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 Class A common stock. You should read this entire prospectus carefully, 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 the related notes included elsewhere in this prospectus, before making an investment decision. Our fiscal year ends on December 31. Unless the context otherwise requires, the terms “MuleSoft,” “the company,” “we,” “us” and “our” in this prospectus refer to MuleSoft, Inc. and its consolidated subsidiaries.MULESOFT, INC.
Our mission is to help organizations change and innovate faster by making it easy to connect the world’s applications, data, and devices.
We are entering a new era of business where competitive advantage is no longer primarily determined by the physical assets organizations own and control, but rather by how they connect and orchestrate a multitude of physical and technology assets. Winning organizations are “composable enterprises” that can quickly and effectively adopt new technologies and rapidly connect these assets to drive competitive advantage.
The convergence of major technology forces such as mobile, cloud, big data, and Internet of Things, or IoT, is driving the shift to composability and placing unrelenting demands on IT as it attempts to connect these increasingly distributed new technologies. This strains legacy IT infrastructures that are built on heavy and hardwired architectures and creates a bottleneck to transformation.
We are enabling a fundamental shift in organizations’ technology operating models and self-serve innovation by developers across the organization. Our customers use our Anypoint Platform to connect their applications, data, and devices into an “application network” in which these IT assets are pluggable using application programming interfaces, or APIs, instead of glued together with custom integration code. The application network becomes an infrastructure of discoverable building blocks that can be used and reused to rapidly compose applications. Anypoint Platform is a single, unified platform that allows organizations to easily build and rapidly scale application networks.
Anypoint Platform enables our customers to change and innovate faster by resolving the IT bottleneck. It speeds innovation by empowering developers to experiment and prototype new solutions, and freeing IT from writing manual integrations. Our platform connects and exposes existing IT investments as nodes on the application network for continued reuse, which can dramatically increase the longevity of, and return on, these assets. Application networks built on Anypoint Platform increase in value as new nodes are added, resulting in network effects that drive increasing speed and agility and lower costs.
A Customer Journey with Anypoint Platform
Each of our customers takes a different journey in building an application network with Anypoint Platform. For example, a large organization may begin with a single integration project, such as composing a customer profile web app for its sales team to better engage with its customers. This app
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would require real-time data feeds from various back-end applications, including order data from an on-premises eCommerce system, billing data from SAP, and customer data from Salesforce. With Anypoint Platform, our customer exposes this data as discoverable and consumable APIs and then combines those APIs to compose a “single view of the customer.” This single view itself can then become a consumable API. All four of these APIs are building blocks that are accessible as nodes on a nascent application network.
Next, the same organization may want to build a new product recommendation mobile app that requires the same order, billing, and customer data. In this case, the mobile app developer can use Anypoint Platform to discover and reuse the previously built single view of the customer API. She now has access to all of that information without depending on the IT organization or writing a single line of code. The developer can focus her energy on adding value to the app by using an API for product catalog data and an API for web clickstream data that tracks customer interest and intent. She can then combine these new APIs with the previously-created single view of a customer API to compose the new product recommendation mobile app. By having the existing APIs available on the application network, the barriers to creating a new app and the time to realizing value are dramatically reduced.
As more applications are built and added, the application network organically expands, increasing an organization’s delivery speed. Every incremental project builds on what has been built before. Applications that are plugged into the network are now accessible and reusable by any developer with
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access to the network. The organization can more easily change any app or system without breaking or impacting other applications running on the application network.
Our Opportunity
We estimate our current market opportunity to be $29 billion. We calculate our market opportunity by identifying the number of companies worldwide across all industries based on certain independent industry data from the S&P CapIQ database, segmented by cohorts based on annual revenue. We then multiply the number of companies worldwide in each cohort by our average annual contract value of subscription and support contracts per cohort. See the section titled “Business—Our Opportunity.”
We are disrupting large, existing markets. Forrester estimates that $32 billion will be spent in 2017 on the integration software market. Separately, Forrester estimates an additional $394 billion will be spent in 2017 on systems integration project work, which does not include the spending on custom-coded integrations by internal development teams. As the market for application networks continues to develop, we believe there is an opportunity to convert a meaningful portion of this spend to a software-based approach.
See the sections titled “Risk Factors—Risks Related to Our Business and Industry—The market for application networks and our platform is new and unproven” and “Risk Factors—Risks Related to Our Business and Industry—The estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all” for certain risks related to our market opportunity.
Our Customers
We currently have over 1,000 customers located in over 60 countries across every major industry, including 30 customers with over $1.0 million in annual contract value of subscription and support contracts. Although our platform can be adopted by organizations of nearly any size, we focus our sales efforts on the largest global organizations. Our direct sales force targets CIOs, IT architects, and other business leaders, who are driving digital transformation in their organizations. We also partner with systems integrators and independent software vendors, which enhances our sales leverage by sourcing new prospects and providing systems integration services on implementations of our platform.
Financial Overview
We have grown rapidly in recent periods. Our revenue for 2014, 2015, and 2016 was $57.6 million, $110.3 million, and $187.7 million, respectively, representing a growth rate of 91% and 70%, respectively. We incurred net losses of $47.8 million, $65.4 million, and $49.6 million in 2014, 2015, and 2016, respectively.
Risk Factors Summary
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary. Some of these risks are:
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Corporate Information
Our principal executive offices are located at 77 Geary Street, Suite 400, San Francisco, California 94108, and our telephone number is (415) 229-2009. Our website address is www.mulesoft.com. Information contained on, or that can be accessed through, our website does not constitute part of this prospectus, and inclusions of our website address in this prospectus are inactive textual references only. We were incorporated in the state of Delaware in April 2006 as Azechi, Inc., and in July 2006, we changed our name to MuleSource, Inc. In August 2009, we changed our name to MuleSoft, Inc.
The MuleSoft design logo, “MuleSoft” and our other registered or common law trademarks, service marks, or trade names appearing in this prospectus are the property of MuleSoft, Inc. Other trademarks and trade names referred to in this prospectus are the property of their respective owners.
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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, or the Sarbanes-Oxley Act, 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.
We have elected to take advantage of certain of the reduced disclosure obligations in this prospectus and may elect to take advantage of other reduced reporting requirements in our future filings with the SEC. As a result, the information that we provide to our stockholders may be different than what you might receive from other public reporting companies in which you hold equity interests.
The JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this exemption, and therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
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 as of the last day of our then most recently completed second fiscal quarter; (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 this offering.
See the section titled “Risk Factors—Risks Related to this Offering and Ownership of Our Class A Common Stock—We are an ‘emerging growth company,’ and our election to comply with the reduced disclosure requirements as a public company may make our Class A common stock less attractive to investors” for certain risks related to our status as an emerging growth company.