Prospectus Summary
This summary highlights information contained elsewhere in this prospectus; it does not contain all the information you should consider before buying shares in this offering. You should read the entire prospectus carefully before making a decision whether to purchase our common stock. Unless otherwise indicated, information in this prospectus assumes that the underwriters do not exercise their over-allotment option.
Interwoven
Interwoven is a provider of software products and services that help businesses and other organizations manage the information that makes up the content of their web sites. In the Internet industry, this is often referred to as "web content management." We have designed our software products to help companies rapidly and efficiently develop, maintain and extend large web sites that are essential to their businesses. Our principal product, TeamSite, incorporates widely accepted Internet industry standards and is designed with an open architecture that allows it to support a wide variety of Internet software products, including web authoring tools and web application servers. Using TeamSite, our customers can manage web content, control the versions of their web sites, manage web site contribution and content approval processes, and develop Internet applications. TeamSite allows large numbers of contributors across an enterprise to add web content in a carefully-managed process. In addition, our OpenDeploy product allows customers to distribute web content automatically from one server to one or more servers.
As leading companies demonstrate success on the Internet, business leaders are seeking to capitalize on new business opportunities, reach a broader customer base and reduce overall operating costs by moving their businesses to the Internet. The use of the Internet to conduct business is frequently referred to as "Internet commerce" or "eBusiness." Companies are making significant investments to develop and deploy these eBusiness initiatives. International Data Corporation, or IDC, estimates that spending on software applications and services for Internet commerce will grow from $7.8 billion in 1998 to $53.8 billion in 2002.
The competitive online environment is driving companies to deploy complex web sites that offer enhanced user experiences. These web sites can contain hundreds of thousands of content-rich web pages, and this content has been increasing in volume and complexity. In addition, today's web sites must be updated frequently by numerous contributors throughout an enterprise. Web teams find it difficult to manage the increasing complexity, volume and variability of this content. At the same time, the large number of web authoring tools and web application servers have contributed to the increasing technological complexity involved in developing and maintaining web sites. These trends have created a need for content management software that can accommodate the increasing volume of web content, leverage existing investments in computers, software and associated information technology infrastructure, and allow more contributors to add content to a web site. IDC estimates that one of the markets in which we participate, which they refer to as the web development life-cycle management software market, will grow from $76.4 million in 1998 to $1.6 billion in 2003.
Interwoven's content management software assists customers in accelerating their time-to-web--the rate at which they can deploy new content on their web sites--by enabling them to develop multiple eBusiness applications simultaneously. It lowers web operating costs by reducing a customer's dependence on highly-paid web professionals and reducing the time required to test and approve new content for a web site or eBusiness application. The scalability of our products also allows customers to manage hundreds of thousands of web files and enables hundreds of employees throughout the enterprise to contribute web content. In addition, our software's architecture is non-proprietary and based on recognized industry standards, so it enables businesses to take advantage of existing investments in technology and web content and, at the same time, to integrate new technologies and applications easily.
We market and sell our software products and services primarily through a direct sales force in North America. To date, we have licensed our software products to over 125 customers, including AltaVista, AT&T/TCI, BellSouth, Best Buy, Cisco Systems, eBay, E*Trade, FedEx, Gap, General Electric, the U.S. Department of Education, USWeb/CKS, Viacom/Nickelodeon and Yahoo!/GeoCities, although we have incurred losses to date resulting in an accumulated deficit of approximately $21.3 million at September 30, 1999.
We were incorporated in California in March 1995 and reincorporated in Delaware in October 1999. Our principal executive offices are located at 1195 West Fremont Avenue, Suite 2000, Sunnyvale, California 94087 and our telephone number is (408) 774-2000. Our World Wide Web address is www.interwoven.com. The information on our web site is not part of this prospectus.
The Offering
Common stock offered by Interwoven.................. 1,000,000 shares Common stock offered by the selling stockholders.... 2,000,000 shares Common stock to be outstanding after this offering.. 23,681,885 shares Use of proceeds..................................... For general corporate purposes, including working capital. See "Use of Proceeds." Nasdaq National Market symbol....................... IWOV The number of shares of our common stock to be outstanding immediately after this offering is based on the number of shares outstanding as of September 30, 1999, and includes 3,622,500 shares of common stock issued in our initial public offering in October 1999.
The number of shares of our common stock to be outstanding immediately after this offering does not include:
. the issuance of 64,123 shares of common stock upon exercise of warrants in October 1999;
. 1,030,258 shares issuable upon exercise of options outstanding as of September 30, 1999 under our stock option plans and 3,240,484 shares available for future issuance under those plans;
. 300,000 shares available for future issuance under our employee stock purchase plan; and . 45,648 shares issuable upon exercise of outstanding warrants.
Interwoven(R), TeamSite(R), OpenDeploy(TM) and SmartContext(TM) are our trademarks. This prospectus also contains trademarks of other companies and organizations.
Unless otherwise indicated, all information contained in this prospectus reflects:
. a 2-for-3 reverse stock split completed in October 1999;
. the conversion in October 1999 of each outstanding share of our preferred stock into two-thirds of a share of common stock, except for Series B Preferred Stock, each share of which converted into 0.702205 shares of common stock; and . our reincorporation from California to Delaware, which was completed in October 1999.
Summary Consolidated Financial Data (in thousands, except per share amounts)
Nine Months
Ended September
Years Ended December 31, 30,
1996 1997 1998 1998 1999
Consolidated Statement of Operations Data: Revenues..................... $ -- $ 168 $ 4,003 $ 2,109 $ 9,261 Gross profit................. -- 73 2,670 1,299 5,572 Total operating expenses..... 520 2,933 9,165 5,886 16,999 Loss from operations......... (520) (2,860) (6,495) (4,587) (11,427) Net loss..................... (510) (2,948) (6,344) (4,498) (11,011) Net loss per share: Basic and diluted.......... $ (0.22) $ (1.36) $ (2.85) $ (1.98) $ (6.51) Weighted average shares-- basic and diluted......... 2,282 2,356 2,633 2,505 3,722 Pro forma net loss per share: Basic and diluted.......... $ (0.74) $ (0.74) Weighted average shares-- basic and diluted......... 8,530 14,957
As of September 30, 1999
Pro Pro Forma
Actual Forma As Adjusted
Consolidated Balance Sheet Data: Cash, cash equivalents and investments......... $ 21,995 $ 78,195 $214,945 Working capital................................ 18,203 74,403 211,153 Total assets................................... 29,472 85,672 222,422 Long-term debt and capital lease obligations, less current portion.......................... 875 875 875 Manditorily redeemable convertible preferred stock......................................... 52,996 -- -- Total stockholders' equity (deficit)........... (31,218) 77,978 214,728
See Note 1 of Notes to Consolidated Financial Statements for a description of the method that we used to compute our basic and diluted net loss per share and pro forma basic and diluted net loss per share.
The pro forma balance sheet data gives effect to the application of the net proceeds of approximately $56.2 million from the sale of 3,622,500 shares of our common stock in our initial public offering in October 1999.
The pro forma as adjusted balance sheet data gives effect to the sale of the 1,000,000 shares of common stock that we are offering under this prospectus at an assumed public offering price of $145.00 per share and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. See "Use of Proceeds" and "Capitalization."