Prospectus Summary
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before buying shares in the offering. You should read the entire prospectus carefully.
Vitria Technology, Inc.
Our Business
We are a leading provider of eBusiness infrastructure software. eBusiness refers to the use of the Internet to conduct business with customers and partners. Our product, BusinessWare, provides the infrastructure that enables incompatible information technology systems to exchange information over corporate networks and the Internet. BusinessWare enables this exchange to take place automatically, without human intervention. This eliminates manual entry of information into multiple IT systems, and eliminates the need to manually exchange information with customers and business partners using phone, facsimile or mail. We have designed BusinessWare to give our customers complete control and visibility of their business operations across an "extended enterprise" that includes their customers and partners. BusinessWare allows our customers to improve the efficiency of their business operations, reduce time to market for new products and services, develop closer relationships with their customers and partners, and rapidly respond to changing business conditions. To date, we have licensed BusinessWare to over 70 companies, including American Century, CableVision, Covad, Deutsche Bank, Duke Energy, FedEx, Fujitsu PC, Inacom, Level 3, NorthPoint Communications, Rhythms NetConnections, 3Com, Verio and Weblink Wireless. In 1999, sales of the BusinessWare product accounted for approximately 69% of our total revenues.
Our Market Opportunity eBusiness is fundamentally changing the speed and nature of business. To compete in this new environment, companies must be able to communicate instantly with customers and partners over the Internet, using a clearly defined set of business processes that can be continuously analyzed and rapidly changed. This is what we refer to as "real-time eBusiness." Companies that engage in real-time eBusiness can bring new products and services to market faster, form new partnerships more easily, and respond to changing business conditions more rapidly. To conduct business at this accelerated pace, we believe that companies must address four key requirements:
(1) Business Process Automation. Business processes describe, step-by-step, how a company conducts its business operations across their extended enterprise. For example, a company may define its order fulfillment process as follows: receive an order, allocate inventory, request product shipment from a distribution partner, and bill the customer. These business processes define how information should flow across internal IT systems and across the Internet to the IT systems of customers and partners. In many companies today, this information flow is not automated.
(2) Internet-Based Communications. As companies extend their business processes to directly include their customers and partners, they need a way to communicate business information over the Internet in a secure and reliable fashion. In the prior example, the interactions between the company, its distribution partners and the customer could take place over the Internet. These exchanges of information would take place through the exchange of electronic messages over the Internet.
(3) Application Integration. To automate business processes, companies must exchange information between IT systems. For example, the fulfillment of customer orders might require that a company's order management, shipping and billing systems exchange data to ensure that the order is correctly received, requested products are shipped, and the customer is appropriately billed. As a result, companies need a way to automatically access information in one system and translate it into standard formats so that it can be shared with and understood by other systems.
(4) Real-Time Analysis. Business managers need to continuously monitor and analyze automated business processes to identify and respond to problems as they occur. Analysis software typically requires information to be accumulated in the database before it can be analyzed. The resulting delay reduces a company's ability to respond to a problem in a timely manner. Real-time analysis allows information to be analyzed as soon as it is captured. In the prior example, the company can monitor and analyze orders from customers and adjust inventories on a continuous basis, rather than waiting until the end of the day to extract the information from the database.
We do not believe that other competitors adequately address all four of these requirements. For example, enterprise application integration vendors focus on integrating IT systems. Messaging software vendors focus on inter- application communications. We believe that no approach adequately addresses process automation or real-time analysis, and that there is a significant market opportunity for infrastructure software that addresses all four requirements for real-time eBusiness.
Our Solution
BusinessWare addresses the four eBusiness requirements in a single comprehensive software product. Business users can use BusinessWare to create visual diagrams of their business processes, called "process models," using a graphical user interface. This eliminates the need for expensive custom programming. BusinessWare then uses these process models to automatically coordinate the flow of information across a company's internal IT systems and across the Internet to the systems of its customers and partners. Once BusinessWare has automated a business process, it selectively gathers and analyzes key performance statistics and allows business managers to identify and respond to business problems the moment they occur.
