Prospectus Summary
PROSPECTUS SUMMARY This summary highlights selected information appearing elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should carefully read this prospectus in its entirety before investing in our common stock, including the sections titled ‘‘Risk Factors’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and our consolidated financial statements and related notes included elsewhere in this prospectus. Our fiscal year ends on December 31.MOBILE IRON, INC.
We invented a purpose-built mobile IT platform for enterprises to secure and manage mobile applications, content and devices while providing their employees with device choice, privacy and a native user experience. Customers use our platform as the technology foundation on their journey to become “Mobile First” organizations, embracing mobility as a primary computing platform for their employees. Mobile First organizations transform their businesses by giving their employees secure access to critical business applications and content on devices employees want with a native user experience they love. Our platform is extensible and fosters a growing ecosystem of application developers and technology partners who augment the functionality and add value to our platform, creating positive network effects for our customers, our ecosystem and our company.
The adoption of mobile technology is a disruption of historic proportions and has outpaced earlier transitions such as mainframe to PCs and client/server to the Internet. IT departments are often challenged to provide users the benefits of mobility, while simultaneously satisfying enterprise requirements. Users want to access business applications, or apps, and corporate content on their favorite smartphone and tablet with the same ease of use they experience on those devices in their personal lives. Users also expect their privacy to be preserved when using their personal devices at work. As a result, IT must satisfy new requirements, including enforcing mobile security, defining mobile management and compliance policies, supporting multiple, rapidly evolving mobile operating systems, enabling both corporate-owned and user-owned devices and mobilizing enterprise applications and content, all while ensuring compatibility with existing IT infrastructure.
Our mobile IT platform addresses the requirements of the mobile era by allowing enterprises to protect corporate data, deliver apps and content, and give users choice of popular mobile devices. Our architecture promotes employee productivity, separates personal data from corporate data, provides a native user experience and gives IT the ability to define security and management policies independent of the device. We enable corporate-owned, bring your own device (BYOD) and mixed device ownership environments.
Our business model is based on winning new customers, expanding sales within existing customers, upselling new products and renewing subscriptions and software support agreements. We win customers using a sales force that works closely with our channel partners, including resellers, service providers and system integrators. We have experienced rapid growth in our customer base, having sold our platform to over 6,000 customers since 2009. Our strategy is based on our existing customers expanding the number of mobile device licenses or subscriptions purchased to facilitate their Mobile First journey. The group of our customers that first bought our products in 2010 subsequently purchased through December 31, 2013 over five times the initial number of mobile device licenses. We enhance the value of our platform by introducing additional products and upselling these additional products to our customers. For example, in late 2012, we extended our platform with new application container and content products, including Docs@Work and AppConnect. Our global Customer Success organization creates highly satisfied customers, leading to additional sales and renewals of subscription and software agreements. In 2013, we generated nearly half of our gross billings from recurring sources. Our renewal rate, determined on a device basis, was greater than 90% for software support agreements and subscription licenses for 2013.
We offer our customers the flexibility to use our software as a cloud service or to deploy it on-premise. They can also choose from various pricing options including subscription and perpetual licensing. We target customers of all sizes across a broad range of industries including financial services, government, healthcare, legal, manufacturing, professional services, retail, technology and telecommunications. As of December 31, 2013, we have sold our solutions to over 6,000 customers worldwide including over 350 of the Global 2000. No customer accounted for more than 5% of our total revenue in 2013.
We have experienced rapid growth in recent periods. Our gross billings were $27.4 million, $68.0 million and $100.8 million in 2011, 2012 and 2013, respectively, representing growth rates of 148% from 2011 to 2012 and 48% from 2012 to 2013. Our total revenue was $13.9 million, $40.9 million and $105.6 million in 2011, 2012 and 2013, respectively. Revenue from subscription and perpetual licenses in 2013 represented approximately 14% and 66% of total revenue in 2013, respectively. The balance, constituting 20% of total revenue for 2013, was software support and services revenue, including revenue from agreements to provide software upgrades and updates, as well as technical support, to customers with perpetual software licenses. Excluding $21.1 million of revenue recognized in 2013 from perpetual licenses delivered in prior years, our total revenue was $84.5 million in 2013. We have incurred net losses of $25.7 million, $46.5 million and $32.5 million in 2011, 2012 and 2013, respectively. See “Selected Consolidated Financial Data—Key Metrics” for more information and a reconciliation of gross billings to total revenue.
Industry Background
The proliferation of smartphones and tablets has transformed the way users interact with applications and content in their personal lives. Apps have become an important way that users conduct commerce, manage their lives and access content. Users are also becoming increasingly self-sufficient with mobile technology. Having benefitted from this transformation in their personal lives, users increasingly demand a similar mobile experience at the workplace. This is pressuring global enterprise IT organizations to enable access to apps, content and critical business processes on mobile devices, creating a better user experience.
results in the creation of a new IT team that is tasked to drive mobile technology and is unbounded by existing vendor relationships.
