12.1.14 - New Relic S1 - For Roadshow

12/1/2014
AmendmentNo.1toFormS1
S1/A1d709327ds1a.htmAMENDMENTNO.1TOFORMS1
TableofContents
AsfiledwiththeSecuritiesandExchangeCommissiononDecember1,2014.
RegistrationNo.333200078
UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549
AmendmentNo.1
to
FormS1
REGISTRATIONSTATEMENT
Under
TheSecuritiesActof1933
NewRelic,Inc.
(ExactnameofRegistrantasspecifiedinitscharter)
Delaware
(Stateorotherjurisdictionof
incorporationororganization)
7372
(PrimaryStandardIndustrial
ClassificationCodeNumber)
262017431
(I.R.S.Employer
IdentificationNumber)
NewRelic,Inc.
188SpearStreet,Suite1200
SanFrancisco,California94105
(650)7777600
(Address,includingzipcode,andtelephonenumber,includingareacode,ofRegistrantsprincipalexecutiveoffices)
LewisCirne
ChiefExecutiveOfficer
NewRelic,Inc.
(650)7777600
(Name,address,includingzipcode,andtelephonenumber,includingareacode,ofagentforservice)
Copiesto:
CraigD.Jacoby,Esq.
DavidG.Peinsipp,Esq.
AndrewS.Williamson,Esq.
CooleyLLP
101CaliforniaStreet,5th Floor
(415)6932000
RobinJ.Schulman,Esq.
VicePresident,GeneralCounsel,andSecretary
NewRelic,Inc.
(650)7777600
JeffreyR.Vetter,Esq.
JamesD.Evans,Esq.
Fenwick&WestLLP
801CaliforniaStreet
MountainView,California94041
(650)9888500
Approximatedateofcommencementofproposedsaletothepublic:Assoonaspracticableafterthisregistrationstatementbecomeseffective.
IfanyofthesecuritiesbeingregisteredonthisFormaretobeofferedonadelayedorcontinuousbasispursuanttoRule415undertheSecuritiesAct,checkthefollowing
box:
IfthisFormisfiledtoregisteradditionalsecuritiesforanofferingpursuanttoRule462(b)undertheSecuritiesAct,pleasecheckthefollowingboxandlisttheSecurities
Actregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering.
IfthisFormisaposteffectiveamendmentfiledpursuanttoRule462(c)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesActregistrationstatement
numberoftheearliereffectiveregistrationstatementforthesameoffering.
IfthisFormisaposteffectiveamendmentfiledpursuanttoRule462(d)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesActregistrationstatement
numberoftheearliereffectiveregistrationstatementforthesameoffering.
Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anonacceleratedfiler,orasmallerreportingcompany.Seethedefinitionsof
largeacceleratedfiler,acceleratedfilerandsmallerreportingcompanyinRule12b2oftheExchangeAct.(Checkone):
Largeacceleratedfiler
Nonacceleratedfiler (Donotcheckifasmallerreportingcompany)
CALCULATIONOFREGISTRATIONFEE
https://www.sec.gov/Archives/edgar/data/1448056/000119312514428453/d709327ds1a.htm
Acceleratedfiler
Smallerreportingcompany
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TitleofEachClassof
SecuritiestobeRegistered
CommonStock,$0.001parvaluepershare
Amounttobe
Registered (1)
5,750,000
Proposed
Maximum
OfferingPrice
PerShare(2)
$20.00
Proposed
Maximum
Aggregate
OfferingPrice(2)
$115,000,000
Amountof
RegistrationFee(3)
$13,363
(1) Includesanadditional750,000sharesthattheunderwritershavetherighttopurchasetocoveroverallotments,ifany.
(2) EstimatedsolelyforthepurposeofcomputingtheamountoftheregistrationfeepursuanttoRule457(a)undertheSecuritiesActof1933,asamended.
(3) TheRegistrantpreviouslypaid$11,620ofthetotalregistrationfeeinconnectionwiththepriorfilingofthisRegistrationStatement.InaccordancewithRule457(a),an
additionalregistrationfeeof$1,743isbeingpaidinconnectionwiththisamendmenttotheRegistrationStatement.
TheRegistrantherebyamendsthisRegistrationStatementonsuchdateordatesasmaybenecessarytodelayitseffectivedateuntiltheRegistrantshallfilea
further amendment whichspecifically statesthatthisRegistrationStatementshall thereafterbecomeeffectiveinaccordancewithSection8(a)oftheSecuritiesAct of

1933oruntiltheRegistrationStatementshallbecomeeffectiveonsuchdateastheCommission,actingpursuanttosaidSection8(a),maydetermine.
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Theinformationinthisprospectusisnotcompleteandmaybechanged.Thesesecuritiesmaynotbesolduntiltheregistrationstatementfiled
withtheSecuritiesandExchangeCommissioniseffective.Thisprospectusisnotanoffertosellthesesecuritiesandwearenotsolicitingoffers
tobuythesesecuritiesinanyjurisdictionwheretheofferorsaleisnotpermitted.
PROSPECTUS(SubjecttoCompletion)
IssuedDecember1,2014
5,000,000Shares
COMMONSTOCK
NewRelic,Inc.isoffering5,000,000sharesofcommonstock.Thisisourinitialpublicofferingandnopublicmarketcurrently
existsforourshares.Weanticipatethattheinitialpublicofferingpricewillbebetween$18.00and$20.00pershare.
WehaveappliedtohaveourcommonstocklistedontheNewYorkStockExchangeunderthesymbolNEWR.
We are an emerging growth company as defined under the federal securities laws. Investing in our
commonstockinvolvesrisks.SeeRiskFactorsbeginningonpage11.
PRICE$ASHARE
Pershare
Total
Priceto
Public
$
$
Underwriting
Discountsand
Commissions(1)
$
$
Proceedsto
NewRelic
$
$
(1) SeeUnderwritingforadescriptionofthecompensationpayabletotheunderwriters.
We have granted the underwriters the right to purchase up to an additional 750,000 shares of common stock to cover over
allotments.
The Securities and Exchange Commission and any state securities regulators have not approved or disapproved of these
securities,ordeterminedifthisprospectusistruthfulorcomplete.Anyrepresentationtothecontraryisacriminaloffense.
Theunderwritersexpecttodeliverthesharesofcommonstocktopurchaserson,2014.
MORGANSTANLEY
J.P.MORGAN
ALLEN&COMPANYLLC
UBSINVESTMENTBANK
JMPSECURITIES
RAYMONDJAMES
,2014
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TABLEOFCONTENTS
ProspectusSummary
RiskFactors
SpecialNoteRegardingForwardLookingStatements
IndustryandMarketData
UseofProceeds
DividendPolicy
Capitalization
Dilution
SelectedConsolidatedFinancialData
ManagementsDiscussionandAnalysisofFinancial
ConditionandResultsofOperations
LetterfromtheFounder
Business
Page
1
11
31
32
33
33
34
36
39
Management
ExecutiveCompensation
CertainRelationshipsandRelatedPartyTransactions
PrincipalStockholders
DescriptionofCapitalStock
SharesEligibleforFutureSale
MaterialU.S.FederalIncomeandEstateTax
ConsequencestoNonU.S.HoldersofOurCommon
Stock
Underwriting
LegalMatters
Experts
AdditionalInformation
IndextoConsolidatedFinancialStatements
41
64
65
Page
83
90
99
102
104
110
112
115
121
121
121
F1
Neitherwenortheunderwritershaveauthorizedanyonetoprovideanyinformationortomakeanyrepresentationsotherthan
thosecontained inthisprospectus orin anyfreewriting prospectuses we have prepared.Wetake noresponsibility for,and can
providenoassuranceastothereliabilityof,anyotherinformationthatothersmaygiveyou.Weareofferingtosell,andseeking
offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this
prospectusisaccurateonlyasofthedateofthisprospectus,regardlessofthetimeofdeliveryofthisprospectusoranysaleofshares
ofourcommonstock.Ourbusiness,financialcondition,resultsofoperations,andprospectsmayhavechangedsincethatdate.
Until,2015(25daysafterthecommencementofthisoffering),alldealersthatbuy,sell,ortradesharesofour
common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery
requirementisinadditiontotheobligationofdealerstodeliveraprospectuswhenactingasunderwritersandwithrespectto
theirunsoldallotmentsorsubscriptions.
ForinvestorsoutsidetheUnitedStates:Neitherwenortheunderwritershavedoneanythingthatwouldpermitthisofferingor
possessionordistributionofthisprospectusinanyjurisdictionwhereactionforthatpurposeisrequired,otherthanintheUnited
States.PersonsoutsidetheUnitedStateswhocomeintopossessionofthisprospectusmustinformthemselvesabout,andobserve
anyrestrictionsrelatingto,theofferingofthesharesofourcommonstockandthedistributionofthisprospectusoutsideofthe
UnitedStates.
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PROSPECTUSSUMMARY
Thissummaryhighlightsinformationcontainedelsewhereinthisprospectus.Thissummaryisnotcompleteanddoesnot
contain all of the information you should consider in making your investment decision. You should read the following
summary together with the more detailed information appearing elsewhere in this prospectus, including Risk Factors,
ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,andourconsolidatedfinancial
statementsandrelatednotesbeforedecidingwhethertopurchasesharesofourcommonstock.Unlessthecontextotherwise
requires, the terms New Relic, the company, we, us, and our in this prospectus refer to New Relic, Inc. and its
subsidiaries.
NEWRELIC,INC.
OurMission
Software is becoming the lifeblood of almost every organization, large and small, around the world. Our mission is to
empowerorganizationstobuildthebestmodernsoftwarepossibleandtoimprovetheirbusinessintelligenceusingthedata
flowing through and about that software. This software data contains massive amounts of information about customer
behaviors,userexperiences,andoverallsoftwareperformance.NewRelicenablesorganizationstogainvisibilityintothisdata
tomakebetter,faster,datadrivendecisions.
Overview
We are building a new category of enterprise software we call Software Analytics. Our cloudbased suite of products
enablesorganizationstocollect,store,andanalyzemassiveamountsofsoftwaredatainrealtime.Wedesignallourproductsto
behighlyintuitiveandfrictionlesstheyareeasytodeploy,andcustomerscanrapidly,oftenwithinminutes,realizebenefits
andresults.Withourproducts,technologyuserscanquicklyfindandfixperformanceproblemsaswellaspredictandprevent
futureissues.Businessuserssuchasproductmanagerscangetanswerstohowtheirnewproductlaunchisbeingreceived,or
how a pricing change impacted customer retention, without waiting for help from IT. Software developers can build better
applicationsfaster,astheycanseehowtheirsoftwarewillperformandisactuallyperformingforendusers.AsofSeptember30,
2014,wecollected,stored,andanalyzedover690billiondatapointsdailyacrossmorethan4millionapplicationinstances
andmonitoreduserexperiencesonoveramillionwebsitedomainsandfromoveronebillionmobileapplicationinstalls.Asof
September 30, 2014, we had over 250,000 users. We define a user as an email address associated with an account that has
deployedoursoftwarecode,calledagents,andfromwhichwereceivedatafromatleastoneapplication.AsofSeptember30,
2014,wehad10,590paidbusinessaccounts.
Software has become critical to businesses and consumers worldwide, from online retailing to social networking to
customer relationship management. This software is found in applications and throughout the architectures on which those
applicationsrun:servers,websites,operatingsystems,mobiledevices,andotherITassets.Theuseofthissoftwaregenerates
huge volumes of data, but historically, organizations collected and analyzed only a small fraction of this data due to
technologyandbusinessconstraints.Legacysoftwareproductsweretypicallycustomized,expensive,requiredtraining,and
werethuslimitedtobusinesscriticalapplicationswithinlargeorganizations.Asaresult,thevastmajorityofsoftwaredatahas
beenunderutilized.
We saw the opportunity for Software Analytics to empower technology and business users to make use of this
underutilizedsoftwaredata.Weprovidedeveloperswithouragentstoaddtotheirapplicationsandinfrastructurequicklyand
easily. Our cloudbased, big data database collects and organizes our users data for analysis through a simple dashboard
interface that users can easily configure to monitor their key metrics and quickly make queries using simple phrases. Our
intuitiveandfrictionlessproductdesignresultsinusersbeingabletoquicklyreceiveanalysisoftheirdata.Withthisvisibility,
developerscansignificantlyimprovethequalityoftheirsoftware,andbusinessandtechnologyuserscangetrealtimeinsights
intotheirdata.
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OurSoftwareAnalyticssolutioniscomprisedofanintegratedsuiteofproducts,abigdatadatabase,andanopenplatform.
Allofourproductshaveasimpleuserinterface,andrequireminimaltrainingorintegration.Ourproductsfortechnologyusers
focus on software performance management and monitoring and consist of New Relic APM, New Relic Mobile, New Relic
Servers,NewRelicBrowser,andNewRelicSynthetics.NewRelicInsightsprovidesbigdataanalyticstobothbusinessand
technology users that enable them to easily extract actionable information from the massive quantities of unstructured and
structured data flowing through their software. New Relic Platform offers a plugin architecture including application
programminginterfaces,orAPIs,andsoftwaredevelopmentkits,orSDKs,forcustomersandpartnerstoembedandextendour
solution into their products. Today, there are over 475 New Relic Platform plugins to extend our functionality to other
applicationsandinfrastructures.
Ourgotomarketstrategycombinesgrassrootsuseradoptionwithbothlowtouchandhightouchsalesapproaches.Our
productsareeasytodownloadanduse,whichhasallowedustobuildalargebaseofusersandsmallerorganizationswithoutan
enterprisesalesorganization.Wearebuildingadirectenterprisesalesandsupportoperationinordertobettermarkettoand
supporttheselargerorganizations,whichrepresentagrowingportionofourrevenue.
Wehaveachievedrapidcustomeradoption,highcustomerretention,andsignificantgrowthsinceourfounding.Forour
fiscal years ended March 31, 2012, 2013, and 2014, our revenue was $11.7 million, $29.7 million, and $63.2 million,
respectively,representingyearoveryeargrowthof154%fromthefiscalyearendedMarch31,2012tothefiscalyearended
March31,2013,and113%fromthefiscalyearendedMarch31,2013tothefiscalyearendedMarch31,2014.Forthesix
monthsendedSeptember30,2013and2014,ourrevenuewas$26.1millionand$48.0million,respectively,representingyear
overyear growth of 83%. We had net losses of $7.5 million, $22.5 million, and $40.2 million for our fiscal years ended
March31,2012,2013,and2014,respectively,and$18.6millionand$19.4millionforthesixmonthsendedSeptember30,
2013and2014,respectively.
IndustryBackground
ImportanceofSoftwareforBusinessesandConsumers
Softwarehasbecomeacentralelementofbusinessandconsumerlife.Businessesrelyupontheirsoftwareapplicationsto
interactwiththeircustomers,employees,andpartnerstoincreaserevenueandimproveoperationalefficiency.Businessesand
consumersusesoftwareonavarietyofdevicesinmoreoftheirdaytodayactivities.Usersincreasinglyexpecttheirsoftwareto
befastandreliable,andtheycanquicklyreplacetheapplicationstheyuseiftheyareunsatisfiedwiththeirexperience.
AdventofCloudArchitecturesandSaaS
Historically, legacy onpremise architectures required companies to purchase and maintain the complete IT stack
includingstorage,servers,networking,andapplications.Incontrast,cloudarchitecturesenablecompaniestosubscribeforand
access computing resources as needed. This has provided a wide range of economic and technology benefits including
applicationsthatareeasiertodeploy,maintain,use,andintegrate.
ExplosionofMobility
Thegreatlyincreasedfunctionalityofsmartphonesandtablets,andtheubiquityofhighbandwidthInternetaccess,have
led to an explosion in mobile devices and mobile applications. These devices and the applications they run need to be
supportedbycompletelynewsoftwarearchitecturesthatarefundamentallydifferentandseparatefromlegacy,onpremiseIT
architectures.Mobilityhasincreasedpressuresonsoftwareperformanceandgreatlyexpandedthevariety,velocity,andvolume
ofdataavailableforanalysis.
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GrowingImportanceofDevelopers
Theincreasingubiquityofsoftwarehasledtogreaterimportanceandrolesforthedeveloperswhobuildandmaintainthat
software.Thesedevelopersareincreasinglyabletocreateandinfluencemajortechnologytrendssuchasadoptionofcloud
architectures,opensource,andnewprogramminglanguagesandframeworkstoimprovethetimetomarketandperformanceof
theirapplications.
EmergenceofBigDataTechnologiesforUnstructuredandStructuredData
Historically,companieshavereliedononpremisedatabasesfromvendorssuchasOracle,IBM,andMicrosoft.Overthe
pastfewyears,awidevarietyoftechnologieshavebeenintroducedtogreatlyincreasetheabilitytocollectandanalyzethe
rapidly growing variety, velocity, and volume of data, commonly referred to as big data. Today, an increasing number of
companiesareinvestingintechnologyandpersonneltogainacompetitiveadvantageusingbigdatatoenablerealtime,data
drivendecisions.
NewComplexitiesforTechnologyUsers,BusinessUsers,andSoftwareDevelopers
Businessandconsumerapplicationsarerunningonbothcloudandlegacyarchitecturesandarebuiltwithamultitudeof
programming languages. This has created significant challenges and complexities for technology users, business users, and
softwaredevelopers.Thesuccessorfailureofbusinessesisincreasinglydeterminedbytheavailability,accessibility,response
time,andqualityoftheirusersexperience.
OurSolution
WehavedevelopedourSoftwareAnalyticssuiteofproducts,bigdatadatabase,andopenplatformtohelptechnologyand
businessusersmakerealtime,datadrivendecisionstoimprovebusinessandITperformance.Inaddition,developerscanbuild
better software, build it faster, and keep it running optimally for enduser experiences. Our solution collects, stores, and
analyzesvastquantitiesofunstructuredandstructureddataflowingthroughandaboutouruserssoftware.Wecurrentlyoffer
anintegratedsuiteofsevenproductsthatwecontinuetoenhanceandexpand:
NewRelicAPM:Applicationperformancemanagement
NewRelicMobile:Mobileapplicationperformancemanagement
NewRelicServers:Servermonitoringforcloudanddatacenters
NewRelicBrowser:Enduserexperiencemonitoringandperformancemonitoring
NewRelicSynthetics:Softwaretestingthroughsimulatedusage
NewRelicPlatform:Platformthatextendsourfunctionalityintootherapplications
NewRelicInsights:Realtimebigdataanalyticsforbusinessmanagers
Thissuiteofproductsusesacommoninfrastructuretoenablecustomersto:
Store.Datacollectedfromouragentsisstoredinourhighlysecureandscalablecloudbased,bigdatadatabase.Our
databasehasbeenoptimizedtostoreunstructuredandstructureddataaswellashandletheanalyticsandqueriesthat
webelieveareimportanttodrivedecisionmaking.
Collect. Our intelligent agents are software code that developers can easily deploy. These agents configure
automatically to their particular IT environment and collect and send event and performance data securely to our
proprietaryclouddatabase.
Analyze. Our simple and intuitive user interface consists of a dashboard of graphical charts for key performance
indicators,whichareeasilyconfigurableandenabledeepdrilldownandrootcause
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analysis. Our New Relic Insights product also includes a field for realtime adhoc queries with corresponding
answersinarangeofvisualandgraphicalformats.Wealsointendtoreleaseplatformfeaturesthatenableusersto
createandpublishcustomizeddataappsandmakethemavailabletonontechnicalbusinessusers.
KeyElementsofOurSolution
LowTotalCostofOwnership.Wepriceourproductsonamonthlysubscriptionbasis,withflexiblepricingplansso
eachcustomerisonlypayingfortheproductsandusagetheyareconsuming.Ourcustomersdonotneedtoinvestin
additionalhardware,infrastructure,orservicestoutilizeourproducts.
