Prospectus Summary
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed information concerning our company, the common stock being sold in this offering and our financial statements appearing in this prospectus. Because this is only a summary, you should read the rest of this prospectus before you invest in our common stock. Read this entire prospectus carefully, especially the risks described under "Risk Factors."
Our Business
ExactTarget is a leading provider of on-demand email marketing software solutions to organizations of all sizes. Our clients depend on our solutions for business-critical marketing and event-triggered communications to increase sales, improve their return on marketing investments and strengthen customer relationships. Through our email offering and our recent expansion into emerging one-to-one marketing technologies, we help our clients deliver the right message to the right person at the right time through the right medium.
Our on-demand software enables our clients to easily create, target, deliver, track and manage permission-based email marketing communications. Our scalable and modular multi-tenant architecture enables us to serve enterprise as well as small and medium size organizations with a single instance of our software. Through our integration capabilities, our clients can easily incorporate ExactTarget functionality into critical business systems such as customer relationship management, or CRM, web analytics and marketing automation programs, and we have developed standardized integrations with Salesforce and Microsoft Dynamics™ CRM. Our software solutions are complemented by our optimization service offering, which include technical support, training and implementation, integration, account management, deliverability, design and deployment and strategic consulting services.
Our sales and marketing efforts are focused on adding new clients and expanding relationships with existing clients. Our field sales team, based in over 20 U.S. markets, sells directly into the enterprise business market via an in-person sales approach, while our inside sales force sells to small and medium size organizations primarily via telesales. Our sales teams are supported by marketing efforts focused on internet-based lead generation, email newsletters, development of partner relationships and sponsored industry events and conferences. Our indirect sales efforts are focused on building channel relationships with marketing service providers, value added resellers and embedded partners.
We provide our solutions through annual subscriptions with additional usage-based pricing for email messaging above contracted levels. As of September 30, 2007, our direct client base consisted of more than 2,800 organizations of all sizes, which included approximately 400 marketing service providers. Through these marketing service providers, more than 2,000 additional organizations utilize our technology. Many of our clients are well known companies or organizations such as Careerbuilder.com, Expedia.com, Florida Power and Light, Gannett Co., Inc./USA TODAY, the Indianapolis Colts, The Leukemia & Lymphoma Society, Liberty Mutual Group, Papa John's and Wellpoint, Inc. We have achieved 27 consecutive quarters of organic revenue growth, and no single client represented more than 3% of our revenues in the nine months ended September 30, 2007. We achieved revenues of $19.7 million and $31.2 million for fiscal years 2005 and 2006, respectively. Our operating income increased from a loss of $1.4 million to income of $2.7 million during the same period.
Our Markets and Opportunities
In today's media-saturated environment, gaining a customer's attention is increasingly difficult. Therefore, it is a competitive imperative for organizations to deliver personalized, relevant and timely marketing messages. This is achieved by leveraging customer relationship data to optimize every interaction with individual customers. Digital and interactive communication mediums such as email are growing rapidly because they allow for personalization on a mass scale, while reducing the time and cost required to reach customers. Additionally, email solutions allow marketers to test, track and optimize communications in real time.
The demand for email marketing products and services is large and growing, driven by organizations' desires to leverage the efficiency and effectiveness of this marketing channel. According to Forrester Research, the size of the U.S. email market for technology and services related to integration, strategy, delivery, creative and analytics is expected to grow from $2.3 billion in 2007 to $3.5 billion in 2010, representing a compound annual growth rate of 15%. We believe these segments of the market will grow at a higher rate due to increased outsourcing to email providers as well as growth in event-triggered email communications. Additionally, we believe our total addressable market opportunity will be larger as organizations embrace emerging one-to-one marketing technologies such as short messaging service, or SMS, really simple syndication, or RSS, web landing pages and voice automated solutions.
Our Solutions
Our on-demand software enables our clients to easily create, target, deliver, track and manage permission-based email marketing communications. Our clients also utilize our software for sending and managing a wide range of event-triggered communications such as billing statements, transaction notifications and alerts. These business-critical communications require best-in-class functionality and services. We believe our solutions offer the following key benefits:
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- Easy to deploy, cost effective and simple to use. Our intuitive user interfaces and workflow have been designed
to enable marketing professionals, with little or no technical background, to create highly targeted and customized one-to-one marketing communications. While easy to use and
deploy, our solutions manage email marketing programs for the most sophisticated and demanding organizations.
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- Modular product offering meets diverse and evolving client needs. We offer four editions of our
on-demand software—Core, Advanced, Enterprise and Agency—allowing organizations to select the appropriate level of functionality for their needs. In addition, our
on-demand architecture and modular product offering enable our clients to easily add functionality as they increase their email marketing use and sophistication.
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- Automate marketing processes. Our solutions enable marketers to automate processes required to deliver highly
relevant and timely communications. Through our interface, marketers can define, schedule, modify and save complex programs that deliver ongoing, automated event-triggered communications. Automating
these processes enables marketers to focus on strategic marketing initiatives rather than the administration of ongoing or repeated customer communications.
