As filed with the Securities and Exchange Commission on May 18, 2012

Registration Statement No. 333-180468

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No. 1

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

REVAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

7372

26-0442565

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code No.)

(I.R.S. Employer

Identification Number)

420 Fifth Avenue, Fifth Floor

New York, New York 10018

(212) 393-1313

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Jiro Okochi

Chief Executive Officer, President and Chairman

Reval Holdings, Inc.

420 Fifth Avenue, Fifth Floor

New York, New York 10018

(212) 393-1313

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:


Alfred Browne, III		Warren de Wied
Nicole Brookshire		Tony Jeffries
Peyton Worley		Andrew Hoffman
Cooley LLP		Wilson Sonsini Goodrich & Rosati, P.C.
1114 Avenue of the Americas		1301 Avenue of the Americas
New York, New York 10036		New York, New York 10019
Telephone: (212) 479-6000		Telephone: (212) 999-5800

Approximate date of commencement of proposed sale to public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨.

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨.

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ¨		Accelerated Filer ¨		Non-accelerated Filer x		Smaller Reporting Company ¨

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion

Preliminary Prospectus dated May 18, 2012

PROSPECTUS

Shares

LOGO

Common Stock

This is the initial public offering of the common stock of Reval Holdings, Inc. We are offering shares of our common stock. The selling stockholders identified in this prospectus are offering an additional shares. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.

We expect the public offering price to be between $ and $ per share.

Currently, no public market exists for the shares. After pricing of the offering, we expect that the shares will trade on the under the symbol “ .”

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common stock involves risks that are described in the “Risk Factors” section beginning on page 13 of this prospectus.


	Per Share	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to us	$	$
Proceeds, before expenses, to the selling stockholders	$	$

The underwriters may also exercise their option to purchase up to an additional shares from us, and up to an additional shares from the selling stockholders, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus to cover overallotments, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The shares will be ready for delivery on or about , 2012.


BofA Merrill Lynch		Stifel Nicolaus Weisel


BMO Capital Markets		Lazard Capital Markets		Raymond James		Oppenheimer & Co.

The date of this prospectus is , 2012

LOGO

TABLE OF CONTENTS


	Page
PROSPECTUS SUMMARY		1

THE OFFERING		6

SUMMARY CONSOLIDATED FINANCIAL DATA		8

RISK FACTORS		13

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		34

INDUSTRY AND MARKET DATA		35

USE OF PROCEEDS		36

DIVIDEND POLICY		36

CAPITALIZATION		37

DILUTION		39

SELECTED CONSOLIDATED FINANCIAL DATA		41

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		47

BUSINESS		81

MANAGEMENT		97

EXECUTIVE COMPENSATION		105

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		118

PRINCIPAL AND SELLING STOCKHOLDERS		121

DESCRIPTION OF CAPITAL STOCK		123

SHARES ELIGIBLE FOR FUTURE SALE		128

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES FOR NON-U.S. HOLDERS		131

UNDERWRITING		135

LEGAL MATTERS		141

EXPERTS		141

CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		141

WHERE YOU CAN FIND ADDITIONAL INFORMATION		142

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1

We, the selling stockholders, and the underwriters have not authorized anyone to provide you with information that is different from that contained in this prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We, the selling stockholders, and the underwriters are not offering to sell, or seeking offers to buy, our common stock in any jurisdiction where such offer or sale is not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

For investors outside the United States: Neither we, the selling stockholders, nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of the United States.

Unless the context requires otherwise, the words “Reval,” the “company,” “we,” “us” and “our” refer to Reval Holdings, Inc. and its consolidated subsidiaries collectively. For purposes of this prospectus, we also refer to information from independent third-party industry analysts, Apps Run The World, or ARW, Gartner, Inc., or Gartner, and Treasury Strategies, Inc., or Treasury Strategies.

PROSPECTUS SUMMARY

The following summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including the financial statements and the related notes included in this prospectus and the information set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Overview

We are a leading, global SaaS provider of comprehensive and integrated treasury and risk management solutions. Our cloud-based software and related offerings enable enterprises to better manage cash, liquidity and financial risk, and include specialized capabilities to account for and report on complex financial instruments and hedging activities. The scope and timeliness of the data and analytics we provide allow chief financial officers, treasurers and finance managers to operate more confidently in an increasingly complex and volatile global business environment.

Our all-in-one treasury and risk management, or TRM, solution delivers deep and broad visibility into cash, liquidity and risk for finance, treasury and accounting groups of enterprises worldwide. Through our SaaS, or Software-as-a-Service, delivery model, clients have access to configurable and integrated solution sets, daily financial market data, and critical third-party technologies and services to address their specific needs. Our solution seamlessly integrates robust global cash and liquidity management capabilities with award-winning financial risk management and hedge accounting functionality, enabling companies to optimize treasury and risk management activities across the enterprise for greater operational efficiency, security, control and compliance.

We believe that our SaaS solution is highly differentiated from competing offerings. It does not require the large, upfront technology investment or reliance on information technology staff typical of traditional on-premise treasury and risk management software. Our solution allows for easier and more rapid implementation and simplifies the ongoing management of our clients’ cash, liquidity and risk management functions. Our solution is single instance and multi-tenant, which enables us to rapidly and seamlessly upgrade it every six months, a critical feature for companies that face constantly changing regulations, accounting rules and global treasury requirements.

Integral to our SaaS solution is a team of experts, including PhDs, CPAs, financial engineers and certified treasury professionals, who have deep domain knowledge of domestic and international best practices and regulatory requirements in cash, liquidity and risk management. The combination of our single version, multi-tenant model and subject matter expertise, along with our robust functionality has allowed us to maintain significant client satisfaction and a high retention rate. Our retention rate, before accounting for any upsells, was approximately 90% in 2011 and has averaged approximately 90% over the last five years.

We serve over 550 clients in more than 20 countries, including 92 clients in the Fortune 500 and 30 clients in the Fortune 100. Our clients are diversified by industry and geography and include leading global enterprises such as Bose, Ford, Microsoft, National Grid, Starbucks Coffee Company, Tiffany & Co., and Visa. In 2011, our largest client accounted for less than 4% of our revenues and our top ten clients for less than 17%. Our clients typically enter into multi-year contracts with us and our revenues from recurring sources represented on average more than 80% of our overall revenues from 2009 through 2011.

Over the past several years, we have achieved significant growth. According to ARW, we are the fastest-growing of the top-ten TRM application software providers. Our revenues increased from $21.9 million in 2009 to $32.2 million in 2010 and to $45.0 million in 2011. To support our growth, we have invested heavily in expanding our client base and technology. As a result, we recorded operating losses of $10.0 million, $8.1 million and $19.3 million in 2009, 2010 and 2011, respectively. Our revenue was $10.2 million and $12.2 million for the quarters ended March 31, 2011 and 2012, respectively. Our operating losses were $3.8 million and $5.1 million for the quarters ended March 31, 2011 and 2012, respectively.

Our Market Opportunity

The TRM market is a component of the approximately $9.6 billion financial management systems, or FMS, market and the $23.3 billion enterprise resource planning, or ERP, market according to Gartner in 2011. According to ARW, the TRM market is expected to grow from $1.5 billion in 2011 to $1.8 billion in 2013, a compound annual growth rate of approximately 9%. The TRM market is primarily comprised of traditional, on-premise software applications. Currently, SaaS applications have a relatively small, but growing share of the overall TRM market. According to Gartner, the SaaS component of the larger ERP market is growing nearly three times as fast as the on-premise ERP market.

The TRM market encompasses both treasury management systems, or TMS, and financial risk management systems and includes the automation of business processes that support corporate treasury operations optimizing the following functions:

•

Risk management — performance analysis, various metrics and calculations used in mark-to-market valuations, financial reporting support and global hedge accounting compliance;

•

Cash management — treasury processes involving electronic payment authorization, bank relationship management and cash and liquidity planning; and

•

Deal management — processes for the implementation of trading controls and the management, tracking and analysis of trading portfolios, as well as market data interfaces from internal or third-party sources.

Historically, companies have relied on manual processes utilizing spreadsheets and cash management software to manage treasury activities, primarily cash tracking and reporting. As user needs have grown over time to include financial risk management, hedge accounting and global cash management, reliance solely on spreadsheets and cash-focused applications has become increasingly untenable.

Frequently changing domestic and international accounting standards and regulations related to the treasury and risk management function have required enterprises to interpret and follow new and often more complex rules and regulations. In addition, the trend towards globalization of the enterprise has made it increasingly difficult for companies to manage global cash and liquidity and to quantify and manage risk exposure.

Today, businesses are increasingly adopting TRM software to integrate and automate treasury and risk functions across business units and international subsidiaries. However, most TRM solutions are on-premise and lack the range and depth of functionality to meet the expanding needs of the global corporation.

The Reval Answer

We provide an all-in-one integrated SaaS solution for treasury and risk management. Our solution enables chief financial officers, treasurers and other corporate finance professionals of enterprises to better manage their cash, liquidity and financial risk, while providing them with specialized capabilities for the reporting of complex financial instruments and hedging activities. Our SaaS solution provides the following key benefits:

•

Comprehensive functionality. We provide a fully-integrated SaaS solution that addresses the complete needs of an enterprise for cash, liquidity and risk management, including seamless interaction with critical third-party technologies. Using our solution, clients can improve processes, increase information quality and gain better control over global treasury operations and risk management.

•

Global visibility. Our integrated solution provides clients with deep and broad visibility into cash, liquidity and risk across the global enterprise, allowing them to quantify financial risk exposures, particularly across multiple asset classes, currencies and geographies. This enables our clients to optimize their operations, increase transparency, and better understand and manage their profitability and cash flow.

•

Regulatory and accounting compliance. We update our solution every six months to conform to the dynamic regulatory and accounting rules affecting our clients. Our team of experts in treasury and risk management helps ensure that our solution incorporates industry best practices.

•

Lower total cost of ownership. Our SaaS delivery model with integrated market information and access to critical third-party technologies provides a cost-effective way to solve the treasury and risk management challenges of our clients.

Our Competitive Strengths

We believe the following strengths are critical to our competitive advantage:

•

Comprehensive and scalable TRM solution. We seamlessly integrate treasury and risk functionality, high quality daily market data and client cash positions, and access to our community of software and service partners to support and enhance our clients’ decision making. For example, clients can analyze, hedge and report on global commodity exposures while also seeing the impact of related derivative settlements on corporate cash flow and making related payments, all in one solution. Our configurable and robust solution utilizes over 70,000 daily market rates to price three million client trades a month across 3,800 active users and provides clients the flexibility to suit their scale and complexity across the broadest range of instruments in the TRM industry.

•

Focus on SaaS delivery and subscription revenue model. We are the only top-ten TRM vendor primarily delivering TRM applications through a SaaS solution. Our SaaS model allows us to focus more of our development spend on a single solution into which we are able to directly incorporate the feedback of our clients. Further, the relative consistency and predictability of our SaaS subscription revenues allow us to more confidently plan and strategically invest in our business.

•

Highly embedded solution. Our solution is embedded into the daily, monthly and quarterly business processes of our clients and may be integrated into other critical systems in the clients’ environment, including their enterprise resource planning systems, foreign exchange, or FX, trading systems and investment platforms. The complex nature of the information our solution manages and its importance to financial reporting help drive client retention.

•

Highly integrated and reliable market data and banking information. Our market data team reviews and incorporates over 70,000 interest, foreign exchange and commodities market rates into our SaaS solution daily from over 65 independent and objective sources. We can also connect clients to their bank accounts across the globe. We believe our solution provides clients with access to critical market and banking information in a more efficient and robust manner than they can achieve independently.

•

Deep TRM domain expertise. We believe we have established a reputation among corporate clients and the major accounting firms as the market standard for hedge accounting and financial risk management. We believe our team of derivative, risk management and accounting experts enables us to maintain our market-leading solution and rapidly meet changing financial regulations and derivative accounting rules. We also bring significant experience and expertise in cash and liquidity management to the enhancement and delivery of our comprehensive SaaS TRM solution.

•

Global scale and presence. With clients based around the globe and approximately half of our employees located outside the United States, we have built a truly global solution utilized by many large and well-known global companies. Our presence in multiple geographies, built through years of investment and acquisition, provides us with an operational platform to more effectively compete for new clients and pursue future strategic acquisitions.

Our Strategy

We believe we have a significant opportunity to build upon our strong track record of growth and success by pursuing the following key elements of our strategy:

•

Acquire new clients and broaden existing relationships. We intend to acquire new clients by marketing our solution to enterprises that either have an inadequate TRM solution or do not currently have a cash or risk solution. In addition, we plan to leverage the high level of satisfaction among our current client base to up-sell and cross-sell risk, cash, and liquidity management modules.

•

Continue to increase scale globally. We intend to continue to expand our business within current global markets as well as expand into additional international markets.

•

Enhance existing technology to maintain market leadership and pursue complementary opportunities. We intend to continue to roll out new capabilities to make our solution more valuable and to appeal to a larger base of clients. We also intend to penetrate new and adjacent markets.

•

Acquire leading technologies to enhance our solution and expand our addressable market. We plan to continue to explore acquisitions that are consistent with our cloud-based strategy and potentially complementary to our technology and addressable market.

•

Expand our indirect sales channel. We plan to leverage and continue to build our indirect sales channels, including resellers and referrals, to expand our offerings to new market segments, including smaller enterprises and additional international geographies.

Risk Factors

Our business is subject to numerous risks and uncertainties, including those highlighted here and described in further detail in “Risk Factors” immediately following this Prospectus Summary. You should carefully read “Risk Factors” beginning on page 13 for a detailed explanation of these risks before investing in our common stock. Some of these risks include:

•

we have a history of losses and we may not achieve profitability in the future;

•

if the SaaS market for treasury and risk management does not grow as we expect, our business may not continue to grow;

•

we recently added cash and liquidity management to our SaaS solution, and we may face delays in gaining market acceptance from new clients for this expanded solution or in selling new modules to existing clients;

•

if we fail to compete successfully, we may be unable to add and retain clients and the growth of our business may be reduced or impeded;

•

if we are not able to develop enhancements and new features that achieve market acceptance or that keep pace with market, regulatory or technological developments, our ability to retain existing clients or attract new clients could be harmed;

•

our business depends substantially on clients renewing, upgrading and expanding their subscriptions for our solution and licenses for our other offerings;

•

our sales cycle may become longer and more expensive as we focus on increasing sales of our recently launched expanded solution; and

•

there has been no prior market for our common stock, our stock price may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

Following this offering, our executive officers, directors and 5% or greater stockholders and their affiliates will beneficially own, collectively, approximately % of our outstanding common stock, or % if the underwriters exercise in full their over-allotment option. As a result, these stockholders will be able to determine substantially all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or its assets.

Corporate Information

Our predecessor, Reval.com, Inc., or Reval.com, was organized in 1999 as a Delaware corporation which focused on developing and providing a single instance, multi-tenant, hosted hedge accounting, compliance and financial risk management offering. We were organized in June 2007 as a Delaware corporation under the name “Reval Holdings, Inc.” as a holding company and acquisition vehicle to acquire the business of Reval.com. We completed the acquisition of Reval.com in July 2007. Our principal executive office is located at 420 Fifth Avenue, Fifth Floor, New York, New York 10018. Our telephone number is (212) 393-1313. Our website address is www.reval.com. Information contained in, or accessible through, our website does not constitute a part of, and is not incorporated into, this prospectus. Our fiscal year ends on December 31.

“Reval,” “FAS 133 Doctor,” the Reval logo, “IAS 39 Doctor,” “Single Solution. Total Visibility,” and other trademarks or service marks of Reval Holdings, Inc. appearing in this prospectus are the property of Reval Holdings, Inc. This prospectus contains additional trade names, trademarks and service marks of others, which are the property of their respective owners.

THE OFFERING

Common stock offered by us

Common stock offered by the selling stockholders

Common stock to be outstanding after this offering

Total common stock offered

Overallotment option of common stock offered by us and the selling stockholders

Use of proceeds

We expect to use the net proceeds of this offering for working capital, other general corporate purposes and may also use a portion of the net proceeds to acquire complementary technologies. These expectations are subject to change. We will not receive any of the proceeds from the sale of shares by the selling stockholders. See “Use of Proceeds.”

Risk factors

See the section titled “Risk Factors” beginning on page 13 and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.

Reserved share program

At our request the underwriters have reserved for sale, at the initial public offering price, up to shares of our common stock offered by this prospectus to persons designated by us.

Proposed symbol

The number of shares of common stock to be outstanding after this offering is based on 50,856,663 shares outstanding as of March 31, 2012 and excludes:

•

10,271,014 shares of our common stock issuable upon the exercise of stock options outstanding under our 2007 Stock Option and Incentive Plan as of March 31, 2012, at a weighted average exercise price of $0.63 per share;

•

780,269 shares of our common stock reserved for future issuance under our 2007 Stock Option and Incentive Plan as of March 31, 2012; provided, however, that in connection with this offering, our 2007 Stock Option and Incentive Plan will terminate so that no further awards may be granted under our 2007 Stock Option and Incentive Plan;

•

an aggregate of up to shares of common stock reserved for future issuance under our 2012 Equity Incentive Plan and 2012 Employee Stock Purchase Plan, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under these benefit plans, each of which will become effective in connection with this offering; and

•

up to 119,048 shares of common stock issuable upon exercise of an outstanding warrant to purchase Series C preferred stock at a weighted average exercise price of $2.10 per share.

Except as otherwise indicated herein, all information in this prospectus, including the number of shares that will be outstanding after this offering, assumes or gives effect to:

•

a -for- reverse split of our common stock to be effected in connection with this offering;

•

that our amended and restated certificate of incorporation, which we will file in connection with this offering, is in effect;

•

the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 50,541,502 shares of our common stock, which will occur automatically in connection with this offering;

•

no exercise by the underwriters of their option to purchase up to additional shares of our common stock from us and the selling stockholders; and

•

no exercise of any outstanding options or the outstanding warrant.

SUMMARY CONSOLIDATED FINANCIAL DATA

The following tables summarize our consolidated financial data and other financial and operational data. We have derived the following summary of our consolidated statements of operations data for the years ended December 31, 2009, 2010 and 2011 and balance sheet data as of December 31, 2011 from our audited financial statements appearing at the end of this prospectus. We have derived the consolidated statements of operations data for the three months ended March 31, 2011 and 2012 and balance sheet data as of March 31, 2012 from our unaudited financial statements appearing at the end of this prospectus. You should read the summary of our consolidated financial data set forth below together with our consolidated financial statements and the related notes to those statements, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing later in this prospectus.

In the following table, pro forma information gives effect to the conversion of all outstanding shares of our preferred stock into 50,541,502 shares of common stock, which will occur automatically upon completion of this offering.

We have prepared the unaudited financial data on the same basis as the audited financial statements. The unaudited consolidated financial data include, in the opinion of our management, all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair presentation of our financial position and results of operations for these periods. Our historical results are not necessarily indicative of the results to be expected in any future period, and our interim results are not necessarily indicative of the results that should be expected for the full year.


	Year Ended December 31,									Three Months Ended March 31,
	2009			2010			2011			2011			2012
	(in thousands, except share and per share data and percentages)
Consolidated Statements of Operations Data:
Revenues
Subscription and support	$	18,651		$	28,002		$	35,587		$	8,630		$	9,149
Professional services and other		3,249			4,221			9,384			1,535			3,033

Total revenues		21,900			32,223			44,971			10,165			12,182
Cost of services⁽¹⁾		10,398			11,543			17,551			3,954			4,965

Gross margin		11,502			20,680			27,420			6,211			7,217
Operating expenses⁽¹⁾
Sales and marketing		8,928			11,917			20,325			4,312			4,965
Research and development		7,785			9,281			17,180			3,886			4,732
General and administrative		4,793			7,554			9,197			1,841			2,586

Total operating expenses		21,506			28,752			46,702			10,039			12,283

Loss from operations		(10,004	)		(8,072	)		(19,282	)		(3,828	)		(5,066	)

Foreign currency transactions gain (loss)		51			(69	)		33			39			7
Interest expense		(46	)		(112	)		(209	)		(41	)		(68	)
Other income (loss)		8			(153	)		670			144			13

Loss before provision for (benefit from) income taxes		(9,991	)		(8,406	)		(18,788	)		(3,686	)		(5,114	)
Provision for (benefit from) income taxes		23			98			(1,466	)		(288	)		(393	)

Net loss	$	(10,014	)	$	(8,504	)	$	(17,322	)	$	(3,398	)	$	(4,721	)

Net loss attributable to common stockholders	$	(10,014	)	$	(8,504	)	$	(17,322	)	$	(3,398	)	$	(4,721	)


Net loss attributable to common stockholders per common share, basic and diluted	$	(412.57	)	$	(135.82	)	$	(78.44	)	$	(29.52)		$	(15.00	)

Weighted average common shares outstanding used in computing net loss attributable to common stockholders per share, basic and diluted		24,272			62,613			220,830			115,113			314,754

Pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)							$	(0.34	)				$	(0.09	)

Pro forma weighted average shares outstanding used in computing pro forma net loss attributable to common stockholders per share, basic and diluted (unaudited)								50,556,306						50,856,256

Other Financial and Operational Data:
Annual Contract Value⁽²⁾	$	24,077		$	34,524		$	37,154		$	35,208		$	38,378
Retention Rate⁽³⁾		89	%		92	%		90	%		N.A.			N.A.
Adjusted Free Cash Flow⁽⁴⁾	$	(3,337	)	$	1,047		$	(10,109	)	$	(2,876	)	$	(3,892	)
Adjusted Gross Margin⁽⁵⁾		67	%		73	%		69	%		70	%		67	%

⁽¹⁾	Cost of services and operating expenses include stock-based compensation expenses and depreciation and amortization expenses as follows:


	Year Ended December 31,						Three Months Ended March 31,
	2009		2010		2011		2011		2012
	(in thousands)
Stock-Based Compensation Expenses:
Cost of services	$	33	$	19	$	17	$	3	$	7
Sales and marketing		10		69		74		17		20
Research and development		67		123		95		31		21
General and administrative		107		172		165		52		36

Total stock-based compensation expenses	$	217	$	383	$	351	$	103	$	84


	Year Ended December 31,						Three Months Ended March 31,
	2009		2010		2011		2011		2012
	(in thousands)
Depreciation and Amortization Expenses:
Cost of services	$	3,145	$	2,768	$	3,622	$	888	$	908
Sales and marketing		1,158		1,543		3,370		840		815
Research and development		—		—		—		—		—
General and administrative		269		376		1,324		293		364

Total depreciation and amortization expenses	$	4,572	$	4,687	$	8,316	$	2,021	$	2,087

⁽²⁾

Annual Contract Value, or ACV, is a measure that we define as the sum of the annual value associated with subscription, term license, and maintenance contracts in effect at a given point in time. For additional information with respect to how we calculate ACV and our use of ACV, see “Management’s Discussion and Analysis—Key Operating Metrics.”