IntegratedSuite.Oursuitecurrentlyconsistsofsevenproductsthatareintegrated,shareacommondesignanduser
interface,andaccessthesamecloudbaseddatabasestructure.Userscanmoveseamlesslyamongdifferentanalytic
categoriesandusecasesfortheirsoftwaredata.
EasyandIntuitive.Wedesignourproductstobesimple,intuitive,anduserfriendly.Usersareabletolearn,deploy,
andbeginusingourproductswithminimalornotraining,oftenwithinafewminutes.
Big Data Database and Analytics. Our proprietary, cloudbased database leverages modern big data technologies
thatenablecollectionandstorageofbillionsofeventsandmetricseachday.Ourdatabasestructureallowscustomers
toeasilybuilddashboardsormakequeriestodeliverrealtimeinsights.
MobileEnabled.WeprovideanativemobileversionofourSoftwareAnalyticsproductswithnearlyallfunctionality
accessibleandusablethroughmobiledevices.Ourproductsaredesignedtoanticipateandhandlethecomplexityof
mobilearchitectures,suchasmobilecarrierperformanceanduserlocation.
BuiltforModernSoftware.Wesupportabroadrangeofsoftwaredevelopmentlanguagesandframeworksaswellas
mobile operating systems. Our agents are easily embedded into applications built using all of these languages,
withouttheneedforcustomizedcoding.
FlexibilitytoManageCloud,Hybrid,andOnPremiseArchitectures.Inadditiontomoderncloudarchitectures,our
SaaSsolutioncanalsomanagehybridcloudandheterogeneousarchitectures,includingonpremisesoftware.Users
areabletorapidlydeployouragentsgloballyacrosstheirITenvironment.
BuiltonCloudArchitecture.WedesignedourproductsbasedonacloudarchitectureandaSaaSdeliverymodel.We
are able to provide frequent updates to our software enabling us to continuously improve it to reflect technology
developments.
ExtensiblePlatform.WeprovideAPIsandSDKsforcustomers,partners,anddeveloperstoeasilybuildapplications
whichintegratewithandembedourproductfunctionalityintootherapplications.
EnterpriseScalabilityandSecurity.Ourproductsaredesignedtobescalableandsecure.AsofSeptember30,2014,
wecollected,stored,andanalyzedover690billiondatapointsperday.Bydefault,oursoftwaredatatransmissions
areencryptedintransitandstoredinoursecuretier3SSAE16certifieddatacenter.WealsoperformanannualSOC
2type2audit.
BenefitsofOurSolution
TechnologyUsers.Technologyuserscanmorerapidlyidentifyproblems,isolaterootcauses,andaddressproblems.
Ouranalyticstoolsalsoenablethemtopredictandpreventfutureissues.
BusinessUsers.Businessuserscanuseourproductstoobtainrealtimeanalyticsabouttheirbusiness.
Software Developers. Software developers can use our products to better monitor software performance to
continuouslyimproveitaswellasfixandpreventproblems.
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OurMarketOpportunity
For technology users, we believe Gartners category of IT Operations Management, or ITOM, captures a subset of our
marketopportunity.AccordingtoGartner,Inc.,aglobalmarketresearchfirm,theworldwideITOMmarketwas$19.1billionin
2013andisprojectedtogrowto$27.9billionin2018.Webelievethisgenerallycapturesthepurchasesbylargerenterprisesof
existinglegacysolutions,butdoesnotincludetheopportunitywithsmallerenterprisesthatcannotaffordsuchsolutionsor
potentialdeploymentsbylargerenterprisesmadefeasiblebyemergingsolutionslikeours.
Webelieveourmarketopportunitywithbusinessusersislargelyuntapped.AccordingtoGartner,theworldwidemarket
forbusinessintelligencesoftwarewas$14.4billionin2013andisprojectedtogrowto$21.9billionin2018.However,we
believethemajorityofourmarketopportunitywithbusinessusersexistswithusecasesforwhichaviablesolutionhasnot
beenhistoricallyavailable.
OurGrowthStrategy
plantocontinuetoimproveourexistingproductsaswellasdevelopnewproducts.
IncreaseOurFootprint.Wecurrentlyofferandplantocontinueofferingfreeversionsofourproductssocustomers
continuetospreadourfootprintrapidlyandglobally.
ExpandOurPlatformandEcosystem.WeintendtoexpandourofferingofAPIsandSDKsthatallowspartnersto
easilyintegratewithotherapplicationsandservicesaswellascombineourapplicationperformanceandeventdata
withinformationfromothersources.
Grow Our Base of Large and Small Customers. We plan to grow our base of paid business accounts from larger
businesses through our direct sales organization. We also plan to grow our base of paid business accounts from
smallerbusinessesbycontinuingourmarketingandsalesprograms,partnerships,andgrassrootsadoption.
DeepenExistingCustomerRelationships.Wehaveobservedthatouraccountstypicallymakeaninitialpurchasefor
aspecificandimmediateneedandthensubsequentlyexpandtoadditionalusersorapplications.Wemakeitsimple
forpotentialandexistingaccountstotrynewapplications.
MaintainOurTechnologyLeadership.WewillcontinuetoinvestinbuildingtheSoftwareAnalyticscategory.We
Extend Our International Footprint. We are increasingly investing in our international operations and intend to
investinfurtherexpandingourfootprintininternationalmarkets.
RisksAssociatedWithOurBusiness
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled Risk
Factorsimmediatelyfollowingthisprospectussummary.Someoftheserisksare:
wehaveahistoryoflossesandweexpectourrevenuegrowthratetodecline,andasourcostsincrease,wemaynotbe
abletogeneratesufficientrevenuetoachieveandsustainprofitability
wehavealimitedoperatinghistory
ifwearenotabletomanageourgrowthandexpansion,orifourbusinessdoesnotgrowasweexpect,ouroperating
resultsmaysuffer
ourquarterlyresultsmayfluctuate,andourstockpriceandthevalueofyourinvestmentcoulddeclinesubstantially
ourbusinessdependsonourcustomerspurchasingadditionalsubscriptionsandproductsfromusandrenewingtheir
subscriptions
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if we are not able to develop enhancements to our products, increase adoption and usage of our products, and
introducenewproductsthatachievemarketacceptance,ourbusinesscouldbeharmed
ifcustomersdonotexpandtheiruseofourproductsbeyondthecurrentpredominantusecases,ourabilitytogrow
ourbusinessandoperatingresultsmaybeadverselyaffectedand
upon the closing of this offering, our directors, officers, and principal stockholders will beneficially own in the
aggregate approximately 70.0% of our outstanding voting stock and will be able to exert significant control over
matterssubjecttostockholderapproval.
CorporateInformation
We were formed in Delaware in September 2007 as New Relic Software, LLC. We converted from a Delaware limited
liability company to a Delaware corporation and changed our name to New Relic, Inc. in February 2008. Our principal
executiveofficesarelocatedat188SpearStreet,Suite1200,SanFrancisco,California94105,andourtelephonenumberis
(650) 7777600. Our website address is www.newrelic.com. Information contained on or that can be accessed through our
websitedoesnotconstitutepartofthisprospectusandinclusionsofourwebsiteaddressinthisprospectusareinactivetextual
referencesonly.
NewRelic,theNewReliclogo,andothertrademarksorservicemarksofNewRelicappearinginthisprospectusareour
property.Thisprospectuscontainsadditionaltradenames,trademarks,andservicemarksofothercompanies.Wedonotintend
ouruseordisplayofothercompaniestradenames,trademarks,orservicemarkstoimplyarelationshipwith,orendorsementor
sponsorshipofusby,theseothercompanies.
ImplicationsofBeinganEmergingGrowthCompany
As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an emerging growth
companyasdefinedintheJumpstartOurBusinessStartupsActof2012,ortheJOBSAct.Anemerginggrowthcompanymay
takeadvantageofspecifiedreducedreportingrequirementsthatareotherwiseapplicablegenerallytopubliccompanies.These
provisionsinclude:
overfinancialreporting
an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may
adopt regarding mandatory audit firm rotation or a supplement to the auditors report providing additional
informationabouttheauditandthefinancialstatements
anexemptionfromcompliancewiththeauditorattestationrequirementontheeffectivenessofourinternalcontrol
reduceddisclosureaboutourexecutivecompensationarrangementsand
exemptionsfromtherequirementstoobtainanonbindingadvisoryvoteonexecutivecompensationorastockholder
approvalofanygoldenparachutearrangements.
Wewillremainanemerginggrowthcompanyuntiltheearliesttooccurof:thelastdayofthefiscalyearinwhichwehave
morethan$1.0billioninannualrevenuethedatewequalifyasalargeacceleratedfiler,withatleast$700millionofequity
securitiesheldbynonaffiliatestheissuance,inanythreeyearperiod,byusofmorethan$1.0billioninnonconvertibledebt
securitiesandthelastdayofthefiscalyearendingafterthefifthanniversaryofourinitialpublicoffering.Wemaychooseto
takeadvantageofsome,butnotall,oftheavailablebenefitsundertheJOBSAct.Wearechoosingtoirrevocablyoptoutof
theextendedtransitionperiodsavailableundertheJOBSActforcomplyingwithneworrevisedaccountingstandards,butwe
intend to take advantage of the other exemptions discussed above. Accordingly, the information contained herein may be
differentthantheinformationyoureceivefromotherpubliccompaniesinwhichyouholdstock.
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THEOFFERING
Commonstockofferedbyus
5,000,000shares
Commonstocktobeoutstandingafterthisoffering
46,095,833shares
Overallotmentoptionofferedbyus
750,000shares
Useofproceeds
Weestimatethatthenetproceedsfromthesaleofsharesof
ourcommonstockthatwearesellinginthisofferingwillbe
approximately $85.6 million (or approximately $98.9
million if the underwriters overallotment option is
exercised in full), based upon an assumed initial public
offeringpriceof$19.00pershare,whichisthemidpointof
thepricerangesetforthonthecoverpageofthisprospectus,
and after deducting estimated underwriting discounts and
commissionsandestimatedofferingexpenses.
The principal purposes of this offering are to increase our

capitalization and financial flexibility, create a public
marketforourcommonstock,therebyenablingaccesstothe
public equity markets by our employees and stockholders,
obtain additional capital, and increase our visibility in the
marketplace.Weintendtousethenetproceedsreceivedfrom
this offering for general corporate purposes, including
headcount expansion, working capital, sales and marketing
activities, product development, general and administrative
matters,andcapitalexpenditures.SeeUseofProceeds.
Concentrationofownership
Upontheclosingofthisoffering,ourexecutiveofficersand
directors and stockholders holding more than 5% of our
capitalstock,andtheiraffiliates,willbeneficiallyown,inthe
aggregate,approximately70.0%ofouroutstandingsharesof
commonstock.
ProposedNewYorkStockExchangetradingsymbol
NEWR
The number of shares of common stock that will be outstanding after this offering is based on 41,095,833 shares
outstandingasofSeptember30,2014,andexcludes:
8,251,617sharesofcommonstockissuableupontheexerciseofstockoptionsoutstandingasofSeptember30,2014,
withaweightedaverageexercisepriceof$7.81pershare
28,000sharesofcommonstockissuableupontheexerciseofaconvertiblepreferredstockwarrantoutstandingasof
September30,2014,withanexercisepriceof$0.50pershare
777,450sharesofcommonstockissuableupontheexerciseofstockoptionsgrantedafterSeptember30,2014,with
anexercisepriceof$19.00pershare(whichdoesnotincludethestockoptionsandrestrictedstockunitsdescribed
belowthatwillbegrantedonthedatethattheregistrationstatementofwhichthisprospectusformsapartisdeclared
effective)
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108,234sharesofcommonstockissuedafterSeptember30,2014,andupto141,766additionalsharesofcommon
stockthatmaysubsequentlybeissued,inconnectionwithouracquisitionofFewDucks,S.L.,orDucksboard
5,618,383sharesofourcommonstocktobereservedforfutureissuanceunderour2014EquityIncentivePlan,or
2014Plan(which(i)includes618,383sharesofcommonstockasofSeptember30,2014reservedforfuturegrants
underour2008EquityIncentivePlan,or2008Plan,(ii)doesnotreflectthestockoptionsandrestrictedstockunits
granted after September 30, 2014, as described above, and (iii) excludes an increase to the 2008 Plan reserve of
1,600,000sharesofcommonstockinNovember2014,whichshares,inthecaseof(i)and(iii),willbeaddedtothe
sharesreservedforfutureissuanceunderour2014Planuponeffectivenessofthatplanifthesharesarenotissuedor
subjecttooutstandinggrantsunderthe2008Planatthattime),whichwillbecomeeffectiveatthetimeofexecution
oftheunderwritingagreementforthisofferingandcontainsprovisionsthatautomaticallyincreaseitssharereserve
eachyear,asmorefullydescribedinExecutiveCompensationEquityIncentivePlansand
approximately1,194,000sharesofcommonstocktobeissuedupontheexerciseofstockoptions,withanexercise
price equal to the initial public offering price, or that will be subject to vesting of restricted stock units, that we
expecttograntonthedatethattheregistrationstatementofwhichthisprospectusformsapartisdeclaredeffective
1,000,000 shares of common stock reserved for issuance under our 2014 Employee Stock Purchase Plan, or 2014
ESPP,whichwillbecomeeffectiveupontheeffectivenessoftheregistrationstatementofwhichthisprospectusforms
apart,andwhichcontainsprovisionsthatautomaticallyincreaseitssharereserveeachyear.
Exceptasotherwiseindicated,allinformationinthisprospectusreflectsandassumes:
of 24,931,796 shares of common stock immediately upon the closing of this offering, assuming an initial public
offering price of $19.00 per share, which is the midpoint of the price range set forth on the cover page of this
prospectus,andgivingeffecttotheconversionpriceadjustmentrelatingtoourSeriesFconvertiblepreferredstock
describedinDescriptionofCapitalStock
noexerciseofoutstandingoptionsorwarrantsafterSeptember30,2014,exceptforthenetexerciseofanoutstanding
warrantforanaggregateof10,362sharesofcommonstockassuminganinitialpublicofferingpriceof$19.00per
share,whichisthemidpointofthepricerangesetforthonthecoverpageofthisprospectus,upontheclosingofthis
offering
the conversion of an outstanding warrant to purchase 28,000 shares of our convertible preferred stock as of
September30,2014intoawarranttopurchasethesamenumberofsharesofcommonstockupontheclosingofthis
offering
theconversionofalloutstandingsharesofourconvertiblepreferredstockasofSeptember30,2014intoanaggregate
the filing and effectiveness of our amended and restated certificate of incorporation and the effectiveness of our
amendedandrestatedbylaws,eachofwhichwilloccurinconnectionwiththeclosingofthisofferingand
noexercisebytheunderwritersoftheiroptiontopurchaseuptoanadditional750,000sharesofcommonstockfrom
ustocoveroverallotments.
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SUMMARYCONSOLIDATEDFINANCIALDATA
Thefollowingtablessummarizeourhistoricalconsolidatedfinancialdata.Wehavederivedtheconsolidatedstatementsof
operationsdataforthefiscalyearsendedMarch31,2012,2013,and2014andtheconsolidatedbalancesheetdataasofMarch
31, 2014 from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated
statementsofoperationsdataforthesixmonthsendedSeptember30,2013and2014andtheconsolidatedbalancesheetdata
asofSeptember30,2014arederivedfromourunauditedconsolidatedfinancialstatementsthatareincludedelsewhereinthis
prospectus.Wehavepreparedtheunauditedconsolidatedfinancialstatementsonthesamebasisastheauditedconsolidated
financialstatementsandhaveincludedalladjustments,consistingonlyofnormalrecurringadjustments,whichinouropinion
are necessary to state fairly the financial information set forth in those statements. Our historical results are not necessarily
indicativeoftheresultsweexpectinthefuture,andourinterimresultsarenotnecessarilyindicativeoftheresultsweexpectfor
thefullfiscalyearoranyotherperiod.Thefollowingsummaryofconsolidatedfinancialdatashouldbereadinconjunction
with the section titled Managements Discussion and Analysis of Financial Condition and Results of Operations and our
consolidatedfinancialstatementsandrelatednotesincludedelsewhereinthisprospectus.
ConsolidatedStatementsofOperationsData:
Revenue
Costofrevenue(1)
Grossprofit
Operatingexpenses:
Researchanddevelopment(1)
Salesandmarketing (1)
Generalandadministrative(1)
Totaloperatingexpenses
Lossfromoperations
Otherincome(expense):
Interestincome
Interestexpense
Other(expense)income,net
Netloss
2012
SixMonthsEnded
YearEndedMarch31,

September30,

2013
2014
2013
2014
(inthousands,exceptpersharedata)
$11,663
1,904
9,759
$ 29,664
5,078
24,586
$ 63,174
10,780
52,394
$ 26,146
4,467
21,679
4,300
10,748
2,180
17,228
(7,469)
8,565
28,365
10,053
46,983
(22,397)
16,496
58,156
17,178
91,830
(39,436)
7,734
25,007
7,161
39,902
(18,223)
$ 47,974
9,061
38,913
10,248
37,635
10,609
58,492
(19,579)
(48)
(105)
$(22,541)
16
(64)
(741)
$(40,225)
10
(34)
(322)
$(18,569)
12
(29)
201
$(19,395)
(10)
(65)
$ (7,542)
Netlosspershareattributabletocommonstockholders,
basicanddiluted (2)
$ (0.51)
Weightedaveragesharesusedtocomputenetlosspershare
attributabletocommonstockholders,basicanddiluted (2)
14,683
15,096
Proformanetlosspershareattributabletocommon
stockholders,basicanddiluted (2)
(1.07)
Proformaweightedaveragesharesusedtocomputenetloss
pershareattributabletocommonstockholders,basicand
diluted (2)
37,082
40,859
(1.49)
(2.58)
15,596
(1.20)
15,515
(1.22)
15,917
(0.48)
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(1) Includesstockbasedcompensationexpenseasfollows:
SixMonthsEnded
YearEndedMarch31,

September30,
2012
2013
2014
2013
2014
(inthousands)
Costofrevenue
$
11
$
212
$
159
$
58
$
194
Researchanddevelopment
126
1,620
1,425
988
457
Salesandmarketing
143
2,060
1,373
390
1,904
Generalandadministrative
323
4,794
3,263
2,003
1,611
Totalstockbasedcompensationexpense
$
603
$
8,686
$
6,220
$
3,439
$
4,166
(2) See note 12ofthe notestoourconsolidatedfinancialstatementsfora descriptionofhowwecomputenetlosspershareattributabletocommonstockholders,basic

anddiluted,andproformanetlosspershareattributabletocommonstockholders,basicanddiluted.
AsofSeptember30,2014
Pro
ProFormaAs
Actual
Forma(1)
Adjusted (2)(3)(4)
(inthousands)
ConsolidatedBalanceSheetData:
Cashandcashequivalents
Workingcapital
Totalassets
Deferredrevenue
Convertiblepreferredstockwarrantliability
Convertiblepreferredstock
Totalstockholders(deficit)equity
$ 92,370
82,255
143,462
15,732
578
193,160
(79,015)
$ 92,370
82,255
143,462
15,732
114,723
177,985
167,870
229,077
15,732
200,338
(1) The pro forma column in the consolidated balance sheet data table above reflects (i) the automatic conversion of all outstanding shares of our convertible preferred
stockasofSeptember30,2014intoanaggregateof24,931,796sharesofcommonstockwhichconversionwilloccurimmediatelyupontheclosingofthisoffering,
assuminganinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageofthisprospectus,andgivingeffect
totheconversionpriceadjustmentrelatingtoourSeriesFconvertiblepreferredstockdescribedinDescriptionofCapitalStock,(ii)theresultingreclassificationof
the preferred stock warrant liability to additional paidin capital, and (iii) the net exercise of an outstanding warrant into an aggregate of 10,362 shares of common
stockupontheclosingofthisoffering,assuminganinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecover
pageofthisprospectus,asifsuchconversion,reclassification,andnetexercisehadoccurredonSeptember30,2014.
