incentive Stock Option Agreement 8 27K
Under 2000 Stock Incentive Plan
5: EX-10.3 EX-10.3 Form of Nonstatutory Stock Option 8 26K
Agreement Under 2000 Stock Incentive
Plan
6: EX-10.4 EX-10.4 Form of Restricted Stock Option Agreement 12 43K
Under 2000 Stock Incentive Plan
7: EX-10.9 EX-10.9 Fiscal 2008 Executive Officer Incentive 7 29K
Bonus Plan
8: EX-10.10 EX-10.10 Lease Agreement, Dated February 12, 2004 44 160K
9: EX-10.11 EX-10.11 Third Amended and Restated Investor 28 97K
Rights Agreement
10: EX-10.12 EX-10.12 Amendment No. 1 to the Third Amended and 6 17K
Restated Investor Rights Agreement
11: EX-10.13 EX-10.13 Letter Agreement, Dated June 1, 2006 2 14K
12: EX-10.14 EX-10.14 Form of Executive Retention Agreement 12 45K
13: EX-10.15 EX-10.15 Form of Indemnification Agreement 8 34K
14: EX-10.16 EX-10.16 Term Loan and Security Agreement Dated 31 99K
June 14, 2005
15: EX-10.17 EX-10.17 Loan and Security Agreement Dated January 41 140K
31, 2007
16: EX-23.1 EX-23.1 Consent of Pricewaterhousecooper HTML 7K
This is an EDGAR HTML document rendered as filed. [ Alternative Formats ]
As filed with the Securities and Exchange Commission on
March 22, 2007
Registration
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
Netezza Corporation
(Exact name of registrant as
specified in its charter)
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Delaware
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3571
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04-3527320
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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Netezza Corporation
200 Crossing Boulevard
(Address, including zip code,
and telephone number, including area code, of registrant’s
principal executive offices)
Jitendra S. Saxena
Chief Executive Officer
Netezza Corporation
200 Crossing Boulevard
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copies to:
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Patrick J. Rondeau, Esq.
Wendell C. Taylor, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
(617) 526-6000
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Anthony J.
Medaglia, Jr., P.C.
John M. Mutkoski, Esq.
Jocelyn M. Arel, Esq.
Goodwin Procter LLP
Exchange Place
Boston, Massachusetts 02109
(617) 570-1000
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Approximate date of commencement of proposed sale to
public: as soon as practicable after this
Registration Statement is declared 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 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 registration statement for the same
offering. o
CALCULATION OF REGISTRATION FEE
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Proposed Maximum
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Amount of
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Title of Each Class of
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Aggregate Offering
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Registration
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Securities to be Registered
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Price(1)
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Fee(2)
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Common Stock, $0.001 par
value per share
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$100,000,000
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$3,070
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(1) |
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Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(o) under the Securities Act of
1933, as amended. |
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(2) |
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Calculated pursuant to Rule 457(o) based on an estimate of
the proposed maximum aggregate offering price. |
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 of 1933 or until the Registration
Statement shall become effective on such date as the Commission,
acting pursuant to Section 8(a), may determine.
The information in
this prospectus is not complete and may be changed. We and the
selling stockholders may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
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Shares
Netezza Corporation
Common Stock
This is the initial public offering of shares of our common
stock. We are
selling shares
of our common stock.
Prior to this offering, there has been no public market for our
common stock. The initial public offering price of our common
stock is expected to be
between and
per share. We have applied to list our common stock on the
NASDAQ Global Market under the symbol “NTZA.”
Investing in our common stock involves risks. See
“Risk Factors” beginning on page 7.
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Underwriting
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Discounts and
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Proceeds to
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Price to Public
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Commissions
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Netezza Corporation
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Per Share
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$
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$
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$
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Total
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$
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$
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$
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Certain of our stockholders have granted the underwriters the
right to purchase up to an
additional shares
of common stock to cover over-allotments.
The Securities and Exchange Commission and state securities
regulators have not approved or disapproved of these securities
or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The underwriters expect to deliver the shares to purchasers
on ,
2007.
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| Credit
Suisse |
Morgan Stanley |
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| Needham &
Company, LLC |
Thomas
Weisel Partners LLC |
, 2007
TABLE OF
CONTENTS
You should rely only on the information contained in this
document and any free writing prospectus prepared by or on
behalf of us or to which we have referred you. We have not
authorized anyone to provide you with information that is
different. This document may only be used where it is legal to
sell these securities. The information in this document may only
be accurate on the date of this document.