⁽³⁾

We measure our retention rate by assessing, on a dollar basis, the ACV we retain for the same client and product set at the end of a calendar year, regardless of when the client’s contract renewal is made, as measured against the ACV at the beginning of such year excluding any increase in values through upsells during such period, such as from subscriptions to additional modules or the addition of new users. For additional information with respect to how we calculate our retention rate and our use of retention rate, see “Management’s Discussion and Analysis—Key Operating Metrics.”

⁽⁴⁾

See the section titled “Non-GAAP Financial Measures” below for how we define and calculate adjusted free cash flow, a reconciliation between adjusted free cash flow and net cash (used in) provided by operating activities, the most directly comparable GAAP financial measure and a discussion about the limitations of adjusted free cash flow.

⁽⁵⁾

Adjusted gross margin is presented as a percentage of total revenues. See the section titled “Non-GAAP Financial Measures” below for how we define and calculate adjusted gross margin, a reconciliation between adjusted gross margin and gross margin, the most directly comparable GAAP financial measure and a discussion about the limitations of adjusted gross margin.

In the following table, the pro forma as adjusted information reflects: (i) the pro forma effects set forth in the paragraph preceding the consolidated statements of operations table above; and (ii) our sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and offering expenses payable by us, and our application of the net proceeds from our sale of those shares. Working capital is calculated as current assets less current liabilities (other than the current portion of deferred revenue).


	As of March 31, 2012
	Actual			Pro forma		Pro forma as adjusted
	(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	4,364		$	4,364
Accounts receivable, net		9,825			9,825
Working capital		8,098			8,098
Total assets		60,168			60,168
Deferred revenue, current and long-term portions		25,831			25,831
Long-term debt, including current portion		7,131			7,131
Redeemable convertible preferred stock		67,477			—
Total stockholders’ (deficit) equity		(50,552	)		17,046

The pro forma as adjusted information set forth above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase or decrease pro forma as adjusted cash and cash equivalents, working capital, total assets and total stockholders’ equity by approximately $ assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

Non-GAAP Financial Measures

The following tables present a reconciliation of adjusted free cash flow to net cash (used in) provided by operating activities and adjusted gross margin to gross margin for each of the periods presented:


	Year Ended December 31,									Three Months Ended March 31,
	2009			2010			2011			2011			2012
	(in thousands)
Reconciliation of Adjusted Free Cash Flow to Net Cash (Used in) Provided by Operating Activities:
Net cash (used in) provided by operating activities	$	(3,354	)	$	1,183		$	(8,802	)	$	(2,604	)	$	(3,070	)
Capital expenditures		(282	)		(1,413	)		(1,307	)		(272	)		(822	)
Costs related to acquisitions and other		299			1,277			—			—			—

Adjusted free cash flow	$	(3,337	)	$	1,047		$	(10,109	)	$	(2,876	)	$	(3,892	)


	Year Ended December 31,									Three Months Ended March 31,
	2009			2010			2011			2011			2012
	(in thousands)
Reconciliation of Adjusted Gross Margin to Gross Margin:
Gross margin	$	11,502		$	20,680		$	27,420		$	6,211		$	7,217
Depreciation expenses		478			751			868			202			243
Amortization expenses		2,667			2,017			2,754			686			665
Stock-based compensation expenses		33			19			17			3			7

Adjusted gross margin	$	14,680		$	23,467		$	31,059		$	7,102		$	8,132

Gross margin %		53	%		64	%		61	%		61	%		59	%
Adjusted gross margin %		67	%		73	%		69	%		70	%		67	%

Adjusted Free Cash Flow

We define adjusted free cash flow as cash flow from operations less capital purchases of property and equipment and adjusted for non-routine items such as costs related to acquisitions. Our management uses adjusted free cash flow as a measure of our liquidity and operating performance as it assists us in assessing our ability to fund our growth. Our management also uses this measure for planning purposes, including the preparation of our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to determine capital requirements; to facilitate a comparison of our results with those of other companies; and in communications with our board of directors concerning our financial performance.

Management believes that the use of adjusted free cash flow provides consistency and comparability with our past financial performance, facilitates period to period comparisons of operations, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement

their GAAP results. Although adjusted free cash flow or similar metrics are sometimes used by investors and securities analysts in their evaluations of companies, adjusted free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results of operations as reported under GAAP.

Some of these limitations are:

•

adjusted free cash flow does not reflect our future expenditures related to our contractual commitments;

•

adjusted free cash flow does not reflect the non-cash component of employee compensation or depreciation and amortization of property, equipment or intangible assets;

•

adjusted free cash flow does not reflect our acquisition costs with respect to our business acquisitions; and

•

other companies in our industry may calculate adjusted free cash flow or similarly titled measures differently than we do, limiting their usefulness as comparative measures.

Management does not use adjusted free cash flow in isolation or as a primary performance measure and also uses other measures of operating performance.

Adjusted free cash flow is not calculated in accordance with GAAP and is not a substitute for or superior to financial measures determined in accordance with GAAP. Management compensates for the inherent limitations associated with using the adjusted free cash flow measure through disclosure of such limitations, presentation of our financial statements in accordance with GAAP, and reconciliation of adjusted free cash flow to the most directly comparable GAAP measure, net cash (used in) provided by operating activities, as presented above.

Adjusted Gross Margin

We define adjusted gross margin as gross margin plus depreciation, amortization of intangible assets and stock-based compensation expenses classified within the cost of services line item. We believe that this measure provides us with additional useful information to measure and understand our performance on a consistent and comparable basis because it excludes items that are not representative of our operating performance and not comparable across periods, particularly the amortization of intangible assets which results from acquisitions. We use adjusted gross margin in the preparation of our annual operating budgets and to measure and evaluate the effectiveness of our business strategies. Although we use adjusted gross margin in evaluating our operating performance, adjusted gross margin has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results of operations as reported under GAAP.

Some of these limitations are:

•

adjusted gross margin excludes material costs such as the non-cash component of employee compensation or depreciation and amortization of property, equipment or intangible assets; and

•

other companies in our industry may calculate adjusted gross margin or similarly titled measures differently than we do, limiting their usefulness as comparative measures.

Management does not use adjusted gross margin in isolation or as a primary performance measure and also uses other measures of our operating performance.

Adjusted gross margin is not calculated in accordance with GAAP and is not a substitute for or superior to financial measures determined in accordance with GAAP. Management compensates for the inherent limitations associated with using the adjusted gross margin measure through disclosure of such limitations, presentation of our financial statements in accordance with GAAP, and reconciliation of adjusted gross margin to the most directly comparable GAAP measure, gross margin, as presented above.

RISK FACTORS

Investing in our common stock involves a high degree of risk. Before you invest in our common stock, you should carefully consider the following risks, as well as general economic and business risks, and all of the other information contained in this prospectus, including our consolidated financial statements and the related notes thereto. Any of the following risks could have a material adverse effect on our business, operating results and financial condition and cause the trading price of our common stock to decline, which would cause you to lose all or part of your investment.

Risks Related to Our Business

We have a history of losses and we may not achieve profitability in the future.

We have incurred losses since our inception. We experienced operating losses of $10.0 million, $8.1 million, $19.3 million and $5.1 million in 2009, 2010, 2011 and the three months ended March 31, 2012, respectively. At March 31, 2012, our accumulated deficit was $52.5 million and total stockholders’ deficit was $50.6 million. We expect to continue to incur operating losses as a result of expenses associated with the continued development and expansion of our business within our current market and adjacent markets. Our expenses include sales and marketing, research and development and other costs relating to the development, marketing and sale of our offerings that may not generate revenues until later periods, if at all. Any failure to increase revenues or manage our cost structure as we implement initiatives to grow our business could prevent us from achieving or sustaining profitability. In addition, our ability to achieve profitability is subject to a number of the risks and uncertainties discussed below, many of which are beyond our control. We cannot be certain that we will be able to achieve or sustain profitability and we may continue to incur significant losses for the foreseeable future.

If the SaaS market for treasury and risk management software and services does not grow as we expect, our business may not continue to grow.

Our future financial performance and revenue growth depend on the willingness of enterprise clients to use an integrated SaaS treasury and risk management, or TRM, solution. The market for SaaS solutions in TRM is developing and it is not certain whether SaaS TRM offerings will achieve market acceptance and sustain high demand. Many enterprises have internal resources and processes to manage their treasuries, so they may not perceive the benefit of our integrated TRM solution. Providing enterprises with applications to address their treasury management challenges through an integrated, comprehensive SaaS solution is a developing market and we have limited experience determining appropriate pricing for our integrated solution. The competitive dynamics may cause pricing levels, as well as pricing models generally, to change, as the market matures and as existing and new market participants introduce new types of solutions and different approaches to enable enterprises to address their TRM needs. It is difficult to predict client adoption rates, client demand for our solution, the future growth rate and size of the TRM market or the entry of competitive solutions. Any expansion of the TRM market for SaaS solutions depends on a number of factors, including the cost, performance and perceived value associated with SaaS TRM solutions. If SaaS TRM solutions do not achieve widespread adoption, or there is a reduction in demand for TRM solutions caused by a lack of client acceptance, technological challenges, weakening economic conditions, competing technologies and products, decreases in corporate spending or otherwise, it could result in lower billings, reduced renewal rates or decreased revenues and our business could be adversely affected.

Our fully integrated solution, which includes four solution sets, has only recently launched, and we may face delays in gaining market acceptance from new clients for this expanded solution or in migrating existing clients to this solution.

Our solution previously included our financial risk management and hedge accounting and compliance solution sets. We acquired ecofinance in December 2010 so that we could expand our current solution to include

our new global cash management and liquidity management solution sets. We launched the expanded version of our solution, which now includes all four solution sets, in October 2011. Therefore, we have limited experience selling this expanded solution in the market and cannot assess what, if any, impact this expansion may have on our selling efforts and its potential impact on our future revenues. Unlike with our previous solution, where we were largely competing against homegrown solutions or spreadsheets, our expanded solution may require the displacement of existing third-party providers in order for clients to be in a position to adopt and deploy all four of our solution sets. As a result, we may face a longer sales cycle and less predictability in completing sales of this solution to new clients or in migrating existing clients into this expanded solution, if at all. Our efforts to deploy our solution sets beyond financial risk management and hedge accounting and compliance may not succeed and may reduce our revenue growth rate. If we are unable to sell this solution to new clients or migrate existing clients to this expanded solution, our operating results may be harmed.

If we fail to compete successfully, we may be unable to add and retain clients and the growth of our business may be reduced or impeded.

The TRM market is highly fragmented, competitive and rapidly evolving. Our major competitors include IT2 Treasury Solutions, Kyriba Corp., SunGard Data Systems Inc., or SunGard, and Wall Street Systems Holdings Inc. (a division of ION Trading), or Wall Street Systems. We also compete to a limited extent with leading enterprise resource planning vendors who offer certain treasury and cash management functionality, such as SAP AG, or SAP. We compete with other technology and outsourced service providers primarily on the basis of our ability to deliver highly integrated solutions, cost efficiency, robust client support, security and reliability as well as our ability to be responsive to ever-changing accounting regulations. We and other technology and outsourced service providers also compete with internally developed treasury management solutions primarily on the bases of domain expertise, the relative cost of implementation and functionality.

We expect the intensity of competition to increase in the future as existing competitors develop their capabilities and as new companies enter our market. Increased competition could result in additional pricing pressure, reduced sales, shorter term lengths for client contracts, lower margins or the failure of our offerings to achieve or maintain broad market acceptance. If we are unable to compete effectively, it will be difficult for us to maintain our prices and add and retain clients, and our business, financial condition and results of operations could be harmed.

Many of our current and potential competitors within the markets in which we currently compete and into which we are expanding have longer operating histories, a larger presence in the general treasury management market, access to larger client bases and substantially greater financial, technical, sales and marketing, management, service, support and other resources than we have. As a result, our competitors may be able to respond more quickly than we can to new or changing opportunities, technologies, standards or client requirements or devote greater resources to the promotion and sale of their products and services than we can. To the extent our competitors have an existing relationship with a potential client, that client may be unwilling to switch vendors due to the potential operational disruptions in removing the existing solution and additional costs of implementing a new solution.

If we are not able to develop enhancements and new features that achieve market acceptance or that keep pace with market, regulatory or technological developments, our ability to retain existing clients or attract new clients could be harmed.

The market for our solution is characterized by changes in accounting regulations, client requirements, changes in financial products and evolving industry standards. Our financial performance and revenue growth depends upon the successful development, introduction and client acceptance of new and enhanced versions of our solution, as well as on our ability to integrate products and services that we acquire into our existing and future offerings. We must continually modify and enhance our solution to keep pace with changes in accounting regulations, treasury management requirements, hardware and software platforms, electronic commerce technical

standards and other items. If we are unable to enhance or develop new features for our existing solution or develop acceptable new solutions that keep pace with these changes, we may lose existing clients or may not be able to attract new clients and our cloud-based services may become less marketable, less competitive or obsolete and our business could be harmed. The success of any enhancements, new modules and cloud-based services depends on several factors, including timely completion, introduction and market acceptance of our solution. However, we remain subject to all of the risks inherent in product development, including unanticipated technical or other development problems, which could result in material delays in product introduction and acceptance or significantly increased costs. There can be no assurance that we will be able to develop new solutions or other products successfully, or that we will be able to introduce and gain market acceptance of new solutions or products in a timely manner. Failure to produce acceptable new offerings and enhancements may significantly impair our revenue growth and reputation.

Further, clients may require features and capabilities that our current solution and other offerings do not have. If we fail to develop products and services that satisfy client preferences in a timely and cost-effective manner, our ability to renew our agreements with existing clients and our ability to create or increase demand for our offerings will be harmed.

Our business depends substantially on clients renewing, upgrading and expanding their subscriptions for our solution and licenses for our other offerings. Any decline in our client renewals, upgrades and expansions could harm our future operating results.

We sell subscriptions for our solution pursuant to client agreements that are generally one to three years in length. Our clients have no obligation to renew their subscriptions after their subscription period expires, and these subscriptions may not be renewed at the same or higher levels, if at all. Further, our ability to grow is dependent, in part, on clients subscribing to additional modules or licensing additional offerings during the term of their agreement with us. Our clients’ renewal rates may decline or fluctuate because of several factors, including their satisfaction or dissatisfaction with our solution, other offerings and services, the prices of our solution, other offerings and services, the prices of services offered by our competitors or reductions in our clients’ spending levels due to the macroeconomic environment or other factors. If our clients do not renew their subscriptions, term licenses, or maintenance contracts with us, renew on less favorable terms, or do not subscribe to additional functionality or purchase additional licenses, our revenues may grow more slowly than we anticipate or decline and our margins may be harmed. For additional information with respect to our historical retention rates, see “Management’s Discussion and Analysis—Key Operating Metrics.”

Our sales cycle may become longer and more expensive as we focus on increasing sales of our recently launched expanded solution.

Our sales cycle, which is the time between the beginning of a qualified sales opportunity with a new potential client and the ultimate sale, has generally ranged from three to ten months for our SaaS solution since January 1, 2010, but is variable and difficult to predict and can be much longer and may become more lengthy and unpredictable as we sell our expanded solution. We launched the expanded version of our solution, which now includes all four solution sets, in October 2011. Therefore, we have limited experience selling this expanded solution in the market and cannot yet estimate the sales cycle for this expanded solution. Clients for our expanded solution may commit significant resources to an evaluation of available alternatives to their existing applications. For example, clients may need to involve additional personnel or departments in the purchasing decision process for our expanded solution. This may require us to expend substantial time, effort and money educating them about the value of our expanded solution. For large enterprises, a purchase decision may be an enterprise-wide decision and, if so, these types of sales may require us to provide greater levels of education regarding the use and benefits of our solution, particularly as compared to legacy installed applications. As a result, we may have limited ability to forecast the timing and size of specific sales. Clients may delay their purchases for even longer periods due to their inability to assess and forecast future business activity, impaired purchasing ability or other economic factors. Any delay in completing, or failure to complete, sales in a particular quarter or year could harm our business and could cause our operating results to vary significantly.

We are currently integrating the operations of the businesses that we acquired and we may in the future expand by acquiring or investing in other businesses, which may divert our management’s attention and consume resources that are necessary to sustain our business.

We are currently integrating the operations of the two businesses that we acquired into our operations. If we encounter unforeseen technical or other challenges in integrating the operations of these acquired businesses, we may incur unforeseen operating costs and management’s attention could be diverted from our core business. Additionally, our business and results of operations could be harmed if we are unable to retain clients of these acquired businesses.

We may continue to evaluate and consider potential strategic transactions, including acquisitions and dispositions of businesses, technologies, services, products and other assets in the future. An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired companies choose not to work for us, the companys’ software is not easily adapted to work with ours or we have difficulty retaining the clients of any acquired business due to changes in management or otherwise. Acquisitions may also disrupt our core business, divert our resources and require significant management attention that would otherwise be available for development of our business. Moreover, the anticipated benefits of any acquisition, investment or business relationship may not be realized or we may be exposed to unknown or unanticipated liabilities.

We may in the future seek to acquire or invest in additional businesses, products, technologies or other assets in order to increase our addressable market. We also may enter into relationships with other businesses to expand our service offerings or our ability to provide service in foreign jurisdictions, which could involve preferred or exclusive licenses, additional channels of distribution, discount pricing or investments in other companies. Negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may often be subject to approvals that are beyond our control. Consequently, these transactions, even if undertaken and announced, may not close. For one or more of these transactions, we could:

•

issue additional equity securities that would dilute our stockholders;

•

use cash that we may need in the future to operate our business;

•

incur debt on terms unfavorable to us or that we are unable to repay;

•

incur large charges or substantial liabilities;

•

encounter difficulties retaining key employees of the acquired company or integrating diverse software codes or business cultures;

•

encounter difficulties maintaining our corporate culture;

•

become subject to adverse tax consequences, substantial depreciation or deferred compensation charges; and

•

be required to write-off goodwill related to acquisitions to the extent that this goodwill becomes impaired.

Any of these risks could harm our business and operating results. Further, if we fail to properly evaluate and execute acquisitions or investments, our business and prospects could be harmed.

We rely on third-party data providers to provide certain content for our offerings, and if those data providers discontinue providing their content for any reason, our client relationships may suffer.

We rely on third parties to provide or make available certain data for our information databases and treasury management services. These third parties may not renew agreements to provide content to us, may

increase the price they charge for their content or begin charging for content that was previously free of charge, or may cease to operate or restrict their operations with companies like ours, which we have experienced in the past. Additionally, the quality of the content provided to us may not be acceptable to us and we may need to enter into agreements with additional third parties. In the event we are unable to use such third-party content or are unable to enter into agreements with comparable third parties, current clients may not renew their subscription agreements with us, it may be difficult to acquire new clients and our reputation may be harmed.

Unfavorable conditions in our industry or the global economy or reductions in information technology spending could limit our ability to grow our business and negatively affect our operating results.