(2) The pro forma as adjusted column gives effect to (i) the pro forma adjustments set forth above and (ii) the sale and issuance by us of 5,000,000 shares of common
stock in this offering at an assumed initial public offering price of $19.00 per share, which is the midpoint of the price range set forth on the cover page of this
prospectus,afterdeductingtheestimatedunderwritingdiscountsandcommissionsandestimatedofferingexpenses.
(3) Each$1.00increaseordecreaseintheassumedinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageof
thisprospectus,wouldincreaseordecrease,asapplicable,thecashandcashequivalents,workingcapital,totalassets,andtotalstockholders(deficit)equityby$4.7
million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated
underwritingdiscountsandcommissions.Theproformaasadjustedinformationpresentedintheconsolidatedbalancesheetdataisillustrativeonlyandwillchange
basedontheactualinitialpublicofferingpriceandothertermsofthisofferingdeterminedatpricing.
(4) Does not reflect our acquisition of Ducksboard for $2.3 million in cash and 108,234 shares of our common stock in October 2014, and up to 141,766 additional
sharesofourcommonstockthatmaysubsequentlybeissuedinconnectionwiththeacquisition.
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RISKFACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties
describedbelow,togetherwithalloftheotherinformationinthisprospectus,includingourconsolidatedfinancialstatementsand
relatednotes,beforeinvestinginourcommonstock.Ifanyofthefollowingrisksarerealized,inwholeorinpart,ourbusiness,
financialcondition,resultsofoperations,andprospectscouldbemateriallyandadverselyaffected.Inthatevent,thepriceofour
commonstockcoulddecline,andyoucouldlosepartorallofyourinvestment.
RisksRelatedtoOurBusiness
We have a history of losses and we expect our revenue growth rate to decline. As our costs increase, we may not be able to
generatesufficientrevenuetoachieveandsustainprofitability.
Wehaveincurrednetlossesineachfiscalperiodsinceourinception,includingnetlossesof$7.5million,$22.5million,and
$40.2millioninthefiscalyearsendedMarch31,2012,2013,and2014,respectively,and$18.6millionand$19.4millioninthe
sixmonthsendedSeptember30,2013and2014,respectively.Wehadanaccumulateddeficitof$100.8millionatSeptember30,
2014.Weexpecttocontinuetoexpendsubstantialfinancialandotherresourceson,amongotherthings:
investmentsinourresearchanddevelopmentteam,andthedevelopmentofnewproducts,features,andfunctionality
salesandmarketing,includingexpandingourdirectsalesorganizationandmarketingprograms,particularlyforlarger
customers
expansionofouroperationsandinfrastructure,bothdomesticallyandinternationally
hiringofadditionalemployeesand
generaladministration,includinglegal,accounting,andotherexpensesrelatedtobeingapubliccompany.
Theseinvestmentsmaynotresultinincreasedrevenueorgrowthofourbusiness.Wealsoexpectthatourrevenuegrowthrate
willdeclineovertime.Accordingly,wemaynotbeabletogeneratesufficientrevenuetooffsetourexpectedcostincreasesandto
achieveandsustainprofitability.Ifwefailtoachieveandsustainprofitability,ouroperatingresultsandbusinesswouldbeharmed.
Wehavealimitedoperatinghistory,whichmakesitdifficulttoevaluateourcurrentbusinessandfutureprospectsandincreases
theriskofyourinvestment.
Wewerefoundedin2007andlaunchedourfirstcommercialproductin2008.Thislimitedoperatinghistorylimitsourability
toforecastourfutureoperatingresultsandsubjectsustoanumberofuncertainties,includingourabilitytoplanforandmodel
futuregrowth.Ourhistoricalrevenuegrowthshouldnotbeconsideredindicativeofourfutureperformance.Wehaveencountered
andwillencounterrisksanduncertaintiesfrequentlyexperiencedbygrowingcompaniesinrapidlychangingindustries,suchas
determining appropriate investments of our limited resources, market adoption of our existing and future products, competition
fromothercompanies,acquiringandretainingcustomers,hiring,integrating,trainingandretainingskilledpersonnel,developing
newproducts,determiningpricesforourproducts,unforeseenexpenses,andchallengesinforecastingaccuracy.Ifourassumptions
regardingtheserisksanduncertainties,whichweusetoplanourbusiness,areincorrectorchange,orifwedonotaddresstheserisks
successfully,ouroperatingandfinancialresultsandourbusinesscouldsuffer.
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Wehaveexperiencedrapidgrowthinrecentperiodsandexpectourgrowthtocontinue.Ifwearenotabletomanagethisgrowth
andexpansion,orifourbusinessdoesnotgrowasweexpect,ouroperatingresultsmaysuffer.
Wehaveexperiencedrapidgrowthinourcustomerbaseandhaveexpandedandintendtocontinuetosignificantlyexpand
ouroperations.Forexample,ouremployeeheadcounthasincreasedfrom315employeesasofSeptember30,2013to534asof
September 30, 2014, and we expect our headcount to continue to grow significantly. Our number of paid business accounts
increased from 7,552 to 10,590 over the same period. In addition, we have established operations in Ireland and the United
Kingdom,and,asaresultoftheacquisitionofDucksboard,wealsohaveasubsidiaryinSpain.Thisrapidgrowthhasplaced,and
willcontinuetoplace,significantdemandsonourmanagementandouroperational,financialinfrastructure,andcompanyculture.
To manage this growth effectively, we must continue to improve our operational, financial, and management systems and
controlsby,amongotherthings:
effectively attracting, training, and integrating a large number of new employees, particularly members of our
managementandsalesteams
further improving our key business systems, processes, and information technology infrastructure, including our data
center,tosupportourbusinessneeds
enhancing our information and communication systems to ensure that our employees are wellcoordinated and can
effectivelycommunicatewitheachotherandourcustomersand
improving our internal control over financial reporting and disclosure controls and procedures to ensure timely and
accuratereportingofouroperationalandfinancialresults.
Ifwefailtomanageourexpansion,implementandtransitiontoournewsystems,orifwefailtoimplementimprovementsor
maintaineffectiveinternalcontrolsandprocedures,ourcostsandexpensesmayincreasemorethanweplanandwemaylosethe
ability to expand our customer base, enhance our existing solutions, develop new solutions, satisfy our customers, respond to
competitivepressures,orotherwiseexecuteourbusinessplan.Ifweareunabletomanageourgrowth,ouroperatingresultslikely
willbeharmed.
Ourquarterlyresultsmayfluctuate,andifwefailtomeettheexpectationsofanalystsorinvestors,ourstockpriceandthevalue
ofyourinvestmentcoulddeclinesubstantially.
Ourquarterlyfinancialresultsmayfluctuatewidelyasaresultoftherisksanduncertaintiesdescribedinthisprospectus,many
of which are outside of our control. If our quarterly financial results fall below the expectations of investors or any securities
analystswhofollowourstock,thepriceofourcommonstockcoulddeclinesubstantially.
Webelievethatquartertoquartercomparisonsofourrevenue,operatingresults,andcashflowsmaynotbemeaningfuland
shouldnotberelieduponasanindicationoffutureperformance.Ifourrevenueoroperatingresultsfallbelowtheexpectationsof
investorsorsecuritiesanalystsinaparticularquarter,orbelowanyguidancewemayprovide,thepriceofourcommonstockcould
decline.
Our business depends on our customers purchasing additional subscriptions and products from us and renewing their
subscriptions.Anydeclineinourcustomerexpansionsandrenewalswouldharmourfutureoperatingresults.
Ourfuturesuccessdependsinpartonourabilitytosellmoresubscriptionsandadditionalproductstoourcurrentcustomers.If
ourcustomersdonotpurchaseadditionalsubscriptionsandproductsfromus,ourrevenuemaydeclineandouroperatingresults
maybeharmed.
In addition, in order for us to maintain or improve our operating results, it is important that our customers enter into paid
subscriptionsandrenewtheirsubscriptionswhenthecontracttermexpires.Thelargemajorityofourcustomersstarttheiraccounts
onafreetrialandhavenoobligationtobeginapaidsubscription.Our
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customersthatenterintopaidsubscriptionshavenoobligationtorenewtheirsubscriptionsaftertheexpirationoftheirsubscription
period, which is typically one month to one year. In addition, our customers may renew for lower subscription amounts or for
shortercontractlengths.Someofourcustomershaveelectednottorenewtheiragreementswithusandwecannotaccuratelypredict
futurenetexpansionrates.Moreover,manyofourcustomerswithannualsubscriptionshavetherighttocanceltheiragreements
withthreemonthsnoticepriortotheexpirationofthesubscriptionterm.
Ourcustomerexpansionsandrenewalsmaydeclineorfluctuateasaresultofanumberoffactors,including:customerusage,
customer satisfaction with our products and customer support, our prices, the prices of competing products, mergers and
acquisitionsaffectingourcustomerbase,theeffectsofglobaleconomicconditions,orreductionsinourcustomersspendinglevels
generally.Thesefactorsmayalsoincreaseasourcustomerbasegrowstoencompasslargerenterprises.
Ifwearenotabletodevelopenhancementstoourproducts,increaseadoptionandusageofourproducts,andintroducenew
productsthatachievemarketacceptance,ourbusinesscouldbeharmed.
Our ability to attract new customers and increase revenue from existing customers depends in large part on our ability to
enhanceandimproveourexistingproducts,increaseadoptionandusageofourproducts,andintroducenewproducts.Thesuccess
of any enhancement or new products depends on several factors, including timely completion, adequate quality testing,
introduction, and market acceptance. Any new products that we develop may not be introduced in a timely or costeffective
manner,maycontainerrorsordefects,ormaynotachievethebroadmarketacceptancenecessarytogeneratesufficientrevenue.If
weareunabletosuccessfullyenhanceourexistingproductstomeetcustomerrequirements,increaseadoptionandusageofour
products,ordevelopnewproducts,ourbusinessandoperatingresultswillbeharmed.
Ifcustomersdonotexpandtheiruseofourproductsbeyondthecurrentpredominantusecases,ourabilitytogrowourbusiness
andoperatingresultsmaybeadverselyaffected.
Mostofourcustomerscurrentlyuseourproductstosupportapplicationperformancemanagementfunctions,andthemajority
ofourrevenuetodatehasbeenfromourapplicationperformancemanagementproducts.Ourabilitytogrowourbusinessdepends
inpartonourabilitytopersuadecurrentandfuturecustomerstoexpandtheiruseofoursoftwaretoadditionalusecases,suchas
business analytics and customer usage analytics. If we fail to achieve market acceptance of our software, or if a competitor
establishes a more widely adopted solution, our ability to grow our business and financial results will be adversely affected. In
addition,astheamountofdatastoredforagivencustomergrows,thatcustomermayhavetoagreetohighersubscriptionfeesfor
our software or limit the amount of data stored in order to stay within the limits of its existing subscription. If their fees grow
significantly,customersmayreactadverselytothispricingmodel,particularlyiftheyperceivethatthevalueofoursoftwarehas
becomeeclipsedbysuchfeesorotherwise.
Wehavelimitedexperiencewithrespecttodeterminingtheoptimalpricesforourproducts.
Weexpectthatwemayneedtochangeourpricingmodelfromtimetotime.Asnewcompetitorsintroducenewproductsor
servicesthatcompetewithours,wemaybeunabletoattractnewcustomersatthesamepriceorbasedonthesamepricingmodelas
we have used historically. Moreover, as we target selling our products to larger organizations, these larger organizations may
demandsubstantialpriceconcessions.Asaresult,inthefuturewemayberequiredtoreduceourprices,whichcouldadversely
affectourbusiness.
Failure to effectively expand our marketing and sales capabilities could harm our ability to increase our customer base and
achievebroadermarketacceptanceofourproducts.
Ourabilitytoincreaseourcustomerbaseandachievebroadermarketacceptanceofourproductswilldependtoasignificant
extent on our ability to expand our marketing and sales operations. We plan to continue expanding our sales force, both
domesticallyandinternationally.Wealsoplantodedicatesignificantresourcestosalesand
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marketingprograms,includingInternetandotheronlineadvertising.Forexample,inthefiscalyearendedMarch31,2014,sales
andmarketingexpensesrepresented92%ofourrevenue.Theeffectivenessofouronlineadvertisinghasvariedovertimeandmay
varyinthefutureduetocompetition.Moreover,wehavehistoricallysoldmostofourproductstosmallandmidsizedbusinesses
andwehaverelativelylittleexperiencesellingourproductstolargerorganizations.Weareexpandingourmarketingandsales
capabilitiestotargetlargerorganizationsbutthereisnoguaranteethatwewillbesuccessfulattractingandmaintainingtheselarger
organizationsascustomers,andevenifwearesuccessful,theseeffortsmaydivertourresourcesawayfromandnegativelyimpact
our ability to attract and maintain small and midsized businesses as customers. All of these efforts will require us to invest
significant financial and other resources. If we are unable to hire, develop, and retain talented sales personnel, if our new sales
personnelareunabletoachievedesiredproductivitylevelsinareasonableperiodoftime,orifoursalesandmarketingprograms
arenoteffective,ourabilitytoincreaseourcustomerbaseandachievebroadermarketacceptanceofourproductscouldbeharmed.
Ifweareunabletoincreasesalesofoursolutionstolargeenterpriseswhilemitigatingtherisksassociatedwithservingsuch
customers,ourbusiness,financialposition,andresultsofoperationsmaysuffer.
Historically, we have not focused our sales efforts on large enterprises. Our growth strategy is dependent, in part, upon
increasingsalesofourproductstosuchenterprises.Salestolargecustomersinvolverisksthatmaynotbepresentorthatarepresent
toalesserextentwithsalestosmallerentities.Asweseektoincreaseoursalestolargeenterprisecustomers,wefacelongersales
cycles,morecomplexcustomerrequirements,substantialupfrontsalescosts,andlesspredictabilityincompletingsomeofoursales
than we do with smaller customers. Large enterprise customers often begin to deploy our products on a limited basis, but
neverthelessdemandextensiveconfiguration,integrationservices,andpricingnegotiations,whichincreaseourupfrontinvestment
in the sales effort with no guarantee that these customers will deploy our products widely enough across their organization to
justifyoursubstantialupfrontinvestment.Inaddition,ourabilitytosuccessfullysellourproductstolargeenterprisesisdependent
onusattractingandretainingsalespersonnelwithexperienceinsellingtolargeorganizations.Also,becausesecuritybreacheswith
respect to larger, highprofile enterprises are likely to be heavily publicized, there is increased reputational risk associated with
servingsuchcustomers.Ifweareunabletoincreasesalesofourproductstolargeenterprisecustomerswhilemitigatingtherisks
associatedwithservingsuchcustomers,ourbusiness,financialposition,andresultsofoperationsmaysuffer.
Because users are able to configure our platform to collect and store personal information of their employees and endusers,
privacyconcernscouldresultinadditionalcostandliabilitytousorinhibitsalesofourproducts.
Ouroperationsinvolveprotectionofourintellectualproperty,alongwiththestorageandtransmissionandprocessingofour
customers proprietary data, including some personally identifiable information, and security breaches, computer malware, and
computer hacking attacks could expose us to a risk of loss of this information, loss of business, severe reputational damage
adversely affecting customer or investor confidence, regulatory investigations and orders, litigation, indemnity obligations,
damages for contract breach, penalties for violation of applicable laws or regulations, and significant costs for remediation and
incentivesofferedtocustomersorotherbusinesspartnersinanefforttomaintainbusinessrelationshipsafterabreachandother
liabilities.
Cyber attacks and other malicious Internetbased activity continue to increase generally. If our security measures are
perceived as weak or actually compromised as a result of thirdparty action, employee or customer error, malfeasance, stolen or
fraudulentlyobtainedlogincredentialsorotherwise,ourcustomersmaycurtailorstopusingourproducts,ourreputationcouldbe
damaged, our business may be harmed, and we could incur significant liability. We may be unable to anticipate or prevent
techniques used to obtain unauthorized access or to sabotage systems because they change frequently and generally are not
detecteduntilafteranincidenthasoccurred.Asweincreaseourcustomerbaseandourbrandbecomesmorewidelyknownand
recognized, we may become more of a target for third parties seeking to compromise our security systems or gain unauthorized
accesstoourcustomersdata.
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Ifwearenotabletodetectandindicateactivityonourplatformthatmightbenefariousinnature,ourcustomerscouldsuffer
harm.Insuchcases,wecouldfaceexposure,particularlyifthecustomersufferedactualharm.
We cannot assure you that any limitations of liability provisions in our contracts for a security lapse or breach would be
enforceableoradequateorwouldotherwiseprotectusfromanyliabilitiesordamageswithrespecttoanyparticularclaim.Wealso
cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or will be available in
sufficientamountstocoveroneormorelargeclaimsrelatedtoasecuritybreach,orthattheinsurerwillnotdenycoverageastoany
future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the
occurrenceofchangesinourinsurancepolicies,includingpremiumincreasesortheimpositionoflargedeductibleorcoinsurance
requirements,couldhaveamaterialadverseeffectonourbusiness,includingexpansionrates,financialcondition,operatingresults,
andreputation.
Changesinprivacylaws,regulations,andstandardsmaycauseourbusinesstosuffer.
Personal privacy and data security have become significant issues in the United States, Europe, and in many other
jurisdictionswhereweofferourproducts.Theregulatoryframeworkforprivacyandsecurityissuesworldwideisrapidlyevolving
andislikelytoremainuncertainfortheforeseeablefuture.Federal,state,orforeigngovernmentbodiesoragencieshaveinthepast
adopted, and may in the future adopt, laws and regulations affecting data privacy and the use of the Internet as a commercial
medium.Industryorganizationsalsoregularlyadoptandadvocatefornewstandardsinthisarea.IntheUnitedStates,theseinclude
rulesandregulationspromulgatedundertheauthorityoffederalagenciesandstateattorneysgeneralandlegislaturesandconsumer
protection agencies. Internationally, virtually every jurisdiction in which we operate has established its own data security and
privacylegalframeworkwithwhichweorourcustomersmustcomply,includingbutnotlimitedtotheDataProtectionDirective,or
the Directive, established in the European Union and data protection legislation of the individual member states subject to the
Directive. The Directive may be replaced in time with the pending European General Data Protection Regulation which may
impose additional obligations and risk upon our business. In many jurisdictions, enforcement actions and consequences for
noncompliancearealsorising.Inadditiontogovernmentregulation,privacyadvocatesandindustrygroupsmayproposenewand
differentselfregulatorystandardsthateitherlegallyorcontractuallyapplytous.Oneexampleofsuchselfregulatorystandardsto
whichwemaybecontractuallyboundisthePaymentCardIndustryDataSecurityStandard,orPCIDSS.Further,totheextentwe
acceptandhandlecreditcardnumbers,wemaybesubjecttovariousaspectsofthePCIDSS.Intheeventwefailtobecompliant
with the PCI DSS, fines and other penalties could result. Further, our customers may require us to comply with more stringent
privacyanddatasecurityrequirements.Becausetheinterpretationandapplicationofmanyprivacyanddataprotectionlawsalong
withmandatoryindustrystandards,areuncertain,itispossiblethattheselawsmaybeinterpretedandappliedinamannerthatis
inconsistentwithourexistingdatamanagementpracticesorthefeaturesofourproducts.Ifso,inadditiontothepossibilityoffines,
lawsuits, and other claims and penalties, we could be required to fundamentally change our business activities and practices or
modifyourproducts,whichcouldhaveanadverseeffectonourbusiness.Anyinabilitytoadequatelyaddressprivacyandsecurity
concerns,evenifunfounded,orcomplywithapplicableprivacyanddatasecuritylaws,regulations,andpolicies,couldresultin
additionalcostandliabilitytous,damageourreputation,inhibitsales,andadverselyaffectourbusiness.Furthermore,thecostsof
compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our
customersmaylimittheuseandadoptionof,andreducetheoveralldemandfor,ourproducts.Privacyanddatasecurityconcerns,
whethervalidornotvalid,mayinhibitmarketadoptionofourproducts,particularlyincertainindustriesandforeigncountries.If
wearenotabletoadjusttochanginglaws,regulations,andstandardsrelatedtotheInternet,ourbusinessmaybeharmed.