Dealer
Prospectus Delivery Obligation
Until ,
2007 (25 days after the commencement of this offering), all
dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealer’s obligation
to deliver a prospectus when acting as an underwriter and with
respect to unsold allotments or subscriptions.
i
PROSPECTUS
SUMMARY
This summary highlights information appearing elsewhere in
this prospectus. This summary does not contain all of the
information you should consider before investing in our common
stock. You should read this entire prospectus carefully,
especially the “Risk Factors” section beginning on
page 7 and our consolidated financial statements and the
related notes appearing elsewhere in this prospectus, before
making an investment decision.
NETEZZA
CORPORATION
Overview
Netezza is a leading provider of data warehouse appliances. Our
product, the Netezza Performance Server, or NPS, integrates
database, server and storage platforms in a purpose-built unit
to enable detailed queries and analyses on large volumes of
stored data. The results of these queries and analyses, often
referred to as business intelligence, provide organizations with
actionable information to improve their business operations. We
designed our NPS data warehouse appliance specifically for
analysis of terabytes of data at higher performance levels and
at a lower total cost of ownership with greater ease of use than
can be achieved via traditional data warehouse systems. Our NPS
appliance performs faster, deeper and more iterative analyses on
larger amounts of detailed data, giving our customers greater
insight into trends and anomalies in their businesses, thereby
enabling them to make better strategic decisions.
As of
January 31, 2007, we had shipped over 200 of our data
warehouse appliances worldwide to 87 data-intensive customers
including large global enterprises, mid-market companies and
government agencies. Our customers span multiple vertical
industries and include data intensive companies and government
agencies such as Ahold, Amazon.com, American Red Cross, AOL,
Blue Cross Blue Shield of Rhode Island, Capital One Services,
Catalina Marketing, CNET Networks, CompuCredit Corporation,
LoanPerformance, Marriott, the NASD, Neiman Marcus Group,
Nielsen Company, Orange UK, Restoration Hardware, Ross Stores,
Ryder Systems, Source Healthcare Analytics, Inc., a Wolters
Kluwer Health company, the United States Army Corps of Engineers
and the United States Department of Veterans Affairs. Our
revenues have increased rapidly, from $13.6 million in
fiscal 2004 to $79.6 million in fiscal 2007, representing a
compound annual growth rate of 80.1%.
The
Industry
The amount of data that is being generated and stored by
organizations is exploding. Examples of this data include
click-stream records generated by
e-business,
customer purchasing histories, call data records, information
from RFID tagging of inventory and products, and pharmaceutical
trial data. Additionally, compliance initiatives driven by
government regulations, such as those issued under the
Sarbanes-Oxley Act of 2002 and the Health Insurance Portability
and Accountability Act of 1996, or HIPAA, as well as company
policies requiring data preservation, are expanding the
proportion of data that must be retained and easily accessible
for future use. As the volume of data continues to grow,
enterprises have recognized the value of analyzing such data to
significantly improve their operations and competitive position.
These enterprises have also realized that frequent analysis of
data at a more detailed level is more meaningful than periodic
analysis of sampled data.
This increasing amount of data and importance of data analysis
has led to heightened demand for data warehouses that provide
the critical framework for data-driven enterprise
decision-making and business intelligence. A data warehouse
consists of three main elements — database, server,
and storage — and interacts with external systems to
acquire and retain raw data, receive query instructions and
provide analytical results. The data warehouse acts as a data
repository for an enterprise, aggregating information from many
departments, and more importantly, enabling analytics through
the querying of the data to deliver specific information. The
need for more robust, yet cost-effective, data warehouse
solutions is being accelerated by the growing number of users of
business intelligence within the enterprise, the increasing
volume and sophistication of their queries and the need for
real-time data availability.
1
Our
Solution
In contrast to traditional data warehouse systems which patch
together general-purpose database, server and storage platforms
that were not originally designed for analytical processing of
large amounts of constantly changing data, our NPS appliance is
designed specifically to provide high-performance business
intelligence solutions at a low total cost of ownership. It
tightly couples database, server, and storage platforms in a
compact, efficient unit that integrates easily through open,
industry-standard interfaces with leading data access and
integration tools. This approach, combined with our proprietary
Intelligent Query Streaming technology and Asymmetric Massively
Parallel Processing architecture, provides significant benefits
to our customers, including:
Superior Performance. The time required to
perform many complex and ad hoc queries on terabytes of data is
reduced from days or hours to minutes or seconds, enabling our
customers to analyze their data more comprehensively so they can
make faster and better decisions.