Our operating results may vary based on the impact of changes in our industry or the global economy on us or our clients. The revenue growth and potential profitability of our business depends on demand for TRM offerings generally and for our solution in particular. To the extent that weak economic conditions or disruptions in the global economy, such as the ongoing European credit crisis, cause our clients and potential clients to freeze or reduce their budgets, demand for our offerings may be negatively affected. Historically, economic downturns have resulted in overall reductions in spending on information technology and TRM as well as pressure for extended billing terms, as occurred during the recent recession. If economic conditions deteriorate or do not materially improve, our clients and potential clients may elect to decrease their information technology and TRM budgets by deferring or reconsidering product purchases, which would limit our ability to grow our business and negatively affect our operating results.

If our offerings fail to perform properly or if they contain technical defects, our reputation could be harmed, our market share could decline and we could be subject to product liability claims.

Our offerings are inherently complex and may contain undetected errors or defects that may result in product failures or otherwise cause our offerings to fail to perform in accordance with client expectations or client contracts. Because our clients use our offerings for important aspects of their business, any errors or defects in, or other performance problems with, our offerings could hurt our reputation and may damage our clients’ businesses. For example, our solution could fail to perform properly, which could result in a hedge failing to be properly accounted for. If our solution fails for any reason, we could lose future sales or our existing subscription and license clients could elect to not renew. Product performance problems could result in loss of market share, failure to achieve market acceptance and the diversion of development resources.

If our offerings fail to perform or contain a technical defect, a client may assert a claim against us for substantial damages, whether or not we are responsible for our offerings’ failure or defect. We do not currently maintain any warranty reserves. Product liability claims could require us to spend significant time and money in litigation or arbitration/dispute resolution or to pay significant settlements or damages. Although we maintain general liability insurance, and coverage for errors and omissions, this coverage may not be sufficient to cover liabilities resulting from such product liability claims. Also, our insurer may disclaim coverage. Our liability insurance also may not continue to be available to us on reasonable terms, in sufficient amounts, or at all. Any product liability claim successfully brought against us could cause our business to suffer.

We generate a significant portion of our revenues and costs from client agreements denominated in foreign currencies; fluctuations in the exchange rate of foreign currencies could impact our revenues and result in currency transaction losses.

We currently have foreign sales denominated in the Pound Sterling, Canadian dollar, Australian dollar, and the Euro, and may in the future have sales denominated in the currencies of additional countries. In addition, we incur a portion of our operating expenses in the Pound Sterling, Canadian dollar, Australian dollar, Euro, and Indian rupee. Any fluctuation in the exchange rate of these foreign currencies may negatively impact our business, revenues, financial condition and operating results. We have only engaged in limited foreign currency

hedging. If we decide to hedge our foreign currency exposure, we may not be able to hedge effectively and even if we effectively hedge the impact of foreign currency fluctuations on our net income or cash flow, our revenues may be impacted.

We may be unsuccessful in managing or expanding our international operations which could adversely affect our ability to grow.

A key element of our growth strategy is to expand our international operations and client base. We have added employees, offices and clients internationally, particularly in Australia, Austria, Germany, India and the United Kingdom. Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic and political risks and competition that are different from those in the United States. We cannot assure you that our international expansion efforts will be successful or that returns on such investments will be achieved in the future.

In addition, our international operations may not succeed due to other risks inherent in operating businesses internationally, including:

•

our lack of familiarity with commercial and social norms and customs in international countries, which may harm our ability to recruit, retain and manage employees in these countries;

•

difficulties and costs associated with staffing and managing foreign operations and potentially higher employee costs and difficulty in terminating non-performing employees;

•

the potential diversion of management’s attention to oversee and direct operations that are geographically distant from our U.S. headquarters;

•

compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, privacy and data protection laws and regulations;

•

legal systems in which our ability to enforce and protect our rights may be different or less effective than in the United States and in which the ultimate result of dispute resolution is more difficult to predict;

•

greater difficulty collecting accounts receivable and longer payment cycles;

•

laws and business practices favoring local competitors and new and different sources of competition;

•

the need to adapt our offerings for specific countries, our ability to comply with differing technical and certification requirements outside the United States;

•

tariffs, export controls and other non-tariff barriers such as quotas and local content rules;

•

more limited protection for intellectual property rights in some countries;

•

fluctuations in currency exchange rates; and

•

restrictions on the transfer of funds.

Our failure to manage any of these risks successfully could harm our existing and future international operations and impair our overall business.

If our security measures are breached and unauthorized access is obtained to a client’s data, our service may be perceived as not being secure and clients may curtail or stop using our solution.

Our solution involves the storage and transmission of clients’ proprietary and confidential information over the Internet, and security breaches, unauthorized access, unauthorized usage, viruses or similar breaches or disruptions could result in loss of this information, damage to our reputation, early termination of our contracts,

litigation, regulatory investigations or other liabilities. If our security measures are breached as a result of third-party action, employee error, malfeasance or otherwise and, as a result, someone obtains unauthorized access to client data, which includes confidential financial information, our reputation could be damaged, our business may suffer and we could incur significant liabilities. Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target. As a result, we may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived security breach occurs, the market perception of our security measures could be harmed and we could lose sales and clients. Any significant violations of data privacy could result in the loss of business, litigation and regulatory investigations and penalties that could damage our reputation and harm our results of operations and financial condition. Moreover, if a high profile security breach occurs with respect to another SaaS provider, our clients and potential clients may lose trust in the security of the SaaS business model generally, which could adversely impact our ability to retain existing clients or attract new ones.

Our business is subject to changing regulations regarding accounting rules and government regulations affecting derivatives accounting that may reduce clients’ need for our offerings, increase our costs or otherwise impact our operations.

Our business is subject to changing regulations regarding accounting rules and government regulations affecting derivatives accounting. Such regulations may have significant effects on our clients and their need of our offerings. Any changes in such regulations may require changes to our offerings we sell to clients which may require the devotion of a substantial amount of our time, may be costly and time-consuming to implement or may not be able to be implemented at all. Additionally, if these regulations are simplified, portions of our solution and other offerings could become less valuable or obsolete.

We rely on our management team and may need additional personnel to grow our business, and the loss of one or more key employees or our inability to attract and retain qualified personnel could harm our business.

Our success and future growth depend to a significant degree on the skills and continued services of our management team and key sales personnel, especially our Chief Executive Officer and our Chief Technology Officer. The replacement of these individuals likely would involve expenditure of significant time and financial resources, and their loss might significantly delay or prevent the achievement of our business objectives.

Our future success also depends on our ability to attract, retain and motivate highly skilled technical, managerial, sales, marketing and service and support personnel, including members of our management team. Despite the economic downturn, competition for qualified management, technical and other personnel is intense, and we may not be successful in attracting and retaining such personnel. Competition for sales, marketing and technology development personnel is particularly intense in the financial, software and technology industries. If we fail to attract and retain qualified employees, our ability to grow our business could be harmed.

Our hosted solution is delivered primarily out of a single data center. Any disruption of service at this facility and a failure in the transition to our back-up data center upon the failure of our primary data center, could interrupt or delay our ability to deliver our solution to our clients.

We host our solution primarily from a single data center located in Secaucus, New Jersey. We also maintain a back-up data center located in Las Vegas, Nevada, which is designed to go live upon a disruption at our primary data center. We do not have sole control over the operations of these facilities. These facilities are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, terrorist attacks, power losses, telecommunications failures and similar events. The occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems could result in lengthy interruptions in our services. The facilities also could be subject to break-ins, computer viruses, sabotage, intentional acts of vandalism and other misconduct. Additionally, if there is any delay in or failure to transition to

our back-up data center upon a disruption at our primary data center, such delay or failure could interrupt or significantly impair our ability to deliver our solution to our clients.

Our data center facilities providers have no obligations to renew their agreements with us on commercially reasonable terms or at all. If we are unable to renew our agreements with the facilities providers on commercially reasonable terms or, if in the future, we add additional data center facility providers, we may incur additional costs or experience downtime in connection with the transfer to, or the addition of, new data center facilities.

Any errors, defects, disruptions or other performance problems with our offerings could harm our reputation and may damage our clients’ businesses. Interruptions in our offerings might reduce our revenues, cause us to issue credits to clients, subject us to potential liability, cause clients to terminate their subscriptions or licenses and harm our renewal rates. Our business will also be harmed if our clients and potential clients believe our services are unreliable.

We also depend on access to the Internet through third-party bandwidth providers to operate our business. If we lose the services of one or more of our bandwidth providers, or if these providers experience outages, for any reason, we could experience disruption in delivering our offerings or we could be required to retain the services of a replacement bandwidth provider.

Any significant disruption in our SaaS hosting network infrastructure could harm our reputation, require us to provide credits or refunds, result in early termination of a client agreement or a loss of clients and subject us to liability.

Our SaaS hosting network infrastructure is a critical part of our business operations. Our clients access our solution through a browser-based user interface and depend on us for fast and reliable access to our solution. Our software is proprietary, and we rely on the expertise of members of our engineering and software development teams for the continued performance of our solution. We may in the future experience disruptions in our computing and communications infrastructure. Factors that may cause such disruptions include:

•

human error;

•

security breaches;

•

telecommunications outages from third-party providers;

•

computer viruses;

•

acts of terrorism, sabotage or other intentional acts of vandalism;

•

unforeseen interruption or damages experienced in moving hardware to a new location;

•

fire, earthquake, flood and other natural disasters; and

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power loss.

Although we replicate our client data and store our data in more than one geographically distinct location at least daily, our infrastructure does not currently guarantee the real-time mirroring of all of our data. Thus, in the event of any of the factors described above, or certain other failures of our computing infrastructure, client data from recent transactions may be permanently lost. Moreover, some of our agreements include performance guarantees and service level standards that obligate us to provide credits, or refunds or termination rights in the event of a significant disruption in our SaaS hosting network infrastructure or other technical problems that relate to the functionality or design of our solution.

If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately.

We have experienced, and may continue to experience, rapid growth and organizational change, which has placed, and may continue to place, significant demands on our management, operational and financial resources. For example, we have increased our annual revenues from $21.9 million in 2009 to $45.0 million in 2011. We have increased our number of full-time employees from 162 as of December 31, 2009 to 363 as of March 31, 2012.

Our principal executive offices are located in New York City. In addition, we have regional offices in Bala Cynwyd, Pennsylvania, Graz, Austria, Gurgaon, India, London, England, Sydney, Australia, and Vienna, Austria and sales offices throughout the world. We may continue to expand our international operations into other countries in the future. We have also experienced significant growth in the number of users, transactions and data that our SaaS hosting infrastructure supports.

Our expansion has placed, and our anticipated growth may continue to place, a significant strain on our managerial, administrative, operational, financial and other resources. We intend to further expand our overall business, client base, headcount and operations. We also intend to continue expanding our operations internationally. Such international expansion may expose us to additional international and regional regulations and such regulations could distract or otherwise place additional burdens on our management, operational and financial resources. Creating a global organization and managing a geographically dispersed workforce will require substantial management effort and significant additional investment in our infrastructure. We will be required to continue to improve our operational, financial and management controls and our reporting procedures and we may not be able to do so effectively. As such, we may be unable to manage our expenses effectively in the future, which may negatively impact our gross margin or operating expenses in any particular quarter.

As we expand into adjacent markets and introduce new offerings, failure to comply with new and potentially more burdensome laws and regulations in connection with our expanded offerings may harm our business and results of operations.

We have explored, and will continue to explore, the possibility of expansion into new and adjacent markets and the introduction of new offerings. Most recently, our wholly-owned subsidiary, Reval SDR, Inc., has applied to the Commodity Futures Trading Commission, or CFTC, to become a multi-asset class, global swap data repository, or SDR, with plans to service the reporting and compliance requirements of over-the-counter derivative use as specified in the Dodd-Frank Wall Street Reform and Consumer Protection Act. It is uncertain whether such application will be approved by the CFTC or if approved, when or if this subsidiary will commence operations.

Registration to become an SDR, if successful, will require compliance with additional governmental regulations, and our failure to comply with any applicable regulations could expose us to unexpected liability or governmental proceedings, and potentially cause us reputational harm. For example, the current definitional rules applicable to SDRs have not been fully promulgated, and the final version of the regulations could potentially become more burdensome for us to comply with or create increased competition among SDRs, impacting our potential client base. In addition, the future enactment of more restrictive laws or rules at the federal, state or local level, or in foreign jurisdictions at the national, provincial, state or other level, could create additional burdens which may adversely affect our business and operating results.

Efforts to comply with these new and complex regulations may delay and possibly prevent our entry into adjacent markets, or our ability to become an SDR in particular, and more generally may limit our ability to introduce new products or to sell our solution and other offerings to potential clients, or impair the ability of clients to adopt our solution and other offerings. Compliance with these laws and regulations may impose added costs on our business, and failure to comply with these or other applicable regulations and requirements could

lead to substantial civil or criminal penalties, fines, or claims for damages, and could impair our overall business. Failure to comply with such regulations or to manage such risks successfully could limit our growth and harm our business and results of operations.

Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our client base and achieve broader market acceptance of our SaaS solution.

We will need to continue to expand our sales and marketing infrastructure in order to grow our client base and our business. We plan to significantly expand our direct sales teams and develop additional strategic alliances. Identifying, recruiting and training these people and entities will require significant time, expense and attention. Our business could be harmed and our financial resources could be diminished if our efforts to expand our direct and indirect sales channels do not generate a corresponding increase in revenues. In particular, if we are unable to hire, develop and retain talented sales personnel or if our new direct sales personnel are unable to achieve expected productivity levels in a reasonable period of time, we may not be able to significantly increase our revenues and grow our business.

Because we recognize subscription and support revenues from our clients over the term of their agreements, downturns or upturns in sales and renewals may not be immediately reflected in our operating results.

We recognize subscription and support revenues over the terms of our client agreements, which typically range from one to three years, with some up to five years. As a result, most of our quarterly revenues are generated from agreements entered into during previous quarters. Consequently, a shortfall in demand for our solution or term licensed offerings in any quarter may not significantly reduce our subscription and support revenues for that quarter, but could negatively affect subscription and support revenues in future quarters. In particular, if such a shortfall were to occur in our fourth quarter, it may be more difficult for us to increase our client sales to recover from such a shortfall in future periods as we have historically signed a higher percentage of agreements with new clients and renewal agreements with existing clients in the fourth quarter of each year, often with a significant portion of these agreements signed during the last month of the fourth quarter. Accordingly, the effect of significant downturns in sales of our solution or term licensed offerings may not be fully reflected in our results of operations until future periods. Our subscription model also makes it difficult for us to rapidly increase our subscription and support revenues through additional sales in any period, as revenues from new clients must be recognized over the applicable subscription term.

Further, because the expenses associated with generating client agreements are generally incurred upfront, but the resulting subscription and support revenues are recognized over the life of the client agreement, increased growth in the number of clients may result in our recognition of more costs than subscription and support revenues in the earlier periods of the terms of our agreements even though the client is expected to be profitable for us over the term of the agreement.

We derive a portion of our revenues from perpetual and term licenses which are currently recognized when the implementation services are substantially completed, which is inherently less predictable than subscription revenue recognition and could impact the timing of our revenue recognition.

Through our ecofinance subsidiary, we have sold and will continue to sell perpetual and term licenses and implementation services to clients. Revenues from those agreements are currently recognized when the implementation services are substantially complete as determined in accordance with generally accepted accounting principles in the United States, or GAAP. Since many of our implementation projects are long and complex and substantial completion is reliant on our ability to deliver the services and often on client’s acceptance, the timing of revenue recognition is difficult to predict. This uncertainty, combined with the fact that all of the perpetual license and related services revenues are recognized at once and not spread over the delivery period, can cause our revenues forecast for such licenses in a particular period to deviate substantially from plan.

Our quarterly operating results may fluctuate in the future. As a result, we may fail to meet or exceed the expectations of research analysts or investors, which could cause our stock price to decline.

Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control. If our quarterly financial results fall below the expectations of investors or any securities analysts who follow our stock, the price of our common stock could decline substantially. Fluctuations in our quarterly financial results may be caused by a number of factors, including, but not limited to, those listed below and elsewhere in this prospectus:

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the extent to which new clients are attracted to our offerings to satisfy their TRM needs and the timing, rate and size of any transactions with such clients;

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the extent to which existing clients renew or increase their subscriptions to our solution and licenses for our other offerings and the timing of those renewals or increases;

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changes in billing cycles and the size of advance payments relative to overall contract value in client agreements;

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the effects of changes in global economic conditions;

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changes in our pricing policies or those of our competitors;

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seasonal factors affecting demand for our offerings or potential client purchasing decisions;

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the amount and timing of operating expenses, particularly sales and marketing, related to the maintenance and expansion of our business, operations and infrastructure;

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the timing and success of new product and service introductions by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, clients or strategic alliances; or

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other general economic, industry and market conditions.

We believe that our quarterly results of operations, including the levels of our revenues and changes in deferred revenues, may vary significantly in the future and that period-to-period comparisons of our operating results may not be meaningful. You should not rely on the results of any one quarter as an indication of future performance. In addition, an increased emphasis on quarterly results may not result in our achievement of long-term business strategies.

We may be exposed to operational failures of financial intermediaries through which clients conduct treasury management or securities transactions from our solution.

As part of our solution, clients may undertake treasury management transactions, such as making payments and importing cash balances, and certain securities trading transactions. Such transactions involve processing through third-party providers that interface with our solution. As a result, we face the risk of operational failure of any of the clearing agents, exchanges, or other financial intermediaries we may use to facilitate such transactions within our solution. Any such failure could adversely affect our ability to effect transactions through our solution or service our clients, and could harm our results of operations.

If we fail to meet our service level commitments to our clients, our clients could terminate their agreements with us or makes claims for breach of these agreements.

If we suffer extended periods of unavailability for our solution, we may be subject to claims for breach of our agreements, we may lose a substantial number of our clients and we may suffer harm to our reputation, any of which could harm our business. Further, some of our client agreements for our solution provide for service level commitments. If we are unable to meet the stated service level commitments, we may be required to issue a credit to qualifying clients up to the value of an entire month of their subscription and support fees with us.

Assertions by a third-party that we infringe its intellectual property, whether successful or not, could subject us to costly and time-consuming litigation or expensive licenses.

The software and technology industries are characterized by the existence of a large number of patents, copyrights, trademarks and trade secrets and by increasingly frequent litigation based on allegations of infringement or other violations of intellectual property rights. As we continue to grow, and as the number of products and competitors in our market increases, the possibility of intellectual property rights claims against us may increase. A party making such a claim, if successful, could secure a judgment that requires us to pay substantial damages. A judgment could also include an injunction or other court order that could prevent us from marketing our solution. In addition, we might be required to seek a license for the use of the infringed intellectual property, which might not be available on commercially reasonable terms, or at all. Alternatively, we might be required to develop non-infringing technology, which could require significant time, effort and expense, and might ultimately be unsuccessful. The occurrence of any of these events could harm our business, operating results, financial condition and cash flows.

We cannot assure you that we do not currently infringe or misappropriate, or that we will not in the future infringe or misappropriate, any third-party patents or other proprietary rights. For instance, because patent applications in the United States and foreign jurisdictions are typically maintained in confidence for up to 18 months after their filing or, in some cases, for the entire time prior to issuance as a U.S. patent, third parties may have earlier filed applications covering methods or other inventions that we consider our trade secrets. Additionally, we have completed several acquisitions in recent years and may be exposed to claims of past or current infringement from the operations of products of such acquired businesses.

Furthermore, many of our client agreements require us to indemnify our clients for certain third-party intellectual property infringement claims, which could increase our costs as a result of defending such claims and may require that we pay damages if there were an adverse ruling related to any such claims. These types of claims could harm our relationships with our clients, may deter future clients from subscribing to our offerings or could expose us to litigation for these claims. Even if we are not a party to any litigation between a client and a third-party, an adverse outcome in any such litigation could make it more difficult for us to defend our intellectual property in any subsequent litigation in which we are a named party.

Any intellectual property rights claim against us or our clients, with or without merit, could be time-consuming, expensive to litigate or settle and could divert management attention and financial resources. The absence of any issued patents may not provide meaningful deterrence against third parties alleging that we infringe their patents, particularly against patent holding companies or other adverse patent owners who have no relevant product revenue.

If we are unable to protect and enforce our proprietary rights, our business may be harmed.

We rely on a combination of copyright, service mark, trademark and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protection. We do not have any issued patents. Any patents that may issue from future patent applications may not provide sufficiently broad protection or they may not prove to be enforceable in actions against alleged infringers. Also, we cannot assure you that any future service mark or trademark registrations will be issued for pending or future applications or that any registered service marks or trademarks will be enforceable or provide adequate protection of our proprietary rights.

We endeavor to enter into agreements with our employees and contractors and agreements with parties with whom we do business to limit access to and disclosure of our proprietary information and to secure our rights in any intellectual property developed by such parties for us. The steps we have taken, however, may not prevent unauthorized use or the reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive to ours or infringe our intellectual property. Enforcement of our

intellectual property rights also depends on our successful legal actions against these infringers, but these actions may not be successful, even when our rights have been infringed.

Furthermore, effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which our offerings are sold. In addition, the legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in Internet-related industries are uncertain and still evolving.