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Ifwefailtoadaptandrespondeffectivelytorapidlychangingtechnology,evolvingindustrystandards,andchangingcustomer
needs,requirements,orpreferences,ourproductsmaybecomelesscompetitive.
The software industry is subject to rapid technological change, evolving industry standards, and practices, and changing
customerneeds,requirements,andpreferences.Thesuccessofourbusinesswilldepend,inpart,onourabilitytoadaptandrespond
effectivelytothesechangesonatimelybasis.Ifweareunabletodevelopandsellnewproductsthatsatisfyourcustomersand
provideenhancementsandnewfeaturesforourexistingproductsthatkeeppacewithrapidtechnologicalandindustrychange,our
revenueandoperatingresultscouldbeadverselyaffected.Ifnewtechnologiesemergethatareabletodelivercompetitiveproducts
andapplicationsatlowerprices,moreefficiently,moreconveniently,ormoresecurely,suchtechnologiescouldadverselyimpact
ourabilitytocompete.
Ourplatformmustalsointegratewithavarietyofnetwork,hardware,mobile,andsoftwareplatforms,andtechnologies,andwe
needtocontinuouslymodifyandenhanceourproductstoadapttochangesandinnovationinthesetechnologies.Ifdevelopers
widelyadoptnewsoftwareplatforms,wewouldhavetodevelopnewversionsofourproductstoworkwiththosenewplatforms.
Thisdevelopmenteffortmayrequiresignificantengineering,marketing,andsalesresources,allofwhichwouldaffectourbusiness
andoperatingresults.Anyfailureofourproductstooperateeffectivelywithfutureinfrastructureplatformsandtechnologiescould
reduce the demand for our products. If we are unable to respond to these changes in a costeffective manner, our products may
becomelessmarketableandlesscompetitiveorobsolete,andouroperatingresultsmaybenegativelyaffected.
Wearedependentuponleadgenerationstrategiestodriveoursalesandrevenue,includingfreetrialsofourproducts.Ifthese
marketingstrategiesfailtocontinuetogeneratesalesopportunities,ourabilitytogrowourrevenuewillbeadverselyaffected.
Wearedependentuponleadgenerationstrategies,includingourmarketingstrategyofofferingfreetrialsofourproducts,to
generate sales opportunities. These strategies may not be successful in continuing to generate sufficient sales opportunities
necessarytoincreaseourrevenue.Manyusersneverconvertfromthetrialversiontothepaidversionofourproducts.Totheextent
thatusersdonotbecome,orweareunabletosuccessfullyattractpayingcustomers,wewillnotrealizetheintendedbenefitsof
thesemarketingstrategiesandourabilitytogrowourrevenuewillbeadverselyaffected.
Themarketinwhichweparticipateisintenselycompetitive,andifwedonotcompeteeffectively,ouroperatingresultscouldbe
harmed.
The market for application performance monitoring is rapidly evolving, significantly fragmented, and highly competitive,
withrelativelylowbarrierstoentryinsomesegments.Ourcompetitorsfallintofourprimarycategories:
diversifiedtechnologycompaniessuchasHP,IBM,Microsoft,andOracle
largeenterprisesoftwareandservicescompaniessuchasBMCSoftware,CA,Inc.,Compuware,RiverbedTechnology,
andSAP
softwareperformanceproviderssuchasAppDynamicsandSplunkand
companiesofferinganalyticsproductscompetingwithourNewRelicInsightsproduct,includingGoogleandWebtrends.
Someofourcompetitorsandpotentialcompetitorsarelargerandhavegreaternamerecognition,longeroperatinghistories,
more established customer relationships, larger budgets, and significantly greater resources than we do, and have the operating
flexibility to bundle competing products and services with other software offerings at little or no perceived incremental cost,
includingofferingthematalowerpriceaspartofalargersale.Asaresult,ourcompetitorsmaybeabletorespondmorequickly
andeffectivelythanwecantoneworchangingopportunities,technologies,standards,orcustomerrequirements.Inaddition,some
competitorsmay
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offerproductsorservicesthataddressoneoralimitednumberoffunctionsatlowerpricesorwithgreaterdepththanourproducts.
Ourcurrentandpotentialcompetitorsmaydevelopandmarketnewtechnologieswithcomparablefunctionalitytoourproducts,
andthiscouldleadtoushavingtodecreasepricesinordertoremaincompetitive.
Withtheintroductionofnewtechnologies,theevolutionofourproductsandnewmarketentrants,weexpectcompetitionto
intensifyinthefuture.Moreover,asweexpandthescopeofoursolutions,wemayfaceadditionalcompetition.Additionally,some
potential customers, particularly large enterprises, may elect to develop their own internal products. If one or more of our
competitorsweretomergeorpartnerwithanotherofourcompetitors,thechangeinthecompetitivelandscapecouldalsoadversely
affect our ability to compete effectively. If we are unable to maintain our current pricing due to the competitive pressures, our
margins will be reduced and our operating results will be negatively affected. In addition, pricing pressures and increased
competitiongenerallycouldresultinreducedsales,reducedmargins,losses,orthefailureofoursolutionstoachieveormaintain
morewidespreadmarketacceptance,anyofwhichcouldharmourbusiness.
Becausewerecognizerevenuefromoursubscriptionsoverthesubscriptionterm,downturnsorupturnsinnewsalesandrenewals
maynotbeimmediatelyreflectedinouroperatingresultsandmaybedifficulttodiscern.
We generally recognize revenue from customers ratably over the terms of their subscriptions. A portion of the revenue we
reportineachquarterisderivedfromtherecognitionofrevenuerelatingtosubscriptionsenteredintoduringpreviousquarters.
Consequently,adeclineinneworrenewedsubscriptionsinanysinglequartermayhaveasmallimpactonourrevenueforthat
quarter. However, such a decline will negatively affect our revenue in future quarters. Accordingly, the effect of significant
downturnsinsalesandmarketacceptanceofoursolutions,andpotentialchangesinourrateofrenewals,maynotbefullyreflected
in our results of operations until future periods. In addition, a significant majority of our costs are expensed as incurred, while
revenueisrecognizedoverthelifeoftheagreementwithourcustomer.Asaresult,increasedgrowthinthenumberofourcustomers
couldcontinuetoresultinourrecognitionofmorecoststhanrevenueintheearlierperiodsofthetermsofouragreements.
Interruptionsorperformanceproblemsassociatedwithourtechnologyandinfrastructuremayadverselyaffectourbusinessand
operatingresults.
Ourcontinuedgrowthdependsinpartontheabilityofourexistingandpotentialcustomerstoaccessourproductsatanytime
andwithinanacceptableamountoftime.Wehaveexperienced,andmayinthefutureexperience,disruptions,outages,andother
performanceproblemsduetoavarietyoffactors,includinginfrastructurechanges,introductionsofnewfunctionality,humanor
software errors, capacity constraints due to an overwhelming number of users accessing our products simultaneously, denial of
serviceattacks,orothersecurityrelatedincidents.Itmaybecomeincreasinglydifficulttomaintainandimproveourperformance,
especiallyduringpeakusagetimesandasourproductsbecomesmorecomplexandourusertrafficincreases.Ifourproductsare
unavailableorifourusersareunabletoaccessourproductswithinareasonableamountoftimeoratall,ourbusinesswouldbe
negatively affected. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed, and
continuallydevelopourtechnologyandnetworkarchitecturetoaccommodateactualandanticipatedchangesintechnology,our
businessandoperatingresultsmaybeadverselyaffected.
Inaddition,wecurrentlyserveourcustomersfromathirdpartydatacenterhostingfacilitylocatedinChicago,Illinois.The
continuousavailabilityofourproductsdependsontheoperationsofthosefacilities,onavarietyofnetworkserviceproviders,on
thirdpartyvendors,andonourownsiteoperationsstaff.Wedependonourthirdpartyfacilityprovidersabilitytoprotectthese
facilities against damage or interruption from natural disasters, power or telecommunications failures, criminal acts, and similar
events.Ifthereareanylapsesofserviceordamagetoafacility,wecouldexperiencelengthyinterruptionsinourproductsaswellas
delays and additional expenses in arranging new facilities and services. Even with current and planned disaster recovery
arrangements,which,todate,havenotbeentestedinanactualcrisis,ourbusinesscouldbeharmed.Also,inthe
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eventofdamageorinterruption,ourinsurancepoliciesmaynotadequatelycompensateusforanylossesthatwemayincur.These
factorsinturncouldfurtherreduceourrevenue,subjectustoliability,andcauseustoissuecreditsorcausecustomersnottorenew
theirsubscriptions,anyofwhichcouldharmourbusiness.
Defects or disruptions in our products could diminish demand for our products, harm our financial results, and subject us to
liability.
Ourcustomersuseourproductsforimportantaspectsoftheirbusinesses,andanyerrors,defects,ordisruptionstoourproducts
orotherperformanceproblemswithourproductscouldhurtourbrandandreputationandmaydamageourcustomersbusinesses.
Weprovideregularproductupdates,whichfrequentlycontainundetectederrorswhenfirstintroducedorreleased.Inthepast,we
havediscoveredsoftwareerrors,failures,vulnerabilities,andbugsinourproductsaftertheyhavebeenreleasedandnewerrorsin
our existing products may be detected in the future. Real or perceived errors, failures, or bugs in our products could result in
negative publicity, loss of or delay in market acceptance of our products, loss of competitive position, delay of payment to us,
lowerrenewalrates,orclaimsbycustomersforlossessustainedbythem.Insuchanevent,wemayberequired,ormaychoose,for
customerrelationsorotherreasons,toexpendadditionalresourcesinordertohelpcorrecttheproblem.Inaddition,wemaynot
carryinsurancesufficienttocompensateusfortheanylossesthatmayresultfromclaimsarisingfromdefectsordisruptionsinour
products.Asaresult,wecouldlosefuturesalesandourreputationandourbrandcouldbeharmed.
Our ongoing and planned investments in data center hosting facilities are expensive and complex, may result in a negative
impactonourcashflows,andmaynegativelyimpactourfinancialresults.
We have made and will continue to make substantial investments in new equipment to support growth at our data center
hostingfacility,provideenhancedlevelsofproductstoourcustomers,andreducefuturecostsofsubscriptionrevenue.Inaddition,
we may need to add additional data centers or similar resources to support our growth. Ongoing or future improvements to our
cloudinfrastructuremaybemoreexpensivethanweanticipate,andmaynotyieldtheexpectedsavingsinoperatingcostsorthe
expectedperformancebenefits.Wemaynotbeabletomaintainorachievecostsavingsfromourinvestments,whichcouldharm
ourfinancialresults.
Wemayneedtochangeourcurrentoperationsinfrastructureinorderforustoachieveprofitabilityandscaleouroperations
efficiently,whichmakesourfutureprospectsevenmoredifficulttoevaluate.Forexample,inordertogrowsalestocommercialand
enterprise customers in a financially sustainable manner, we may need to further customize our offering and modify our goto
marketstrategytoreduceouroperatingandcustomeracquisitioncosts.Ifwefailtoimplementthesechangesonatimelybasisor
areunabletoimplementthemeffectively,ourbusinessmaysuffer.
Because our longterm growth strategy involves further expansion of our sales to customers outside the United States, our
businesswillbesusceptibletorisksassociatedwithinternationaloperations.
A component of our growth strategy involves the further expansion of our operations and customer base internationally.
Operating in international markets requires significant resources and management attention and subjects us to regulatory,
economic, and political risks that are different from those in the United States. We have limited operating experience in
international markets, and we cannot assure you that our expansion efforts into international markets will be successful. Our
internationalexpansioneffortsmaynotbesuccessfulincreatingfurtherdemandforourproductsoutsideoftheUnitedStatesorin
effectivelysellingourproductsintheinternationalmarketsweenter.Ourcurrentinternationaloperations,includingasaresultof
ourrecentacquisitionofBarcelonabasedDucksboard,andfutureinitiativeswillinvolveavarietyofrisks,including:
changesinaspecificcountrysorregionspoliticaloreconomicconditions
unexpectedchangesinregulatoryrequirements,taxes,ortradelaws
regional data security and privacy laws and regulations and the unauthorized use of, or access to, commercial and
personalinformation,particularlyintheEuropeanUnion
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employeesascomparedtotheUnitedStates,includingdeemedhourlywageandovertimeregulationsintheselocations
challenges inherent in efficiently managing an increased number of employees over large geographic distances,
includingtheneedtoimplementappropriatesystems,policies,benefits,andcomplianceprograms
differing labor regulations, especially in the European Union, where labor laws are generally more advantageous to
difficultiesinmanagingabusinessinnewmarketswithdiversecultures,languages,customs,legalsystems,alternative
disputesystems,andregulatorysystems
increasedtravel,realestate,infrastructure,andlegalcompliancecostsassociatedwithinternationaloperations
currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of
enteringintohedgingtransactionsifwechosetodosointhefuture
limitationsonourabilitytorepatriateearnings
lawsandbusinesspracticesfavoringlocalcompetitors,orgeneralpreferencesforlocalvendors
limitedorinsufficientintellectualpropertyprotection
exposuretoliabilitiesunderanticorruption,exportcontrolsandantimoneylaunderinglaws,includingtheU.S.Foreign
CorruptPracticesActandsimilarlawsandregulationsinotherjurisdictionsand
adversetaxburdensandforeignexchangecontrolsthatcouldmakeitdifficulttorepatriateearningsandcashorcreate
othercollectiondifficulties.
Ourlimitedexperienceoperatingourbusinessinternationallyincreasestheriskthatanypotentialfutureexpansioneffortsthat
wemayundertakewillnotbesuccessful.Ifweinvestsubstantialtimeandresourcestoexpandourinternationaloperationsandare
unabletodososuccessfully,ourbusinessandoperatingresultswillsuffer.
Ifwelosekeymembersofourmanagementteamorareunabletoattractandretainexecutivesandemployeesweneedtosupport
ouroperationsandgrowth,ourbusinessmaybeharmed.
Oursuccessandfuturegrowthdependlargelyuponthecontinuedservicesofourexecutiveofficersandotherkeyemployees
intheareasofresearchanddevelopment,marketing,sales,services,andgeneraladministrativefunctions.Fromtimetotime,there
may be changes in our executive management team or other key employees resulting from the hiring or departure of these
personnel. Our executive officers and other key employees are employed on an atwill basis, which means that these personnel
could terminate their employment with us at any time. The loss of one or more of our executive officers, especially our Chief
Executive Officer, Lewis Cirne our President and Chief Operating Officer, Chris Cook and our Chief Revenue Officer, Hilarie
KoplowMcAdamorthefailurebyourexecutiveteamtoeffectivelyworkwithouremployeesandleadourcompanycouldharm
ourbusiness.Wealsoaredependentonthecontinuedserviceofourexistingsoftwareengineersbecauseofthecomplexityofour
products.
Inaddition,toexecuteourgrowthplan,wemustattractandretainhighlyqualifiedpersonnel.Competitionforthesepersonnel
intheSanFranciscoBayAreaandthePortlandarea,whereourheadquartersandthemajorityofourresearchanddevelopment
personnel are located, respectively, and in other locations where we maintain offices, is intense, especially for engineers
experiencedindesigninganddevelopingsoftwareandSaaSapplicationsandexperiencedsalesprofessionals.Wehave,fromtime
to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate
qualifications.Manyofthecompanieswithwhichwecompeteforexperiencedpersonnelhavegreaterresourcesthanwehave.Ifwe
hireemployeesfromcompetitorsorothercompanies,theirformeremployersmayattempttoassertthattheseemployeesorwehave
breachedtheirlegalobligations,resultinginadiversionofourtimeandresources.Inaddition,prospectiveandexistingemployees
oftenconsiderthevalueoftheequityawardstheyreceiveinconnectionwiththeiremployment.Iftheperceivedvalueof
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our equity awards declines, or experiences significant volatility, it may adversely affect our ability to recruit and retain key
employees.Ifwefailtoattractnewpersonnelorfailtoretainandmotivateourcurrentpersonnel,ourbusinessandfuturegrowth
prospectscouldbeadverselyaffected.
Ifwefailtoenhanceourbrand,ortodosoinacosteffectivemanner,ourabilitytoexpandourcustomerbasewillbeimpaired
andourfinancialconditionmaysuffer.
WebelievethatourdevelopmentoftheNewRelicbrandiscriticaltoachievingwidespreadawarenessofourexistingand
futureSoftwareAnalyticssolutions,and,asaresult,isimportanttoattractingnewcustomersandmaintainingexistingcustomers.
We also believe that the importance of brand recognition will increase as competition in our market increases. Successful
promotionofourbrandwilldependlargelyontheeffectivenessofourmarketingefforts,includingourabilitytodosoinacost
effectivemanner,andonourabilitytoprovidereliableandusefulproductsatcompetitiveprices.Inthepast,oureffortstobuildour
brandhaveinvolvedsignificantexpenses.Brandpromotionactivitiesmaynotyieldincreasedrevenue,andeveniftheydo,any
increasedrevenuemaynotoffsettheexpensesweincurinbuildingourbrand.
Ifwecannotmaintainourcorporatecultureaswegrow,wecouldlosetheinnovation,teamwork,passion,andfocusonexecution
thatwebelievecontributetooursuccess,andourbusinessmaybeharmed.
Webelievethatourcorporateculturehasbeenacriticalcomponenttooursuccess.Wehaveinvestedsubstantialtimeand
resourcesinbuildingourteam.Aswegrowandmatureasapubliccompany,wemayfinditdifficulttomaintainourcorporate
culture.Anyfailuretopreserveourculturecouldnegativelyaffectourfuturesuccess,includingourabilitytorecruitandretain
personnelandeffectivelyfocusonandpursueourcorporateobjectives.
Wemaybesuedbythirdpartiesforallegedinfringementoftheirproprietaryrights.
Thereisconsiderablepatent,copyright,trademark,tradesecret,andotherintellectualpropertydevelopmentactivityinour
industry. Our success depends in part on not infringing upon the intellectual property rights of others. From time to time, our
competitorsorotherthirdpartiesmayclaimthatweareinfringingupontheirintellectualpropertyrights,andwemaybefoundto
beinfringinguponsuchrights.Forexample,wearecurrentlypartytoasuitbroughtagainstusbyCA,Inc.thatalleges,among
otherthings,thatwehaveinfringedoncertainpatentsheldbyCA,Inc.SeeBusinessLegalProceedings.Inthefuture,wemay
receive claims that our products and underlying technology infringe or violate the claimants intellectual property rights. Any
claimsorlitigation,regardlessofmerit,couldcauseustoincursignificantexpensesand,ifsuccessfullyassertedagainstus,could
requirethatwepaysubstantialdamagesorongoingroyaltypayments,preventusfromofferingourproducts,orrequirethatwe
complywithotherunfavorableterms.