Easy and Cost-Effective Procurement. Combining
database, server, and storage platforms into a single scalable
platform, based on open standards and commodity components,
delivers a significant cost advantage and enables an easier
procurement process when compared with competing products.
Quick and Easy Infrastructure Installation and
Deployment. With our NPS appliance, data is
loaded quickly and easily, and existing tools and software can
be easily integrated through standard interfaces. Our NPS
appliance can be quickly installed and deployed with minimal
need for custom configuration or additional professional
services.
Rapid Adaptation to Changing Business
Needs. Since our NPS appliance does not require
the tuning, data indexing or the same degree of maintenance and
configuration required by traditional systems, the NPS appliance
can accommodate changes easily without additional administrative
effort.
Minimal Ongoing Administration and
Maintenance. As a self-regulated and
self-monitored data warehouse appliance, our systems typically
require less than a single administrator to manage.
Small Footprint, and Low Power and Cooling
Requirements. Our NPS appliance is a compact,
tightly integrated appliance that requires a significantly
smaller data center “footprint”, consumes less power
and generates less heat than traditional systems.
High Degree of Scalability. Our unique
architecture enables our systems to scale effectively with
additional users, more sophisticated queries and greater amounts
of data. More users can be supported and additional capacity
added quickly and easily, enabling customers to “pay as
they grow.”
Our
Strategy
Our objective is to become the leading provider of data
warehouse solutions. We plan to accomplish this through the
following business strategies:
Broaden Our Target Markets. We plan to
continue our market penetration in the vertical industries that
we currently serve, while expanding into new markets that can
also utilize business intelligence at an affordable cost. We
also plan to expand in the mid-market, enabling companies with
fewer resources and smaller budgets to leverage the benefits of
our data warehouse appliances.
Increase Sales to Our Existing Customer
Base. As our customers increasingly benefit from
the advantages of our solution, we expect further sales to them
to accommodate an increasing number of users and their growing
amount of stored data, as well as for deployment of data
warehouses for other applications in addition to the ones for
which they initially purchased our system.
Extend Our Technology Leadership. We believe
that our proprietary product architecture and design provide us
with significant competitive advantages over traditional data
warehouse systems. We plan to continue to enhance our existing
products and introduce new products to enable us to maintain our
cost and performance advantages versus competitors.
2
Expand Distribution Channels. We plan to
continue to invest in our global distribution channels,
including our direct salesforce and relationships with
resellers, systems integration firms and analytic service
providers to accelerate the sales of our products.
Develop Additional Strategic Relationships. We
plan to continue to invest in our relationships with technology
partners in the complementary areas of data access and
analytics, data integration and data protection to simplify
integration and increase sales of our combined offerings.
Expand Our Customer Support Capabilities. We
intend to invest in our global customer support organization to
enable us to continue providing “high-touch,”
high-quality support as we scale our customer base.
Pursue Selected Acquisition Opportunities. We
intend to pursue acquisitions of products
and/or
technologies that we believe are complementary to or can be
integrated into our current product suite.
“Be Easy to Do Business With.” Our products,
pricing,
contracts and support principles are simple,
straightforward and customer friendly. We plan to continue to
operate with these principles to further differentiate our
offerings from those of our larger competitors
.
Company
Information
We were incorporated in Delaware on
August 18, 2000 as
Intelligent Data Engines, Inc. and changed our name to Netezza
Corporation in November 2000. Our corporate headquarters are
located at 200 Crossing Boulevard,
Framingham,
Massachusetts
01702, and our telephone number is
(508) 665-6800.
Our
website address is
www.netezza.com. The information
contained on our
website or that can be accessed through our
website is not part of this prospectus, and investors should not
rely on any such information in deciding whether to purchase our
common stock.
We use various trademarks and trade names in our business,
including without limitation “Netezza,” “Netezza
Performance Server,” “NPS” and “Intelligent
Query Streaming.” This prospectus also contains trademarks
and trade names of other businesses that are the property of
their respective holders.
Unless the context otherwise requires, we use the terms
“Netezza,” “our company,” “we,”
“us” and
“our” in this prospectus to refer
to Netezza Corporation and its
subsidiaries.
