Prospectus Summary
The following summary should be read in conjunction with, and is qualified in its entirety by, the more detailed information and the Company's Financial Statements and Notes thereto appearing elsewhere in this Prospectus. Except as set forth in the financial statements or as otherwise specified herein, all information in this Prospectus (i) assumes no exercise of the Underwriters' over-allotment option and (ii) reflects the mandatory conversion into Common Stock of all outstanding shares of the Company's Preferred Stock upon the closing of the Offering. See "Underwriting" and "Description of Capital Stock."
The Company
Allaire develops, markets and supports application development and server software for a wide range of Web development, from building static Web pages to developing enterprise-scale, interactive Web applications. The Company's products and services enable professional Web developers to build high-volume, transaction-oriented Web sites and Web applications for electronic commerce, business information systems, content publishing and multi-user collaboration. The Company specifically designs its products to integrate key emerging Web client and Web server software platforms, technologies and protocols and to interoperate with key enterprise and client-server technologies. The Company's flagship ColdFusion product line employs a comprehensive, easy to learn, tag-based markup language that allows professional Web developers to quickly and efficiently create Web applications. More than 20,000 ColdFusion application server licenses and more than 80,000 licenses for the Company's HomeSite Hypertext Markup Language ("HTML") design tool have been sold to date.
International Data Corporation ("IDC") estimates that Web page design and Web application development tools will account for $548 million in license and associated services revenue in 1998 and will grow to more than $1.5 billion in license and associated services revenue by 2002. The Company believes that most existing Web-enabled rapid application development tools fail to address the unique requirements and challenges faced by Web application developers. Most Web developers are proficient with HTML and many are familiar with eXtensible Markup Language ("XML"), core technologies that are specifically designed for the Web platform. The ease of using markup languages such as HTML and XML, which use declarative, English-like tags, has enabled a large number of non- traditional programmers to develop complex Web sites and Web applications.
The Company designed its ColdFusion Markup Language ("CFML") to use the same easy to learn tag and attribute syntax as HTML and XML. When used in conjunction with HTML and XML, CFML provides developers with a complete Web application programming environment without requiring them to change programming syntax. By using CFML, Web developers avoid having to code simultaneously in scripting languages and in tag-based markup languages. In addition, because CFML includes high-level building blocks that encapsulate complex programming interfaces, developers are able to integrate a variety of enterprise technologies, such as databases, directories, messaging servers, transaction monitors and object middleware.
The Company's customers include autobytel.com inc. ("autobytel.com"), the Boeing Company ("Boeing"), Booz, Allen & Hamilton Inc. ("Booz, Allen"), Credit Suisse First Boston Corporation, Hewlett-Packard Company ("Hewlett-Packard"), Intel Corp. ("Intel"), Internal Revenue Service ("IRS"), JC Penney Company, Inc. ("JC Penney"), Lockheed Martin Corporation ("Lockheed Martin"), Lucent Technologies Inc. ("Lucent"), MCI Communications Corp. ("MCI"), Microsoft Corporation ("Microsoft"), SBC Communications Inc. (Pacific Bell & Southwestern Bell) ("SBC Communications") and United Parcel Service of America, Inc. ("UPS").
The Company was incorporated in Minnesota on February 1, 1996 as the successor to a Minnesota limited liability company and was reincorporated in Delaware on April 25, 1997. The Company's principal executive offices are located at One Alewife Center, Cambridge, Massachusetts 02140, and its telephone number at that location is (617) 761-2000.
The Offering
Common Stock offered .................................. shares
Common Stock to be outstanding after the Offering(1) .. shares
Use of Proceeds ....................................... For general corporate purposes, including working
capital. See "Use of Proceeds."
Nasdaq National Market symbol ......................... ALLR
(1) Based on the number of shares outstanding as of June 30, 1998. Excludes: (i) 1,530,697 shares of Common Stock issuable upon exercise of stock options outstanding as of June 30, 1998 at a weighted average exercise price of $.90 per share, and 111,500 shares of Common Stock reserved for issuance as of June 30, 1998 under the Company's 1997 Stock Incentive Plan and (ii) 50,297 shares of Common Stock issuable under exercise of warrants outstanding at June 30, 1998 at a weighted average exercise price of $2.44. In addition, in August 1998 the Board of Directors approved the 1998 Stock Incentive Plan, pursuant to which 1,900,000 shares of Common Stock were reserved for issuance, and approved the 1998 Employee Stock Purchase Plan, pursuant to which 300,000 shares of Common Stock were reserved for issuance. See "Capitalization," "Management-Benefit Plans," "Description of Capital Stock" and Notes 6, 7 and 8 of Notes to Financial Statements.
Summary Financial Data (In thousands, except per share data)
Period from Year Ended Six Months Ended
Inception December 31, June 30,
(May 5, 1995) through ----------------------- ------------------------
December 31, 1995 1996 1997 1997 1998
(unaudited)
Statement of Operations Data: Total revenue .............................................. $ -- $ 2,358 $ 7,650 $ 2,591 $ 8,631 Total cost of revenue ...................................... -- 234 2,414 792 2,430 Gross profit ............................................... -- 2,124 5,236 1,799 6,201 Total operating expenses ................................... 188 3,836 12,848 3,999 10,881 Loss from operations ....................................... (188) (1,712) (7,612) (2,200) (4,680) Net loss ................................................... (188) (1,698) (7,425) (2,169) (4,615) Basic and diluted net loss per share ....................... $ (0.09) $ (0.97) $ (4.40) $ (1.50) $ (1.73) Shares used in computing basic and diluted net loss per share ........................................... 2,200 1,743 1,687 1,443 2,670 Unaudited pro forma basic and diluted net loss per share(1) ............................................ $ (1.27) $ (0.64) Shares used in computing unaudited pro forma basic and diluted net loss per share (1) ................ 5,865 7,224
June 30, 1998
December 31,
------------------------- Pro Forma
1996 1997 Actual As Adjusted (2)
(unaudited)
Balance Sheet Data: Cash and cash equivalents ............................ $ 526 $ 5,521 $ 3,974 $ Working capital (deficit) ............................ 224 1,492 (2,220) Total assets ......................................... 2,038 9,697 9,189 Total long-term debt, net of current portion ......... -- 499 1,399 1,399 Total redeemable convertible preferred stock ......... 2,800 12,673 12,673 -- Total stockholders' equity (deficit) ................. (1,768) (9,153) (13,042)
(1) For an explanation of unaudited pro forma basic and diluted net loss per share and the weighted average shares used in computing unaudited pro forma basic and diluted net loss per share, see Note 2 of Notes to Financial Statements.
(2) Pro forma to give effect to the conversion of all outstanding shares of Preferred Stock into Common Stock upon the closing of the Offering. As adjusted to give effect to the sale by the Company of shares of Common Stock offered hereby at an assumed initial public offering price of $ per share, after deducting estimated underwriting discounts and commissions and offering expenses.