Prospectus Summary
PROSPECTUS SUMMARY This summary highlights selected information that is presented in greater detail 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, including the sections titled “Risk Factors,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, the terms “Gigamon,” “our company,” “we,” “us,” and “our” refer, prior to the conversion discussed below, to Gigamon LLC, and, after the conversion, to Gigamon Inc., in each case together with its consolidated subsidiaries as a combined entity.Overview
We have developed a new and innovative solution that delivers pervasive and dynamic visibility and control of traffic across networks. Our solution, which we refer to as our Traffic Visibility Fabric, consists of distributed network appliances that provide an advanced level of network traffic intelligence. Our Fabric enables IT organizations to forward traffic from network infrastructure to management, analysis, compliance and security tools in a manner that is optimized for specific uses or locations. At the heart of the Fabric is our patented Flow Mapping™ technology that identifies and directs incoming traffic to single or multiple tools based on user-defined rules implemented from a centralized management console. Our Fabric is designed to help organizations ensure the reliability, performance and security of their network infrastructure, minimize capital investment in management, analysis, compliance and security tools, reduce operating expenses and realize greater value from the existing tools that are deployed throughout their networks.
Virtualization and cloud computing, mobility and big data are reshaping the way enterprises and service providers operate and the way people communicate over IP networks in an increasingly connected world. Organizations increasingly require enhanced visibility and control of their networks through the efficient collection and analysis of network traffic flows without degrading network performance or reliability. Our Fabric provides the pervasive visibility and control over network traffic, including voice, video and data, that organizations need to successfully manage, analyze and secure their network environments.
We sell our products directly through our own sales force and indirectly through our channel partners. As of March 31, 2012, our end-user customers included 43 of the Fortune 100, and we had sold products to over 825 end-user customers across many vertical markets, including four of the top ten U.S. retailers, four of the top five U.S. banks and financial services companies, five of the top ten U.S. integrated telecommunication service providers, three of the top five U.S. managed healthcare providers, five of the top ten U.S. cable and satellite providers and three of the top ten global securities and commodities exchanges.
We were founded in 2004, and have experienced significant growth since inception. Our total revenue increased from $31.4 million in 2009 to $68.1 million in 2011, representing a compound annual growth rate, or CAGR, of 47%. Our total revenue increased from $10.1 million during the three months ended March 31, 2011 to $16.7 million during the three months ended March 31, 2012, representing 66% growth, and we have generated positive cash flows in each of the last six years.
Industry Overview
Powerful forces are transforming the traditional ways that enterprises and service providers design, operate and manage their networks. These forces include:
These forces are enabling significant benefits to be realized from IT innovation, but are also presenting significant challenges in how organizations manage, analyze and secure their networks to address growing network traffic volumes, security and compliance, the proliferation of mobile devices, the consumerization of IT and adoption of cloud-based IT.
Limitations of Traditional Approaches
The impact of virtualization and cloud computing, mobility and big data are combining to increase network complexity and introduce new network vulnerabilities while creating new challenges for enterprises and service providers that are struggling to maintain or improve service delivery and limit network downtime. As a result, organizations are seeking to improve visibility and control of their networks through the intelligent collection, modification and analysis of traffic without adversely impacting network performance or reliability. IT organizations have historically had access to a limited range of approaches to address these requirements, including deploying additional management, analysis, compliance and security tools, repurposing Ethernet switches, duplicating traffic via mirroring ports or dividing traffic flows via network TAPs.
Given the performance limitations, cost and complexity of traditional approaches, enterprises and service providers utilizing these approaches struggle to scale and ensure the performance, reliability and integrity of their network infrastructure. Without the ability to scale with network growth and to analyze packet contents, prioritize latency-sensitive data and intelligently direct individual packets to the relevant tools, these approaches fail to deliver a comprehensive solution that offers visibility into and control over network traffic.
Need for a Comprehensive Visibility Solution
We were founded on the belief that organizations need a fundamentally new approach to network traffic visibility to address growing demand for increased efficiency and performance, and to improve quality and breadth of service offerings. We believe a solution that can optimize the efficiency and performance of these tools by delivering pervasive visibility and control over network traffic creates a significant market opportunity. Our belief is supported by the results of an independent survey of IT leaders conducted by the Enterprise Strategy Group, or ESG, in which 78% of respondents indicated that a traffic visibility fabric would be a useful enhancement to their network environment.
Our Solution
The key benefits of our Traffic Visibility Fabric include:
Growth Strategy
Key elements of our growth strategy include:
Risks Affecting Us
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary. These risks include, but are not limited to, the following:
Conversion to a Corporation
We are currently a Delaware limited liability company. Prior to the issuance of common stock in this offering, we will convert into a Delaware corporation and change our name from Gigamon LLC to Gigamon Inc. In connection with the conversion, all of our outstanding common units and preferred units will convert into shares of common stock and preferred stock, respectively. Immediately following our conversion to a corporation, the holder of all of our outstanding common stock, Gigamon Systems LLC, as well as certain entities affiliated with Highland Capital Partners that hold shares of our preferred stock, will be merged with and into us, and the equity holders of Gigamon Systems LLC, and the entities affiliated with Highland Capital Partners that will merge with and into us, will receive our common stock and preferred stock in exchange for their respective equity interests.
In this prospectus, we refer to all of the transactions related to our conversion to a corporation, and the mergers of the holder of our common stock and certain holders of shares of our preferred stock with and into us, as the “LLC Conversion.” See the section titled “Certain Relationships and Related Party Transactions—LLC Conversion” for additional information.
While our outstanding equity as a limited liability company prior to the LLC Conversion is called “common units” and “preferred units,” unless otherwise indicated in this prospectus, we refer to such common units and preferred units in this prospectus as common stock and preferred stock for the periods prior to the LLC Conversion for ease of comparison.
Distribution to Members
In connection with the LLC Conversion, and as permitted by our Restated Limited Liability Company Agreement, dated as of January 20, 2010, as amended, or the LLC Agreement, we currently intend to distribute an amount of cash to our stockholders as of the date of the LLC Conversion equal to the members’ distribution payable balance on our consolidated financial statements, which was $7.4 million as of March 31, 2012.
Corporate Background and Information
Our business was founded in 2004 and originally operated by a California limited liability company, Gigamon Systems LLC. In January 2009, Gigamon Systems LLC contributed substantially all of its assets and liabilities to us in exchange for all of our common stock. In January 2010, entities affiliated with Highland Capital Partners invested in our company through the purchase of our preferred stock. As of March 31, 2012, Gigamon Systems LLC held all of our outstanding common stock and entities affiliated with Highland Capital Partners held all of our outstanding preferred stock.
Our principal executive offices are located at 598 Gibraltar Drive, Milpitas, California 95035, and our telephone number is (408) 263-2022. Our website address is www.gigamon.com. Information contained on, or that can be accessed through, our website, does not constitute part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.