Additionally, in order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Litigation brought to protect and enforce our intellectual property rights could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our failure to secure, protect and enforce our intellectual property rights could harm our brand and adversely impact our business.

Mergers of or other strategic transactions by our competitors could weaken our competitive position or reduce our revenues.

If one or more of our competitors were to merge or partner with another of our competitors, the change in the competitive landscape could impair our ability to compete effectively. Our competitors may also establish or strengthen cooperative relationships with our current or future strategic alliances or other parties with whom we have relationships, thereby limiting our ability to promote our solution. Disruptions in our business caused by these events could reduce our revenues.

If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired and investors’ views of us could be harmed.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. We are in the process of integrating ecofinance into our financial accounting systems, and our internal control over financial reporting could be impacted by this integration effort.

Section 404 of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In connection with this offering, we have begun the process of documenting, reviewing and improving our internal control over financial reporting for compliance with the Sarbanes-Oxley Act, which will require an annual management assessment of and report on the effectiveness of our internal control over financial reporting beginning with our second filing of an Annual Report on Form 10-K with the Securities and Exchange Commission, or SEC, after we become a public company. We have had material weaknesses and significant deficiencies in the past and may have them in the future. Our remediation efforts may not enable us to avoid a material weakness in the future.

Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until our first annual report required to be filed with the SEC after the date we are no longer an “emerging growth company” as defined in the recently enacted Jumpstart Our Business Startups Act of 2012, or the JOBS Act, if we take advantage of the exemption under Section 404(b) of the Sarbanes-Oxley Act contained in the JOBS Act. We may remain an “emerging growth company” for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time or certain other events occur, we would cease to be an “emerging growth company” as of the following January 1. To comply with the requirements of

being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff.

As part of our process of documenting and testing our internal control over financial reporting, we may identify areas for further attention and improvement. In addition, at such time that our independent registered public accounting firm is required to formally attest to the effectiveness of our internal control over financial reporting, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

Forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, we cannot assure you our business will grow at similar rates, or at all.

Growth forecasts are subject to significant uncertainty and are based on assumptions and estimates which may not prove to be accurate. Forecasts relating to the expected growth in the SaaS TRM market may prove to be inaccurate. Even if this market experiences the forecasted growth, we may not grow our business at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, the forecasts included in this prospectus should not be taken as indicative of our potential future growth.

Our use of open source and third-party technology could impose limitations on our ability to commercialize our solution.

We use and incorporate “open source” software in our solution. Although we monitor our use of open source software to avoid subjecting our products and services to conditions we do not intend, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to market our solution. In such event, we could be required to seek licenses from third parties in order to continue offering our solution, to make generally available, in source code form, proprietary code that links to or incorporates certain open source modules, to re-engineer our solution, or to discontinue offering our solution if re-engineering cannot be accomplished on a timely basis, any of which could cause us to breach contracts, harm our reputation, result in client losses or claims, increase our costs or otherwise adversely affect our business, operating results and financial condition.

We rely on the availability of third-party technology.

We incorporate certain proprietary third-party technologies into our solution and may desire to incorporate additional third-party technologies, including software programs, into our solution in the future. However, licenses to relevant third-party technology may not be available to us on commercially reasonable terms, or at all. As a result, we could face delays or be unable to make changes to our solution until equivalent technology can be identified, licensed or developed and integrated with our solution. Such delays or an inability to make changes to our solution, if it were to occur, could adversely affect our business, operating results and financial condition.

In addition, we could be subject to suits by parties claiming ownership of what we believe to be open source software or claiming violations of open source software licenses. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development to change our solution.

Our failure to raise additional capital or generate the cash flows necessary to expand our operations and invest in our offerings could reduce our ability to compete successfully.

We may need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the per share value of our common stock could decline. If we

engage in further debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness and force us to maintain specified liquidity or other ratios. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things:

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develop or enhance our solution and services;

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continue to expand our product development, sales and marketing organizations;

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acquire complementary technologies, products or businesses;

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expand operations, in the United States or internationally;

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hire, train and retain employees; or

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respond to competitive pressures or unanticipated working capital requirements.

The terms of our existing credit facility with Silicon Valley Bank and future indebtedness could restrict our operations, particularly our ability to respond to changes in our business or to take specified actions.

Our existing credit facility with Silicon Valley Bank, or SVB, contains, and any future indebtedness would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to take actions that may be in our best interests. Our credit facility requires us to satisfy specified financial covenants in the future. Our ability to meet those financial covenants can be affected by events beyond our control, and we may not be able to continue to meet those covenants. In the past, we have been in violation of such covenants and could be in violation again in the future. A breach of any of these covenants could result in a default under the credit facility. Upon the occurrence of an event of default, our lender could elect to declare all amounts outstanding under the credit facility to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, our lender could proceed against the collateral granted to them to secure such indebtedness. We have pledged all of our assets, other than our intellectual property, as collateral under the credit facility. If our lender accelerates the repayment of borrowings, we may not have sufficient funds to repay our existing debt.

If we fail to effectively manage and develop our strategic alliances, or if those third parties choose not to market and sell or recommend our offerings, our operating results may suffer.

The successful implementation of our strategic goals is dependent, in part, upon on our strategic alliances with thirty party software vendors, consulting firms, resellers, and accounting firms to offer our offerings or refer us to a larger client base than we can reach through our current direct sales and marketing efforts. Some of our strategic alliances are relatively new and, therefore, it is uncertain whether these third parties will be able to market and sell our offerings or refer them successfully to their client base or provide the volume and quality of clients that we currently expect.

Some of these third parties have previously entered, and may in the future enter, into strategic relationships with our competitors. Further, many of our strategic alliances have multiple strategic relationships and they may not regard us as significant to their businesses. Our strategic alliances may terminate their respective relationships with us, pursue other partnerships or relationships, or attempt to develop or acquire products or services that compete with our offerings. Our strategic alliances also may interfere with our ability to enter into other desirable strategic relationships.

If we are unable to manage and develop our strategic alliances, our potential client base may grow more slowly than we anticipate and we may have to devote substantially more resources to the distribution, sales and marketing of our offerings.

Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.

Our agreements with clients and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, damages caused by us to property or persons, or other liabilities relating to or arising from our products, services, or other contractual obligations. Some of these indemnity agreements provide for uncapped liability for which we would be responsible. The term of these indemnity provisions generally survives termination or expiration of the applicable agreement. Large indemnity payments could harm our business, operating results and financial condition. From time to time, we are requested by clients to indemnify them for breach of confidentiality with respect to personal data. Although we typically do not agree to, or contractually limit our liability with respect to, such requests, the existence of such a dispute with a client may have adverse effects on our client relationships and reputation.

We are subject to governmental export and import controls that could subject us to liability, impair our ability to compete in international markets and adversely affect our business.

Our solution is subject to U.S. export controls, including the Commerce Department’s Export Administration Regulations and various economic and trade sanctions regulations established by the Treasury Department’s Office of Foreign Assets Controls, and exports of our solution must be made in compliance with these laws. Furthermore, U.S. export control laws and economic sanctions prohibit the provision of products and services to countries, governments, and persons targeted by U.S. sanctions. Even though we take precautions to prevent our solution from being provided to U.S. sanctions targets, our solution and services could be provided to those targets or provided by our customers despite such precautions. Any such provision could have negative consequences, including government investigations, penalties and reputational harm. If we fail to comply with U.S. export control laws and import laws, including U.S. Customs regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, fines, which may be imposed on us and responsible employees or managers, and, in extreme cases, the incarceration of responsible employees or managers.

We incorporate encryption technology into certain of our products. These encryption products and the underlying technology may be exported outside of the United States only with the required export authorizations, including by license, a license exception or other appropriate government authorizations, including the filing of an encryption registration. In addition, various countries regulate the import of certain encryption technology, including import permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our solution or could limit our customers’ ability to implement our solution in those countries. Governmental regulation of encryption technology and regulation of imports or exports, or our failure to obtain required import or export approval for our products, could harm our international sales and adversely affect our revenues.

Any change in export or import regulations, economic sanctions or related legislation, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our solution, or in our decreased ability to export or sell our solution to existing or potential clients with international operations. These potential changes may also create delays in the introduction and sale of our solution in international markets, prevent our clients with international operations from deploying our solution or, in some cases, prevent the export or import of our solution to certain countries, governments or persons altogether. Any decreased use of our solution or limitation on our ability to export or sell our solution could likely adversely affect our business, financial condition and results of operations.

Failure to comply with such regulations or to manage such risks successfully could result in penalties, costs and restrictions on export privileges, which could harm our existing and future operating results and impair our business.

Our ability to use net operating loss carryforwards to reduce future tax payments is limited and may be limited further if we experience a change in ownership, or if taxable income does not reach sufficient levels.

Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change” (generally defined as a greater than 50% change (by value) in its equity ownership over a three year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We have experienced ownership changes in the past and may experience ownership changes in the future and subsequent shifts in our stock ownership. As a result, we are limited and may be limited further in the portion of net operating loss carryforwards that we can use in the future to offset taxable income for U.S. federal income tax purposes.

We will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could harm our operating results.

As a public company, we will incur significant additional legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting requirements. We also have incurred and will incur costs associated with current corporate governance requirements, including requirements under Section 404 and other provisions of the Sarbanes-Oxley Act, as well as rules implemented by the SEC and the exchange on which we list our shares of common stock issued in this offering. We expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We are unable to currently estimate these costs with any degree of certainty. We also expect that these rules and regulations will make it more difficult and more expensive for us to obtain directors and officers’ liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage previously available. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as our executive officers.

However, for as long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We plan to take advantage of these reporting exemptions until we are no longer an “emerging growth company.”

We may remain an “emerging growth company” for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time or certain other events occur, we would cease to be an “emerging growth company” as of the following January 1.

Risks Related to the Securities Markets and Ownership of Our Common Stock

There has been no prior market for our common stock, our stock price may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

There has been no public market for our common stock prior to this offering. The initial public offering price for our common stock was determined through negotiations between the underwriters and us and may vary from the market price of our common stock following this offering. If you purchase shares of our common stock in this offering, you may not be able to resell those shares at or above the initial public offering price. An active or liquid market in our common stock may not develop upon completion of this offering or, if it does develop, may not be sustainable. The trading prices of the securities of technology companies have been and are expected

to continue to be highly volatile. The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

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price and volume fluctuations in the overall stock market;

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changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

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actual or anticipated fluctuations in our operating results;

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the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

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changes in financial estimates by any securities analysts who follow our company, our failure to meet these estimates, or failure of those analysts to initiate or maintain coverage of our stock;

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rating downgrades by any securities analysts who follow our company;

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announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;

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the public’s response to our press releases or other public announcements, including our filings with the SEC;

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market conditions or trends in our industry or the economy as a whole;

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the loss of key personnel;

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lawsuits threatened or filed against us;

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future sales of our common stock by our executive officers, directors and significant stockholders; and

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other events or factors, including those resulting from war, incidents of terrorism or responses to these events.

In addition, the stock markets have experienced significant price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following a decline in stock price. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business, operating results and financial condition.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendations regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price could decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Our principal stockholders will have a controlling influence over our business affairs and may make business decisions with which you disagree and which may adversely affect the value of your investment.

After this offering, it is anticipated that, based on share ownership as of May 1, 2012, including shares issuable upon the exercise of outstanding options exercisable within 60 days of May 1, 2012, our executive officers,

directors and their affiliates will beneficially own or control, directly or indirectly, in the aggregate shares of our common stock, or approximately % of our outstanding shares, or, if the underwriters’ option to purchase additional shares is exercised in full, shares of common stock in the aggregate, or approximately % of our outstanding shares. As a result, if some of these persons or entities act together, they will have the ability to control matters submitted to our stockholders for approval, including the election and removal of directors, amendments to our certificate of incorporation and bylaws and the approval of any business combination. These actions may be taken even if they are opposed by other stockholders. This concentration of ownership may also have the effect of delaying, discouraging or preventing a change of control of our company or discouraging others from making tender offers for our shares, which could prevent our stockholders from receiving a premium for their shares. Additionally, affiliates of certain of our directors are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. One or more of these affiliates may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.

Some of these persons or entities may have interests different than yours. For example, because many of these stockholders purchased their shares at prices substantially below the price at which shares are being sold in this offering and have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors or may want us to pursue strategies that deviate from the interests of other stockholders.

A significant portion of our total outstanding shares may be sold into the public market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time after the expiration of the lock-up agreements described in this prospectus. Of the 50,856,663 shares of our common stock outstanding on March 31, 2012, shares are subject to a 180-day contractual lock-up with the underwriters for our initial public offering. These shares can be sold, subject to any applicable volume limitations under federal securities laws, after the earlier of the expiration of, or release from, the 180-day lock-up period. Additionally, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Stifel, Nicolaus & Company, Incorporated may, together, in their sole discretion, permit our officers, directors, employees and stockholders who are subject to the 180-day contractual lock-up to sell shares prior to the expiration of the lock-up agreements. In addition, as of March 31, 2012, there were 10,271,014 shares subject to outstanding options and 119,048 shares subject to an outstanding warrant that will become eligible for sale in the public market to the extent such options are exercised as permitted by any applicable vesting requirements, and to the extent permitted by the lock-up agreements and Rules 144 and 701 under the Securities Act of 1933, as amended.

The 180-day restricted period under the lock-up agreements with the underwriters will be automatically extended if: (1) during the last 17 days of the 180-day restricted period we issue an earnings release or material news or a material event relating to us occurs; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. See “Shares Eligible for Future Sale” for a discussion of these and other transfer restrictions.

Moreover, holders of an aggregate of approximately 50,541,502 shares of our outstanding common stock have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register all shares of common stock that we may issue under our equity incentive plans, including shares reserved for future issuance under our equity incentive plans as of . Once we register and issue these shares, they will be able to be freely sold in the public market upon issuance, subject to the lock-up agreements, to the extent applicable.

The market price of the shares of our common stock could decline as a result of sales of a substantial number of our shares in the public market or the perception in the market that the holders of a large number of shares intend to sell their shares.

Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.

The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our outstanding common stock immediately after this offering. Therefore, if you purchase our common stock in this offering, you will incur immediate dilution of $ in net tangible book value per share from the price you paid. In addition, following this offering, purchasers in the offering will have contributed % of the total consideration paid by our stockholders to purchase shares of common stock but will only own % of our outstanding shares, exclusive of shares acquired by purchasers in this offering from selling stockholders. Moreover, we issued options in the past to acquire common stock at prices significantly below the initial public offering price. As of March 31 2012, 10,271,014 shares of common stock were issuable upon exercise of outstanding stock options with a weighted-average exercise price of $0.63 per share and 119,048 shares subject to an outstanding warrant with an exercise price of $2.10 per share. To the extent that these outstanding options or warrant are ultimately exercised, you will incur further dilution. For a further description of the dilution that you will experience immediately after this offering, see the “Dilution” section of this prospectus.

Our management will have broad discretion over the use of the proceeds we receive in this offering and might not apply the proceeds in ways that increase the value of your investment.

Our management will have broad discretion to use our net proceeds from this offering, and you will be relying on the judgment of our management regarding the application of these proceeds. Our management might not apply our net proceeds of this offering in ways that increase the value of your investment. We expect to use the net proceeds from this offering for capital expenditures and general corporate purposes and working capital, which may in the future include investments in, or acquisitions of, complementary businesses, products, services technologies or assets. Our management might not be able to yield a significant return, if any, on any investment of these net proceeds. You will not have the opportunity to influence our decisions on how to use our net proceeds from this offering.

The issuance of additional stock in connection with acquisitions, our stock incentive plans, or otherwise will dilute all other stockholdings.

Our certificate of incorporation authorizes us to issue up to 100,000,000 shares of common stock and up to 5,000,000 shares of preferred stock with such rights and preferences as may be determined by our board of directors. Subject to compliance with applicable rules and regulations, we may issue all of these shares that are not already outstanding without any action or approval by our stockholders. We intend to continue to evaluate strategic acquisitions in the future. We may pay for such acquisitions, partly or in full, through the issuance of additional equity. Any issuance of shares in connection with our acquisitions, the exercise of stock options or otherwise would dilute the percentage ownership held by existing investors.

After the completion of this offering, we do not expect to declare any dividends in the foreseeable future.

We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. In addition, our existing credit facility and any future indebtedness may prohibit us from paying any type of dividends. Consequently, investors may need to sell all or part of their holdings of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase our common stock.

Anti-takeover provisions that will be contained in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law will contain provisions that may have the effect of delaying, discouraging or preventing a change in control of us

or changes in our management. Our amended and restated certificate of incorporation and bylaws will include provisions that:

•

authorize “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;

•

create a classified board of directors whose members serve staggered three-year terms;

•

specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of the board, the chief executive officer or the president;

•

establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;

•

provide that our directors may be removed only for cause;

•

provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;

•

specify that no stockholder is permitted to cumulate votes at any election of directors; and

•

require supermajority votes of the holders of our common stock to amend specified provisions of our charter documents.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

In addition, because we are incorporated in Delaware, we are governed by the provisions of the Delaware General Corporation Law, including Section 203, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.

Any provision of our amended and restated certificate of incorporation or bylaws or Delaware law that has the effect of delaying, discouraging or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” but are also contained elsewhere in this prospectus. In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,”“predict,” “project,” “should,” “will,” and “would” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statements include statements about:

•

our expectations regarding our revenues, gross margin and expenses;

•

our expectations regarding generating positive cash flows and attaining and maintaining profitability;

•

our ability to compete in our industry;

•

our growth strategy and our growth rate;

•

our ability to attract new clients and retain and upsell existing clients;

•

our ability to manage our international expansion;

•

our anticipated cash needs and our estimates regarding our capital requirements and our need for additional financing;

•

our future capital expenditures;

•

our ability to protect our intellectual property rights;

•

our ability to enter new markets;

•

our ability to maintain and grow our strategic alliances;

•

trends in the TRM market;

•

shifts in the mix of our revenues; and

•

our expectations regarding the use of proceeds from this offering.

You should refer to the “Risk Factors” section of this prospectus for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Forward looking statements represent our management’s beliefs and expectations as of the date of this prospectus. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

INDUSTRY AND MARKET DATA

Some of the industry and market data contained in this prospectus are based on independent industry publications, including those generated by ARW, Gartner and Treasury Strategies, or other publicly available information. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. These industry publications, surveys and forecasts generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these publications.

The Gartner reports described in this prospectus represent data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner and are not representations of fact. The Gartner reports speak as of their original publication date, and not as of the date of this prospectus, and the opinions expressed in the Gartner reports are subject to change without notice. The Gartner reports consist of: Gartner, Inc., Forecast: Enterprise Software Markets, Worldwide, 2009-2016, 1Q12 Update (C. Graham, et al, March 2012); and Forecast: Software as a Service, Worldwide, 2010-2015, 2H11 Update (S. Mertz, et al, November 2011).

We have also included in this prospectus industry and market data derived from a report of ARW and reports of Treasury Strategies. The ARW report consists of: Apps Run the World, Treasury & Risk Management, Enterprise Applications Market Report 2010-2015, Profiles of Top 10 Vendors, May 30, 2011. The Treasury Strategies reports consist of: Treasury Strategies, Inc., Treasury in Transformation, Results of Treasury Strategies’ 2008 Global Corporate Treasury and Liquidity Research Program, 2008, and Building the Next Generation of Treasury: Survey Participant Report, March 1, 2012.

USE OF PROCEEDS

We estimate that the net proceeds from our issuance and sale of shares of our common stock in this offering will be approximately $ million, or approximately $ million if the underwriters exercise their over-allotment option in full, based upon an assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any of the proceeds from the sale of shares by the selling stockholders, although we will bear the costs, other than underwriting discounts and commissions, associated with those sales.

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

We currently expect to use the net proceeds from this offering for working capital and other general corporate purposes, including, but not limited to, expanding our development, operations, sales and marketing activities, and acquiring property, plant and equipment. We have not allocated specific amounts of net proceeds for any of these purposes. We may also use a portion of the net proceeds that we receive from this offering for investments in or acquisitions of complementary businesses, products, services, technologies or other assets. We have not entered into any agreements or commitments with respect to any investments or acquisitions at this time.

The expected use of net proceeds from this offering represents our intentions based upon our present plans and business conditions. We cannot predict with certainty all of the particular uses for the proceeds of this offering or the amounts that we will actually spend on the uses set forth above. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering. Pending their use, we intend to invest the net proceeds of this offering in a variety of capital-preservation investments, including short- and intermediate-term, interest-bearing, investment-grade securities.

DIVIDEND POLICY

We have never declared or paid any dividends on our common stock. We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our common stock is limited by restrictions on our ability to pay dividends or make distributions, including restrictions under the terms of the agreements governing our credit facility with SVB.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and our capitalization as of March 31, 2012:

•

on an actual basis;

•

on a pro forma basis to reflect the conversion of all outstanding shares of our preferred stock into 50,541,502 shares of common stock which will occur automatically upon the completion of this offering; and

•

on a pro forma as adjusted basis to give further effect to (i) our sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and (ii) the filing of our amended and restated certificate of incorporation, which will occur immediately upon the closing of this offering.