3
THE
OFFERING
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Common stock offered |
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shares |
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Over-allotment option offered by the selling stockholders |
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shares |
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Common stock to be outstanding after this offering |
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shares |
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Use of proceeds |
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We intend to use the net proceeds to us from this offering for
working capital and other general corporate purposes, including
the development of new products, sales and marketing activities,
capital expenditures and the costs of operating as a public
company. We also intend to use a portion of the net proceeds to
us to repay approximately $ of
debt. We may use a portion of the net proceeds to us to expand
our current business through acquisitions of other companies,
assets or technologies. We will not receive any of the proceeds
from the sale of shares of common stock by the selling
stockholders. See “Use of Proceeds” for more
information. |
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Risk factors |
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You should read the “Risk Factors” section of this
prospectus for a discussion of factors to consider carefully
before deciding whether to purchase shares of our common stock. |
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Proposed NASDAQ Global Market symbol |
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“NTZA” |
The number of shares of our common stock to be outstanding after
this offering is based on 46,309,542 shares of our common
stock outstanding as of
February 28, 2007 and excludes:
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•
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9,039,748 shares of our common stock issuable upon the
exercise of stock options outstanding as of February 28,
2007;
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•
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2,412,107 shares of our common stock reserved as of
February 28, 2007 for future issuance under our stock
compensation plans; and
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•
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312,781 shares of our common stock issuable upon the
exercise of warrants outstanding as of February 28, 2007.
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Unless otherwise indicated, the information in this prospectus
assumes the following:
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a
one-for-two
reverse split of our common stock to be effected prior to the
closing of this offering;
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•
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the automatic conversion of all of our outstanding convertible
preferred stock into 38,774,847 shares of our common stock
upon the closing of this offering;
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•
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the filing of our second amended and restated certificate of
incorporation and the adoption of our amended and restated
by-laws as of the closing date of this offering; and
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•
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no exercise by the underwriters of their over-allotment option.
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4
SUMMARY
FINANCIAL DATA
You should read the following financial information together
with 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 appearing elsewhere in this prospectus. Our
fiscal year ends on January 31. When we refer to a
particular fiscal year, we are referring to the fiscal year
ended on January 31 of that year. For example, fiscal 2007
refers to the fiscal year ended
January 31, 2007.
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Fiscal Year Ended January 31,
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2005
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2006
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2007
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(In thousands, except share, per share
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and other operating data)
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Consolidated Statement of
Operations Data:
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Revenue
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Product
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$
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30,908
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$
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45,508
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$
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64,632
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Services
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5,121
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8,343
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14,989
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Total revenue
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36,029
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53,851
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79,621
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Cost of revenue
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Product
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8,874
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18,941
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26,697
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Services
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1,640
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3,491
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5,403
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Total cost of revenue
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10,514
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22,432
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32,100
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Gross profit
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25,515
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31,419
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47,521
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Operating expenses
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Sales and marketing
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14,783
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25,626
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32,908
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Research and development
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11,366
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16,703
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18,037
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General and administrative
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2,500
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3,124
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4,827
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Total operating expenses
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28,649
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45,453
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55,772
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Operating loss
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(3,134
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)
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(14,034
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)
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(8,251
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Interest income
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206
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487
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414
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Interest expense
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121
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173
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765
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Other income (expense), net
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35
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(87
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)
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627
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Loss before cumulative effect of
change in accounting principle
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(3,014
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)
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(13,807
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)
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(7,975
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)
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Cumulative effect of change in
accounting principle
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—
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(218
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)
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—
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Net loss
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$
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(3,014
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)
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$
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(14,025
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)
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$
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(7,975
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)
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Accretion to preferred stock
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(4,096
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)
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(5,797
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)
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(5,931
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)
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Net loss attributable to common
shareholders
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$
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(7,110
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)
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$
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(19,822
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)
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$
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(13,906
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)
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Net loss per share attributable to
common stockholders — basic and diluted Loss before
cumulative effect of change in accounting principle
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$
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(0.50
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$
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(2.08
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)
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$
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(1.10
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)
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Cumulative effect of change in
accounting principle
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—
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(0.03
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)
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—
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Accretion to preferred stock
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(0.67
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)
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|
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(0.88
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)
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|
(0.82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to
common stockholders — basic and diluted
|
|
$
|
(1.17
|
)
|
|
$
|
(2.99
|
)
|
|
$
|
(1.92
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding:
|
|
|
6,077,538
|
|
|
|
6,635,274
|
|
|
|
7,230,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net loss per
share — basic and diluted (unaudited)(1)
|
|
|
|
|
|
|
|
|
|
$
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma weighted average common
shares outstanding (unaudited)(1)
|
|
|
|
|
|
|
|
|
|
|
46,005,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of customers
|
|
|
15
|
|
|
|
46
|
|
|
|
87
|
|
|
Number of full-time employees
|
|
|
140
|
|
|
|
179
|
|
|
|
225
|
|
|
|
|
|
(1)
|
|
The pro forma consolidated
statement of operations data in the table above gives effect to
the automatic conversion of all of our outstanding convertible
preferred stock into common stock upon the closing of this
offering.