Eveniftheclaimsdonotresultinlitigationorareresolvedinourfavor,theseclaims,andthetimeandresourcesnecessaryto
resolve them, could divert the resources of our management and harm our business and operating results. We expect that the
occurrenceofinfringementclaimsislikelytogrowasthemarketforSoftwareAnalyticsproductsgrows.Accordingly,ourexposure
to damages resulting from infringement claims could increase and this could further exhaust our financial and management
resources.
Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our
brand.
Oursuccessdependstoasignificantdegreeonourabilitytoprotectourproprietarytechnologyandourbrand.Werelyona
combination of trademarks, trade secret laws, patent, copyrights, service marks, contractual restrictions, and other intellectual
propertylawsandconfidentialityprocedurestoestablishandprotectourproprietaryrights.However,thestepswetaketoprotect
ourintellectualpropertymaybeinadequate.Wewillnotbeabletoprotectourintellectualpropertyifweareunabletoenforceour
rights or if we do not detect unauthorized use of our intellectual property. If we fail to protect our intellectual property rights
adequately,ourcompetitorsmaygainaccesstoourtechnologyandourbusinessmaybeharmed.Inaddition,defendingour
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intellectualpropertyrightsmightentailsignificantexpense.Anypatents,trademarks,orotherintellectualpropertyrightsthatwe
obtainmaybechallengedbyothersorinvalidatedthroughadministrativeprocessorlitigation.AsofSeptember30,2014,weonly
hadonependingpatentapplicationandnoissuedpatents.Despitethependingpatentapplication,wemaybeunabletoobtainany
patentprotectionforourtechnology.Inaddition,anypatentsissuedinthefuturemaynotprovideuswithcompetitiveadvantages,
ormaybesuccessfullychallengedbythirdparties.Furthermore,legalstandardsrelatingtothevalidity,enforceability,andscopeof
protectionofintellectualpropertyrightsareuncertain.Despiteourprecautions,itmaybepossibleforunauthorizedthirdpartiesto
copy our products and use information that we regard as proprietary to create products and services that compete with ours.
Effective patent, trademark, copyright, and trade secret protection may not be available to us in every country in which our
productsisavailable.Thelawsofsomeforeigncountriesmaynotbeasprotectiveofintellectualpropertyrightsasthoseinthe
United States, and mechanisms for enforcement of intellectual property rights may be inadequate. To the extent we expand our
internationalactivities,ourexposuretounauthorizedcopyinganduseofourproductsandproprietaryinformationmayincrease.
Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our
intellectualproperty.
We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into
confidentiality agreements with other parties. No assurance can be given that these agreements will be effective in controlling
access to and distribution of our proprietary information. Further, these agreements may not prevent our competitors from
independentlydevelopingtechnologiesthataresubstantiallyequivalentorsuperiortoourproducts.
Inordertoprotectourintellectualpropertyrights,wemayberequiredtospendsignificantresourcestomonitorandprotect
ourintellectualpropertyrights.Litigationmaybenecessaryinthefuturetoenforceourintellectualpropertyrightsandtoprotect
ourtradesecrets.Litigationbroughttoprotectandenforceourintellectualpropertyrightscouldbecostly,timeconsuming,and
distractingtomanagement,andcouldresultintheimpairmentorlossofportionsofourintellectualproperty.Further,oureffortsto
enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and
enforceabilityofourintellectualpropertyrights.Ourinabilitytoprotectourproprietarytechnologyagainstunauthorizedcopying
oruse,aswellasanycostlylitigationordiversionofourmanagementsattentionandresources,coulddelayfurthersalesorthe
implementation of our products, impair the functionality of our products, delay introductions of new solutions, result in our
substitutinginferiorormorecostlytechnologiesintoourproducts,orinjureourreputation.
Ouruseofopensourcesoftwarecouldnegativelyaffectourabilitytosellourproductsandsubjectustopossiblelitigation.
Weuseopensourcesoftwareinourproductsandexpecttocontinuetouseopensourcesoftwareinthefuture.Wemayface
claims from others claiming ownership of, or seeking to enforce the terms of, an open source license, including by demanding
releaseoftheopensourcesoftware,derivativeworks,orourproprietarysourcecodethatwasdevelopedusingsuchsoftware.These
claims could also result in litigation, require us to purchase a costly license, or require us to devote additional research and
developmentresourcestochangeourplatform,anyofwhichwouldhaveanegativeeffectonourbusinessandoperatingresults.In
addition,ifthelicensetermsfortheopensourcesoftwareweutilizechange,wemaybeforcedtoreengineerordiscontinueour
productsorincuradditionalcosts.Wecannotbecertainthatwehavenotincorporatedopensourcesoftwareinourproductsina
mannerthatisinconsistentwithourpolicies.
Weprovideservicelevelcommitmentsundersomeofourcustomercontracts.Ifwefailtomeetthesecontractualcommitments,we
could be obligated to provide credits or refunds for prepaid amounts related to unused subscriptions or face contract
terminations,whichcouldadverselyaffectourrevenue.
Some of our customer agreements provide service level commitments. If we are unable to meet the stated service level
commitmentsorsufferextendedperiodsofunavailabilityforourproducts,wemaybecontractually
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obligated to provide these customers with service credits or refunds for prepaid amounts related to unused subscriptions, or we
couldfacecontractterminations.Ourrevenuecouldbesignificantlyaffectedifwesufferunscheduleddowntimethatexceedsthe
alloweddowntimesunderouragreementswithourcustomers.Anyextendedserviceoutagescouldadverselyaffectourreputation,
revenue,andoperatingresults.
IfthemarketforourtechnologydeliverymodelandSaaSdevelopsmoreslowlythanweexpect,ourgrowthmaysloworstall,and
ouroperatingresultswouldbeharmed.
ThemarketforSaaSbusinesssoftwareislessmaturethantraditionalonpremisesoftwareapplications,andtheadoptionrate
of SaaS business software may be slower among subscribers in industries with heightened data security interests or business
practicesrequiringhighlycustomizableapplicationsoftware.Oursuccesswilldependtoasubstantialextentonthewidespread
adoptionofSaaSbusinesssoftwareingeneral,butwedonotknowwhetherthetrendofadoptionofSaaSsolutionswillcontinuein
the future. In particular, many organizations have invested substantial personnel and financial resources to integrate legacy
software into their businesses over time, and some have been reluctant or unwilling to migrate to SaaS. It is difficult to predict
customeradoptionratesanddemandforourproducts,thefuturegrowthrateandsizeoftheSaaSbusinesssoftwaremarketorthe
entryofcompetitiveapplications.TheexpansionoftheSaaSbusinesssoftwaremarketdependsonanumberoffactors,including
thecost,performance,andperceivedvalueassociatedwithSaaS,aswellastheabilityofSaaSproviderstoaddressdatasecurityand
privacyconcerns.IfSaaSbusinesssoftwaredoesnotcontinuetoachievemarketacceptance,orthereisareductionindemandfor
SaaSbusinesssoftwarecausedbyalackofcustomeracceptance,technologicalchallenges,weakeningeconomicconditions,data
security or privacy concerns, governmental regulation, competing technologies and products, or decreases in information
technologyspending,itwouldresultindecreasedrevenueandourbusinesswouldbeadverselyaffected.
Ourfutureperformancedependsinpartonsupportfromthirdpartysoftwaredevelopers.
Weprovidesoftwarethatenablesthirdpartysoftwaredeveloperstobuildpluginsthatintegratewithourproducts.Weoperate
acommunitywebsiteforsharingthesethirdpartyplugins.Thispresentscertainriskstoourbusiness,including:
website
we do not currently provide support for plugins developed by thirdparty software developers, and users may be left
withoutsupportandpotentiallyceaseusingourproductsifthethirdpartysoftwaredevelopersdonotprovidesupportfor
thesepluginsand
we cannot provide any assurance that these plugins meet the same quality standards that we apply to our own
developmentefforts,and,totheextenttheycontainbugs,defects,orsecurityrisks,theymaycreatedisruptionsinour
customersuseofoursoftwareornegativelyaffectourbrand
thirdparty developers may not continue developing or supporting the plugins that they share on our community
thesethirdpartysoftwaredevelopersmaynotpossesstheappropriateintellectualpropertyrightstodevelopandshare
theirplugins.
Manyoftheserisksarenotwithinourcontroltoprevent,andourbrandmaybedamagedifthesepluginsdonotperformto
ourcustomerssatisfactionandthatdissatisfactionisattributedtous.
Wemaynotbeabletosecureadditionalfinancingonfavorableterms,oratall,tomeetourfuturecapitalneeds.Ifadditional
capitalisnotavailable,wemayhavetodelay,reduce,orceaseoperations.
Wedonotknowwhenorifouroperationswillgeneratesufficientcashtofundourongoingoperations.Inthefuture,wemay
requireadditionalcapitaltorespondtobusinessopportunities,includingtheneedtodevelopnewproductsorenhanceourexisting
products,enhanceouroperatinginfrastructure,possibleacquisitionsofcomplementarybusinessesandtechnologies,adeclinein
thelevelofsubscriptionsforourproducts,or
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unforeseencircumstances.Wemaynotbeabletotimelysecureadditionaldebtorequityfinancingonfavorableterms,oratall.
Anydebtfinancingobtainedbyuscouldinvolverestrictivecovenantsrelatingtofinancialandoperationalmatters,whichmay
makeitmoredifficultforustoobtainadditionalcapitalandtopursuebusinessopportunities,includingpotentialacquisitions.If
weraiseadditionalfundsthroughfurtherissuancesofequity,convertibledebtsecurities,orothersecuritiesconvertibleintoequity,
our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity
securitiesweissuecouldhaverights,preferences,andprivilegesseniortothoseofholdersofourcommonstock.Ifweareunableto
obtainadequatefinancingorfinancingontermssatisfactorytous,whenwerequireit,ourabilitytocontinuetogroworsupportour
business and to respond to business challenges could be significantly limited. If we are unable to obtain adequate financing or
financingontermssatisfactorytouswhenwerequireit,ourabilitytosupportourbusinessandtorespondtobusinesschallenges
couldbesignificantlylimited,andourbusiness,operatingresults,financialcondition,andprospectscouldbeharmed.
Theestimatesofmarketopportunityandforecastsofmarketgrowthincludedinthisprospectusmayprovetobeinaccurate,and
evenifthemarketinwhichwecompeteachievestheforecastedgrowth,ourbusinesscouldfailtogrowatsimilarrates,ifatall.
Marketopportunityestimatesandgrowthforecastsaresubjecttosignificantuncertaintyandarebasedonassumptionsand
estimatesthatmaynotprovetobeaccurate.Theestimatesandforecastsinthisprospectusrelatingtothesizeandexpectedgrowth
ofourmarketmayprovetobeinaccurate.Evenifthemarketinwhichwecompetemeetsthesizeestimatesandgrowthforecastedin
thisprospectus,ourbusinesscouldfailtogrowatsimilarrates,ifatall.Formoreinformationregardingtheestimatesofmarket
opportunityandtheforecastsofmarketgrowthincludedinthisprospectus,seethesectiontitledIndustryandMarketData.
Unanticipatedchangesinoureffectivetaxratecouldharmourfutureresults.
WearesubjecttoincometaxesintheUnitedStatesandforeignjurisdictions,andourdomesticandinternationaltaxliabilities
aresubjecttotheallocationofexpensesindifferingjurisdictions.Oureffectivetaxratecouldbeadverselyaffectedbychangesin
the mix of earnings and losses in countries with differing statutory tax rates, certain nondeductible expenses as a result of
acquisitions, the valuation of deferred tax assets and liabilities, and changes in federal, state, or international tax laws and
accounting principles. Further, each jurisdiction has different rules and regulations governing sales and use, value added, and
similartaxes,andtheserulesandregulationsaresubjecttovaryinginterpretationsthatchangeovertime.Certainjurisdictionsin
whichwedidnotcollectsuchtaxesmayassertthatsuchtaxesareapplicable,whichcouldresultintaxassessments,penalties,and
interest,andwemayberequiredtocollectsuchtaxesinthefuture.Inaddition,wemaybesubjecttoincometaxauditsbymanytax
jurisdictions throughout the world, many of which have not established clear guidance on the tax treatment of SaaSbased
companies. Any tax assessments, penalties, and interest, or future requirements may adversely affect our results of operations.
Moreover, imposition of such taxes on us going forward will effectively increase the cost of our products to our customers and
might adversely affect our ability to retain existing customers or to gain new customers in the areas in which such taxes are
imposed.
Acquisitions,strategicinvestments,partnerships,oralliancescouldbedifficulttoidentifyandintegrate,diverttheattentionof
management,disruptourbusiness,dilutestockholdervalue,andadverselyaffectouroperatingresultsandfinancialcondition.
Wehaveinthepastandmayinthefutureseektoacquireorinvestinbusinesses,products,ortechnologiesthatwebelieve
could complement or expand our products, enhance our technical capabilities, or otherwise offer growth opportunities. Any
acquisition may divert the attention of management and cause us to incur various expenses in identifying, investigating, and
pursuingsuitableacquisitions,whetherornottheacquisitionsarecompleted,andmayresultinunforeseenoperatingdifficulties
and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products,
personnel,oroperationsoftheacquiredcompanies,particularlyifthekeypersonneloftheacquiredcompanychoosenottowork
forus,theirsoftwareisnoteasilyadaptedtoworkwithourplatform,orwehavedifficultyretainingthecustomersofany
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acquired business due to changes in ownership, management, or otherwise. For example, we only recently completed our
acquisition of Ducksboard, and substantially all of the acquisition and integration risks remain. Acquisitions, including our
acquisitionofDucksboard,mayalsodisruptourbusiness,divertourresources,andrequiresignificantmanagementattentionthat
wouldotherwisebeavailablefordevelopmentofourexistingbusiness.Anyacquisitionsweareabletocompletemaynotresultin
anysynergiesorotherbenefitswehadexpectedtoachieve,whichcouldresultinimpairmentchargesthatcouldbesubstantial.In
addition,wemaynotbeabletofindandidentifydesirableacquisitiontargetsorbesuccessfulinenteringintoanagreementwith
anyparticulartarget.Acquisitionscouldalsoresultindilutiveissuancesofequitysecuritiesortheincurrenceofdebt,whichcould
adverselyaffectouroperatingresults.Inaddition,ifanacquiredbusiness,includingDucksboard,failstomeetourexpectations,our
operatingresults,business,andfinancialconditionmaysufferorwemaybeexposedtounknownrisksorliabilities.
Wefaceexposuretoforeigncurrencyexchangeratefluctuations.
WemayinthefutureconducttransactionsincurrenciesotherthantheU.S.dollarorthefunctionaloperatingcurrencyofthe
transactional entities. While we have historically transacted with customers and vendors in U.S. dollars, we have transacted in
foreign currencies for subscriptions and may transact with customers in foreign currencies in the future. In addition, any
internationalsubsidiarieswillmaintainnetassetsthataredenominatedincurrenciesotherthanthefunctionaloperatingcurrencies
of these entities. Accordingly, changes in the value of foreign currencies relative to the U.S. dollar can affect our revenue and
operatingresultsduetotransactionalandtranslationalremeasurementthatisreflectedinourearnings.Asaresultofsuchforeign
currencyexchangeratefluctuations,itcouldbemoredifficulttodetectunderlyingtrendsinourbusinessandresultsofoperations.
Inaddition,totheextentthatfluctuationsincurrencyexchangeratescauseourresultsofoperationstodifferfromourexpectations
or the expectations of our investors, the trading price of our common stock could be adversely affected. We do not currently
maintain a program to hedge transactional exposures in foreign currencies. However, in the future, we may use derivative
instruments,suchasforeigncurrencyforwardandoptioncontracts,tohedgecertainexposurestofluctuationsinforeigncurrency
exchangerates.Theuseofsuchhedgingactivitiesmaynotoffsetanyormorethanaportionoftheadversefinancialeffectsof
unfavorable movements in foreign exchange rates over the limited time the hedges are in place. Moreover, the use of hedging
instrumentsmayintroduceadditionalrisksifweareunabletostructureeffectivehedgeswithsuchinstruments.
Weakenedglobaleconomicconditionsmayharmourindustry,business,andresultsofoperations.
Ouroverallperformancedependsinpartonworldwideeconomicconditions.Globalfinancialdevelopmentsanddownturns
seemingly unrelated to us or the information technology industry may harm us. The United States and other key international
economies have been impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced
corporateprofitability,volatilityincredit,equityandforeignexchangemarkets,bankruptcies,andoveralluncertaintywithrespect
totheeconomy.Therevenuegrowthandpotentialprofitabilityofourbusinessdependsondemandforsoftwareapplicationsand
productsgenerally,andapplicationperformancemonitoringspecifically.Inaddition,ourrevenueisdependentonthenumberof
usersofourproducts.Historically,duringeconomicdownturnstherehavebeenreductionsinspendingoninformationtechnology
systemsaswellaspressureforextendedbillingtermsandotherfinancialconcessions,whichwouldlimitourabilitytogrowour
businessandnegativelyaffectouroperatingresults.Theseconditionsaffecttherateofinformationtechnologyspendingandcould
adverselyaffectourcustomersabilityorwillingnesstopurchaseourproducts,delayprospectivecustomerspurchasingdecisions,
reducethevalueordurationoftheirsubscriptions,oraffectrenewalrates,allofwhichcouldharmouroperatingresults.
Naturaldisastersandothereventsbeyondourcontrolcouldharmourbusiness.
Naturaldisastersorothercatastrophiceventsmaycausedamageordisruptiontoouroperations,internationalcommerce,and
the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by
naturaldisasters,fire,powershortages,pandemics,andothereventsbeyondourcontrol.Werelyonournetworkandthirdparty
infrastructureandenterpriseapplications,
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internal technology systems, and our website for our development, marketing, operational support, hosted products, and sales
activities. The west coast of the United States contains active earthquake zones. Although we maintain crisis management and
disaster response plans, in the event of a major earthquake, hurricane, or catastrophic event such as fire, power loss,
telecommunications failure, cyberattack, war, or terrorist attack, we may be unable to continue our operations and may endure
system interruptions, reputational harm, delays in our product development, lengthy interruptions in service, breaches of data
security,andlossofcriticaldata,allofwhichcouldhaveanadverseeffectonourfutureoperatingresults.
Weareanemerginggrowthcompanyandwecannotbecertainifthereduceddisclosurerequirementsapplicabletoemerging
growthcompanieswillmakeourcommonstocklessattractivetoinvestors.
We are an emerging growth company, as defined in the federal securities laws, and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companiesincluding,butnotlimitedto,notbeingrequiredtocomplywiththeauditorattestationrequirementsofSection404of
theSarbanesOxleyActof2002,ortheSarbanesOxleyAct,reduceddisclosureobligationsregardingexecutivecompensationin
our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on
executivecompensationandstockholderapprovalofanygoldenparachutepaymentsnotpreviouslyapproved.Wecannotpredict
ifinvestorswillfindourcommonstocklessattractivebecausewemayrelyontheseexemptions.Ifsomeinvestorsfindourcommon
stocklessattractiveasaresult,theremaybealessactivetradingmarketforourcommonstockandourstockpricemaybemore
volatile.
Therequirementsofbeingapubliccompanymaystrainourresources,divertmanagementsattention,andaffectourabilityto
attractandretainexecutivemanagementandqualifiedboardmembers.
Asapubliccompany,wewillbesubjecttothereportingrequirementsoftheSecuritiesExchangeActof1934,asamended,or
theExchangeAct,theSarbanesOxleyAct,theDoddFrankWallStreetReformandConsumerProtectionActof2010,thelisting
requirementsoftheNewYorkStockExchange,andotherapplicablesecuritiesrulesandregulations.Compliancewiththeserules
and regulations will increase our legal and financial compliance costs, make some activities more difficult, timeconsuming, or
costly,andincreasedemandonoursystemsandresources,particularlyafterwearenolongeranemerginggrowthcompany.The
Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and
operating results. The SarbanesOxley Act requires, among other things, that we maintain effective disclosure controls and
proceduresandinternalcontroloverfinancialreporting.