	As of March 31, 2012
	Actual			Pro forma			Pro forma as adjusted
	(in thousands, except share and per share data)
Cash and cash equivalents	$	4,364		$	4,364		$

Long-term debt, including current portion		6,307			6,307
Capital lease obligations, including current portion		824			824
Stock warrant exercisable for 119,048 preferred shares		121			—
Redeemable convertible preferred stock, $0.001 par value; 50,541,502 shares authorized, 50,541,502 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted		67,477			—
Stockholders’ (deficit) equity:
Preferred stock, $0.001 par value; no shares authorized, issued or outstanding, actual or pro forma; 5,000,000 shares authorized, no shares issued or outstanding, pro forma as adjusted		—			—
Common stock, $0.001 par value; 65,000,000 shares authorized, 315,161 shares issued and outstanding, actual; 65,000,000 shares authorized, 50,856,663 shares issued and outstanding, pro forma; 100,000,000 shares authorized, shares issued and outstanding, pro forma as adjusted		—			51
Accumulated other comprehensive loss		264			264
Additional paid-in-capital		1,644			69,191
Accumulated deficit		(52,460	)		(52,460	)

Total stockholders’ (deficit) equity		(50,552	)		17,046

Total capitalization	$	24,177		$	24,177		$

The pro forma as adjusted information set forth above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase or decrease pro forma as adjusted cash and cash equivalents, additional paid-in-capital, total stockholders’ equity and total capitalization by approximately $ assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The number of shares of common stock outstanding in the table above does not include:

•

10,271,014 shares of our common stock issuable upon the exercise of stock options outstanding under our 2007 Stock Option and Incentive Plan as of March 31, 2012 at a weighted average exercise price of $0.63 per share;

•

an aggregate of up to shares of our common stock reserved for future issuance under our 2012 Equity Incentive Plan and 2012 Employee Stock Purchase Plan, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under these benefit plans, each of which will become effective in connection with this offering; and

•

up to 119,048 shares of our common stock issuable upon exercise of an outstanding warrant to purchase Series C preferred stock at a weighted average exercise price of $2.10 per share.

DILUTION

If you invest in our common stock, your interest will be diluted to the extent of the difference between the public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after the completion of this offering.

Dilution results from the fact that the per share offering price of our common stock is substantially in excess of the book value per share attributable to the existing stockholders for our currently outstanding common stock. At March 31, 2012, after giving effect to the automatic conversion of our preferred stock in connection with this offering, the pro forma historical net tangible book value of our common stock was negative $20.4 million, or a negative $0.40 per share. Historical net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and divided by the aggregate number of shares of our outstanding common stock.

After giving effect to the sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and the application of the net proceeds we will receive from this offering in the manner described in “Use of Proceeds,” our pro forma as adjusted net tangible book value as of March 31, 2012 would have been $ million, or $ per share. This represents an immediate increase in pro forma as adjusted net tangible book value of $ per share to existing stockholders and an immediate dilution of $ per share to new investors purchasing shares in the offering.

The following table illustrates this per share dilution:


Assumed initial public offering price per share			$
Actual net tangible book value per share as of March 31, 2012	$	(55.26)
Increase per share attributable to conversion of preferred stock	$	54.86

Pro forma net tangible book value per share before this offering	$	(0.40)
Increase in pro forma net tangible book value per share attributable to new investors participating in this offering

Pro forma as adjusted net tangible book value per share after this offering

Dilution per share to investors participating in this offering			$

The dilution information discussed above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease our pro forma as adjusted net tangible book value by approximately $ million, or approximately $ per share, and the dilution per share to investors participating in this offering by approximately $ per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The following table sets forth as of March 31, 2012, on the pro forma basis described above, the differences between the number of shares of common stock purchased from us and the selling stockholders, the total consideration paid and the weighted average price per share paid by existing stockholders and by investors purchasing shares of our common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page on this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

Shares purchased

Total consideration

Weighted average
price per share

Number

Percent

Amount

Percent

(in thousands, except share and per share data)

Existing stockholders

New investors

Total

100.0

The foregoing table does not reflect sales by existing stockholders in connection in this offering. Sales by the selling stockholders in this offering will reduce the number of shares held by existing stockholders to shares, or % of the total number of shares of our common stock outstanding after this offering, and will increase the number of shares held by new investors to shares, or % of the total number of shares of our common stock outstanding after this offering. In addition, if the underwriters exercise their option to purchase additional shares from us and the selling stockholders in full, the number of shares held by the existing stockholders after this offering would be reduced to , or % of the total number of shares of our common stock outstanding after this offering, and the number of shares held by new investors would increase to , or % of the total number of shares of our common stock outstanding after this offering.

The table above also excludes:

•

up to 119,048 shares of our common stock issuable upon exercise of an outstanding warrant to purchase Series C preferred stock at a weighted average exercise price of $2.10 per share.

To the extent that options are exercised, new options are issued under our equity incentive plans, or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

SELECTED CONSOLIDATED FINANCIAL DATA

You should read the following selected consolidated financial data together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and accompanying notes included later in this prospectus. The selected consolidated financial data in this section is not intended to replace our consolidated financial statements and the accompanying notes.

We have derived the selected consolidated statements of operations data for the years ended December 31, 2009, 2010 and 2011 and the selected consolidated balance sheet data as of December 31, 2010 and 2011 from our audited consolidated financial statements that are included in this prospectus. We have derived the selected consolidated statement of operations data for the year ended December 31, 2008 and the selected consolidated balance sheet data as of December 31, 2008 and 2009 from our audited consolidated financial statements that are not included in this prospectus. We have derived the selected consolidated statement of operations data for the twelve months ended December 31, 2007 and the selected consolidated balance sheet data as of December 31, 2007 from our unaudited consolidated financial statements that are not included in this prospectus. We have derived the consolidated statements of operations data for the three months ended March 31, 2011 and 2012 and balance sheet data as of March 31, 2012 from our unaudited consolidated financial statements that are included in this prospectus.

Pro forma basic and diluted net loss per common share have been calculated assuming the conversion of all outstanding shares of our preferred stock into 50,541,502 shares of common stock.


	Predecessor⁽¹⁾			Successor⁽²⁾
	Period Ended July 1, 2007 (unaudited)			Period Ended December 31, 2007 (unaudited)			Year Ended December 31,												Three Months Ended March 31,
	Period Ended July 1, 2007 (unaudited)			Period Ended December 31, 2007 (unaudited)			2008			2009			2010			2011			2011			2012
	(in thousands, except share, per share amounts and percentages)
Consolidated Statements of Operations Data:
Revenues
Subscription and support	$	4,888		$	4,813		$	14,529		$	18,651		$	28,002		$	35,587		$	8,630		$	9,149
Professional services and other		1,144			2,367			5,512			3,249			4,221			9,384			1,535			3,033

Total revenues		6,032			7,180			20,041			21,900			32,223			44,971			10,165			12,182
Cost of services⁽³⁾		1,644			3,425			9,659			10,398			11,543			17,551			3,954			4,965

Gross margin		4,388			3,755			10,382			11,502			20,680			27,420			6,211			7,217
Operating expenses⁽³⁾
Sales and marketing		1,445			2,443			7,861			8,928			11,917			20,325			4,312			4,965
Research and development		1,507			2,602			5,717			7,785			9,281			17,180			3,886			4,732
General and administrative		5,017			1,629			5,060			4,793			7,554			9,197			1,841			2,586

Total operating expenses		7,969			6,674			18,638			21,506			28,752			46,702			10,039			12,283

Loss from operations		(3,581	)		(2,919	)		(8,256	)		(10,004	)		(8,072	)		(19,282	)		(3,828	)		(5,066	)

Foreign currency transactions (loss) gain		(12	)		45			(125	)		51			(69	)		33			39			7
Interest expense		—			—			(10	)		(46	)		(112	)		(209	)		(41	)		(68	)
Other income (loss)		13			50			59			8			(153	)		670			144			13

Loss before provision for (benefit from) income taxes		(3,580	)		(2,824	)		(8,332	)		(9,991	)		(8,406	)		(18,788	)		(3,686	)		(5,114	)
Provision for (benefit from) income taxes		—			—			9			23			98			(1,466	)		(288	)		(393	)

Net loss	$	(3,580	)	$	(2,824	)	$	(8,341	)	$	(10,014	)	$	(8,504	)	$	(17,322	)	$	(3,398	)	$	(4,721	)

Net loss attributable to common stockholders	$	(3,580	)	$	(2,824	)	$	(8,341	)	$	(10,014	)	$	(8,504	)	$	(17,322	)	$	(3,398	)	$	(4,721	)

Net loss attributable to common stockholders per common share, basic and diluted	$	(0.29	)	$	—		$	(24,460.41	)	$	(412.57	)	$	(135.82	)	$	(78.44	)	$	(29.52	)	$	(15.00	)

Weighted average common shares outstanding used in computing net loss attributable to common stockholders per share, basic and diluted		12,459,906			—			341			24,272			62,613			220,830			115,113			314,754

Pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)																$	(0.34	)				$	(0.09	)

Pro forma weighted average shares outstanding used in computing pro forma net loss attributable to common stockholders per share, basic and diluted (unaudited)																	50,556,306						50,856,256

Other Financial and Operational Data:
Annual Contract Value⁽⁴⁾		NA		$	10,615		$	15,663		$	24,077		$	34,524		$	37,154		$	35,208		$	38,378
Retention Rate⁽⁵⁾		NA			96	%		84	%		89	%		92	%		90	%		N.A.			N.A.
Adjusted Free Cash Flow⁽⁶⁾	$	(41	)	$	898		$	(535	)	$	(3,337	)	$	1,047		$	(10,109	)	$	(2,876	)	$	(3,892	)
Adjusted Gross Margin⁽⁷⁾		74	%		70	%		65	%		67	%		73	%		69	%		70	%		67	%

⁽¹⁾	We acquired Reval.com, Inc. on July 2, 2007. This period represents the operations of Reval.com, Inc. from January 1 through July 1, 2007.

⁽²⁾	This period represents our operations with Reval.com, Inc. from July 2, 2007 through December 31, 2007.

⁽³⁾	Cost of services and operating expenses include stock-based compensation expenses and depreciation and amortization expenses as follows:


	Predecessor⁽¹⁾		Successor⁽²⁾
	Period Ended July 1, 2007		Period Ended December 31,		Year Ended December 31,								Three Months Ended March 31,
	Period Ended July 1, 2007		2007		2008		2009		2010		2011		2011		2012
	(in thousands)
Stock-Based Compensation Expenses:
Cost of services	$	—	$	4	$	8	$	33	$	19	$	17	$	3	$	7
Sales and marketing		—		4		42		10		69		74		17		20
Research and development		—		61		100		67		123		95		31		21
General and administrative		—		99		140		107		172		165		52		36

Total stock-based compensation expenses	$	—	$	168	$	290	$	217	$	383	$	351	$	103	$	84


	Predecessor⁽¹⁾		Successor⁽²⁾
	Period Ended July 1, 2007		Period Ended December 31,		Year Ended December 31,								Three Months Ended March 31,
	Period Ended July 1, 2007		2007		2008		2009		2010		2011		2011		2012
	(in thousands)
Depreciation and Amortization Expenses:
Cost of services	$	53	$	1,284	$	2,713	$	3,145	$	2,768	$	3,622	$	888	$	908
Sales and marketing		—		367		733		1,158		1,543		3,370		840		815
Research and development		—		—		—		—		—		—		—		—
General and administrative		20		51		179		269		376		1,324		293		364

Total depreciation and amortization expenses	$	73	$	1,702	$	3,625	$	4,572	$	4,687	$	8,316	$	2,021	$	2,087

⁽⁴⁾

⁽⁵⁾

We measure our retention rates by assessing on a dollar basis the ACV we retain for the same client and product set at the end of a calendar year, regardless of when the client’s contract renewal is made, as measured against the ACV at the beginning of such year excluding any increase in values through upsells during such period, such as from subscriptions to additional modules or the addition of new users. For additional information with respect to how we calculate our retention rate and our use of retention rate, see “Management’s Discussion and Analysis—Key Operating Metrics.”

⁽⁶⁾

See the section titled “Non-GAAP Financial Measures” below for how we define and calculate adjusted free cash flow, a reconciliation between adjusted free cash flow and net cash provided by (used in) operating activities, the most directly comparable GAAP financial measure and a discussion about the limitations of adjusted free cash flow.

⁽⁷⁾

Adjusted gross margin is presented as a percentage of total revenues. See the section titled “Non-GAAP Financial Measures” below for how we define and calculate adjusted gross margin, a reconciliation between adjusted gross margin and gross margin, the most directly comparable GAAP financial measure, and a discussion about the limitations of adjusted gross margin.

In the following table, working (deficit) capital is calculated as current assets less current liabilities (other than the current portion of deferred revenue).


	Predecessor⁽¹⁾			Successor⁽²⁾
	As of July 1, 2007 (Unaudited)			As of December 31, 2007 (Unaudited)
							As of December 31,												As of March 31, 2012
							2008			2009			2010			2011			As of March 31, 2012
	(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	532		$	5,504		$	4,821		$	4,843		$	11,717		$	4,644		$	4,364
Accounts receivable, net		3,540			4,975			5,122			6,686			9,398			9,600			9,825
Working (deficit) capital		(1,227	)		7,886			6,500			7,725			12,034			7,144			8,098
Total assets		4,640			36,996			31,472			44,033			71,791			59,204			60,168
Deferred revenue		5,387			7,421			11,047			16,193			21,507			24,069			25,831
Long-term debt, including current portion		164			120			73			929			2,747			4,756			7,131
Redeemable convertible preferred stock		12,972			28,000			28,000			44,146			64,463			67,477			67,477
Total stockholders’ deficit	$	(19,366	)	$	(3,390	)	$	(11,441	)	$	(21,211	)	$	(29,315	)	$	(46,261	)	$	(50,552	)

⁽¹⁾	We acquired Reval.com, Inc. on July 2, 2007. This period represents the operations of Reval.com, Inc. from January 1 through July 1, 2007.

⁽²⁾	This period represents our operations with Reval.com, Inc. from July 2, 2007 through December 31, 2007.

Non-GAAP Financial Measures

The following table presents a reconciliation of adjusted free cash flow to net cash provided by (used in) operating activities and a reconciliation of adjusted gross margin to gross margin for each of the periods presented:


	Predecessor⁽¹⁾			Successor⁽²⁾
	Period Ended July 1, 2007			Period Ended December 31, 2007			Year Ended December 31,												Three Months Ended March 31,
	Period Ended July 1, 2007			Period Ended December 31, 2007			2008			2009			2010			2011			2011			2012
	(in thousands)
Reconciliation of Adjusted Free Cash Flow to Net Cash Provided by (Used in) Operating Activities:
Net cash provided by (used in) operating activities	$	19		$	1,675		$	27		$	(3,354	)	$	1,183		$	(8,698	)	$	(2,604	)	$	(3,070	)
Capital expenditures		(60	)		(777	)		(562	)		(282	)		(1,413	)		(1,307	)		(272	)		(822	)
Costs related to acquisitions and other		—			—			—			299			1,277			—			—			—

Adjusted free cash flow	$	(41	)	$	898		$	(535	)	$	(3,337	)	$	1,047		$	(10,005	)	$	(2,876	)	$	(3,892	)


	Predecessor⁽¹⁾			Successor⁽²⁾
	Period Ended July 1, 2007			Period Ended December 31, 2007			Year Ended December 31,												Three Months Ended March 31,
	Period Ended July 1, 2007			Period Ended December 31, 2007			2008			2009			2010			2011			2011			2012
	(in thousands)
Reconciliation of Adjusted Gross Margin to Gross Margin:
Gross margin	$	4,388		$	3,755		$	10,382		$	11,502		$	20,680		$	27,420		$	6,211		$	7,217
Depreciation expenses		53			101			346			478			751			868			202			243
Amortization expenses		—			1,183			2,367			2,667			2,017			2,754			686			665
Stock-based compensation expenses		—			4			8			33			19			17			3			7

Adjusted gross margin	$	4,441		$	5,043		$	13,103		$	14,680		$	23,467		$	31,059		$	7,102		$	8,132

Gross margin %		73	%		52	%		52	%		53	%		64	%		61	%		61	%		59	%
Adjusted gross margin %		74	%		70	%		65	%		67	%		73	%		69	%		70	%		67	%

⁽¹⁾	We acquired Reval.com, Inc. on July 2, 2007. This period represents the operations of Reval.com, Inc. from January 1 through July 1, 2007.

⁽²⁾	This period represents our operations with Reval.com, Inc. as a wholly-owned subsidiary from July 2, 2007 through December 31, 2007.

Adjusted Free Cash Flow

comparisons with other peer companies many of which use similar non-GAAP financial measures to supplement their GAAP results. Although adjusted free cash flow or similar metrics are sometimes used by investors and securities analysts in their evaluations of companies, adjusted free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results of operations as reported under GAAP.

Some of these limitations are:

•

adjusted free cash flow does not reflect our future expenditures related to our contractual commitments;

•

adjusted free cash flow does not reflect the non-cash component of employee compensation or depreciation and amortization of property, equipment or intangible assets;

•

adjusted free cash flow does not reflect our acquisition costs with respect to our business acquisitions; and

•

other companies in our industry may calculate adjusted free cash flow or similarly titled measures differently than we do, limiting their usefulness as comparative measures.

Management does not use adjusted free cash flow in isolation or as a primary performance measure and also uses other measures of operating performance.

Adjusted free cash flow is not calculated in accordance with GAAP and is not a substitute for or superior to financial measures determined in accordance with GAAP. Management compensates for the inherent limitations associated with using the adjusted free cash flow measure through disclosure of such limitations, presentation of our financial statements in accordance with GAAP, and reconciliation of adjusted free cash flow to the most directly comparable GAAP measure, net cash provided by (used in) operating activities, as presented above.

Adjusted Gross Margin

Some of these limitations are:

•

adjusted gross margin excludes material costs such as the non-cash component of employee compensation or depreciation and amortization of property, equipment or intangible assets; and

•

other companies in our industry may calculate adjusted gross margin or similarly titled measures differently than we do, limiting their usefulness as comparative measures.

Management does not use adjusted gross margin in isolation or as a primary performance measure and also uses other measures of our operating performance.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes and other financial information included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should read “Risk Factors” for a discussion of important factors that could cause our actual results to differ materially from our expectations.

Overview

We are a leading, global SaaS provider of comprehensive and integrated treasury and risk management solutions. Our cloud-based software and related offerings enable enterprises to better manage cash, liquidity and financial risk, and include specialized capabilities to account for and report on complex financial instruments and hedging activities. The scope and timeliness of the analytics and data we provide allow chief financial officers, treasurers and finance managers to operate more confidently in an increasingly complex and volatile global business environment.

Our predecessor, Reval.com, Inc., or Reval.com, was organized in 1999 as a Delaware corporation which focused on developing and providing a SaaS hedge accounting, compliance and financial risk management offering. We were organized in June 2007 as a Delaware corporation under the name “Reval Holdings, Inc.” as a holding company and acquisition vehicle to acquire the business of Reval.com. We completed the acquisition of Reval.com in July 2007.

We began generating subscription revenues in 2001. In addition to organically developing our offerings, since our founding we have made two acquisitions designed to solidify our market position and expand our product offerings. In August 2009, we acquired all of the capital stock of FXpress Corporation, or FXpress, a treasury software provider. Our acquisition of FXpress further solidified our position in derivative and exposure management and provided us access to new clients. In December 2010, we acquired all of the capital stock of ecofinance Finanzsoftware & Consulting GmbH, or ecofinance, a leading treasury management software provider operating primarily in the Germanic region, to expand our current SaaS solution to include, among other features, global cash management and liquidity management.

In October 2011, we launched our integrated, expanded all-in-one TRM solution, which includes new solution sets for global cash management and liquidity management, in addition to our existing hedge accounting and compliance, and financial risk management solution sets. Since this launch, we have begun to see new and existing clients adopt our expanded solution. We serve over 550 clients in more than 20 countries, including 92 clients in the Fortune 500 and 30 clients in the Fortune 100.

We generate revenues primarily from the sale of subscriptions to our SaaS solution, professional services for configuration and implementation and other services related to our SaaS solution and other offerings and term licenses associated with offerings acquired from ecofinance. In addition, we generate revenues from perpetual licenses and associated maintenance contracts primarily in the Germanic region related to the acquired ecofinance offerings. We also offer development services associated with client-funded enhancements to our solution. We offer our SaaS subscriptions and term licenses with terms typically ranging from 12 to 36 months. We expect that over time we will generate a smaller proportion of revenues from our perpetual license offerings as we focus more on delivering our offerings on a subscription or term license basis.

