We estimate that our net proceeds from the sale of our common stock in this
offering will be approximately $ 78.3 million, based on the initial public
offering price of $ 16.00 per share and after deducting underwriting discounts
and commissions and estimated offering expenses payable by us. If the
underwriters exercise their over-allotment option in full, we estimate that
our net proceeds will be approximately $90.6 million.
The principal purposes of this offering are to obtain additional capital,
to create a public market for our common stock and to facilitate our future
access to the public capital markets.
We have not yet determined with any certainty the manner in which we will
allocate the net proceeds of this offering. We intend to use the net proceeds
to us from this offering for financing our growth, working capital and other
general corporate purposes. In addition we believe that opportunities may
exist from time to time to expand our current business through acquisitions
of or investments in complementary companies, products or technologies. While
we have no current agreements, commitments or understandings for any specific
acquisitions at this time, we may use a portion of the net proceeds for these
purposes.
Pending use of the proceeds as described above, we intend to invest the
proceeds in short-term, interest-bearing, investment-grade securities.
The market for e-commerce platform software, services and solutions is
intensely competitive, subject to rapid technological change and significantly
affected by new product introductions and other market activities. We expect
competition to persist and intensify in the future. Our primary sources of
competition include:
Ÿ in-house development efforts by potential customers or their web
consultants;
Ÿ e-commerce application vendors, such as IBM, Oracle/ATG, eBay/Magento
and hybris;
Ÿ full-service e-commerce business process outsourcers, such as Digita
River and eBay/GSI Commerce; and
Ÿ providers of hosted on-demand subscription and SaaS services, such as
MarketLive and Venda.
We compete primarily on the basis of our robust set of merchandising
capabilities and features, the reliability and scalability of our solutions,
our speed of deployment and cross-channel integration and extendibility.
Our current and potential competitors may have significantly greater
financial, technical, marketing and other resources than we do, and there is
no assurance we will be able to continue to compete effectively.
Company Description
Demandware is a leading provider of software-as-a-service e-commerce solutions
that enable companies to easily design, implement and manage their own
customized e-commerce sites, including websites, mobile applications and
other digital storefronts. Our customers use our highly scalable and
integrated Demandware Commerce platform to create a seamless brand experience
for consumers across all digital touch points worldwide. By simplifying access
to the complex e-commerce functionality required for an effective and engaging
consumer experience, we enable our customers to more easily launch and manage
multiple e-commerce sites, initiate marketing campaigns more quickly and
improve e-commerce site traffic, all of which can lead to increased revenue.
Through our on-demand software-as-a-service, or SaaS, platform, our customers
run the latest version of our software and have access to a steady stream of
new and innovative e-commerce functionality as soon as it becomes available.
By using our platform, our customers avoid the need for a large upfront
investment in on-premise hardware infrastructure and in customized software
that is difficult and expensive to implement, upgrade and maintain. They also
avoid the limitations of generic vendor-created e-commerce solutions that
typically do not offer the flexibility and functionality necessary for
merchants and retailers to create, manage and control their own customized
online brand presence. Through our network of data centers, we continually
monitor the environment in which our customers’ e-commerce sites operate for
performance, availability and accuracy of content delivery.
From December 31, 2007 to December 31, 2011, the number of customers using
our Demandware Commerce platform increased from 10 to 101, a 78.3% compound
annual growth rate, or CAGR, and the number of e-commerce sites operating on
our platform increased from 19 to 361, a 108.8% CAGR. Our customers include
multinational corporations, large retailers and branded consumer product
manufacturers, such as Barneys New York, Burton, Columbia Sportswear, Crocs,
House of Fraser, Jewelry Television, Jones Apparel Group, Lifetime Brands,
L’Oreal and neckermann.de. We have structured our customer contracts to
align our interests with those of our customers by participating in a share
of our customers’ gross revenue processed on our platform. We derive our
subscription revenue from fees paid to us by our customers for their access
to our e-commerce solutions during the term of our subscription contracts,
which is typically three years and ranges from one year to seven years.
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We were incorporated in Delaware in February 2004 as SSE Holdings, Inc., and
changed our name to Demandware, Inc. in August 2004. Our executive offices
are located at 5 Wall Street, Burlington, Massachusetts 01803 and our
telephone number is (888) 553-9216. Our website address is
www.demandware.com.