In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating
uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time
consuming. These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of
specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and
governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by
ongoingrevisionstodisclosureandgovernancepractices.Weintendtoinvestsubstantialresourcestocomplywithevolvinglaws,
regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of
managements time and attention from revenuegenerating activities to compliance activities. If our efforts to comply with new
laws,regulations,andstandardsdifferfromtheactivitiesintendedbyregulatoryorgoverningbodiesduetoambiguitiesrelatedto
theirapplicationandpractice,regulatoryauthoritiesmayinitiatelegalproceedingsagainstusandourbusinessmaybeadversely
affected.
Wealsoexpectthatbeingapubliccompanyandthesenewrulesandregulationswillmakeitmoreexpensiveforustoobtain
directorandofficerliabilityinsurance,andwemayberequiredtoacceptreducedcoverageorincursubstantiallyhighercoststo
obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of
directors,particularlytoserveonourauditcommitteeandcompensationcommittee,andqualifiedexecutiveofficers.
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As a result of disclosure of information in this prospectus and in filings required of a public company, our business and
financial condition will become more visible, which we believe may result in threatened or actual litigation, including by
competitorsandotherthirdparties.Ifsuchclaimsaresuccessful,ourbusinessandoperatingresultscouldbeadverselyaffected,and
even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to
resolvethem,coulddiverttheresourcesofourmanagementandadverselyaffectourbusinessandoperatingresults.
Asaresultofbecomingapubliccompany,wewillbeobligatedtoimplementandmaintainproperandeffectiveinternalcontrol
overfinancialreporting.Wemaynotcompleteouranalysisofourinternalcontroloverfinancialreportinginatimelymanner,or
theseinternalcontrolsmaynotbedeterminedtobeeffective,whichmayadverselyaffectinvestorconfidenceinourcompanyand,
asaresult,thevalueofourcommonstock.
We will be required, pursuant to the Exchange Act, to furnish a report by management on, among other things, the
effectivenessofourinternalcontroloverfinancialreportingforthefirstfiscalyearbeginningaftertheeffectivedateofthisoffering.
Thisassessmentwillneedtoincludedisclosureofanymaterialweaknessesidentifiedbyourmanagementinourinternalcontrol
overfinancialreporting.
We are currently evaluating our internal controls, identifying and remediating deficiencies in those internal controls, and
documentingtheresultsofourevaluation,testing,andremediation.Wemaynotbeabletocompleteourevaluation,testing,and
any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material
weaknessesinourinternalcontroloverfinancialreportingthatweareunabletoremediatebeforetheendofthesamefiscalyearin
whichthematerialweaknessisidentified,wewillbeunabletoassertthatourinternalcontrolsareeffective.Ifweareunableto
assertthatourinternalcontroloverfinancialreportingiseffective,orifourindependentregisteredpublicaccountingfirm,when
required,isunabletoattesttomanagementsreportontheeffectivenessofourinternalcontrols,wecouldloseinvestorconfidence
intheaccuracyandcompletenessofourfinancialreports,whichwouldcausethepriceofourcommonstocktodecline.
As a public company, we will be required to disclose material changes made in our internal control and procedures on a
quarterly basis. However, our independent registered public accounting firm will not be required to formally attest to the
effectivenessofourinternalcontroloverfinancialreportingpursuanttoSection404oftheSarbanesOxleyActuntilthelaterofthe
yearfollowingourfirstannualreportrequiredtobefiledwiththeSECorthedatewearenolongeranemerginggrowthcompany
asdefinedintheJOBSAct,ifwetakeadvantageoftheexemptionscontainedintheJOBSAct.Tocomplywiththerequirementsof
beingapubliccompany,wemayneedtoundertakevariousactions,suchasimplementingnewinternalcontrolsandprocedures
andhiringaccountingorinternalauditstaff.
RisksRelatedtoOwnershipofOurCommonStockandthisOffering
Therehasbeennopriormarketforourcommonstockandanactivemarketmaynotdeveloporbesustainedandinvestorsmay
notbeabletoreselltheirsharesatorabovetheinitialpublicofferingprice.
Therehasbeennopublicmarketforourcommonstockpriortothisoffering.Theinitialpublicofferingpriceforourcommon
stockwillbedeterminedthroughnegotiationsbetweentheunderwritersandusandmayvaryfromthemarketpriceofourcommon
stockfollowingthisoffering.Ifyoupurchasesharesofourcommonstockinthisoffering,youmaynotbeabletoresellthoseshares
atorabovetheinitialpublicofferingprice,ifatall.Anactiveorliquidmarketinourcommonstockmaynotdevelopuponthe
closingofthisofferingor,ifitdoesdevelop,itmaynotbesustainable.
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Our stock price may be volatile or may decline regardless of our operating performance resulting in substantial losses for
investorspurchasingsharesinthisoffering.
The trading price of our common stock is likely to be volatile and could fluctuate widely regardless of our operating
performance.Themarketpriceofourcommonstockmayfluctuatesignificantlyinresponsetonumerousfactors,manyofwhichare
beyondourcontrol,including:
projections
ratingschangesbyanysecuritiesanalystswhofollowourcompany
announcementsbyusorourcompetitorsofsignificanttechnicalinnovations,acquisitions,strategicpartnerships,joint
ventures,orcapitalcommitments
changesinoperatingperformanceandstockmarketvaluationsofothertechnologycompaniesgenerally,orthoseinour
industryinparticular
price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the
economyasawhole
changesinaccountingstandards,policies,guidelines,interpretations,orprinciples
actual or anticipated developments in our business or our competitors businesses or the competitive landscape
generally
failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any
securitiesanalystswhofollowourcompany,orourfailuretomeettheseestimatesortheexpectationsofinvestors
actualoranticipatedfluctuationsinouroperatingresults
the financial projections we may provide to the public, any changes in these projections, or our failure to meet these
developmentsordisputesconcerningourintellectualpropertyorourproducts,orthirdpartyproprietaryrights
announcedorcompletedacquisitionsofbusinessesortechnologiesbyusorourcompetitors
newlawsorregulationsornewinterpretationsofexistinglaws,orregulationsapplicabletoourbusiness
anymajorchangeinourboardofdirectorsormanagement
salesofsharesofourcommonstockbyusorourstockholders
lawsuitsthreatenedorfiledagainstusand
othereventsorfactors,includingthoseresultingfromwar,incidentsofterrorism,orresponsestotheseevents.
Inaddition,themarketfortechnologystocksandthestockmarketsingeneralhaveexperiencedextremepriceandvolume
fluctuations. 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
periodsofmarketvolatility.Ifweweretobecomeinvolvedinsecuritieslitigation,itcouldsubjectustosubstantialcosts,divert
resources and the attention of management from our business, and adversely affect our business, results of operations, financial
condition,andcashflows.
Substantialfuturesalesofsharesofourcommonstockcouldcausethemarketpriceofourcommonstocktodecline.
Themarketpriceofourcommonstockcoulddeclineasaresultofsubstantialsalesofourcommonstock,particularlysalesby
ourdirectors,executiveofficers,andsignificantstockholders,alargenumberofsharesofourcommonstockbecomingavailablefor
sale,ortheperceptioninthemarketthatholdersofalargenumberof
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sharesintendtoselltheirshares.Afterthisoffering,wewillhaveoutstanding46,095,833sharesofourcommonstock,basedonthe
numberofsharesoutstandingasofSeptember30,2014.Thisincludesthesharestobesoldinthisoffering,whichmayberesoldin
thepublicmarketimmediately.Theremaining41,095,833sharesarecurrentlyrestrictedasaresultofmarketstandoffagreements
restrictingtheirsalefor180daysafterthedateofthisprospectus.Inaddition,substantiallyallofthesesharesarealsosubjectto
lockup agreements with the underwriters. Morgan Stanley & Co. LLC may, in its sole discretion, permit our officers, directors,
employees,andcurrentsecurityholderswhoaresubjecttolockupagreementstosellsharespriortotheexpirationofthelockup
agreements.
Additionally, the shares of common stock subject to outstanding options under our equity incentive plans and the shares
reservedforfutureissuanceunderourequityincentiveplans,aswellassharesissuableuponvestingofrestrictedstockawards,will
becomeeligibleforsaleinthepublicmarketinthefuture,subjecttocertainlegalandcontractuallimitations.SeeSharesEligible
forFutureSaleforamoredetaileddescriptionofsalesthatmayoccurinthefuture.
Afterthisoffering,theholdersofanaggregateof24,970,158sharesofourcommonstockasofSeptember30,2014,including
28,000sharesissuableuponexerciseofawarrant,willhaverights,subjecttocertainconditions,torequireustofileregistration
statements covering their shares or to include their shares in registration statements that we may file for ourselves or our
stockholders. We also intend to register shares of common stock that we may issue under our employee equity incentive plans.
Onceweregistertheseshares,theywillbeabletobesoldfreelyinthepublicmarketuponissuance,subjecttoexistingmarket
standofforlockupagreements.
Upon the closing of this offering, our directors, officers, and principal stockholders will beneficially own in the aggregate
approximately 70.0% of our outstanding voting stock and will be able to exert significant control over matters subject to
stockholderapproval.
Upon the closing of this offering, our directors, officers, greater than 5% stockholders, and their respective affiliates will
beneficiallyownintheaggregateapproximately70.0%ofouroutstandingvotingstock,including24.2%heldbyourfounder,
ChiefExecutiveOfficer,anddirector,LewisCirne.Therefore,afterthisofferingthesestockholderswillcontinuetohavetheability
to influence us through this ownership position. These stockholders may be able to determine all matters requiring stockholder
approval. For example, these stockholders will be able to control elections of directors, amendments of our organizational
documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage
unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our
stockholders.
Ifsecuritiesorindustryanalystsdonotpublishresearchorpublishinaccurateorunfavorableresearchaboutourbusiness,our
stockpriceandtradingvolumecoulddecline.
Thetradingmarketforourcommonstockwilldependinpartontheresearchandreportsthatsecuritiesorindustryanalysts
publishaboutusorourbusiness.Iffewsecuritiesanalystscommencecoverageofus,orifindustryanalystsceasecoverageofus,
thetradingpriceforourcommonstockwouldbenegativelyaffected.Ifoneormoreoftheanalystswhocoverusdowngradeour
commonstockorpublishinaccurateorunfavorableresearchaboutourbusiness,ourcommonstockpricewouldlikelydecline.If
oneormoreoftheseanalystsceasecoverageofusorfailtopublishreportsonusregularly,demandforourcommonstockcould
decrease,whichmightcauseourcommonstockpriceandtradingvolumetodecline.
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Antitakeover provisions in our charter documents and under Delaware law could make an acquisition of our company more
difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our
commonstock.
Provisions in our amended and restated certificate of incorporation and amended and restated bylaws to be effective in
connectionwiththisoffering,mayhavetheeffectofdelayingorpreventingachangeofcontrolorchangesinourmanagement.Our
amendedandrestatedcertificateofincorporationandamendedandrestatedbylawsincludeprovisionsthat:
stockwithterms,rights,andpreferencesdeterminedbyourboardofdirectorsthatmaybeseniortoourcommonstock
establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including
proposednominationsofpersonsforelectiontoourboardofdirectors
specifythatspecialmeetingsofourstockholderscanbecalledonlybyourboardofdirectors,theChairmanofourboard
ofdirectors,orourChiefExecutiveOfficer
requirethatanyactiontobetakenbyourstockholdersbeeffectedatadulycalledannualorspecialmeetingandnotby
writtenconsent
authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred
establishthatourboardofdirectorsisdividedintothreeclasses,witheachclassservingthreeyearstaggeredterms
prohibitcumulativevotingintheelectionofdirectors
providethatourdirectorsmayberemovedonlyforcause
providethatvacanciesonourboardofdirectorsmaybefilledonlybyamajorityofdirectorstheninoffice,eventhough
lessthanaquorumand
requiretheapprovalofourboardofdirectorsortheholdersofatleastseventyfivepercent(75%)ofouroutstanding
sharesofcapitalstocktoamendourbylawsandcertainprovisionsofourcertificateofincorporation.
Theseprovisionsmayfrustrateorpreventanyattemptsbyourstockholderstoreplaceorremoveourcurrentmanagementby
making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the
members of our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of
Section203oftheDelawareGeneralCorporationLaw,whichgenerallyprohibitsaDelawarecorporationfromengaginginanyofa
broadrangeofbusinesscombinationswithanyinterestedstockholderforaperiodofthreeyearsfollowingthedateonwhichthe
stockholder became an interested stockholder. Any delay or prevention of a change of control transaction or changes in our
managementcouldcausethemarketpriceofourcommonstocktodecline.
Wemayinvestorspendtheproceedsofthisofferinginwayswithwhichyoumaynotagreeorinwayswhichmaynotyielda
return.
Our management will have considerable discretion in the application of the net proceeds, and you will not have the
opportunity,aspartofyourinvestmentdecision,toassesswhethertheproceedsarebeingusedappropriately.Thenetproceedsmay
beusedforcorporatepurposesthatdonotincreasethevalueofourbusiness,whichcouldcauseourstockpricetodecline.
Wedonotintendtopaydividendsonourcommonstocksoanyreturnswillbelimitedtochangesinthevalueofourcommon
stock.
Wehaveneverdeclaredorpaidanycashdividendsonourcommonstock.Wecurrentlyanticipatethatwewillretainfuture
earningsforthedevelopment,operation,andexpansionofourbusinessanddonotanticipate
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declaringorpayinganycashdividendsfortheforeseeablefuture.Inaddition,ourabilitytopaycashdividendsonourcommon
stockmaybeprohibitedorlimitedbythetermsofanyfuturedebtfinancingarrangements.Anyreturntostockholderswilltherefore
belimitedtotheincrease,ifany,ofourstockprice,whichmayneveroccur.
Asanewinvestor,youwillexperienceimmediateandsubstantialdilutioninthebookvalueofthesharesthatyoupurchasein
thisoffering.
Theinitialpublicofferingpriceissubstantiallyhigherthantheproformanettangiblebookvaluepershareofourcommon
stockimmediatelyfollowingthisofferingbasedonthetotalvalueofourtangibleassetslessourtotalliabilities.Therefore,ifyou
purchasesharesofourcommonstockinthisoffering,attheassumedinitialpublicofferingpriceof$19.00pershare,whichisthe
midpointofthepricerangesetforthonthecoverpageofthisprospectus,youwillexperienceimmediatedilutionof$14.87per
share,thedifferencebetweenthepricepershareyoupayforourcommonstockandourproformanettangiblebookvaluepershare
as of September 30, 2014, after giving effect to the issuance of 5,000,000 shares of our common stock in this offering. See
Dilution.Furthermore,investorspurchasingsharesofourcommonstockinthisofferingwillonlyownapproximately10.8%of
our outstanding shares of common stock after this offering even though the new investors aggregate investment will represent
32.4%ofthetotalconsiderationreceivedbyusinconnectionwithallinitialsalesofsharesofourcapitalstockoutstandingasof
September30,2014,aftergivingeffecttotheissuanceof5,000,000sharesofourcommonstockinthisoffering.Totheextent
outstanding options or warrants to purchase our common stock are exercised, investors purchasing our common stock in this
offeringwillexperiencefurtherdilution.
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SPECIALNOTEREGARDINGFORWARDLOOKINGSTATEMENTS
This prospectus contains forwardlooking statements within the meaning of the federal securities laws, which statements
involvesubstantialrisksanduncertainties.Forwardlookingstatementsgenerallyrelatetofutureeventsorourfuturefinancialor
operating performance. In some cases, you can identify forwardlooking statements because they contain words such as may,
will, should, expects, plans, anticipates, could, intends, target, projects, contemplates, believes,
estimates,predicts,potential,orcontinueorthenegativeofthesewordsorothersimilartermsorexpressionsthatconcern
ourexpectations,strategy,plans,orintentions.Forwardlookingstatementscontainedinthisprospectusinclude,butarenotlimited
to,statementsabout:
expenses,abilitytogeneratepositivecashflow,andabilitytoachieveandmaintainprofitability
our future financial performance, including our revenue, cost of revenue, gross profit, or gross margin, operating
thesufficiencyofourcashandcashequivalentstomeetourliquidityneeds
ourabilitytoattractandretaincustomerstouseourproducts,andtooptimizethepricingforourproducts
theevolutionoftechnologyaffectingourproductsandmarkets
ourabilitytoinnovateandprovideasuperioruserexperienceandourintentionswithrespectthereto
ourabilitytosuccessfullyexpandinourexistingmarketsandintonewmarkets,includinginternationalmarkets
theattractionandretentionofqualifiedemployeesandkeypersonnel
worldwideeconomicconditionsandtheirimpactonspending
ourabilitytoeffectivelymanageourgrowthandfutureexpenses
ourabilitytomaintain,protect,andenhanceourintellectualproperty
ourabilitytocomplywithmodifiedornewlawsandregulationsapplyingtoourbusiness,includingprivacyanddata
securityregulations
theincreasedexpensesassociatedwithbeingapubliccompanyand
ouruseofthenetproceedsfromthisoffering.
Wecautionyouthattheforegoinglistmaynotcontainalloftheforwardlookingstatementsmadeinthisprospectus.
You should not rely upon forwardlooking statements as predictions of future events. We have based the forwardlooking
statementscontainedinthisprospectusprimarilyonourcurrentexpectationsandprojectionsaboutfutureeventsandtrendsthatwe
believemayaffectourbusiness,financialcondition,operatingresults,andprospects.Theoutcomeoftheeventsdescribedinthese
forwardlooking statements is subject to risks, uncertainties, and other factors described in the section titled Risk Factors and
elsewhere in this prospectus. Moreover, we operate in a very competitive and rapidly changing environment. New risks and
uncertaintiesemergefromtimetotime,anditisnotpossibleforustopredictallrisksanduncertaintiesthatcouldhaveanimpact
ontheforwardlookingstatementscontainedinthisprospectus.Wecannotassureyouthattheresults,events,andcircumstances
reflected in the forwardlooking statements will be achieved or occur, and actual results, events, or circumstances could differ
materiallyfromthosedescribedintheforwardlookingstatements.
Theforwardlookingstatementsmadeinthisprospectusrelateonlytoeventsasofthedateonwhichthestatementsaremade.
Weundertakenoobligationtoupdateanyforwardlookingstatementsmadeinthisprospectustoreflecteventsorcircumstances
afterthedateofthisprospectusortoreflectnewinformationortheoccurrenceofunanticipatedevents,exceptasrequiredbylaw.
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INDUSTRYANDMARKETDATA
Thisprospectuscontainsstatisticaldata,estimates,andforecaststhatarebasedonindependentindustrypublications,suchas
thosepublishedbyGartner,Inc.,InternationalDataCorporation,andEvansDataCorp.,orotherpubliclyavailableinformation,as
well as other information based on our internal sources. Although we believe that the thirdparty sources referred to in this
prospectusarereliable,estimatesastheyrelatetoprojectionsinvolvenumerousassumptions,aresubjecttorisksanduncertainties,
andaresubjecttochangebasedonvariousfactors,includingthosediscussedunderthesectiontitledRiskFactorsandelsewhere
inthisprospectus.Theseandotherfactorscouldcauseresultstodiffermateriallyfromthoseexpressedintheestimatesmadebythe
independentpartiesandbyus.
Certain information in the text of this prospectus is contained in independent industry publications. The sources of these
independentindustrypublicationsareprovidedbelow:
September2014.
EvansData,GlobalDeveloperPopulationandDemographicStudy,2013.