|
5
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of January 31, 2007
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
|
Actual
|
|
|
Pro Forma(1)
|
|
|
As Adjusted(2)
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Consolidated Balance Sheet
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,018
|
|
|
$
|
5,018
|
|
|
$
|
|
|
|
Working capital
|
|
|
25,899
|
|
|
|
25,899
|
|
|
|
|
|
|
Total assets
|
|
|
69,199
|
|
|
|
69,199
|
|
|
|
|
|
|
Note payable to bank, including
current portion
|
|
|
6,535
|
|
|
|
6,535
|
|
|
|
|
|
|
Convertible redeemable preferred
stock
|
|
|
97,131
|
|
|
|
—
|
|
|
|
|
|
|
Total stockholders’ equity
(deficit)
|
|
|
(81,123
|
)
|
|
|
16,008
|
|
|
|
|
|
|
|
|
|
(1) |
|
The pro forma consolidated balance sheet data in the table above
gives effect to the automatic conversion of all of our
outstanding convertible preferred stock into common stock upon
the closing of this offering. |
| |
|
(2) |
|
The pro forma as adjusted consolidated balance sheet data in the
table above gives effect to our receipt of the estimated net
proceeds to us from this offering at an assumed initial public
offering price of $ per
share, which is the midpoint of the range listed on the cover
page of this prospectus, after deducting estimated underwriting
discounts and commissions and estimated offering expenses
payable by us. |
6
RISK
FACTORS
An investment in our common stock involves a high degree of
risk. You should carefully consider the risks and uncertainties
described below together with all of the other information
appearing elsewhere in this prospectus, including our
consolidated financial statements and the related notes, before
deciding whether to purchase shares of our common stock. Each of
these risks could materially adversely affect our business,
operating results and financial condition. As a result, the
trading price of our common stock could decline and you might
lose all or part of your investment in our common stock.
Risks
Related to Our Business and Industry
We
have a history of losses, and we may not achieve or maintain
profitability in the future.
We have not been profitable in any fiscal period since we were
formed. We experienced a net loss of $14.0 million in
fiscal 2006 and $8.0 million in fiscal 2007. As of
January 31, 2007, our accumulated deficit was
$80.8 million. We expect to make significant additional
expenditures to facilitate the expansion of our business,
including expenditures in the areas of sales, research and
development, and customer service and support. Additionally, as
a public company, we expect to incur legal, accounting and other
expenses that are substantially higher than the expenses we
incurred as a private company. Furthermore, we may encounter
unforeseen issues that require us to incur additional costs. As
a result of these increased expenditures, we will have to
generate and sustain increased revenue to achieve profitability.
Accordingly, we may not be able to achieve or maintain
profitability and we may continue to incur significant losses in
the future.
Our
operating results may fluctuate significantly from quarter to
quarter and may fall below expectations in any particular fiscal
quarter, which could adversely affect the market price of our
common stock.
Our operating results are difficult to predict and may fluctuate
from quarter to quarter due to a variety of factors, many of
which are outside of our control. As a result, comparing our
operating results on a
period-to-period
basis may not be meaningful, and you should not rely on our past
results as an indication of our future performance. If our
revenue or operating results fall below the expectations of
investors or any securities analysts that follow
our company in
any period, the price of our common stock would likely decline.
