Prospectus Summary
PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our Class A common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included in this prospectus and the information set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”InvenSense, Inc.
We are the pioneer and a global market leader in intelligent motion processing solutions. We define motion processing as the ability to detect, measure, synthesize, analyze and digitize an object’s motion in three-dimensional space. We have designed and developed the industry’s first integrated motion processing solution that enables a motion-based user interface for consumer electronics. Our solutions are comprised of an integrated circuit (IC) that incorporates motion sensors, such as gyroscopes, with associated software and are differentiated by their small form factor, high level of integration, performance, reliability and cost effectiveness. While our solutions have broad applicability, we currently target consumer electronics applications such as console and portable video gaming devices, handset and tablet devices, digital still and video cameras, digital television and set-top box remote controls, 3D mice and portable navigation devices. As of the date of this prospectus, we have shipped over 60 million units of our products. Our net revenue was $7.8 million, $29.0 million and $79.6 million for fiscal years 2008, 2009 and 2010, respectively. Nintendo was our largest customer in fiscal years 2009 and 2010, incorporating our motion sensing dual-axis gyroscope into its Wii MotionPlus accessory.
Our MotionProcessing platform offers our customers an intelligent, integrated and scalable solution comprised of our micro-electro-mechanical systems (MEMS) based motion sensors and their companion mixed-signal integrated circuits, embedded DigitalMotion processors that combine digital outputs from multiple motion sensors to provide more accurate motion tracking functionality, which we refer to as SensorFusion, and our MotionProcessing library that allows our customers to create applications using our MotionProcessing solutions. To promote faster adoption and time to market for our customers, we provide application programming interfaces and pre-configured application functionalities, such as gesture recognition, which we refer to as MotionApplication software.
Since the introduction of the Nintendo Wii in 2006 and the Apple iPhone in 2007, both of which incorporated early motion sensing accelerometer components, many consumers have become accustomed to basic motion-based user interfaces. Accelerometers are motion sensors that provide limited motion sensing functionality. However, to provide solutions that can capture and digitize the full range of natural human motion, more advanced, intelligent motion processing solutions are required. Similar to how microprocessors provide a platform for building computing applications and graphics processors enable visually rich applications, we believe that there is an opportunity to deliver advanced, intelligent MotionProcessing solutions that enable broader development and adoption of motion-based applications in the consumer electronics and other markets.
Historically, there have been a number of challenges preventing the broad adoption of advanced motion sensing capabilities in consumer devices. These challenges included the lack of a consumer grade high performance gyroscope, the complexity of integrating and calibrating multiple discrete sensors and a separate microcontroller or digital processor into a system-level solution and meeting the requirements of size, cost, power consumption, performance and reliability for consumer electronics products. We believe our MotionProcessing solutions address these challenges and provide us with unique competitive advantages.
Our Technology and Solutions
Our technology is comprised of four proprietary components: our patented Nasiri-Fabrication process, our advanced MEMS gyroscope design, our mixed-signal circuitry that provides sensor signal processing and enables SensorFusion technology critical to our MotionProcessing platform, and our MotionProcessing library and MotionApplication software solutions. Our Nasiri-Fabrication process allows us to combine MEMS with standard complementary metal oxide semiconductor (CMOS) at the wafer level, resulting in significant performance, reliability, integration and cost benefits that differentiate our solutions. Our technology allows us to offer products for consumer electronics applications that span increasing levels of integration, from single-axis analog gyroscopes to fully-integrated, intelligent three- and six-axis digital MotionProcessing solutions.
We utilize a fabless business model, working with third parties to manufacture, package and assemble our products. We perform our own wafer level sorting, testing and calibration with proprietary testing tools at our facilities in Taiwan. We predominantly sell our products through direct sales to manufacturers of consumer electronics devices.
The competitive advantages of our technology and solutions are:
to interference from environmental sounds and vibrations, enabling higher performance and accuracy. As a result, our solutions can enable a motion-based user interface that has greater tolerance to environmental factors.
Our Strategy
Our objective is to enable broad adoption of our MotionProcessing solutions in consumer electronics devices and other emerging consumer products. To accomplish our objective, we are pursuing the following key strategies:
Risk Factors
Our business is subject to numerous risks, which are described in the section entitled “Risk Factors” immediately following this prospectus summary on page 10. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our growth strategy, which could cause a decline in the price of our Class A common stock and result in a loss of all or a portion of your investment:
Corporate Information
We were incorporated in the State of California in June 2003 and reincorporated in the State of Delaware in October 2004. Our principal executive offices are located at 1197 Borregas Avenue, Sunnyvale, CA 94089. Our telephone number is (408) 988-7339. Our website is www.invensense.com. The reference to our website is an inactive textual reference only and the information contained on our website is not a part of this prospectus.
InvenSenseTM , MotionProcessingTM, MPLTM, DigitalMotionTM, DMPTM, SensorFusionTM, MotionApplicationTM, MASTM, AirSignTM, MotionCommandTM, TouchAnywhereTM and BlurFreeTM are our trademarks. Trade names, trademarks and service marks of other companies appearing in this prospectus are the property of the respective holders.
The Offering
The number of shares of our Class A and Class B common stock to be outstanding after this offering is based on 67,367,372 shares outstanding as of March 28, 2010, on an as converted basis, and excludes:
Except as otherwise indicated, all information in this prospectus assumes:
Summary Consolidated Financial Data
The following tables summarize the consolidated financial data for our business. You should read this summary financial data in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes, all included elsewhere in this prospectus.
We derived the summary consolidated financial data as of March 28, 2010 and for the fiscal years ended March 30, 2008, March 29, 2009 and March 28, 2010 from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future.
The pro forma net income (loss) per common share data is computed using the weighted average number of shares of common stock outstanding, after giving effect to the conversion (using the if-converted method) of all shares of our convertible preferred stock into common stock as though the conversion had occurred on the original date of issuance.
We end our fiscal quarters and years on Sundays, rather than using calendar periods. Our fiscal year is either a 52- or 53-week period ending on the Sunday closest to March 31. Our three most recent fiscal years ended on March 30, 2008 (“fiscal year 2008”), March 29, 2009 (“fiscal year 2009”) and March 28, 2010 (“fiscal year 2010”).
Consolidated Statement of Operations Data:
The pro forma consolidated balance sheet data as of March 28, 2010 in the table below gives effect to (i) the conversion of all outstanding shares of our convertible preferred stock into shares of our common stock and (ii) the reclassification of the preferred stock warrant liability to common stock, as if each had occurred at March 28, 2010. The pro forma as adjusted consolidated balance sheet as of March 28, 2010 also gives effect to our receipt of the estimated net proceeds from this offering, based on an assumed initial public offering price of $ per share (the mid-point of the range set forth on the cover page of this prospectus), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable to us.
Consolidated Balance Sheet Data: