Prospectus Summary
This summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all the information you should consider before buying shares in this offering. You should read the entire prospectus carefully.
Software.com, Inc.
Software.com is a leading developer and provider of scalable, high performance messaging software applications for providers of Internet communications and services. We have developed an extensible software platform utilizing Internet standards-based technologies, enabling our customers to deliver a variety of messaging services. We have multiple messaging applications based on this platform, including Web browser-based email, desktop client-based email, outsourced or "managed" business messaging, and Internet- based voicemail and faxmail messaging. We augment our product offerings with a wide variety of consulting and support services in order to provide our customers with complete messaging solutions.
Our service provider customers, including traditional telecommunications carriers, Internet service providers and wholesalers, cable-based Internet access providers, competitive local exchange telephone carriers, and Internet destination sites or portals, use our software solutions to provide advanced messaging services to their consumer and business users. To date, we have licensed over 37 million mailboxes to over 1,000 service providers, including: @Home Network, Ameritech Interactive Media Services, AT&T Canada, AT&T WorldNet Service, Bell Atlantic Internet Services, Excite Inc., GTE Internetworking Services, Hongkong Telecom, Pacific Internet, PSINet, Telecom Italia Net, Telecom Malaysia, Telecom New Zealand, TeleDanmark, and Time Warner/Road Runner. We have also established strategic relationships with Cisco Systems, Hewlett-Packard, and IBM, in order to further develop, market, and sell our messaging solutions. AT&T Ventures, Cisco Systems, and Hewlett-Packard have each made minority equity investments in our company.
Our InterMail family of messaging product packages includes InterMail Post.Office, for service providers with up to 25,000 users; InterMail Kx, for service providers with up to 250,000 users; and InterMail Mx, for service providers with more than 250,000 and up to millions of users. Our messaging solutions have been proven to work in highly demanding environments, supporting service providers with user bases ranging from hundreds to millions of subscribers. Our distributed, fault-tolerant architecture enables service providers to easily scale their service offerings as they rapidly add new subscribers. We believe that we offer service provider customers the ability to:
. easily deliver new services based on our Internet standards-based messaging platform;
. rapidly scale the number of users they support;
. provide email and other messaging services that are highly reliable;
. increase overall customer satisfaction;
. decrease subscriber turnover; and . reduce the overall cost of delivering these services.
Our goal is to be the leading provider of scalable, high performance Internet software designed for service providers. We seek to attain this objective by:
. extending our leadership position in providing Internet email solutions;
. utilizing our core messaging platform to deliver additional Internet applications;
. providing our solutions exclusively to service providers;
. directly targeting large and well-known service providers; and . leveraging our professional services expertise to provide complete messaging solutions.
In April 1999, we completed the acquisition of Silicon Valley-based Mobility.Net Corporation, the developer of a Java-based, high-performance and customizable integrated Web mail, address book, and calender product, called the Mobility.Net Integrated Web Mail System. The Integrated Web Mail System is designed to be compatible with all leading email servers, computer operating systems, Internet browsers, and palm-computing devices. We intend to incorporate the Mobility.Net technology into our existing messaging platform to extend our capabilities in offering multiple Web-based applications to service providers.
In 1992, John MacFarlane, our founder and Chief Executive Officer, registered the domain name Software.com with the idea to develop an Internet software distribution business. In January 1993, he founded our company as a partnership and began developing and marketing Internet standards-based email software. Software.com, Inc. was incorporated in California in October 1994, and intends to reincorporate in Delaware in May 1999. Our principal executive offices are located at 525 Anacapa Street, Santa Barbara, California 93101 and our telephone number is (805) 882-2470. Our World Wide Web site is www.software.com. The information in our Web site is not incorporated by reference into this prospectus.
All information in this prospectus reflects:
. the sale of 1,626,016 shares of Series D preferred stock on April 5, 1999, . the issuance of 1,579,294 shares of common stock and the assumption of 74,424 options to purchase common stock in connection with the acquisition of Mobility.Net on April 12, 1999.
In addition, except as otherwise indicated, all information in this prospectus is based on the following assumptions:
. the reincorporation of Software.com into Delaware, . the conversion of all outstanding shares of preferred stock into common stock upon the closing of this offering, and . no exercise of the underwriters' over-allotment option.
The Offering
Common stock offered by Software.com.. shares Common stock offered by selling stockholders......................... shares Common stock to be outstanding after this offering........................ shares Use of proceeds....................... For repayment of indebtedness, working capital and general corporate purposes. Proposed Nasdaq National Market symbol............................... SWCM Common stock to be outstanding after this offering is based on shares outstanding as of April 5, 1999. It excludes:
. 8,572,764 shares of common stock issuable upon exercise of options outstanding, of which 2,472,415 shares are exercisable, at a weighted average exercise price of $3.57 per share, and . 866,903 shares issuable upon exercise of warrants outstanding at a weighted average exercise price of $4.23 per share.
Summary Financial Information (in thousands, except per share data)
July 11, 1994
(Inception) Year Ended December 31,
to December 31, ---------------------------------
1994 1995 1996 1997 1998
Consolidated Statement of Operations Data: Total revenues............ $ 648 $4,727 $ 7,882 $ 10,666 $25,619 Total cost of revenues.... 2 58 985 3,364 9,019 Gross profit.............. 646 4,669 6,897 7,302 16,600 Income (loss) from operations............... (49) 2,043 (3,250) (11,707) (6,521) Net income (loss)......... (58) 1,970 (3,163) (11,469) (7,403) Net income (loss) applicable to common shareholders............. (58) 1,970 (3,343) (12,199) (8,228) Basic and diluted net income (loss) per share.. $ 0.00 $ 0.10 $ (0.13) $ (0.44) $ (0.29) Weighted-average shares of common stock outstanding used in computing basic and diluted net income (loss) per share......... 15,106 20,080 25,419 27,814 28,228 Pro forma basic and diluted net loss per share.................... $ (0.23) Shares used in computing pro forma basic and diluted net income (loss) per share................ 32,110 December 31, 1998 Pro Forma Actual Pro Forma As Adjusted
Consolidated Balance Sheet Data: Cash and cash equivalents...................... $ 5,447 $15,447 $ Working capital (deficiency)................... (115) 9,885 Total assets................................... 19,059 29,059 Long-term debt................................. 100 100 Redeemable convertible preferred stock......... 13,370 -- -- Total shareholders' equity (deficit)........... (10,061) 13,309
See Note 1 of Notes to Consolidated Financial Statements for an explanation of the determination of the number of shares used in computing per share data.
The pro forma consolidated balance sheet information gives effect to the sale of 1,626,016 shares of Series D preferred stock in April 1999, and the conversion of all outstanding shares of preferred stock into shares of common stock upon the closing of the offering.
The pro forma as adjusted numbers give effect to the conversion of all preferred stock, including the Series D preferred stock, as well as the sale of the shares of common stock offered hereby by Software.com at an assumed public offering price of $ per share and after deducting the underwriting discounts and commissions and estimated offering expenses payable by Software.com. See "Use of Proceeds" and "Capitalization."