Factors that may cause our operating results to fluctuate
include:
|
|
|
| |
•
|
the typical recording of a significant portion of our quarterly
sales in the final month of the quarter, whereby small delays in
completion of sales transactions could have a significant impact
on our operating results for that quarter;
|
| |
| |
•
|
the relatively high average selling price of our products and
our dependence on a limited number of customers for a
substantial portion of our revenue in any quarterly period,
whereby the loss of or delay in a customer order could
significantly reduce our revenue for that quarter;
|
| |
| |
•
|
the possibility of seasonality in demand for our products;
|
| |
| |
•
|
the addition of new customers or the loss of existing customers;
|
| |
| |
•
|
the rates at which customers purchase additional products or
additional capacity for existing products from us;
|
| |
| |
•
|
changes in the mix of products and services sold;
|
| |
| |
•
|
the rates at which customers renew their maintenance and support
contracts with us;
|
| |
| |
•
|
our ability to enhance our products with new and better
functionality that meet customer requirements;
|
| |
| |
•
|
the timing of recognizing revenue as a result of revenue
recognition rules, including due to the timing of delivery and
receipt of our products;
|
| |
| |
•
|
the length of our product sales cycle;
|
| |
| |
•
|
the productivity and growth of our salesforce;
|
7
|
|
|
| |
•
|
service interruptions with any of our single source suppliers or
manufacturing partners;
|
| |
| |
•
|
changes in pricing by us or our competitors, or the need to
provide discounts to win business;
|
| |
| |
•
|
the timing of our product releases or upgrades or similar
announcements by us or our competitors;
|
| |
| |
•
|
the timing of investments in research and development related to
new product releases or upgrades;
|
| |
| |
•
|
our ability to control costs, including operating expenses and
the costs of the components used in our products;
|
| |
| |
•
|
volatility in our stock price, which may lead to higher stock
compensation expenses pursuant to Statement of Financial
Accounting Standards No. 123(R), Share-Based
Payment, or SFAS No. 123(R), which first became
effective for us in fiscal 2007 and requires that employee
stock-based compensation be measured based on fair value on
grant date and treated as an expense that is reflected in our
financial statements over the recipient’s service period;
|
| |
| |
•
|
future accounting pronouncements and changes in accounting
policies;
|
| |
| |
•
|
costs related to the acquisition and integration of companies,
assets or technologies;
|
| |
| |
•
|
technology and intellectual property issues associated with our
products; and
|
| |
| |
•
|
general economic trends, including changes in information
technology spending or geopolitical events such as war or
incidents of terrorism.
|
Most of our operating expenses do not vary directly with revenue
and are difficult to adjust in the short term. As a result, if
revenue for a particular quarter is below our expectations, we
could not proportionately reduce operating expenses for that
quarter, and therefore this revenue shortfall would have a
disproportionate effect on our expected operating results for
that quarter.
Our
limited operating history and the emerging nature of the data
warehouse market make it difficult to evaluate our current
business and future prospects, and may increase the risk of your
investment.
Our company has only been in existence since August 2000. We
first began shipping products in February 2003 and much of our
growth has occurred in the past two fiscal years. Our limited
operating history and the nascent state of the data warehouse
market in which we operate makes it difficult to evaluate our
current business and our future prospects. As a result, we
cannot be certain that we will sustain our growth or achieve or
maintain profitability. We will encounter risks and difficulties
frequently experienced by early-stage companies in
rapidly-evolving industries. These risks include the need to:
|
|
|
| |
•
|
attract new customers and maintain current customer
relationships;
|
| |
| |
•
|
continue to develop and upgrade our data warehouse solutions;
|
| |
| |
•
|
respond quickly and effectively to competitive pressures;
|
| |
| |
•
|
offer competitive pricing or provide discounts to customers in
order to win business;
|
| |
| |
•
|
manage our expanding operations;
|
| |
| |
•
|
maintain adequate control over our expenses;
|
| |
| |
•
|
maintain adequate internal controls and procedures;
|
| |
| |
•
|
maintain our reputation, build trust with our customers and
further establish our brand; and
|
| |
| |
•
|
identify, attract, retain and motivate qualified personnel.
|
If we fail to successfully address these needs, our business,
operating results and financial condition may be adversely
affected.
8
We
depend on a single product family, the Netezza Performance
Server family, for all of our revenue, so we are particularly
vulnerable to any factors adversely affecting the sale of that
product family.
Our revenue is derived exclusively from sales and service of the
NPS product family, and we expect that this product family will
account for substantially all of our revenue for the foreseeable
future. If the data warehouse market declines or the Netezza
Performance Server fails to maintain or achieve greater market
acceptance, we will not be able to grow our revenues
sufficiently to achieve or maintain profitability.
