Prospectus Summary
PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. The following summary should be read together with the more detailed information and consolidated financial statements and related notes appearing elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. Before you decide to invest in our common stock, you should read the entire prospectus carefully, including the section entitled “Risk Factors” and the consolidated financial statements and related notes included in this prospectus.Company Overview
We are a provider of revenue management solutions for the life science and technology industries, and we believe that we are a pioneer in this market. Our solutions enable our customers to maximize revenues and reduce revenue compliance risk by transforming their revenue lifecycle from a series of tactical, disjointed operations into a strategic end-to-end process. Our customers use our application suites to manage mission-critical functions, such as pricing, contracting, incentives and rebates. We believe our solutions serve as the system of record for our customers’ revenue management processes and can provide a competitive advantage for them. Our application suites are built on a modern, web-based platform that can be deployed both on-premise or through the cloud.
Our domain expertise in revenue management for the life science and technology industries has enabled us to develop applications designed to meet the unique, strategic needs of these industries. Our applications are then further configured to meet the specific needs of our customers. Our solutions include two complementary suites of software applications, Revenue Management Enterprise and Revenue Management Intelligence. Our Revenue Management Enterprise suite serves as the system of record for, and automates the execution of, revenue management processes such as pricing, contracting and incentive and rebate management. Our Revenue Management Intelligence suite provides analytical insights to define and optimize revenue management strategies. Each of these suites consists of a number of applications, which can be purchased together or as separate stand-alone applications. Historically, a substantial majority of our total revenues has been associated with our Revenue Management Enterprise suite. For example, in the fiscal year ended September 30, 2012 and in the three months ended December 31, 2012, revenues from this suite constituted more than 85% of our total revenues for each respective period.
We primarily target large and mid-sized organizations worldwide through our marketing team and direct sales force. We assist our customers with the configuration and implementation of our solutions. We have also established non-exclusive relationships with system integrators and consultants that promote and assist with the implementation of our solutions. A representative list of our customers based on our total revenues for the fiscal year ended September 30, 2012 includes our life science customers Abbott Laboratories, Amgen Inc., Boston Scientific Corporation, Bristol-Meyers Squibb Company, Johnson & Johnson and Merck & Co., Inc., and our technology customers Dell Inc., Nokia Corporation, STMicroelectronics N.V. and VMware, Inc.
Our on-premise solutions are typically purchased as perpetual licenses and our cloud-based solutions are purchased on a subscription basis. We derive revenues primarily from license fees and related implementation services, as well as maintenance and application support, from the sale of our on-premise solutions, and from subscription fees and related implementation services from the sale of our cloud-based solutions. Our total revenues were $50.4 million, $65.2 million and $84.3 million for the fiscal years ended September 30, 2010, 2011 and 2012, respectively, representing period over period growth each year of approximately 29%. Our total revenues were $18.1 million and $22.3 million for the three months ended December 31, 2011 and 2012, respectively, representing period over period growth of approximately 24%. We generated net income of $0.6 million and $1.5 million and net losses of $5.7 million and $1.3 million in the fiscal years ended September 30, 2010, 2011 and 2012 and the three months ended December 31, 2012, respectively. We had an accumulated deficit of $62.5 million as of December 31, 2012.
Overview of the Life Science and Technology Industries
According to Gartner, Inc., a research firm, in 2011, life science and technology companies spent a combined $17.3 billion on software, consulting services and internal information technology (IT) personnel dedicated to sales support, marketing and finance. Management of the revenue lifecycle is becoming a strategic imperative and source of competitive advantage for life science and technology companies as they address increasingly globalized markets, sophisticated buyers, complex channels and expanding volumes of data from internal and market sources. We believe these companies are seeking innovative solutions to increase revenues and reduce missed revenue opportunities, or revenue leakage, as the opportunity to capture lost revenues has a significant business impact for life science and technology companies. For example, International Data Corporation (IDC), a research firm, reported in its Health Insights 2009 report that a lack of centralized and automated solutions for managing the revenue lifecycle resulted in over $11 billion per year in lost revenue for companies in the life science industry alone.
Traditionally, many life science and technology companies have addressed revenue management through a patchwork of manual processes and inflexible and costly custom systems, which has led to a number of challenges in managing the revenue lifecycle effectively, including:
Our Solutions
Our customers use our solutions to achieve significant returns on investment, improve gross margins and address vital business objectives by:
Our Competitive Strengths
We believe our key competitive strengths include:
Our Growth Strategy
We intend to expand our leadership in the market for revenue management solutions by:
Risks Affecting Us
We believe the key risks affecting us include:
Corporate Information
We incorporated in Delaware on December 14, 1999. Our principal offices are located at 1800 Bridge Parkway, Redwood City, CA 94065, and our telephone number is (650) 610-4600. Our website address is www.modeln.com. The information contained on, or that can be accessed through, our website is not part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only. In this prospectus, unless the context otherwise requires, the terms “Model N,” “we,” “us” and “our” refer to Model N, Inc., a Delaware corporation, together with its subsidiaries.
Model N is our registered trademark in various international jurisdictions and is pending registration in the United States. Model N, the Model N logo and all of our product names appearing in this prospectus are our trademarks. All other trademarks, trade names or service marks appearing in this prospectus are trademarks of the respective companies that use them. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with these other companies, or endorsement or sponsorship of us by these other companies. Other trademarks appearing in this prospectus are the property of their respective holders.