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- Integration across internal and external applications. Our open web services-based architecture enables our
solutions to be easily integrated with a wide range of third party service providers and with our clients' in-house applications. Our standardized integrations with CRM software products
such as Salesforce and Microsoft Dynamics™ CRM, as well as our partnerships with web analytics vendors such as Omniture, WebTrends and Coremetrics, enable our clients to better leverage
customer data to deliver personalized and relevant communications.
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- Reliable and scalable technology infrastructure. Our technology infrastructure supports large transactional volumes and allows our clients to store large amounts of data without limits while
maintaining high application availability that is essential for their business-critical communications.
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- Embedded deliverability and functionality to assist with CAN-SPAM Act compliance. We solve challenging issues
associated with deliverability and help our clients with CAN-SPAM Act compliance through embedded functionality within our application, our internet service providers, or ISP, relationships, and our
knowledge and experience regarding regulatory matters and deliverability standards.
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- Measurable results via reporting and analytics. Marketing departments are under increased pressure to track spending, processes and approvals, as well as to justify marketing investment spend through return on investment, or ROI, and other analyses. Through our interface and integration with the leading CRM and web analytics providers, we offer robust reporting and analytics functionality.
Our Products and Services
Our on-demand modular software enables our clients to easily create, target, deliver, track and manage permission-based email marketing communications and leverage emerging one-to-one technologies like SMS, automated voice solutions and web landing pages. We offer four editions of our application, which allow our clients to select the appropriate level of functionality for their individual needs. We also offer integrated and embedded products so that our clients can easily integrate our functionality into business-critical systems.
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- Core Edition—designed to help small and medium sized organizations. Comprehensive and
easy-to-use functionality includes content management tools, subscriber management capabilities and real-time tracking.
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- Advanced Edition—tailored to meet the needs of the most sophisticated email marketers. In addition to Core
Edition capabilities, functionality includes content
syndication, dynamic content, relational data, automated interaction management, triggered and transactional communications, advanced reporting and integration capabilities.
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- Enterprise Edition—built for distributed organizations that seek centralized control and compliance management
for their email marketing communications. In addition to Advanced Edition capabilities, functionality includes international sending, content locking and publishing, account provisioning, advanced
role and permission administration, and enterprise tracking and reporting.
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- Agency Edition—enables marketing services providers to offer email marketing services to their customers. Through
our interface, these service firms can provision, configure and manage their customer accounts through the Core, Advanced or Enterprise editions, as well as by private labeling our application to
match their brand.
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- ExactTarget Integrated—integrates our products with leading CRM providers Salesforce.com and Microsoft
Corporation. These standardized integrations are based on a single data model approach which eliminates the need for synchronization between applications, thus saving time and significantly reducing
import, export and unsubscribe management errors. We also offer integrated products with leading web analytics providers including Omniture, WebTrends and Coremetrics. These standardized integrations
automate the transfer of website visitor information into our application and return email link tracking information from our application to the web analytics platform.
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- ExactTarget Embedded—provides our messaging platform as a set of web services to independent software vendors and other software developers so that they may embed our
functionality into their applications. This enables software providers to leverage our functionality, infrastructure and deliverability expertise, thereby significantly reducing their time to market and their upfront and ongoing cost of development and operations.
Our software solutions are complemented by our optimization services offering, which includes technical support, training and implementation, integration, account management, deliverability, design and deployment and strategic consulting services.
Our Strategy
Our mission is to be the leading provider of on-demand, one-to-one marketing software and services enabling organizations of all sizes to increase sales, optimize marketing investments and strengthen customer relationships. Key elements of our strategy include:
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- Maintaining
focus on email marketing solutions;
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- Expanding
direct and indirect sales;
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- Increasing
revenue from current clients;
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- Extending
product offering into emerging one-to-one marketing technologies;
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- Increasing
our presence internationally; and
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- Selectively pursuing acquisitions.
Risks Associated with Our Business
Our business is subject to numerous risks and uncertainties, as more fully described under "Risk Factors" beginning on page 9, which you should carefully consider prior to deciding whether to invest in our common stock. For example:
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- Changes
in the market for email marketing solutions could harm our business;
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- We
may not be able to compete effectively;
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- Any
failure to protect client data would adversely affect us;
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- Defects
in our products would harm our business; and
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- Our ability to attract and retain clients.
Corporate Information
We began our operations in December 2000 as ExactTarget, LLC, an Indiana limited liability company, and merged into ExactTarget, Inc., a Delaware corporation, in July 2004. Our principal executive offices are located at 20 North Meridian Street, Indianapolis, Indiana 46204, and our telephone number is (317) 423-3928. Our website is http://www.exacttarget.com. The information contained in, or that can be accessed through, our website is not part of this prospectus.
EXACTTARGET®, EXACTTARGET(&DESIGN)® and Deliverability REPORT CARD® are registered trademarks of ExactTarget, Inc. All other trademarks, tradenames and service marks appearing in this prospectus are the property of their respective owners.