We
face intense and growing competition from leading technology
companies as well as from emerging companies. Our inability to
compete effectively with any or all of these competitors could
impact our ability to achieve our anticipated market penetration
and achieve or sustain profitability.
The data warehouse market is highly competitive and we expect
competition to intensify in the future. This competition may
make it more difficult for us to sell our products, and may
result in increased pricing pressure, reduced profit margins,
increased sales and marketing expenses and failure to increase,
or the loss of, market share, any of which would likely
seriously harm our business, operating results and financial
condition.
Currently, our most significant competition includes companies
which typically sell several if not all elements of a data
warehouse environment as individual products, including database
software, servers, storage and professional services. These
competitors are often leaders in many of these segments
including EMC, Hewlett-Packard, IBM, Oracle, Sun Microsystems,
Sybase and Teradata (a division of NCR). In addition, a large
number of fast growing companies have recently entered the
market, many of them selling integrated appliance offerings
similar to our products. Additionally, as the benefits of an
appliance solution have become evident in the marketplace, many
of our larger competitors have also begun to bundle their
products into appliance-like offerings that more directly
compete with our products. We also expect additional competition
in the future from new and existing companies with whom we do
not currently compete directly. As our industry evolves, our
current and potential competitors may establish cooperative
relationships among themselves or with third parties, including
software and hardware companies with whom we have partnerships
and whose products interoperate with our own, that could acquire
significant market share, which could adversely affect our
business. We also face competition from internally-developed
systems. Any of these competitive threats, alone or in
combination with others, could seriously harm our business,
operating results and financial condition.
Many of our competitors have greater market presence, longer
operating histories, stronger name recognition, larger customer
bases and significantly greater financial, technical, sales and
marketing, manufacturing, distribution and other resources than
we have. In addition, many of our competitors have broader
product and service offerings than we do. These companies may
attempt to use their greater resources to better position
themselves in the data warehouse market including by pricing
their products at a discount or bundling them with other
products and services in an attempt to rapidly gain market
share. Moreover, many of our competitors have more extensive
customer and partner relationships than we do, and may therefore
be in a better position to identify and respond to market
developments or changes in customer demands. Potential customers
may also prefer to purchase from their existing suppliers rather
than a new supplier regardless of product performance or
features. We cannot assure you that we will be able to compete
successfully against existing or new competitors.
If we
lose key personnel, or if we are unable to attract and retain
highly-qualified personnel on a
cost-effective
basis, it will be more difficult for us to manage our business
and to identify and pursue growth opportunities.
Our success depends substantially on the performance of our key
senior management, technical, and sales and marketing personnel.
Each of our employees may terminate his or her relationship with
us at any time and the loss of the services of such persons
could have an adverse effect on our business. We rely on our
senior management to manage our existing business operations and
to identify and pursue new growth opportunities, and our ability
to develop and enhance our products requires talented hardware
and software engineers with specialized skills. In addition, our
success depends in significant part on maintaining and growing
an effective salesforce. We experience intense competition for
such personnel and we cannot ensure that we will successfully
attract, assimilate, or retain highly qualified managerial,
technical or sales and marketing personnel in the future.
9
Our
success depends on the continued recognition of the need for
business intelligence in the marketplace and on the adoption by
our customers of data warehouse appliances, often as
replacements for existing systems, to enable business
intelligence. If we fail to improve our products to further
drive this market migration as well as to successfully compete
with alternative approaches and products, our business would
suffer.
Due to the innovative nature of our products and the new
approaches to business intelligence that our products enable,
purchases of our products often involve the adoption of new
methods of database access and utilization on the part of our
customers. This may entail the acknowledgement of the benefits
conferred by business intelligence and the customer-wide
adoption of business intelligence analysis that makes the
benefits of our system particularly relevant. Business
intelligence solutions are still in their early stages of growth
and their continued adoption and growth in the marketplace
remain uncertain. Additionally, our appliance approach requires
our customers to run their data warehouses in new and innovative
ways and often requires our customers to replace their existing
equipment and supplier relationships, which they may be
unwilling to do, especially in light of the often critical
nature of the components and systems involved and the
significant capital and other resources they may have previously
invested. Furthermore, purchases of our products involve
material changes to established purchasing patterns and
policies. Even if prospective customers recognize the need for
our products, they may not select our NPS solution because they
choose to wait for the introduction of products and technologies
that serve as a replacement or substitute for, or represent an
improvement over, our NPS solutions. Therefore, our future
success also depends on our ability to