Over the past several years, we have achieved significant growth. Our revenues increased from $21.9 million in 2009 to $32.2 million in 2010 and to $45.0 million in 2011. To support our growth, we have also continued to invest heavily in expanding our client base and our technology, and as a result, we recorded operating losses of $10.0 million, $8.1 million, and $19.3 million in 2009, 2010 and 2011, respectively. Our revenue was $10.2 million and $12.2 million for the quarters ended March 31, 2011 and 2012, respectively. Our operating losses were $3.8 million and $5.1 million for the quarters ended March 31, 2011 and 2012, respectively.

Key Operating Metrics

We review four key business metrics to help us monitor the performance of our business and to identify trends affecting our business. These metrics are annual contract value, retention rate, adjusted free cash flow and adjusted gross margin. We believe these metrics are useful to understanding the underlying trends in our business. The following table summarizes our key operating metrics for 2009, 2010 and 2011 and our annual contract value, adjusted free cash flow and adjusted gross margin for the three months ended March 31, 2011 and 2012 (unaudited)).


	Year Ended December 31,									Quarter Ended March 31,
($ in thousands)	2009			2010			2011			2011			2012
Annual contract value	$	24,077		$	34,524		$	37,154		$	35,208		$	38,378
Retention rate		89	%		92	%		90	%		N.A.			N.A.
Adjusted free cash flow	$	(3,337	)	$	1,047		$	(10,109	)	$	(2,876	)	$	(3,892	)
Adjusted gross margin		67	%		73	%		69	%		70	%		67	%

Annual Contract Value. Annual contract value, or ACV, is a measure that we define as the sum of the annual value associated with subscription, term license, and maintenance contracts, but does not include any contract value from one-time sources such as professional and development services or perpetual licenses. ACV, in addition to revenues, is a fundamental top-line metric we use to manage our business, as it reflects our annualized contract value in a given period. We typically enter into subscription and term license agreements that are one to three years in length and invoice our clients for subscription and term license fees in annual, ratable increments upon initiation of the initial contract or subsequent renewal. ACV only includes 12 months of subscription and term license value. If pricing on a multi-year, non-cancelable subscription or term license contract has different contract values for different years, we use the average annual value for the entire contracted period in determining ACV. Our maintenance contracts associated with perpetual software licenses generally have a 12 month term and are invoiced annually in advance. We use ACV as one factor to evaluate the results of our operations, generate future operating plans and assess the performance of our company. While we believe that this financial measure is useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for revenues recognized in accordance with GAAP. In addition, other companies that charge for some or all of their annual fees in advance, including companies in our industry, may calculate ACV differently or not at all, which reduces its usefulness as a comparative measure.

Retention Rate. The predictability of our future revenues is tied to our ability to retain clients and renew their subscription, maintenance and term license agreements with us. We measure retention rates by assessing on a dollar basis the ACV we retain for the same client and product set at the end of a calendar year, regardless of when the contract renewal is made, as measured against the ACV for such client and product set at the beginning of such year. We exclude any increase in values through upsells during such period, such as from subscriptions to additional modules, price increases, or the addition of new users. For example, if all clients as of January 1^st had an aggregate ACV of $10.0 million and during the year one client with ACV of $1.0 million did not renew; our retention rate would be 90%. Similarly, if such client had increased its ACV by the end of the year to $2.0 million our retention rate would remain at 100%, as the upsell is not reflected in our retention rate calculation. Our five year average annual retention rate is approximately 90% as of December 31, 2011. Our use of a retention rate has limitations as an analytical tool, and you should not consider it in isolation. Other companies in our industry may calculate retention rate differently, which reduces its usefulness as a comparative measure. We cannot predict our retention rate in future periods.

Adjusted Free Cash Flow. Our management uses adjusted free cash flow, which we define as cash flow from operations less purchases of property and equipment and adjusted for non-routine items such as costs related to acquisitions. We use this as a measure of liquidity and operating performance as it assists us in assessing our ability to fund our growth. We believe that this measure also provides us with useful information to measure and understand our performance on a consistent and comparable basis. We use adjusted free cash flow in the preparation of our annual operating budgets and to measure and evaluate the effectiveness of our business

strategies. Adjusted free cash flow is not calculated in accordance with GAAP and is not a substitute for or superior to financial measures determined in accordance with GAAP. For further discussion regarding adjusted free cash flow and a reconciliation of adjusted free cash flow to net cash (used in) provided by operating activities, the most nearly comparable GAAP measure, see “Selected Consolidated Financial Data—Non-GAAP Financial Measures.”

Adjusted Gross Margin. Our management uses adjusted gross margin as a measure of our operating performance because it does not include the impact of depreciation, amortization of intangible assets and stock-based compensation expenses classified within the cost of services line item. We believe that this measure provides us with additional useful information to measure and understand our performance on a consistent and comparable basis because this measure excludes non-cash items that are not representative of our operating performance. We use adjusted gross margin in the preparation of our annual operating budgets and to measure and evaluate the effectiveness of our business strategies. Adjusted gross margin is not calculated in accordance with GAAP and is not a substitute for or superior to financial measures determined in accordance with GAAP. For further discussion regarding adjusted gross margin and a reconciliation of adjusted gross margin to GAAP gross margin, the most nearly comparable GAAP measure, see “Selected Consolidated Financial Data—Non-GAAP Financial Measures.”

Factors Affecting our Performance

The following represents a summary of certain trends and uncertainties, which could have a significant impact on our financial condition and results of operations. This summary is not intended to be a complete list of potential trends and uncertainties that could impact our business in the long or short term. This summary, however, should be considered along with the factors identified in the “Risk Factors” section of this prospectus.

•

Investment in growth. We have aggressively invested, and intend to continue to invest, in expanding our global product development, sales and operations to support our growth. As a result, we have incurred operating losses in all quarters since 2009. Specifically, in each of the quarters ending June 30, 2011, September 30, 2011, December 31, 2011 and March 31, 2012, our cost of services, sales and marketing, research and development, and general and administrative expenses have increased significantly as compared to prior quarters as we prepared for, and continue to support, the launch of our expanded solution in October 2011. We expect to continue to incur operating losses as a result of expenses associated with the continued development and expansion of our business within our current market and adjacent markets.

•

Success of our expanded TRM solution. Prior to our acquisition of ecofinance in December 2010, our SaaS solution included only our financial risk management and hedge accounting and compliance solution sets. We acquired ecofinance in December 2010 to broaden our solution to include global cash management and liquidity management solution sets. We launched the expanded version of our solution, which now includes all four solution sets, in October 2011, and have begun to see new and existing clients adopt this expanded solution. However, we have limited experience selling this expanded solution in the market and cannot assess what, if any, impact this expansion may have on our selling efforts and its potential impact on our future revenues.

•

Growth of the SaaS TRM market. Our future financial performance and revenue growth depend on the willingness of enterprise clients to use an integrated SaaS TRM solution. Providing enterprises with applications to address their treasury management challenges through an integrated, comprehensive SaaS solution is a developing market and it is not certain whether SaaS TRM offerings will achieve market acceptance and achieve sustained high demand. The competitive dynamics may cause pricing levels, as well as pricing models generally, to change, as the market matures and as existing and new market participants introduce new types of solutions and different approaches to enable enterprises to address their TRM needs.

•

Anticipated increase in subscription and support revenues in our total revenue mix. While we historically sold our offerings exclusively on a SaaS subscription basis, acquisitions have brought perpetual licenses into our revenue mix. While we are continuing to sell our ecofinance offerings, primarily in the Germanic region, on a perpetual license basis, we now provide these offerings on a term license basis as well. Over time, we expect that the total mix of our revenues between subscription and support revenues, which includes term licenses, and professional services and other revenues, which includes perpetual licenses, will increasingly shift towards subscription and support revenues as a result of increased adoption of our integrated TRM solution and our planned shift away from perpetual licenses in our acquired ecofinance business.

Key Components of Our Results of Operations

Revenues

We generate revenues primarily in the form of software subscription fees and professional services for configuration, implementation and other services related to our SaaS solution. In addition, we generate revenues from perpetual license fees and maintenance fees associated with acquired offerings from ecofinance and FXpress. At the end of 2011, we also began selling our ecofinance offerings on a term license basis.

Subscription and support revenues

Subscription and support revenues represent subscription fees, maintenance fees associated with our perpetual licenses, and the amortization of fees related to development of enhancements to our SaaS solution, and term license fees

For subscriptions, we recognize subscription revenues ratably over the contract term. For perpetual license arrangements, we recognize maintenance revenues upon substantial completion of the associated implementation services and then ratably over the expected contract term. For development services associated with client-funded enhancements to our solution, we recognize revenues over the greater of three years or the contract term.

For term license arrangements without significant software production, modification, or customization and/or without services that are essential to functionality of the software, we begin recognizing revenues upon the delivery of the software and commencement of the license term ratably over the longer of the contract term or expected customer relationship period. For the years ended December 31, 2009, 2010, and 2011 and for the three months ended March 31, 2011 and 2012, there were no material revenues recognized from such arrangements.

For any software arrangements with substantial software production, modification, or customization and/or with services that are essential to the functionality of the software, we recognize revenues using contract accounting. For the years ended December 31, 2009, 2010, and 2011 and for the three months ended March 31, 2011 and 2012, there were no material revenues recognized from such arrangements.

We offer our SaaS subscriptions and our term licenses with terms typically ranging from 12 to 60 months.

Professional services and other

Professional services and other revenues represent professional services for configuration, implementation, training and other services related to our solution and also includes our perpetual licenses and the related professional services. We typically recognize revenues from professional services related to our SaaS solution as those services are delivered. We recognize revenues from our perpetual licenses and related professional services upon substantial completion of the delivery of the services.

Invoicing and revenue concentration

We generally invoice our clients for subscription, term license, and maintenance services in advance in annual installments, and typical payment terms provide that our clients pay us within 30 to 60 days of invoice. Amounts that have been invoiced where the client has a legal obligation to pay are recorded in accounts receivable and deferred revenues. We generally invoice our clients for professional services related to our SaaS solution monthly as those services are delivered to clients and for professional services related to our term and perpetual licenses on a milestone basis. We generally invoice perpetual software licenses upon delivery of the software to the client.

For the year ended December 31, 2011, we derived 59% of our revenues from North America, 34% from Europe, and 7% from the Asia-Pacific region. However, our revenues from international sources have increased over time and significantly increased in Europe in 2011 as result of our ecofinance acquisition. We intend to continue to build our international sales operations by increasing our direct sales force and distribution relationships abroad. We expect our international revenues to increase over time, both in absolute dollars and as a percentage of total revenues.

Cost of Services and Gross Margin

Cost of services primarily consists of costs related to personnel and related costs of operations for hosting our SaaS solution, client support, professional services, market data management and our outsourced reporting services, allocated overhead for facilities and operations as well as a significant amount of intangible asset amortization expenses associated with acquired technology from our ecofinance and FXpress acquisitions, related property and equipment depreciation and amortization expenses and stock-based compensation expenses related to employees who provide services. We expect that the amortization of intangible assets expenses included in our cost of services related to technology we acquired in the ecofinance and FXpress acquisitions will decrease over time.

We recognize cost of services expenses related to our SaaS solution as they are incurred while we recognize subscription revenues for the SaaS solution ratably over the subscription term. We recognize professional services expenses related to implementation of the SaaS services as incurred. With respect to our perpetual and term licenses, we defer direct costs related to the implementation of such licenses until the substantial completion of the delivery of the implementation services.

We intend to continue to invest additional resources in expanding the delivery capability of our solution. The timing of these additional expenses could affect our cost of services, both in terms of absolute dollars and as a percentage of total revenues, in any particular quarterly or annual period. In recent years, we have increased our investment in resources to accommodate additional capacity. Many of these investments were fixed and are not expected to vary directly with our revenues. We believe, over the long term, we will be able to reduce our cost of services as a percentage of total revenues to the extent that we achieve the benefits of scale from increased adoption of our TRM solution. However, cost of services as a percentage of total revenues may fluctuate from period to period depending on growth of our professional services and any associated costs relating to the delivery of services such as market data and hosting costs, the timing of sales of perpetual and term licenses, the amount and timing of amortization of intangibles from acquisitions and the timing of significant expenditures.

Gross margin as a percentage of total revenues is affected by two main factors, the mix of SaaS subscriptions, software and services sold and our average contractual selling price. We believe that over time we will achieve improvements in our gross margin both in absolute dollars and as a percentage of revenues as we integrate the acquired operations, decrease our amortization of intangible assets, and capture the operating efficiencies of the overall business. However, our gross margin could fluctuate based on the mix of software and services sold and average contractual selling price, timing of revenue recognition, and any future acquisition activity.

Operating Expenses

Each operating expense category, including cost of services, reflects an overhead expense allocation. We allocate overhead such as rent and employee benefits costs to all departments based on relative headcount. Our operating expenses also include a significant amount of amortization of intangible assets related to the purchase accounting treatment of our historical acquisitions. We expect that the amortization of intangible assets expenses included in our operating expenses will decrease over time.

Sales and marketing. Sales and marketing expenses are recognized as incurred and primarily consist of personnel and related costs for our sales and marketing employees, including salaries, employee benefits, bonuses, commissions, training and allocated overhead, the cost of marketing programs such as online lead generation, promotional and tradeshow events, webinars and other meeting costs, amortization of intangible assets related to trade name and client relationships from our acquisitions and stock-based compensation. Sales incentive compensation is earned and paid partially at the time a client enters into a binding purchase agreement and the remainder when the client pays for the first year of services.

We plan to continue to invest in sales and marketing to expand our global client and revenue base. We expect sales and marketing expenses to increase in absolute dollars and continue to be our largest expenses in absolute dollars and as a percentage of total revenues.

Research and development. Research and development expenses are recognized as incurred and primarily consist of personnel and related costs for our research and development employees, including salaries, employee benefits, allocated overhead and stock-based compensation expenses.

We believe that continued investment in our offerings and SaaS technology is important for our future growth, and therefore, we expect research and development expenses to increase in absolute dollars. A significant portion of our research and development expenses are related to highly trained and educated financial engineers, product specialists and developers with domain expertise in derivatives and financial reporting. We expect that research and development expenses may fluctuate as a percentage of total revenues in the near term as we continue to enhance and extend our offerings, including our integrated TRM solution. However, we expect research and development to generally decrease as a percentage of total revenues over the longer term of our business.

General and administrative. General and administrative expenses primarily consist of personnel and related costs for executive, finance, human resources and administrative personnel, including salaries, employee benefits and allocated overhead, legal and other professional fees, other corporate expenses not allocated to other departments, amortization and depreciation and stock-based compensation expenses.

We expect our general and administrative expenses to increase in terms of absolute dollars and as a percentage of total revenues as we incur additional costs as a publicly traded company.

Interest Expense

Interest expense consists primarily of interest on borrowings under our Silicon Valley Bank, or SVB, credit facility, our Austrian credit facilities, debt issuance costs, and capitalized leases.

Other Income (Loss)

Other income (loss) consists primarily of government research and development subsidies from Austrian governmental authorities in support of the establishment of high technology jobs.

Provision for (Benefit from) Income Taxes

Provision for (benefit from) income taxes consists of federal and state income taxes in the United States and income taxes in certain foreign tax jurisdictions.

As of March 31, 2012, we had U.S. federal net operating loss carryforwards of approximately $49.0 million and Austrian net operating loss carryforwards of approximately $5.6 million. We have engaged in several transactions since our inception that have resulted in a change in control as defined by Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, which limits our ability to utilize these U.S. federal net operating loss carryforwards in the future. As of March 31, 2012, $19.9 million of our U.S. federal net operating loss carryforwards were so limited, and if they remain unused, will expire in 2031. At March 31, 2012, we recorded a valuation allowance against the full amount of our U.S. deferred tax assets, as our management believes it is uncertain that they will be fully realized. If we determine in the future that we will be able to realize all or a portion of our net operating loss carryforwards, an adjustment to our net operating loss carryforwards would increase net income or decrease net loss, as applicable, in the period in which we make such a determination. Our Austrian net operating loss carryforwards do not expire and we have not recorded a valuation allowance with respect to these net operating loss carryforwards.

Results of Operations

The following table sets forth our selected consolidated statements of operations data:


	Year Ended December 31,									Three Months Ended March 31,
	2009			2010			2011			2011			2012
	(in thousands)
Consolidated Statements of Operations Data:
Revenues
Subscription and support	$	18,651		$	28,002		$	35,587		$	8,630		$	9,149
Professional services and other		3,249			4,221			9,384			1,535			3,033

Total revenues		21,900			32,223			44,971			10,165			12,182
Cost of services⁽¹⁾		10,398			11,543			17,551			3,954			4,965

Gross margin		11,502			20,680			27,420			6,211			7,217
Operating expenses⁽¹⁾
Sales and marketing		8,928			11,917			20,325			4,312			4,965
Research and development		7,785			9,281			17,180			3,886			4,732
General and administrative		4,793			7,554			9,197			1,841			2,586

Total operating expenses		21,506			28,752			46,702			10,039			12,283

Loss from operations		(10,004	)		(8,072	)		(19,282	)		(3,828	)		(5,066	)

Foreign currency transactions gain (loss)		51			(69	)		33			39			7
Interest expense		(46	)		(112	)		(209	)		(41	)		(68	)
Other income (loss)		8			(153	)		670			144			13

Loss before provision for (benefit from) income taxes		(9,991	)		(8,406	)		(18,788	)		(3,686	)		(5,114	)
Provision for (benefit from) income taxes		23			98			(1,466	)		(288	)		(393	)

Net loss	$	(10,014	)	$	(8,504	)	$	(17,322	)	$	(3,398	)	$	(4,721	)

⁽¹⁾	Cost of services and operating expenses include stock-based compensation expenses and depreciation and amortization expenses as follows:


	Year Ended December 31,						Three Months Ended March 31,
	2009		2010		2011		2011		2012
	(in thousands)
Stock-Based Compensation Expenses:
Cost of services	$	33	$	19	$	17	$	3	$	7
Sales and marketing		10		69		74		17		20
Research and development		67		123		95		31		21
General and administrative		107		172		165		52		36

Total stock-based compensation expenses	$	217	$	383	$	351	$	103	$	84

Depreciation and Amortization Expenses:
Cost of services	$	3,145	$	2,768	$	3,623	$	888	$	908
Sales and marketing		1,158		1,543		3,370		840		815
Research and development		—		—		—		—		—
General and administrative		269		376		1,323		293		364

Total depreciation and amortization expenses	$	4,572	$	4,687	$	8,316	$	2,021	$	2,087

The following table sets forth our selected consolidated statements of operations data expressed as a percentage of total revenues:


	Year Ended December 31,									Three Months Ended March 31,
	2009			2010			2011			2011			2012
Consolidated Statements of Operations Data:
Revenues:
Subscription and support		85	%		87	%		79	%		85	%		75	%
Professional services and other		15			13			21			15			25

Total revenues		100			100			100			100			100
Cost of services		47			36			39			39			41

Gross margin		53			64			61			61			59
Operating expenses:
Sales and marketing		41			37			45			43			41
Research and development		36			29			38			38			39
General and administrative		22			23			20			18			21

Total operating expenses		99			89			103			99			101

Loss from operations		(46	)		(25	)		(42	)		(38	)		(42	)

Loss before provision for income taxes		(46	)		(25	)		(41	)		(36	)		(42	)
Provision for (benefit from) income taxes		—			—			(3	)		(3	)		(3	)

Net loss		(46	%)		(25	%)		(38	%)		(33	%)		(39	%)

Three Months Ended March 31, 2011 and 2012

Revenues


	Three Months Ended March 31,				% Change
	2011		2012		% Change
	(dollars in thousands)
Subscription and support	$	8,630	$	9,149		6	%
Professional services and other		1,535		3,033		98	%

Total revenues	$	10,165	$	12,182		20	%

Revenues for the three months ended March 31, 2012 increased $2.0 million, or 20%, compared to the three months ended March 31, 2011.

Subscription and support revenues for the three months ended March 31, 2012 increased $0.5 million, or 6%, compared to the three months ended March 31, 2011. This increase was primarily the result of additional subscriptions sold during the preceding 12 months.

Professional services and other revenues for the three months ended March 31, 2012 increased $1.5 million, or 98%, compared to the three months ended March 31, 2011. The increase was due to increases in perpetual license revenues and related professional services of $1.1 million and increases in professional services related to subscriptions of $0.4 million.

Cost of Services


	Three Months Ended March 31,						% Change
	2011			2012			% Change
	(dollars in thousands)
Costs of services	$	3,954		$	4,965			26	%
Gross margin %		61	%		59	%
Adjusted gross margin %		70	%		67	%

The increase in cost of services was primarily the result of a $0.7 million increase in personnel costs resulting from an increase in headcount, a $0.2 million increase in travel related expenses and a $0.1 million increase in professional fees.

Our gross margin percentage decreased to 59% in the three months ended March 31, 2012 compared to 61% for the three months ended March 31, 2011. This decrease resulted primarily from the above increases in personnel costs, professional fees and travel related expenses which increased 26% while revenues grew at 20%, respectively, during the three months ended March 31, 2012 compared to the three months ended March 31, 2011.