Gartner, Gartner Market Statistics, Forecast: Enterprise Software Markets, Worldwide, 20112018, 3Q14 Update,
Gartner,OutsourcingTrends2013:GrowingITImpactontheBusinessDrivesNewSourcingDecisions,April23,2014.
IDC,WorldwideSmartphone20142018ForecastandAnalysis,Doc#247140,March2014.
IDC,WorldwideandU.S.TabletPlus2in120142018Forecast,Doc#247350,March2014.
IDC,WorldwidePC20132017ForecastUpdate:2013YearEndReview,Doc#246547,February2014.
IDC,WorldwideBlackbookVersion420062017,Doc#246614,February2014.
TheGartnerReportsdescribedherein,ortheGartnerReports,representdata,researchopinion,orviewpointspublishedaspart
ofasyndicatedsubscriptionservicebyGartnerandarenotrepresentationsoffact.EachGartnerReportspeaksasofitsoriginal
publicationdate(andnotasofthedateofthisprospectus)andtheopinionsexpressedintheGartnerReportsaresubjecttochange
withoutnotice.
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USEOFPROCEEDS
We estimate that the net proceeds from the sale of shares of our common stock that we are selling in this offering will be
approximately$85.6million,baseduponanassumedinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthe
pricerangesetforthonthecoverpageofthisprospectus,andafterdeductingestimatedunderwritingdiscountsandcommissions
andestimatedofferingexpenses.Iftheunderwritersoverallotmentoptionisexercisedinfull,weestimatethatournetproceeds
wouldbeapproximately$98.9million,afterdeductingestimatedunderwritingdiscountsandcommissionsandestimatedoffering
expenses.
Each$1.00increaseordecreaseintheassumedinitialpublicofferingpriceof$19.00persharewouldincreaseordecreasethe
netproceedsthatwereceivefromthisofferingbyapproximately$4.7million,assumingthatthenumberofsharesofferedbyus,as
set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and
commissions.
Theprincipalpurposesofthisofferingaretoincreaseourcapitalizationandfinancialflexibility,createapublicmarketforour
commonstock,therebyenablingaccesstothepublicequitymarketsbyouremployeesandstockholders,obtainadditionalcapital,
andincreaseourvisibilityinthemarketplace.Weintendtousethenetproceedsreceivedfromthisofferingprimarilyforgeneral
corporatepurposes,includingheadcountexpansion,workingcapital,salesandmarketingactivities,productdevelopment,general
andadministrativematters,andcapitalexpenditures.Wecannotspecifywithcertaintytheparticularusesofthenetproceedsthat
wewillreceivefromthisoffering.Accordingly,wewillhavebroaddiscretionovertheusesofthenetproceedsofthisoffering.
Pending these uses, we intend to invest the net proceeds from this offering in shortterm, investmentgrade interestbearing
securities such as money market accounts, certificates of deposit, commercial paper, and guaranteed obligations of the U.S.
government.
DIVIDENDPOLICY
Wehaveneverdeclaredorpaidanycashdividendonourcapitalstock.Wecurrentlyintendtoretainallavailablefundsand
anyfutureearningsforuseintheoperationofourbusinessanddonotanticipatepayinganydividendsonourcommonstockinthe
foreseeable future, if at all. Any future determination to declare cash dividends will be made at the discretion of our board of
directors,subjecttoapplicablelaws,andwilldependonanumberoffactors,includingourfinancialcondition,operatingresults,
capitalrequirements,contractualrestrictions,generalbusinessconditions,andotherfactorsthatourboardofdirectorsmaydeem
relevant.
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CAPITALIZATION
ThefollowingtablesetsforthourcashandcashequivalentsandcapitalizationasofSeptember30,2014on:
as of September 30, 2014 into an aggregate of 24,931,796 shares of common stock, which conversion will occur
immediatelyupontheclosingofthisoffering,asifsuchconversionhadoccurredonSeptember30,2014,assumingan
initialpublicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageof
thisprospectus,andgivingeffecttotheconversionpriceadjustmentrelatingtoourSeriesFconvertiblepreferredstock
describedinDescriptionofCapitalStock,andtheresultingreclassificationofthepreferredstockwarrantliabilityto
additional paidin capital and (ii) the net exercise of an outstanding warrant into an aggregate of 10,362 shares of
commonstockupontheclosingofthisoffering,assuminganinitialpublicofferingpriceof$19.00pershare,whichis
themidpointofthepricerangesetforthonthecoverpageofthisprospectusand
anactualbasis
aproformabasis,givingeffectto(i)theautomaticconversionofalloutstandingsharesofourconvertiblepreferredstock
aproformaasadjustedbasis,givingeffecttotheproformaadjustmentsandthesaleof5,000,000sharesofcommon
stockbyusinthisoffering,basedonanassumedinitialpublicofferingpriceof$19.00pershare,themidpointofthe
price range reflected on the cover page of this prospectus, after deducting the estimated underwriting discounts and
commissionsandestimatedofferingexpenses.
Theproformaasadjustedinformationsetforthinthetablebelowisillustrativeonlyandwillbeadjustedbasedontheactual
initialpublicofferingpriceandothertermsofthisofferingdeterminedatpricing.
You should read this table together with Managements Discussion and Analysis of Financial Condition and Results of
Operationsandourauditedconsolidatedfinancialstatementsandrelatednotesincludedelsewhereinthisprospectus.
ProForma
Actual
ProForma
AsAdjusted (2)(3)
(inthousands,exceptshareandpersharedata)
$ 92,370
92,370
177,985
578
193,160
Convertiblepreferredstock,$0.001parvalue:24,961,092shares
authorized,24,813,343sharesissuedandoutstanding,actualno
sharesissuedandoutstanding,proformaandproformaasadjusted
Stockholders(deficit)equity:
Preferredstock,$0.001parvaluenosharesauthorized,issued
andoutstanding,actual10,000,000sharesauthorized,no
sharesissuedandoutstanding,proformaandproformaas
adjusted
Commonstock,$0.001parvalue55,000,000sharesauthorized,
16,413,675sharesissuedand16,153,675sharesoutstanding,
actual100,000,000sharesauthorized,41,355,833shares
issuedand41,095,833sharesoutstanding,proforma
100,000,000sharesauthorized,46,355,833sharesissuedand
46,095,833sharesoutstanding,proformaasadjusted (1)
Treasurystockatcost(260,000shares)
Additionalpaidincapital
Accumulateddeficit
Totalstockholders(deficit)equity
Totalcapitalization
16
(263)
22,078
(100,846)
(79,015)
$ 114,723
41
(263)
215,791
(100,846)
114,723
114,723
46
(263)
301,401
(100,846)
200,338
200,338
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(1) ThenumberofsharesofourcommonstocktobeissuedupontheautomaticconversionofalloutstandingsharesofourSeriesFconvertiblepreferredstockdependsinpart
on the initial public offering price of our common stock. The number of shares issued and outstanding pro forma and pro forma as adjusted assume that our Series F
convertiblepreferredstockconvertsinto3,574,593sharesofcommonstock,basedupontheassumedinitialpublicofferingpriceof$19.00pershare,themidpointofthe
pricerangesetforthonthecoverpageofthisprospectus.SeeDescriptionofCapitalStockforadditionalinformation.
(2) Each$1.00increase(decrease)intheassumedinitialpublicofferingpriceof$19.00pershare,themidpointofthepricerangereflectedonthecoverpageofthisprospectus,
wouldincrease(decrease)eachofourproformaasadjustedcashandcashequivalents,additionalpaidincapital,totalstockholders(deficit)equity,andtotalcapitalization
byapproximately$4.7million,assumingthatthenumberofsharesofferedbyus,assetforthonthecoverpageofthisprospectus,remainsthesameandafterdeducting
theestimatedunderwritingdiscountsandcommissions.
(3) DoesnotreflectouracquisitionofDucksboardfor$2.3millionincashand108,234sharesofourcommonstockinOctober2014,andupto141,766additionalsharesof
ourcommonstockthatmaysubsequentlybeissuedinconnectionwiththeacquisition.
Thenumberofsharesofcommonstockthatwillbeoutstandingafterthisofferingisbasedon41,095,833sharesoutstanding
asofSeptember30,2014,andexcludes:
approximately1,194,000sharesofcommonstocktobeissuedupontheexerciseofstockoptions,withanexerciseprice
equaltotheinitialpublicofferingprice,orthatwillbesubjecttovestingofrestrictedstockunits,thatweexpecttogrant
onthedatethattheregistrationstatementofwhichthisprospectusformsapartisdeclaredeffective
108,234sharesofcommonstockissuedafterSeptember30,2014,andupto141,766additionalsharesofcommonstock
thatmaysubsequentlybeissued,inconnectionwithouracquisitionofDucksboard
5,618,383sharesofourcommonstocktobereservedforfutureissuanceunderour2014Plan(which(i)includes618,383
sharesofcommonstockasofSeptember30,2014reservedforfuturegrantsunderour2008Plan,(ii)doesnotreflectthe
stock options and restricted stock units granted after September 30, 2014, as described above, and (iii) excludes an
increasetothe2008Planreserveof1,600,000sharesofcommonstockinNovember2014,whichshares,inthecaseof(i)
and(iii),willbeaddedtothesharesreservedforfutureissuanceunderour2014Planuponeffectivenessofthatplanifthe
sharesarenotissuedorsubjecttooutstandinggrantsunderthe2008Planatthattime),whichwillbecomeeffectiveon
the date immediately prior to the effectiveness of the registration statement of which this prospectus forms a part and
contains provisions that automatically increase its share reserve each year, as more fully described in Executive
CompensationEquityIncentivePlansand
777,450sharesofcommonstockissuableupontheexerciseofstockoptionsgrantedafterSeptember30,2014,withan
exercisepriceof$19.00pershare(whichdoesnotincludethestockoptionsandrestrictedstockunitsdescribedbelow
thatwillbegrantedonthedatethattheregistrationstatementofwhichthisprospectusformsapartisdeclaredeffective)
28,000 shares of common stock issuable upon the exercise of a convertible preferred stock warrant outstanding as of
1,000,000sharesofcommonstockreservedforissuanceunderour2014ESPP,whichwillbecomeeffectiveuponthe
effectiveness of the registration statement of which this prospectus forms a part, and which contains provisions that
automaticallyincreaseitssharereserveeachyear.
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DILUTION
If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference
betweentheinitialpublicofferingpricepershareofourcommonstockandtheproformaasadjustednettangiblebookvalueper
shareofourcommonstockimmediatelyafterthisoffering.
Nettangiblebookvaluepershareisdeterminedbydividingourtotaltangibleassetslessourtotalliabilitiesbythenumberof
sharesofcommonstockoutstanding.OurhistoricalnettangiblebookvalueasofSeptember30,2014was$102.8million,or$6.37
pershare.OurproformanettangiblebookvalueasofSeptember30,2014was$103.4million,or$2.52pershare,basedonthetotal
numberofsharesofourcommonstockoutstandingasofSeptember30,2014,aftergivingeffectto(i)theautomaticconversionof
all outstanding shares of our convertible preferred stock as of September 30, 2014 into an aggregate of 24,931,796 shares of
commonstock,whichconversionwilloccurimmediatelyupontheclosingoftheoffering,assuminganinitialpublicofferingprice
of$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageofthisprospectus,andgivingeffecttothe
conversionpriceadjustmentrelatingtoourSeriesFconvertiblepreferredstockdescribedinDescriptionofCapitalStockand
(ii)thenetexerciseofanoutstandingwarrantintoanaggregateof10,362sharesofcommonstockupontheclosingofthisoffering,
assuminganinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageof
thisprospectus.
Aftergivingeffecttothesaleof5,000,000sharesofcommonstockinthisofferingattheassumedinitialpublicofferingprice
of$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageofthisprospectus,andafterdeducting
estimatedunderwritingdiscountsandcommissionsandestimatedofferingexpenses,ourproformaasadjustednettangiblebook
valueasofSeptember30,2014wouldhavebeen$190.6million,or$4.13pershare.Thisrepresentsanimmediateincreaseinpro
formanettangiblebookvalueof$1.61persharetoourexistingstockholdersandanimmediatedilutioninproformanettangible
book value of $14.87 per share to investors purchasing shares of common stock in this offering at the assumed initial public
offeringprice.Thefollowingtableillustratesthisdilution:
Assumedinitialpublicofferingpricepershare
ProformanettangiblebookvaluepershareasofSeptember30,2014
Increaseinproformanettangiblebookvalue(deficit)pershareattributabletonewinvestorsinthis
offering
Proformaasadjustednettangiblebookvaluepershareimmediatelyafterthisoffering
Dilutioninproformanettangiblebookvaluepersharetonewinvestorsinthisoffering
$2.52
1.61
$19.00
4.13
$14.87
Each$1.00increaseordecreaseintheassumedinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthe
pricerangesetforthonthecoverpageofthisprospectus,wouldincreaseordecrease,asapplicable,ourproformaasadjustednet
tangiblebookvaluepersharetonewinvestorsby$0.10,andwouldincreaseordecrease,asapplicable,dilutionpersharetonew
investors in this offering by $0.90, assuming that the number of shares offered by us, as set forth on the cover page of this
prospectus,remainsthesameandafterdeductingestimatedunderwritingdiscountsandcommissions.Inaddition,totheextentany
outstandingoptionsorwarrantsareexercised,newinvestorswouldexperiencefurtherdilution.
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The following table presents, as of September 30, 2014, the differences between the existing stockholders and the new
investorspurchasingsharesofourcommonstockinthisofferingwithrespecttothenumberofsharespurchasedfromus,thetotal
considerationpaidortobepaidtous,whichincludesnetproceedsreceivedfromtheissuanceofcommonstockandconvertible
preferred stock, cash received from the exercise of stock options, and the average price per share paid or to be paid to us at an
assumedinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageofthis
prospectus,beforedeductingestimatedunderwritingdiscountsandcommissionsandestimatedofferingexpenses:
Existingstockholders
Newinvestors
Total
SharesPurchased
Number
41,095,833
5,000,000
46,095,833
Percent
89.2%
10.8
100%
TotalConsideration
Amount
$197,803,109
95,000,000
$292,803,109
Percent
67.6%
32.4
100%
Average
PricePer
Share
$ 4.81
19.00
Each$1.00increaseordecreaseintheassumedinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthe
pricerangesetforthonthecoverpageofthisprospectus,wouldincreaseordecrease,asapplicable,thetotalconsiderationpaidby
newinvestorsandtotalconsiderationpaidbyallstockholdersbyapproximately$4.7million,assumingthatthenumberofshares
offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting
discountsandcommissions.
Exceptasotherwiseindicated,theabovediscussionandtablesassumenoexerciseoftheunderwritersoverallotmentoption.
Iftheunderwritersexercisetheiroverallotmentoptioninfull,thetotalconsiderationpaidbynewinvestorsandtotalconsideration
paidbyallstockholderswouldincreasebyapproximately$14.3million,theproformaasadjustednettangiblebookvalueper
sharewouldbe$4.35pershare,andthedilutioninproformaasadjustednettangiblebookvaluepersharetonewinvestorsinthis
offeringwouldbe$14.65pershare.Followingsuchexercise,ourexistingstockholderswouldown87.7%andournewinvestors
wouldown12.3%ofthetotalnumberofsharesofourcommonstockoutstandingupontheclosingofthisoffering.
Thenumberofsharesofcommonstockthatwillbeoutstandingafterthisofferingisbasedon41,095,833sharesoutstanding
asofSeptember30,2014,andexcludes:
777,450sharesofcommonstockissuableupontheexerciseofstockoptionsgrantedafterSeptember30,2014,withan
exercisepriceof$19.00pershare(whichdoesnotincludethestockoptionsandrestrictedstockunitsdescribedbelow
thatwillbegrantedonthedatethattheregistrationstatementofwhichthisprospectusformsapartisdeclaredeffective)
approximately1,194,000sharesofcommonstocktobeissuedupontheexerciseofstockoptions,withanexerciseprice
equaltotheinitialpublicofferingprice,orthatwillbesubjecttovestingofrestrictedstockunits,thatweexpecttogrant
onthedatethattheregistrationstatementofwhichthisprospectusformsapartisdeclaredeffective
28,000 shares of common stock issuable upon the exercise of a convertible preferred stock warrant outstanding as of
108,234sharesofcommonstockissuedafterSeptember30,2014,andupto141,766additionalsharesofcommonstock
thatmaysubsequentlybeissued,inconnectionwithouracquisitionofDucksboard
5,618,383sharesofourcommonstocktobereservedforfutureissuanceunderour2014Plan(which(i)includes618,383
sharesofcommonstockasofSeptember30,2014reservedforfuturegrantsunderour2008Plan,(ii)doesnotreflectthe
stock options and restricted stock units granted after September 30, 2014, as described above, and (iii) excludes an
increasetothe2008Planreserveof1,600,000sharesofcommonstockinNovember2014,whichshares,inthecaseof(i)
and(iii),willbe
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addedtothesharesreservedforfutureissuanceunderour2014Planuponeffectivenessofthatplanifthesharesarenot
issued or subject to outstanding grants under the 2008 Plan at that time), which will become effective on the date
immediatelypriortotheeffectivenessoftheregistrationstatementofwhichthisprospectusformsapartandcontains
provisionsthatautomaticallyincreaseitssharereserveeachyear,asmorefullydescribedinExecutiveCompensation
EquityIncentivePlansand
1,000,000sharesofcommonstockreservedforissuanceunderour2014ESPP,whichwillbecomeeffectiveuponthe
effectiveness of the registration statement of which this prospectus forms a part, and which contains provisions that
automaticallyincreaseitssharereserveeachyear.
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SELECTEDCONSOLIDATEDFINANCIALDATA
WehavederivedtheselectedconsolidatedstatementsofoperationsdataforthefiscalyearsendedMarch31,2012,2013,and
2014andtheconsolidatedbalancesheetdataasofMarch31,2013and2014fromourauditedconsolidatedfinancialstatements
included elsewhere in this prospectus. The selected consolidated statements of operations data for the six months ended
September30,2013and2014andtheconsolidatedbalancesheetdataasofSeptember30,2014arederivedfromourunaudited
interim consolidated financial statements included elsewhere in this prospectus. The unaudited interim consolidated financial
statements were prepared on a basis consistent with our audited consolidated financial statements and, in the opinion of
management,includealladjustmentsofanormal,recurringnaturethatarenecessaryforthefairpresentationoftheconsolidated
financial statements. The selected consolidated financial data below should be read in conjunction with the section entitled
Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial
statementsandrelatednotesincludedelsewhereinthisprospectus.Theselectedconsolidatedfinancialdatainthissectionarenot
intended to replace our consolidated financial statements and the related notes, and are qualified in their entirety by the
consolidatedfinancialstatementsandrelatednotesincludedelsewhereinthisprospectus.Ourhistoricalresultsarenotnecessarily
indicativeoftheresultsthatmaybeexpectedforanyperiodinthefuture,andourinterimresultsarenotnecessarilyindicativeof
theresultsweexpectforthefullfiscalyearoranyotherperiod.