BusinessWare provides the following key benefits to customers:
. Provides Complete Control and Visibility of Business Operations Across the Extended Enterprise. Companies can increase the efficiency of their operations and lower operating costs by automating and analyzing the performance of their business processes in real-time.
. Reduces Time to Market. Business users can quickly automate new processes that accelerate the delivery of new products and services.
. Enables Rapid Response to Change. Business users can revise and continuously refine processes by changing process models.
. Enables Tighter Relationships with Customers and Partners. Companies can quickly establish sophisticated and highly automated relationships with partners or customers that support shared business processes.
Our Strategy
We intend to establish BusinessWare as the leading infrastructure software product for eBusiness. As part of this strategy, we have developed strong working relationships with leading system integrators, including Andersen Consulting, Deloitte Consulting and Electronic Data Systems, or EDS. These system integrators help our customers install and deploy our product and in many cases these integrators have existing relationships with our targeted customers. In addition, we are working to develop market-focused eBusiness solutions that are built on BusinessWare and targeted to the needs of specific industries. These solutions include pre-defined, customizable process models that reflect the business processes of the target industry. Our first industry- specific product was made available to customers in December 1999. As of December 31, 1999, we had an accumulated deficit of $24.3 million.
Other Information
We were incorporated in California in October 1994 and reincorporated in Delaware in July 1999. Our principal executive offices are located at 945 Stewart Drive, Sunnyvale, California 94086, and our telephone number is (408) 212-2700. Our Internet address is www.vitria.com. The information on our website is not incorporated by reference into this prospectus.
The Offering
Common stock offered by Vitria.............. 1,500,000 shares Common stock offered by selling stockholders............................... 3,500,000 shares Common stock to be outstanding after this offering................................... 63,250,992 shares Use of proceeds ............................ General corporate purposes, including expansion of our sales and marketing capabilities, product development, and other working capital requirements. We will not receive any proceeds from the shares sold by selling stockholders. See "Use of Proceeds." Nasdaq National Market symbol .............. VITR The number of shares of common stock to be outstanding after this offering is based on the number of shares outstanding as of December 31, 1999, and excludes:
. 7,276,014 shares subject to options outstanding as of December 31, 1999, at a weighted average exercise price of $6.74 per share;
. 9,106,248 additional shares that we could issue under our stock option plans; and . 3,000,000 shares that we could issue under our employee stock purchase plan.
Summary Financial Information (in thousands, except per share data) Year Ended December 31, 1997 1998 1999
Statement of Operations Data: Revenues: License......................................... $ 955 $ 5,198 $ 21,790 Service......................................... 1,425 1,633 8,539 Government grant................................ 1,255 796 1,212 Total revenues................................. 3,635 7,627 31,541 Cost of revenues.................................. 1,611 2,905 7,722 Gross profit...................................... 2,024 4,722 23,819 Loss from operations.............................. (655) (9,875) (15,442) Net loss.......................................... (580) (9,569) (14,106) Basic and diluted net loss per share available to common stockholders.............................. $ (0.03) $ (0.40) $ (0.42) Basic and diluted weighted average shares used in the computation of net loss per share available to common stockholders........................... 19,830 24,006 37,874
December 31, 1999 Actual As Adjusted
Balance Sheet Data: Cash and cash equivalents................................... $52,218 $236,962 Working capital............................................. 54,237 238,981 Total assets................................................ 86,494 271,238 Deferred revenue............................................ 15,627 15,627 Stockholders' equity........................................ 59,450 244,194
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 as adjusted balance sheet data gives effect to the net proceeds from the sale of the 1,500,000 shares of common stock offered by Vitria in this offering at an assumed offering price of $129.8125 per share after deducting the underwriting discounts and commissions and estimated offering expenses. See "Use of Proceeds" and "Capitalization."