Our adjusted gross margin percentage decreased to 67% in the three months ended March 31, 2012 compared to 70% in the three months ended March 31, 2011 primarily due to the above increases in personnel costs, professional fees and travel related expenses. For additional discussion with respect to our calculation of adjusted gross margin, and the limitations of such calculation, see “—Non-GAAP Financial Measures—Adjusted Gross Margin.”

Sales and Marketing Expenses


	Three Months Ended March 31,						% Change
	2011			2012			% Change
	(dollars in thousands)
Sales and marketing	$	4,312		$	4,965			15	%
% of total revenues		42	%		41	%

The increase in sales and marketing expenses from the three months ended March 31, 2011 to the three months ended March 31, 2012 was primarily the result of a $0.5 million increase in personnel costs, a $0.1 million increase in professional fees and a $0.1 million increase in travel related expenses. The increase in personnel costs related primarily to increases in the number of employees and annual salary increases.

Research and Development Expenses


	Three Months Ended March 31,						% Change
	2011			2012			% Change
	(dollars in thousands)
Research and development	$	3,886		$	4,732			22	%
% of total revenues		38	%		39	%

Research and development expenses increased from the three months ended March 31, 2011 to the three months ended March 31, 2012 primarily as a result of a $0.8 million increase in personnel costs resulting in part from investing in our TRM solution and a $0.1 million increase in professional fees.

General and Administrative Expenses


	Three Months Ended March 31,						% Change
	2011			2012			% Change
	(dollars in thousands)
General and administrative	$	1,841		$	2,586			40	%
% of total revenues		18	%		21	%

General and administrative expenses increased from the three months ended March 31, 2011 to the three months ended March 31, 2012 primarily as a result of a $0.4 million increase in personnel costs, a $0.1 million increase in professional fees predominantly for accounting, tax and valuation services and a $0.1 million increase in depreciation related to capital expenditures made since March 31, 2011.

Interest Expense


	Three Months Ended March 31,						% Change
	2011			2012			% Change
	(dollars in thousands)
Interest expense	$	41		$	68			66	%
% of total revenues		*	%		*	%

*	Percentage not meaningful.

Interest expense from the three months ended March 31, 2011 to the three months ended March 31, 2012 increased primarily due to interest on increased net borrowings under our SVB facility.

Other Income (Loss)


	Three Months Ended March 31,						% Change
	2011			2012			% Change
	(dollars in thousands)
Other income (loss)	$	144		$	13			(91	)%
% of total revenues		1	%		*	%

*	Percentage not meaningful.

The $0.1 million decrease in other income from the three months ended March 31, 2011 to the three months ended March 31, 2012 resulted primarily from a reduction of subsidies from Austrian governmental agencies.

Provision for (Benefit from) Income Taxes


	Three Months Ended March 31,						% Change
	2011			2012			% Change
	(dollars in thousands)
Provision for (benefit from) income taxes	$	(288	)	$	(393	)		36	%
% of total revenues		3	%		3	%

The benefit from income taxes in the three months ended March 31, 2012 resulted primarily from our operating losses and the amortization of intangible assets related to our Austrian tax group.

Years Ended December 31, 2009, 2010 and 2011

Revenues


	Year Ended December 31,						% Change
	2009		2010		2011		2010 vs. 2009			2011 vs. 2010
	(dollars in thousands)
Subscription and support	$	18,651	$	28,002	$	35,587		50	%		27	%
Professional services and other		3,249		4,221		9,384		30	%		122	%

Total revenues	$	21,900	$	32,223	$	44,971		47	%		40	%

2011 compared to 2010

Revenues for 2011 increased $12.7 million, or 40%, compared to 2010.

Subscription and support revenues for 2011 increased $7.6 million, or 27%, compared to 2010. This increase was primarily the result of a $4.2 million increase in revenues resulting from the acquisition of new clients through the ecofinance acquisition and a $3.4 million increase in revenues from new and existing clients.

Professional services and other revenues for 2011 increased $5.2 million, or 122%, compared to 2010. The increase was due to an increase in implementation services revenues for ecofinance clients of $3.0 million and perpetual license revenues for ecofinance clients of $2.5 million, partially offset by a reduction of implementation service revenues from our SaaS clients of $0.3 million.

2010 compared to 2009

Revenues for 2010 increased $10.3 million, or 47%, compared to 2009.

Subscription and support revenues in 2010 increased $9.4 million, or 50%, compared to 2009 due to the $2.9 million of revenues from the full year realization of recurring agreements with clients acquired in the FXpress transaction that were only partially recognized in 2009, $6.0 million of additional revenues from new and existing clients, and increased revenues from amortization of client funded enhancements to our SaaS solution of $0.5 million.

The increase in professional services and other revenues of $1.0 million, or 30%, was due to the increased delivery of implementation services to new and existing clients.

Cost of Services


	Year Ended December 31,									% Change
	2009			2010			2011			2010 vs. 2009			2011 vs. 2010
	(dollars in thousands)
Cost of services	$	10,398		$	11,543		$	17,551			11	%		52	%
Gross margin %		53	%		64	%		61	%
Adjusted gross margin %		67	%		73	%		69	%

2011 compared to 2010

The increase in cost of services was primarily the result of a $3.5 million increase related to the acquisition of ecofinance and a $0.8 million increase in personnel costs resulting from an increase in headcount other than ecofinance employees, a $0.7 million increase in amortization of intangible assets expenses related to

the amortization of technology acquired with ecofinance, an increase in travel related expenses of $0.2 million and an increase of $0.1 million related to increases in network related communication expenses.

Our gross margin percentage decreased to 61% in 2011 compared to 64% for 2010. This decrease resulted primarily from an increase in the amortization of intangible assets expenses related to technology acquired from ecofinance and an increase in the hiring of professional services and client support personnel in preparation for our October 2011 integrated SaaS TRM solution launch.

Our adjusted gross margin percentage decreased to 69% in 2011 compared to 73% in 2010 primarily due to expense growth related to the acquisition of ecofinance partially offset by growth of our revenues.

2010 compared to 2009

The increase in cost of services was primarily the result of a $1.0 million increase in compensation expenses related to new hires, a $0.5 million increase in communications expenses related to our hosted SaaS environment and a $0.3 million increase in depreciation expenses, offset in part by a $0.7 million decrease in the amortization of intangible assets expenses.

Our gross margin percentage increased from 53% in 2009 to 64% in 2010 primarily due to the decrease in amortization of intangible assets expenses.

Our adjusted gross margin percentage increased from 67% in 2009 to 73% in 2010 primarily due to our revenue growth of 47% and our expense growth of only 21% when excluding the amortization of intangible assets, depreciation and stock-based compensation. For additional discussion with respect to our calculation of adjusted gross margin, and the limitations of such calculation, see “—Non-GAAP Financial Measures—Adjusted Gross Margin.”

Sales and Marketing Expenses


	Year Ended December 31,									% Change
	2009			2010			2011			2010 vs. 2009			2011 vs. 2010
	(dollars in thousands)
Sales and marketing	$	8,928		$	11,917		$	20,325			33	%		71	%
% of total revenues		41	%		37	%		45	%

2011 compared to 2010

The increase in sales and marketing expenses from 2010 to 2011 was primarily the result of a $2.3 million increase resulting from the acquisition of ecofinance, an additional $1.8 million increase in amortization of intangible assets expenses associated with the acquisition of ecofinance, a $1.8 million increase in personnel costs, a $1.1 million increase in advertising and promotional expenses and a $0.6 million increase in professional consulting fees. The increase in personnel costs related primarily to increases in the number of employees, annual salary increases, and sales commissions, and the increases in advertising and promotion expenses and professional consulting fees related to the October 2011 launch of our integrated TRM solution.

2010 compared to 2009

The increase in sales and marketing expenses from 2009 to 2010 was primarily the result of a $1.8 million increase in personnel costs, a $0.4 million increase in amortization of intangibles expenses associated with the acquisition of FXpress, a $0.3 million increase in travel and related expenses and a $0.2 million increase in advertising and promotional expenses. The increase in personnel costs related primarily to increases in the number of employees, annual salary increases, and sales commissions.

Research and Development Expenses


	Year Ended December 31,									% Change
	2009			2010			2011			2010 vs. 2009			2011 vs. 2010
	(dollars in thousands)
Research and development	$	7,785		$	9,281		$	17,180			19	%		85	%
% of total revenues		36	%		29	%		38	%

2011 compared to 2010

Research and development expenses increased from 2010 to 2011 primarily as a result of a $4.7 million increase resulting from the acquisition of ecofinance and a $2.7 million increase resulting from an increase in the number of employees, annual salary increases, and incentive bonuses as we invested in our TRM solution, and an increase in occupancy costs.

2010 compared to 2009

Research and development expenses increased from 2009 to 2010 primarily as a result of a $1.8 million increase in personnel costs related primarily to increased headcount, annual salary increases, incentive bonuses, and a $0.1 million increase in allocated overhead, and was offset by a reduction of $0.6 million in professional fees primarily related to changing the consultants at our Indian operations to direct employees.

General and Administrative Expenses


	Year Ended December 31,									% Change
	2009			2010			2011			2010 vs. 2009			2011 vs. 2010
	(dollars in thousands)
General and administrative	$	4,793		$	7,554		$	9,197			58	%		22	%
% of total revenues		22	%		23	%		20	%

2011 compared to 2010

General and administrative expenses increased from 2010 to 2011 primarily as a result of a $1.7 million increase from the acquisition of ecofinance, an increase of $0.5 million in amortization of intangibles associated with the acquisition of ecofinance, an increase of $0.4 million in depreciation expenses, and an increase of $0.4 million in professional service fees related to accounting and legal services, an increase of $0.2 million in personnel costs related to increase in headcount, annual salary increases, and incentive bonuses offset in part by a $1.3 million reduction in transaction costs associated with the acquisition of ecofinance.

2010 compared to 2009

General and administrative expenses increased from 2009 to 2010 primarily as a result of a $1.4 million increase in personnel costs related to an increase in headcount, annual salary increases, and incentive bonuses, an increase of $1.0 million in transaction costs associated with the acquisition of ecofinance, and an increase of $0.4 million in allocated overhead and other.

Interest Expense


	Year Ended December 31,									% Change
	2009			2010			2011			2010 vs. 2009			2011 vs. 2010
	(dollars in thousands)
Interest expense	$	(46	)	$	(112	)	$	(209	)		143	%		87	%
% of total revenues		*			*			*

*	Percentage not meaningful.

2011 compared to 2010

Interest expense from 2010 to 2011 increased by $0.1 million primarily due to the full year effect of interest from our $1.0 million SVB equipment loan.

2010 compared to 2009

Interest expense increased by $0.1 million from 2009 to 2010 due to the incurrence of a $1.0 million equipment loan with SVB in 2010.

Other Income (Loss)

Year Ended December 31,

% Change

2009

2010

2011

2010 vs.
2009

2011 vs.
2010

(dollars in thousands)

Other income (loss)

(153

)

670

% of total revenues

*	Percentage not meaningful.

2011 compared to 2010

The $0.8 million increase in other income from 2010 to 2011 resulted primarily from the acquisition of ecofinance which receives subsidies from Austrian government agencies in support of research and development grants and local employment commitments of $0.6 million.

2010 compared to 2009

The $0.2 million decrease in other income from 2009 to 2010 resulted primarily from miscellaneous other state and local franchise taxes incurred by us in 2010.

Provision for (Benefit from) Income Taxes

Year Ended December 31,

% Change

2009

2010

2011

2010 vs.
2009

2011 vs.
2010

(dollars in thousands)

Provision for (benefit from) income taxes

(1,466

)

% of total revenues

*	Percentage not meaningful.

2011 compared to 2010

The benefit from income taxes in 2011 primarily resulted from the reversal of deferred tax liabilities in our Austrian tax group related to the acquisition of ecofinance.

2010 compared to 2009

In 2009 and 2010, we recorded income taxes that were principally attributable to foreign taxes in 2010.

Quarterly Results of Operations

The following tables set forth our unaudited quarterly consolidated statements of operations data for each of the nine quarters in the period ended March 31, 2012. We have prepared the quarterly data on a consistent basis with the audited consolidated financial statements included in this prospectus. In the opinion of management, the financial information reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data. This information should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.


	Quarter Ended
	March 31, 2010			June 30, 2010			September 30, 2010			December 31, 2010			March 31, 2011			June 30, 2011			September 30, 2011			December 31, 2011			March 31, 2012
	(in thousands, except per share data)
Revenues
Subscription and support	$	6,197		$	6,886		$	7,371		$	7,548		$	8,630		$	8,721		$	8,972		$	9,264		$	9,149
Professional services and other		1,271			1,073			1,078			799			1,535			2,147			2,094			3,608			3,033

Total revenues		7,468			7,959			8,449			8,347			10,165			10,868			11,066			12,872			12,182
Cost of services⁽¹⁾		3,181			3,141			2,507			2,714			3,954			4,162			4,510			4,925			4,965

Gross margin		4,287			4,818			5,942			5,633			6,211			6,706			6,556			7,947			7,217
Operating expenses⁽¹⁾
Sales and marketing		2,766			3,133			2,702			3,316			4,312			5,103			4,905			6,005			4,965
Research and development		2,216			2,309			2,407			2,349			3,886			4,420			4,381			4,493			4,732
General and administrative		1,318			1,460			1,420			3,356			1,841			2,056			2,341			2,959			2,586

Total operating expenses		6,300			6,902			6,529			9,021			10,039			11,579			11,627			13,457			12,283
Loss from operations		(2,013	)		(2,084	)		(587	)		(3,388	)		(3,828	)		(4,873	)		(5,071	)		(5,510	)		(5,066	)
Foreign currency transactions (loss) gain		(67	)		(40	)		71			(33	)		39			(1	)		(64	)		59			7
Interest expense		(20	)		(23	)		(28	)		(41	)		(41	)		(38	)		(34	)		(96	)		(68	)
Other (loss) income		(43	)		(45	)		(64	)		(1	)		144			258			199			73			13
Loss before provision for (benefit from) income taxes		(2,143	)		(2,192	)		(608	)		(3,463	)		(3,686	)		(4,658	)		(4,970	)		(5,474	)		(5,114	)
Provision for (benefit from) income taxes		—			10			69			19			(288	)		(363	)		(388	)		(427	)		(393	)

Net loss	$	(2,143	)	$	(2,202	)	$	(677	)	$	(3,482	)	$	(3,398	)	$	(4,295	)	$	(4,582	)	$	(5,047	)	$	(4,721	)

Net loss attributable to common stockholders	$	(2,143	)	$	(2,202	)	$	(677	)	$	(3,482	)	$	(3,398	)	$	(4,295	)	$	(4,582	)	$	(5,047	)	$	(4,721	)

Net loss attributable to common stockholders per share, basic and diluted	$	(34.23	)	$	(35.17	)	$	(10.81	)	$	(55.61	)	$	(29.52	)	$	(24.86	)	$	(16.48	)	$	(16.04	)	$	(15.00	)

Weighted average common shares outstanding used in computing net loss attributable to common stockholders per share, basic and diluted		62,613			62,613			62,613			62,613			115,113			172,737			277,989			314,661			314,754

⁽¹⁾ Cost of services and operating expenses include stock-based compensation expenses and depreciation and amortization expenses as follows:


	Quarter Ended
(in thousands)	March 31, 2010		June 30, 2010		September 30, 2010		December 31, 2010		March 31, 2011		June 30, 2011		September 30, 2011		December 31, 2011		March 31, 2012
Stock-Based Compensation Expenses:
Cost of services	$	2	$	6	$	6	$	5	$	3	$	3	$	3	$	8	$	7
Sales and marketing		12		20		19		19		17		16		15		26		20
Research and development		20		34		34		34		31		30		13		22		21
General and administrative		33		46		46		47		52		54		22		36		36

Total stock-based compensation expenses	$	67	$	106	$	105	$	105	$	103	$	103	$	53	$	92	$	84


	Quarter Ended
(in thousands)	March 31, 2010		June 30, 2010		September 30, 2010		December 31, 2010		March 31, 2011		June 30, 2011		September 30, 2011		December 31, 2011		March 31, 2012
Depreciation and Amortization Expenses:
Cost of services	$	980	$	994	$	398	$	396	$	888	$	919	$	915	$	900	$	908
Sales and marketing		478		478		294		294		840		865		845		821		815
Research and development		—		—		—		—		—		—		—		—		—
General and administrative		100		104		84		86		293		314		353		364		364

Total depreciation and amortization expenses	$	1,558	$	1,576	$	776	$	776	$	2,021	$	2,098	$	2,113	$	2,085	$	2,087

Quarterly Trends

All revenues and expenses increased in the first quarter of 2011 primarily as a result of the acquisition of ecofinance on December 31, 2010.

Subscription and support revenues have generally increased sequentially in each of the quarters presented primarily due to new clients, renewals of existing clients, and upselling additional subscriptions to existing clients.

Professional services and other revenues fluctuate with the level of services provided to clients implementing subscriptions or licenses. Perpetual license revenues are recognized upon substantial completion of the delivery of the service. In the fourth quarter of 2011, professional and other revenues increased $1.1 million as a result of a spike in the number of significant ecofinance perpetual license implementations completed in the quarter. In the first quarter of 2012, the number of significant implementations completed were more in line with historical norms.

Total operating expenses have increased in absolute dollars in most of the quarters presented, primarily due to increased salaries and benefits associated with the hiring of additional personnel in sales and marketing, research and development and general and administrative functions to support the growth of our business. In the fourth quarter of 2010, we recognized a non-recurring charge of $1.3 million related to the acquisition of ecofinance. General and administrative costs increased in the third and fourth quarters of 2011 primarily due to increased headcount and outside services fees related to both the overall growth of our business and in preparation for our initial public offering. In the fourth quarter of 2011, we launched our expanded TRM solution and, as a result, incurred significantly higher sales and marketing costs than in the first quarter of 2012.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have funded our operations primarily from cash from operations, private placements of preferred stock, and borrowings under our credit facilities. As of March 31, 2012, we had cash and cash equivalents of $4.4 million, accounts receivable of $9.8 million and amounts due under our SVB credit facility and Austrian credit facilities of $6.2 million in the aggregate.

At March 31, 2012, our principal sources of liquidity were $4.4 million of cash, our $10.0 million revolving line of credit facility with SVB and $1.1 million from our Austrian credit facilities as described below under “—Financing Arrangements.”

The following table sets forth our cash and cash equivalents as of December 31, 2009, 2010 and 2011, and as of March 31, 2012 :


	As of December 31,						As of March 31, 2012
	2009		2010		2011		As of March 31, 2012
	(dollars in thousands)
Cash and cash equivalents	$	4,843	$	11,717	$	4,644	$	4,364

The following table sets forth our cash flows for 2009, 2010 and 2011 and for the three months ended March 31, 2011 and 2012:


	Year Ended December 31,									Three Months Ended March 31,
	2009			2010			2011			2011			2012
	(dollars in thousands)
Cash flows (used in) provided by operating activities	$	(3,354	)	$	1,183		$	(8,802	)	$	(2,604	)	$	(3,070	)
Cash used in investing activities		(12,595	)		(15,338	)		(3,268	)		(1,171	)		(822	)
Cash provided by financing activities		15,971			21,029			4,660			2,870			3,676

Effect of exchange rate changes on cash and cash equivalents		—			—			337			270			(64	)

Increase (decrease) in cash and cash equivalents	$	22		$	6,874		$	(7,073	)	$	(635	)	$	(280	)

Cash Flows

Operating Activities

Operating activities used $3.1 million of cash during the first quarter of 2012. The cash flows from operating activities primarily resulted from our net loss of $4.7 million, partially offset by net non-cash charges of $1.9 million, consisting primarily of $1.6 million in amortization of intangible assets expenses, $0.5 million in depreciation expenses, and $0.1 million in stock-based compensation expenses partially offset by deferred taxes of $0.3 million, and the impact of changes in operating assets and liabilities consisting primarily of a $0.2 million increase in accounts receivable, an increase in prepaid expenses and other current assets from $2.5 million to $4.0 million as a result of increases in deferred costs related to our initial public offering, implementation of ecofinance perpetual licenses and increases in other prepaid expenses, a decrease of $0.3 million in accounts payable, accrued expenses and other current liabilities as a result of growth in operating expenses, and an increase of $1.6 million in deferred revenues as advanced invoicing increased as revenues continued to grow.

Operating activities used $8.8 million of cash in 2011. The cash flows from operating activities primarily resulted from our net loss of $17.3 million, partially offset by net non-cash charges of $6.9 million, consisting primarily of $6.8 million in amortization of intangible assets expenses, $1.6 million in depreciation expenses, and $0.4 million in stock-based compensation expenses, partially offset by deferred taxes of $2.0 million. The cash flows from operating expenses was also impacted by changes in operating assets and liabilities consisting primarily of a $0.4 million increase in accounts receivable, an increase in prepaid expenses and other current assets of $0.6 million to $2.5 million as a result of increases in deferred costs related to implementation of ecofinance perpetual licenses and the deferral of costs related to the initial public offering, an increase of $0.2 million in accounts payable, accrued expenses and other current liabilities as a result of growth in operating expenses, and an increase of $2.6 million in deferred revenues due to increased subscriptions as revenues continued to grow.