Limitations of Legacy Approaches
The mobile transformation is happening at a rapid pace and at massive scale, exposing many issues with traditional approaches to managing and securing enterprise data and computers in the enterprise:
Requirements of a Mobile IT Platform
Key Requirements for Users
Key Requirements for IT
Our Solution—The MobileIron Platform
We invented a purpose-built mobile IT platform for enterprises to secure and manage mobile applications, content and devices while providing their employees with device choice, privacy and a native user experience. Customers use our platform as the technology foundation on their journey to become Mobile First organizations, embracing mobility as a primary computing platform. Mobile First organizations transform their businesses by giving their users secure access to critical business applications and content on devices users want with the native user experience they expect. Our mobile IT platform is architected so that IT can define policies protecting enterprise data in real time both on the device and as it moves between the devices and enterprise systems. Our platform enables application developers to secure their mobile apps in order to make them enterprise-ready. Technology vendors leverage our platform extensibility to integrate their existing products and solutions to augment them with mobile IT functionality. IT organizations use our platform application programming interfaces, or APIs, to integrate our mobile IT platform with their existing IT infrastructure.
To address the unique challenges of mobile, our platform is composed of three integrated and distributed software components: a mobile IT policy server that allows IT to define security and management policies across popular mobile operating systems, software on the device to enforce those policies at the mobile end-point, and an intelligent gateway that secures data as it moves between the device and back-end enterprise systems. Each component is distributed to accommodate corporate IT environments and integrated into a single solution for a simplified management experience. Customers, independent application vendors and technology vendors leverage our extensible interfaces to add value to our platform, and in turn, mobilize and secure their applications and content.
How We Provide Value to Users
third-party apps through our enterprise app storefront that combines the user experiences found in the consumer world with enterprise requirements.
How We Provide Value to IT
data, than would otherwise be possible. With our granular privacy framework, the IT administrator can both alleviate user privacy concerns and lessen the customer’s burden of complying with a wide range of privacy laws.
Our Market Opportunity
We estimate that the size of the global mobile IT market will be $27 billion for 2014 and will grow to approximately $49 billion in 2017, based on the projected number of smartphones and tablets to be used in enterprises, multiplied by the estimated amount that enterprises will spend annually to secure and manage corporate email, data and applications on those devices. According to IDC, 280 million business-use smartphones and commercial-use tablets will be shipped in 2014 with 480 million of such devices expected to be shipped in 2017. Based on a two-year device replacement cycle, we estimate a global installed base of 498 million smartphones and tablets in 2014 growing to 887 million by 2017, representing a compounded annual growth rate of 21%. Gartner estimated in 2012 that the total cost of mobile IT management software is approximately $55 per device annually. We believe the costs to secure and manage enterprise mobility will grow as enterprises transform their businesses into Mobile First organizations.
We believe that as enterprises make the transition to mobile, an increasing number of dollars will be shifted away from the PC ecosystem and invested into technologies that enable enterprise users to work on mobile devices. As the world moves towards Mobile First, we believe our platform enables us to own a strategic position in the enterprise architecture. Our opportunity is to be the core platform inside the enterprise IT architecture for delivering mobility.
Our Competitive Strengths
Our Growth Strategy
secure browser for accessing web applications within the corporate intranet, and Help@Work, which enables users to request and get IT help directly from their iOS devices. Most recently, we introduced MobileIron Tunnel, which allows any managed iOS 7 application to securely access enterprise resources without requiring a traditional virtual private network, or VPN, connection.
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, among others, the following:
Corporate Information
Our principal executive offices are located at 415 East Middlefield Road, Mountain View, CA 94043, and our telephone number is (650) 919-8100. Our website is www.mobileiron.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider information on our website to be part of this prospectus. We were incorporated in Delaware in July 2007.
“MobileIron,” the MobileIron logos and other trade names, trademarks or service marks of Mobile Iron, Inc. appearing in this prospectus are the property of Mobile Iron, Inc. This prospectus contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.
Emerging Growth Company
The Jumpstart Our Business Startups Act, or the JOBS Act, was enacted in April 2012 with the intention of encouraging capital formation in the United States and reducing the regulatory burden on newly public companies that qualify as “Emerging Growth Companies.” We are an emerging growth company within the meaning of the JOBS Act. As an emerging growth company, we may take advantage of certain exemptions from various public reporting requirements, including the requirement that our internal control over financial reporting be audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, certain requirements related to the disclosure of executive compensation in this prospectus and in our periodic reports and proxy statements, and the requirement that we hold a nonbinding advisory vote on executive compensation and any golden parachute payments. We may take advantage of these exemptions until we are no longer an emerging growth company.
Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
We will remain an emerging growth company until the earliest to occur of (i) the last day of the fiscal year in which we have more than $1.0 billion in annual revenue; (ii) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the fiscal year ending after the fifth anniversary of the completion of our initial public offering.
For certain risks related to our status as an emerging growth company, see “Risk Factors—Risks Related to this Offering and Ownership of Our Common Stock—We are an ‘Emerging Growth Company,’ and any decision on our part to comply only with certain reduced disclosure requirements applicable to Emerging Growth Companies could make our common stock less attractive to investors.”