Operating activities provided $1.2 million of cash in 2010. The cash provided in operating activities primarily resulted from our net loss of $8.5 million that was offset by net non-cash charges of $5.3 million, consisting primarily of $3.6 million in amortization of intangible assets, $1.0 million in depreciation expenses, and $0.4 million in stock-based compensation expenses, and the impact of changes in operating assets and liabilities consisting primarily of an increase of $1.5 million in accounts receivable as a result of increased invoicing, an increase of $2.8 million in accounts payable, accrued expenses and other current liabilities, and an increase of $3.3 million in deferred revenues due to increased subscriptions.

Operating activities used $3.4 million of cash in 2009. The cash used in operating activities primarily resulted from a net loss of $10.0 million, offset by net non-cash charges of $4.8 million, consisting primarily of $3.9 million in amortization of intangible assets, $0.7 million in depreciation expenses, and $0.2 million in stock- based compensation expenses, and the impact of changes in operating assets and liabilities consisting primarily of an increase of $0.7 million in accounts receivable as a result of increased invoicing, and an increase of $3.1 million in deferred revenues due to increased subscriptions.

Investing Activities

Cash used in investing activities of $0.8 million in the first quarter of 2012 primarily resulted from acquisition of capital equipment.

Cash used in investing activities of $3.3 million in 2011 primarily resulted from $2.0 million used for post-closing payments associated with our acquisition of ecofinance and $1.3 million used for the acquisition of capital equipment.

Cash used in investing activities of $15.3 million in 2010 primarily resulted from $13.9 million used for our acquisition of ecofinance and $1.4 million used for the acquisition of capital equipment.

Cash used in investing activities of $12.6 million in 2009 primarily resulted from $12.3 million used for our acquisition of FXpress and $0.3 million used for the acquisition of capital equipment.

Financing Activities

Cash from financing activities of $3.7 million in the first quarter of 2012 resulted from long-term borrowings of $6.5 million under our new SVB credit facility, partially offset by repayments of long-term debt of $2.7 million under our prior SVB facility and repayments of capital leases of $0.1 million.

Cash from financing activities of $4.7 million in 2011 primarily resulted from long-term borrowings of $3.2 million under our SVB and Austrian credit facilities, and net proceeds of $3.0 million from the issuance of our Series C preferred stock in 2011, partially offset by repayments of long-term debt of $1.1 million under our credit facilities and repayments of capital leases of $0.6 million.

Cash from financing activities of $21.0 million in 2010 primarily resulted from $20.3 million of net proceeds from the issuance of our Series C preferred stock in 2010, and borrowings of long-term debt of $1.1 million under our SVB credit facility, partially offset by repayments of long-term debt under capital leases of $0.4 million.

Cash from financing activities of $16.0 million in 2009 primarily resulted from $16.1 million of net proceeds of the issuance of our Series B preferred stock.

Operating and Capital Expenditure Requirements

We believe that our existing cash and cash equivalents, our cash flow from operating activities and our net proceeds from this offering will be sufficient to meet our anticipated cash needs for at least the next twelve months. To the extent our cash and cash equivalents, cash flow from operating activities, and net proceeds from this offering are insufficient to fund our future activities, we may need to raise additional funds through bank credit arrangements or public or private equity or debt financings. We also may need to raise additional funds in the event we determine in the future to effect one or more acquisitions of, or investments in, businesses, our offerings or technologies. If additional funding is required, we may not be able to obtain bank credit arrangements or to effect an equity or debt financing on terms acceptable to us or at all.

Our future capital requirements will depend on many factors, including the following:

•

the revenues generated by our offerings;

•

costs of operations, including costs relating to expansion, growth into new or adjacent markets, and transition to a public company;

•

potential expansion of our operations to additional locations;

•

the emergence of competing or complementary technological developments; and

•

the acquisition of businesses, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.

Our annual capital expenditures generally have varied between approximately 3.0% and 4.0% of annual revenues. We believe future capital expenditures are likely to be consistent with historical experience with variations above or below the range depending upon our need to make additional investments for capital equipment for international hosting locations.

Contractual Obligations

A summary of our contractual commitments and obligations as of December 31, 2011 is as follows:


	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in thousands)
Long-term debt obligations⁽¹⁾	$	3,949	$	1,693	$	1,866	$	390	$	—
Capital lease obligations		876		480		350		46		—
Operating lease obligations		9,462		2,235		3,767		3,460		—

Total contractual obligations	$	14,287	$	4,408	$	5,983	$	3,896	$	—

⁽¹⁾	Long-term debt represents the principal amount of loans with a weighted average interest rate of 5.0% as of December 31, 2011.

See “—Financing Arrangements” below for a description of our payment obligations under our credit facilities. As of March 31, 2012, our long-term debt was $5.2 million.

Acquisitions

ecofinance Finanzsoftware & Consulting GmbH

On December 31, 2010, we acquired all of the capital stock of ecofinance, a leading treasury management software provider operating primarily in the Germanic region. Prior to our acquisition, while clients could access ecofinance’s offerings on either a hosted or on-premise basis, the license model was perpetual. We acquired ecofinance to expand our current SaaS solution to include, among other features, global cash management and liquidity management. Our acquisition of ecofinance also strengthened our international position in treasury and risk management and provided us access to new clients in Europe. We paid $18.4 million for the acquisition of ecofinance and paid transaction costs of $1.3 million.

FXpress Corporation

On August 21, 2009, we acquired all of the capital stock of FXpress, a treasury software provider. Our acquisition of FXpress further solidified our position in derivative and exposure management and provided us access to new clients. We paid $12.5 million for the acquisition of FXpress and paid transaction costs of $0.3 million.

Financing Arrangements

In March 2012, our wholly-owned subsidiary, Reval.com, Inc., entered into an amended and restated credit facility with Silicon Valley Bank, or SVB, comprised of a $10.0 million revolving line of credit, a $5.0 million term loan, and a $1.5 million letter of credit and other bank product facility, or the New SVB Facility. The New SVB Facility refinanced our previous facility with SVB, which was comprised of a $5.0 million revolving line of credit, a $1.0 million equipment loan and a $2.0 million term loan, or the Prior SVB Facility.

Under the New SVB Facility, borrowings under the revolving line of credit bear interest at a floating rate based on SVB’s prime rate plus 1.75%. The term loan bears interest at a floating rate based on SVB’s prime rate plus 2.25%. Borrowings under the letter of credit and other bank products portion bear interest at 2.0%. As of March 31, 2012, SVB’s prime rate was 4.0%. Borrowings under the revolving line of credit are limited to a borrowing base formula of 85.0% of eligible accounts receivable as defined in the loan agreement with SVB. Principal and interest payments under the New SVB Facility are payable monthly. The revolving line of credit and letter of credit and other bank product facility each mature in March 2014 and the maturity date of the term loan is December 2015.

The proceeds of the $5.0 million term loan under the New SVB Facility were utilized to repay all amounts outstanding under the Prior SVB Facility and for general corporate purposes. Prior to the execution of the New SVB Facility we were in default under the Prior SVB Facility due to the breach of the minimum liquidity covenant in such facility. SVB waived this breach in connection with the execution of the New SVB Facility. As March 31, 2012, there was $5.0 million outstanding under the term loan, $1.5 million outstanding under the revolving line of credit, and $0.6 million outstanding under the letter of credit and other bank product portion of the facility.

The New SVB Facility requires immediate repayment upon an event of default, as defined in the SVB agreement, which includes events such as a payment default, a covenant default or the occurrence of a material adverse change, as defined in the agreement. The New SVB Facility also contains customary negative covenants with respect to our operations, including requirements with respect to monthly working capital levels, and effective as of January 15, 2013, an adjusted quick ratio financial covenant. The New SVB Facility is secured by substantially all of our assets other than our intellectual property. In connection with the New SVB Facility, we also issued SVB a warrant to acquire 119,048 shares of our Series C preferred stock at an exercise price of $2.10 per share which is the price paid by the other investors in our December 2010 private placement of shares of our Series C preferred stock.

Upon our acquisition of ecofinance in December 2010, we assumed outstanding loans of ecofinance. These loans were provided by Steiermarkische Bank und Sparkassen AG, or Exportfondrahmenkredit, for $0.7 million and Osterreichische Forschungsforderungsgesellschaft mgH (FFG), or Forschung, for $0.5 million as of December 31, 2011.

The initial loan from Exportfondrahmenkredit was a term loan repaid in full in June 2011. In October 2011, ecofinance entered into a new loan with Exportfondrahmenkredit to be utilized to encourage export sales by ecofinance. The loan does not have a specific maturity date, but is callable by either party upon ten days’ notice before each quarter end. Certain accounts receivable of ecofinance secure this loan. Interest under this loan is payable quarterly and is calculated at a floating rate, which was 2.0% at March 31, 2012. The outstanding principal balance under this loan at March 31, 2012 was $0.7 million, and this loan does not contain any restrictive covenants.

The loans by Forschung are unsecured and are utilized for research and development activities. The Forschung loans bear interest at variable rates ranging from 2.0% to 2.5% per annum payable semi-annually. At March 31, 2012, the outstanding balance under the Forschung loans was $0.5 million and the loans under this facility mature from 2014 to 2016. This facility does not contain any restrictive covenants.

Seasonality

We have historically experienced seasonality in sales of our offerings, with a higher percentage of our clients entering into new subscription agreements and renewals in the fourth quarter, and we expect this trend to continue. However, this seasonality is not generally reflected in our revenues as revenues from these offerings are recognized over the term of the applicable subscription or term license and when the implementation is substantially completed for our perpetual licenses.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements in 2009, 2010 or 2011 or in the three months ended March 31, 2012.

Critical Accounting Policies and Judgments

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. These principles require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Our estimates include those related to revenue recognition, impairment of goodwill, stock-based compensation, valuation of accounts receivable and deferred tax assets, and any liabilities from uncertain tax positions. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

We believe that, of our significant accounting policies, which are described in note three to our financial statements included in this prospectus, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, we believe these are the most critical to fully understand and evaluate our financial condition and results of operations.

Revenue Recognition

We recognize revenues from two sources, subscription and support and professional services and other. Our subscription and support revenues include subscription fees from clients accessing our SaaS solution or receiving reports utilizing our SaaS solution, term license revenues from clients who have executed term licenses

for certain of our offerings, maintenance services related to perpetual licenses, and the amortized value of client-funded development enhancements to our SaaS solution. Maintenance services are sold in conjunction with perpetual licenses and not subscriptions. Generally, our subscription arrangements with clients do not provide the client with the right to take possession of the software supporting our SaaS solution. Professional services and other revenues include fees from perpetual software licenses and consulting services related to both subscriptions and perpetual licenses to support business process mapping, configuration, data migration, integration and training. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenues, depending on whether our revenue recognition criteria have been met.

We recognize revenues from these sources when all of the following conditions have been met:

•

persuasive evidence of an arrangement exists;

•

delivery has occurred or the services have been rendered;

•

the fee is fixed or determinable; and

•

collectability is probable.

If an agreement contains non-standard acceptance terms or requires non-standard performance criteria to be satisfied, we defer the revenues until these conditions are satisfied. We consider signed subscription and other agreements as evidence of an arrangement. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess cash collectability based on a number of factors, including past collection history with the client and the client’s creditworthiness. If we determine that collectability is not reasonably assured, we defer revenue recognition until collectability becomes reasonably assured, which is generally upon receipt of the cash. Our arrangements are generally non-cancellable, though clients typically have the right to terminate their agreement for cause if we materially fail to perform.

Generally, revenues from new client acquisition is generated under sales agreements with multiple elements, comprised of subscription and support fees from clients accessing our SaaS solution and services. We evaluate each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. This requires us to determine the stand alone value and vendor-specific objective evidence, or VSOE, of fair value to allocate the selling price to each deliverable. We believe that subscription and support have stand alone value because we routinely sell them separately. VSOE of the subscription services was established through utilization of substantive renewals. We believe professional services have standalone value because there are several third party vendors that historically have provided similar professional services to clients on a stand alone basis. VSOE of the professional services was established based on standard daily rates. Any services that do not have stand alone value, including any customized development services for our SaaS solution, are recognized along with the subscription period over the longer of the remaining subscription term or the estimated client relationship period of three years, assuming all of the revenue recognition criteria have been met.

We do not sell our licensed software products or implementation services separately; therefore VSOE cannot be established on the perpetual software license element or the professional services element of the multi-element contract. However, maintenance is sold separately. We use the substantive annual renewals as a basis to establish VSOE on the maintenance element of the contract. We use the residual method to allocate revenues between components without VSOE, such as the perpetual license element and professional services element, on the one hand, and maintenance element which has VSOE, on the other hand.

We recognize the total contracted subscription revenues ratably over the contracted term of the subscription agreement. Subscription terms commence on the later of the start date specified in the subscription arrangement, the date the client’s service is provisioned or when all of the revenue recognition criteria have been

met. We generally consider delivery to have occurred upon provisioning of the service, which is the point in time that a client is provided access to use our solution. We defer all revenues from our perpetual software licenses, professional services and maintenance contracts until substantial completion and delivery of the services to the client. We define substantial completion and delivery of the services as either signed or contractual acknowledgment of acceptance by the client or final payment of outstanding invoices for services delivered to the client enabling the client to utilize the software in operations. This may occur with or prior to completion of supplemental reports or training activities. We recognize maintenance contract revenues ratably over the contract period after substantial completion and delivery of the services.

Purchase Accounting

We accounted for the acquisitions of FXpress and ecofinance using the purchase method of accounting for acquisitions. As a result, the purchase price for each of the transactions has been allocated to the tangible and intangible assets acquired and liabilities assumed based on their respective fair values at the date of acquisition. We applied significant judgment and estimates in determining the fair values of the assets acquired and their useful lives. The excess of the purchase price over the fair value of assets and liabilities was assigned to goodwill, which is not amortized for accounting purposes, but is subject to testing for impairment annually and more frequently if certain events occur.

Impairment of Goodwill

Goodwill represents the excess of the purchase price over the estimated fair value of the net tangible and intangible assets of acquired entities. We perform a goodwill impairment test annually and more frequently if an event or circumstance indicates that an impairment may have occurred. Such events or circumstances may include significant adverse changes in the general business climate, among other things. We operate as one operating segment with two reporting units for goodwill impairment testing purposes. The annual goodwill impairment test is a two-step process. First, we determine if the carrying value of our related reporting unit exceeds fair value, which would indicate that goodwill may be impaired. If we determine that goodwill may be impaired, we compare the implied fair value of the goodwill to our carrying amount to determine if there is an impairment loss. In the process of our annual impairment review, we use the income approach methodology of valuation that includes the discounted cash flow method to determine the fair value of our intangible assets. Significant management judgment is required in the forecasts of future operating results that are used in the discounted cash flow method of valuation. The estimates that we have used are consistent with the plans and estimates that we use to manage our business. If our actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, we could incur impairment charges. Any write-down could have a material adverse effect on our consolidated financial statements. As of March 31, 2012, we had goodwill of $28.8 million. Based on our most recent annual impairment review, we have determined that, as of December 31, 2011, no reporting unit was at risk of impairment.

Stock-Based Compensation

We measure and recognize compensation expenses for all share-based payment awards granted to our employees, consultants and directors based on the estimated fair value of the award on the grant date. We use the Black-Scholes-Merton, or Black-Scholes, valuation model to estimate the fair value of stock option awards. The fair value is recognized as expenses, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award. Stock-based compensation expenses are classified in the statements of operations based on the functional area to which the related recipients belong.

The determination of the grant date fair value of options using an option-pricing model is affected by the estimated fair value of our common stock as well as assumptions regarding a number of other complex and subjective variables. In addition to the fair value of our common stock, these variables include our expected stock

price volatility over the expected term of the options, stock option exercise and cancellation behaviors, risk-free interest rates and expected dividends, which are estimated as follows:

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Fair value of our common stock. Because our stock is not publicly traded, we must estimate the fair value of common stock, as discussed in “Common Stock Valuation Methodologies” below.

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Expected term. The expected term was estimated using the vesting period of the option.

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Volatility. As we do not have a trading history for our common stock, the expected stock price volatility for our common stock was estimated by taking the average historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the stock option grants. Industry peers were self-designated and consist of an average of thirteen public companies in the technology industry that grant options with substantially similar terms. We did not rely on implied volatilities of traded options in our industry peers’ common stock because the volume of activity was relatively low. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

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Risk-free rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.

•

Dividend yield. We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.

If any of the assumptions used in the Black-Scholes model changes significantly, stock-based compensation for future awards may differ materially compared with the awards granted previously.

The following table presents the weighted-average assumptions used to estimate the fair value of options granted during the periods presented:


	Year Ended December 31,
	2009		2010		2011
Expected volatility		42%		40%		40%
Expected dividend yield		—		—		—
Expected term		4 years		4 years		4 years
Risk-free rate		1.43%		2.58%		0.27%

Stock-based compensation expenses totaled $0.2 million, $0.4 million, $0.4 million and $0.1 million, respectively, in 2009, 2010, 2011 and the three months ended March 31, 2012, respectively. At March 31, 2012, we had $0.8 million of unrecognized stock-based compensation expenses, which will be recognized over the weighted average remaining vesting period of three years.

Determination of the Fair Value of Common Stock on Grant Dates

The following table summarizes by grant date the number of shares of common stock subject to stock options granted since January 1, 2010, as well as the associated per share exercise price and the estimated fair value per share of our common stock on the grant date.


Grant Date	Number of Shares Underlying Options Granted		Exercise Price per Share		Estimated Fair Value per Share
March 31, 2010		100,000	$	0.84	$	0.84
April 27, 2010		1,732,526		0.84		0.84
October 3, 2011		1,588,000		1.16		1.16

We are a private company with no active public market for our common stock. Therefore, in response to Section 409A of the Code and related regulations issued by the Internal Revenue Service, we have periodically determined for financial reporting purposes the estimated per share fair value of our common stock at various dates using contemporaneous valuations performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants Practice Aid, “Valuation of Privately-Held Company Equity Securities Issued as Compensation,” also known as the Practice Aid. We performed these contemporaneous valuations as of August 21, 2009, May 31, 2011 and March 1, 2012. We used an independent third-party valuation firm to assist us with the development of these contemporaneous valuations. In conducting the contemporaneous valuations, we considered all objective and subjective factors that we believed to be relevant in each valuation conducted, including management’s best estimate of our business condition, prospects and operating performance at each valuation date. Within the contemporaneous valuations performed by our management, a range of factors, assumptions and methodologies were used. The significant factors included:

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the fact that we are a privately held technology company and our common stock is illiquid;

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the prices paid in recent transactions involving our capital stock;

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our historical operating results;

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our discounted future cash flows, based on our projected operating results;

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valuations of comparable public companies;

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the potential impact on common stock of liquidation preference rights of preferred stock for certain valuation scenarios;

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our stage of development and business strategy;

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the likelihood of achieving a liquidity event for shares of our common stock, such as an initial public offering, or IPO, or a sale of our company, given prevailing market conditions; and

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the state of the IPO market for similarly situated privately held technology companies.

The dates of our contemporaneous valuations have not always coincided with the dates of our stock-based compensation grants. In such instances, management’s estimates have been based on the most recent contemporaneous valuation of our shares of common stock and our assessment of additional objective and subjective factors we believed were relevant as of the grant date. The additional factors considered when determining any changes in fair value between the most recent contemporaneous valuation and the grant dates included, when available, the prices paid in recent transactions involving our equity securities, as well as our stage of development, our operating and financial performance, current business conditions, whether significant business changes had occurred such as an acquisition, and the market performance of comparable publicly traded companies.

There are significant judgments and estimates inherent in these contemporaneous valuations. These judgments and estimates include assumptions regarding our future operating performance, the time to completing an IPO or other liquidity event, and the determinations of the appropriate valuation methods. If we had made different assumptions, our stock-based compensation expenses, net loss and net loss per common share could have been significantly different.

Common Stock Valuation Methodologies

For the contemporaneous valuations of our common stock, our management estimated, as of each valuation date, our enterprise value on a continuing operations basis, primarily using the income or market approaches, which are both acceptable valuation methods in accordance with the Practice Aid, or the pricing of recent transactions involving our equity securities, which we view as a strong indicator of the value of illiquid securities such as our common stock.

Within the income approach, we used the discounted cash flow method based on management’s financial forecasts and projections, as described in further detail below. When we used the market approach, we used the guideline transaction methodologies based on inputs from comparable public companies’ equity valuations and comparable acquisition transactions, as described further below.

Income Approach

The discounted free cash flow method is based on the premise that our enterprise value as of the respective valuation date is equal to the projected future free cash flows and expected terminal value of our business, discounted by a required rate of return that investors would demand given the risks of ownership and the risks associated with achieving the stream of projected future free cash flows. The calculation of our enterprise value using the discounted free cash flow method requires the following steps:

Reval Holdings Inc S-1/A