SixMonthsEnded,
YearEndedMarch31,

September30,

2013
2014
2013
2014
(inthousands,exceptpersharedata)
Revenue
Costofrevenue(1)
Grossprofit
Operatingexpenses:
Lossfromoperations
Interestincome
Interestexpense
Netloss
$11,663
1,904
9,759
$ 29,664
5,078
24,586
$ 63,174
10,780
52,394
$ 26,146
4,467
21,679
2012
4,300
10,748
2,180
17,228
(7,469)
8,565
28,365
10,053
46,983
(22,397)
16,496
58,156
17,178
91,830
(39,436)
7,734
25,007
7,161
39,902
(18,223)
$ 47,974
9,061
38,913
10,248
37,635
10,609
58,492
(19,579)
(48)
(105)
$(22,541)
16
(64)
(741)
$(40,225)
10
(34)
(322)
$(18,569)
12
(29)
201
$(19,395)
(10)
(65)
$ (7,542)
Netlosspershareattributabletocommonstockholders,basic
anddiluted (2)
$ (0.51)
attributabletocommonstockholders,basicanddiluted (2)
14,683
15,096
stockholders,basicanddiluted (2)
(1.07)
Proformaweightedaveragesharesusedtocomputenetlossper
shareattributabletocommonstockholders,basicand
diluted (2)
37,082
40,859
(1.49)
(2.58)
15,596
(1.20)
15,515
(1.22)
15,917
(0.48)
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Costofrevenue
Salesandmarketing
YearEndedMarch31,

2012
2013
2014
(inthousands)
$ 11
$ 212
$ 159
126
1,620
1,425
143
2,060
1,373
323
4,794
3,263
$603
$8,686
$6,220
SixMonthsEnded
September30,
2013
2014
$
58
$ 194
988
457
390
1,904
2,003
1,611
$ 3,439
$ 4,166
(2) See note 12 of the notes to our consolidated financial statements for a description of how we compute net loss per share attributable to common stockholders, basic and
diluted,andproformanetlosspershareattributabletocommonstockholders,basicanddiluted.
AsofMarch31,

AsofSeptember30,
2013
2014
2014
(inthousands)
ConsolidatedBalanceSheetData:
Workingcapital
Totalassets
Deferredrevenue
Totalliabilities
Totalstockholdersdeficit
$ 57,099
51,116
76,907
4,970
112
12,229
95,917
(31,239)
$ 19,453
8,026
55,208
10,359
830
23,956
95,917
(64,665)
92,370
82,255
143,462
15,732
578
29,317
193,160
(79,015)
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MANAGEMENTSDISCUSSIONANDANALYSISOFFINANCIAL
CONDITIONANDRESULTSOFOPERATIONS
Youshouldreadthefollowingdiscussionandanalysisofourfinancialconditionandresultsofoperationstogetherwiththe
consolidated financial statements and related notes that are included elsewhere in this prospectus. This discussion contains
forwardlookingstatementsbaseduponcurrentplans,expectationsandbeliefsthatinvolverisksanduncertainties.Ouractual
resultsmaydiffermateriallyfromthoseanticipatedintheseforwardlookingstatementsasaresultofvariousfactors,including
thosesetforthunderRiskFactorsandinotherpartsofthisprospectus.OurfiscalyearendsonMarch31.
Overview
WearebuildinganewcategoryofenterprisesoftwarewecallSoftwareAnalytics.Ourcloudbasedsuiteofproductsenables
organizationstocollect,store,andanalyzemassiveamountsofsoftwaredatainrealtime.Wedesignallourproductstobehighly
intuitive and frictionless they are easy to deploy, and customers can rapidly, often within minutes, realize benefits and results.
Withourproducts,technologyuserscanquicklyfindandfixperformanceproblemsaswellaspredictandpreventfutureissues.
Business users such as product managers can get answers to how their new product launch is being received, or how a pricing
changeimpactedcustomerretention,withoutwaitingforhelpfromIT.Softwaredeveloperscanbuildbetterapplicationsfaster,as
they can see how their software will perform and is actually performing for endusers. As of September 30, 2014, we collected,
stored, and analyzed over 690 billion data points daily across more than 4 million application instances and monitored user
experiencesonoveramillionwebsitedomainsandfromoveronebillionmobileapplicationinstalls.AsofSeptember30,2014,we
hadover250,000users.Wedefineauserasanemailaddressassociatedwithanaccountthathasdeployedoursoftwarecode,called
agents, and from which we receive data from at least one application. As of September 30, 2014, we had 10,590 paid business
accounts.
Sinceourformationin2007,wehaveinvestedinbuildinganintegratedplatformthatenablesorganizationstocollect,store
and analyze massive amounts of data from their software in real time. We launched our first product offering, New Relic APM
(Application Performance Management) for Ruby, in 2008. Since then, we broadened our product offerings to support a wide
varietyofprogramminglanguagesandframeworks,withJavain2009,PHPand.NETin2010,andPythonin2011.In2011,we
released New Relic Servers to provide server monitoring for the cloud and data centers and New Relic Browser to provide user
monitoringandbrowserexperiencereportingthroughallinfrastructurelayersfromthebrowsertotheserver.In2013,wereleased
NewRelicMobiletosupportmobilebyprovidingnativemobileapplicationperformancemanagementfortheiOSandAndroid
mobileoperatingsystems.WealsolaunchedsupportforNode.js,aprogramminglanguage,andNewRelicPlatformtoenablethird
partiestointegratewithourplatform.InMarch2014,welaunchedNewRelicInsightstoleveragebigdataanalytics.InOctober
2014,wereleasedNewRelicSyntheticstoenableouruserstotesttheirsoftwarethroughsimulatedusage.
Wesellourproductsprimarilythroughdirectsalesandmarketingchannelsutilizingawiderangeofonlineandofflinesales
andmarketingactivities.Themajorityofourusersvisitourwebsite,createanaccountanddeployoursoftware.Upondeployment,
all users experience our fullfeatured products with a 14day or 30day free trial, enabling them to realize the benefits of our
products,afterwhichtheyhavetheoptiontopurchaseoneormoreofoursubscriptionplans.Duringandafterthetrialperiod,our
directsalesteamengageswiththeusertoconverttheuserintoapaidbusinessaccount.Manyusersinitiallysubscribetooneofour
productstoaddressaparticularusecaseandbroadentheusageofourproductsastheybecomemorefamiliarwithourproducts.
Most of our customers to date have been small to mediumsized organizations, and many of our customers to date have made
purchasing decisions without interacting with our sales or other personnel. For larger organizations, our sales team focuses on
leveragingusersinexistingaccountstobroadenourfootprintacrosstheorganization.
Weofferaccesstooursuiteofproductsundersubscriptionplansthatalsoincludeserviceandsupport.Weofferavarietyof
pricingplansbasedontheparticularproductpurchasedbyanaccount,basedonthenumberofserversused,numberofapplications
monitoredornumberofmobiledevicesmonitored.Ourplanstypicallyhave
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termsofoneyear,althoughsomeofourcustomerscommitforshorterperiods.Werecognizerevenuefromsubscriptionfeesratably
overtheserviceperiod.Mostofourcustomerspayusonamonthlybasis.Asaresult,ourdeferredrevenueatanygivenperiodof
time has historically been relatively low. As we begin to sell more to larger organizations, we expect to invoice more of our
customersonalessfrequentbasis,andtherefore,weexpectourdeferredrevenuetoincreaseovertime.However,duetoourmixof
subscriptionplansandbillingfrequencies,wedonotbelievethatchangesinourdeferredrevenueinagivenperiodaredirectly
correlatedwithourrevenuegrowth.
We have grown rapidly in recent periods, with revenues for the fiscal years ended March 31, 2012, 2013, and 2014 of
$11.7 million, $29.7 million, and $63.2 million, respectively, representing yearoveryear growth of 154% from the fiscal year
endedMarch31,2012tothefiscalyearendedMarch31,2013,and113%fromthefiscalyearendedMarch31,2013tothefiscal
yearendedMarch31,2014.ForthesixmonthsendedSeptember30,2013and2014,ourrevenuewas$26.1millionand$48.0
million, respectively, representing yearoveryear growth of 83%. We have continued to make significant expenditures and
investments,includinginpersonnelrelatedcosts,salesandmarketing,infrastructureandoperations,andhaveincurrednetlossesin
eachperiodsinceourinception,includingnetlossesof$7.5million,$22.5million,and$40.2millioninthefiscalyearsended
March31,2012,2013,and2014,respectively,and$18.6millionand$19.4millionforthesixmonthsendedSeptember30,2013
and2014,respectively.OuraccumulateddeficitasofSeptember30,2014was$100.8million.
Ouremployeeheadcounthasincreasedfrom315employeesasofSeptember30,2013to534asofSeptember30,2014,and
ournumberofpaidbusinessaccountsfrom7,552to10,590overthesameperiod,andweplantocontinuetoaggressivelyinvestin
thegrowthofourbusinesstotakeadvantageofourmarketopportunity.Weintendtocontinuetoincreaseourinvestmentinsales
and marketing, as we further expand our sales teams, increase our marketing activities, and grow our international operations,
particularlyasweincreaseourfocusonsellingourproductstolargerorganizations.Internationally,wecurrentlyofferourproducts
in EMEA, or Europe, Middle East, and Africa, and APAC, or AsiaPacific, as determined based on the billing address of our
customers, and our revenue from those regions constituted 17% and 7%, respectively, of our revenue for the fiscal year ended
March31,2014,and15%and8%,respectively,ofourrevenueforthefiscalyearendedMarch31,2013.Ourrevenuefromthe
EMEAandAPACregionsconstituted19%and8%,respectively,ofourrevenueforthesixmonthsendedSeptember30,2014,and
17%and7%,respectively,ofourrevenueforthesixmonthsendedSeptember30,2013.Webelievethereisfurtheropportunityto
increaseourinternationalrevenueoverallandasaproportionofourrevenue,andweareincreasinglyinvestinginourinternational
operationsandintendtoinvestinfurtherexpandingourfootprintininternationalmarkets,includingthroughourOctober2014
acquisitionofBarcelonabasedDucksboard,pursuanttowhichweacquiredalloftheoutstandingsharesofDucksboardforupto
250,000 shares of our common stock and $2.3 million in cash. To support the growth of our customer base, we also intend to
increaseourinvestmentinoursupportorganizationandinfrastructure.Inaddition,weplantocontinuetoinvestinourresearchand
developmentorganizationtoenhanceandfurtherdevelopourproducts.Whiletheseareasrepresentsignificantopportunitiesforus,
wealsofacesignificantrisksandchallengesthatwemustsuccessfullyaddressinordertosustainthegrowthofourbusinessand
improveouroperatingresults.Duetoourcontinuinginvestmentstogrowourbusiness,inadvanceofandinpreparationfor,our
expectedincreaseinsalesandexpansionofourpaidbusinessaccounts,wearecontinuingtoincurexpensesintheneartermfrom
whichwemaynotrealizeanylongtermbenefit.Inaddition,anyinvestmentsthatwemakeinsalesandmarketingorotherareas
willoccurinadvanceofourexperiencinganybenefitsfromsuchinvestments,soitmaybedifficultforustodetermineifweare
efficiently allocating our resources in these areas. As a result, we have never achieved profitability and we do not expect to be
profitablefortheforeseeablefuture.
Further,ourreportedrevenue,operatingresults,andcashflowsforagivenperiodmaynotbeindicativeoffutureresultsdueto
ourlimitedoperatinghistoryandfluctuationsinthenumberofnewemployees,therateofourexpansion,thetimingofexpenseswe
incurtogrowourbusinessandoperations,levelsofcompetition,andmarketdemandforourproducts.
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FactorsAffectingOurPerformance
MarketAdoptionofOurProducts.Wearedefininganewcategoryofsoftware,whichwerefertoasSoftwareAnalytics.Our
success is dependent on the market adoption of this emerging and unproven category of software, which may not yet be well
understoodbythemarket.Fortheforeseeablefuture,weexpectthatourrevenuegrowthwillbeprimarilydrivenbythepaceof
adoptionandpenetrationofourproductsandwewillincursignificantexpensesassociatedwitheducatingthemarketaboutthe
benefitsofourproducts.
IncreasingtheNumberofPaidBusinessAccounts.Ourfuturegrowthisdependentonourabilitytoincreasethenumberof
accountsthatpayustouseourproducts.Allusersexperienceourproductswithafreetrialafterwhichtheyhavetheoptionto
purchase one or more of our subscription plans. We believe that we have a significant competitive advantage as our users
experiencetheeaseofinstallationandthefullsetoffeaturesthatourproductsdeliversduringthefreetrialperiod.
RetentionandExpansionwithinPaidBusinessAccounts.Akeyfactorinoursuccessistheretentionandexpansionofour
subscriptionagreementswithourexistingcustomers.Inorderforustocontinuetogrowourbusiness,itisimportanttogenerate
additionalrevenuefromourexistingcustomers,andwedothisinseveralways.Asweimproveourexistingproductsandintroduce
new products, we believe that the demand for our products will generally grow. We also believe that there is a significant
opportunityforustoincreasethenumberofsubscriptionsweselltoourcurrentcustomersastheybecomemorefamiliarwithour
productsandadoptourproductstoaddressadditionalbusinessusecases.
InvestmentinSalesandMarketing.Weexpecttocontinuetoinvestaggressivelyinsalesandmarketingtodriveadditional
revenue. In particular, we intend to focus our investment more heavily toward larger organizations, whereas to date, we have
focusedoursalesandmarketingeffortsprimarilyonsmalltomediumsizedorganizations.Anyinvestmentsthatwemakeinsales
and marketing will occur in advance of our experiencing any benefits from such investments, so it may be difficult for us to
determine if we are efficiently allocating our resources in these areas. As we also focus sales and marketing investments more
heavilytowardslargeorganizations,thismayrequiremoreofourresources.Inaddition,weexpectoursalescycletobelongerand
lesspredictablewithrespecttolargercustomers,whichmaydelayrealizationoffuturesales.Wealsointendtoincreaseoursales
and marketing investment in international markets, such as Europe, and those markets may take longer and be more costly to
developthantheU.S.market.
KeyOperatingMetrics
Wereviewthefollowingkeymetricstoevaluateourbusiness,measureourperformance,identifytrendsaffectingourbusiness,
formulatebusinessplansandmakestrategicdecisions:
Number of Paid Business Accounts. We believe that our ability to increase our number of paid business accounts is one
indicatorofourmarketpenetration,thegrowthofourbusinessandourpotentialfutureprospects.Wedefinethenumberofpaid
businessaccountsattheendofanyparticularperiodasthenumberofaccountsattheendoftheperiodasidentifiedbyaunique
accountidentifierforwhichwehaverecognizedrevenueonthelastdayoftheperiodindicated.Asingleorganizationorcustomer
mayhavemultiplepaidbusinessaccountsforseparatedivisions,segments,orsubsidiaries.Eachoftheseistreatedasaseparate
paidbusinessaccount.Thefollowingtablesummarizesthenumberofpaidbusinessaccountsateachquarterend:
Jun.30,
Sep.30,
Dec.31,
Mar.31,
Jun.30,
Sep.30,
Dec.31,
Mar.31,
Jun.30,
2012 2012 2012
2013
2013
2013 2013
2014
2014
PaidBusinessAccounts
3,180 3,847 4,777 5,768 6,634 7,552 8,437 9,117 9,764 10,590
Sep.30,
2014
DollarBased Net Expansion Rate. Our ability to generate revenue is dependent on our ability to maintain and grow our
relationshipswithourexistingcustomers.Wetrackourperformanceinthisareabymeasuringour
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dollarbasednetexpansionrate.Ournetexpansionrateincreaseswhencustomersincreasetheiruseofourproducts,useadditional
products, or upgrade to a higher subscription tier. Our net expansion rate is reduced when customers decrease their use of our
products,usefewerproducts,ordowngradetoalowersubscriptiontier.
Ourdollarbasednetexpansionratecomparesourrecurringsubscriptionrevenuefromcustomersfromoneperiodtothenext.
Wemeasureournetexpansionrateonamonthlybasisbecausemanyofourcustomerschangetheirsubscriptionsmorefrequently
thanquarterlyorannually.Tocalculateourannuallydollarbasednetexpansionrate,wefirstestablishthebaseperiodmonthly
recurring revenue from all our customers at the end of a month. This represents the revenue we would contractually expect to
receivefromthosecustomersoverthefollowingmonth,withoutanyincreaseorreductioninanyoftheirsubscriptions.Wethen
(i)calculatetheactualmonthlyrecurringrevenuefromthosesamecustomersattheendofthatfollowingmonththen(ii)divide
thatfollowingmonthsrecurringrevenuebythebasemonthsrecurringrevenuetoarriveatourmonthlynetexpansionratethen
(iii)calculateaquarterlynetexpansionratebycompoundingthenetexpansionratesofthethreemonthsinthequarterandthen
(iv)calculateourannualizednetexpansionratebycompoundingourquarterlynetexpansionrateoveranannualperiod.
Thefollowingtablesummarizesourannualizeddollarbasednetexpansionrateforeachquarter:
Jun.30,
2012
DollarBasedNet
ExpansionRate
139.2% 133.6% 137.3% 120.0% 133.5% 119.5% 129.3% 115.5% 109.9% 115.0%
Sep.30,
2012
Dec.31,
2012
Mar.31,
2013
Jun.30,
2013
Sep.30,
2013
Dec.31,
2013
Mar.31,
2014
Jun.30,
2014
Sep.30,
2014
Thequarterlyfluctuationsinourdollarbasednetexpansionratenotedinthetableaboveareprimarilydrivenbytransactions
withinaparticularquarterinwhichcertainpaidbusinessaccountsfromlargersubscriptioncustomerseithersignificantlyupgrade
orsignificantlydowngradetheirsubscriptionsandbyincreasedsalesinparticularquartersduetosalesandmarketingcampaignsin
aparticularquarter.Inaddition,webelievethatthecompositionofourcustomerbasealsohasanimpactonthenetexpansionrate,
such that a relative increase in the number of paid business accounts from larger enterprises versus small to mediumsized
organizationswilltendtoincreaseourquarterlynetexpansionrateandarelativeincreaseinthenumberorpaidbusinessaccounts
fromsmalltomediumsizedorganizationsversuslargerenterpriseswilltendtodecreasethequarterlynetexpansionrate,assmaller
businessestendtocancelsubscriptionsmorefrequentlythanlargerenterprises.
KeyComponentsofResultsofOperations
Revenue
Weofferaccesstoourproductsundersubscriptionplansthatincludeserviceandsupportforoneormoreofourproducts.For
ourpayingcustomers,weofferavarietyofpricingplansbasedontheparticularproductpurchasedbyanaccount,basedonthe
numberofserversused,numberofapplicationsmonitoredornumberofmobiledevicesmonitored.Ourplanstypicallyhaveterms
ofoneyear,althoughsomeofourcustomerscommitforshorterperiods.Weinvoicemostofourcustomersonamonthlybasis.Asa
result, our deferred revenue has historically been relatively low. As we begin to sell more to larger organizations, we expect to
invoicemoreofourcustomersonalessfrequentbasis,andtherefore,weexpectourdeferredrevenuetoincreaseovertime.
CostofRevenue
Cost of revenue consists of expenses relating to data center operations, hostingrelated costs, payment processing fees,
depreciation and amortization, consulting costs and salaries and benefits of operations and global customer support personnel.
Salaries and benefits costs associated with our operations and global customer support personnel consist of salaries, benefits,
bonuses, and stockbased compensation. We plan to continue increasing the capacity, capability, and reliability of our
infrastructuretosupportthegrowthofourcustomerbaseandthenumberofproductsweoffer.
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GrossProfitandMargin
Grossprofitisrevenuelesscostofrevenue.Grossmarginisgrossprofitexpressedasapercentageofrevenue.Ourgrossmargin
has been, and will continue to be affected by, a number of factors, including the timing and extent of our investments in our
operationsandglobalcustomersupportpersonnel,hostingrelatedcosts,andtheamortizationofcapitalizedsoftware.Weexpect
thatourgrossmarginwilldeclinemodestlyoverthelongterm,althoughweexpectourgrossmargintofluctuatefromperiodto
periodasaresultofthesefactors.
OperatingExpenses
Personnelcosts,whichconsistofsalaries,benefits,bonuses,stockbasedcompensationand,withregardtosalesandmarketing
expenses, sales commissions, are the most significant component of our operating expenses. We also incur other nonpersonnel
costssuchasanallocationofourgeneraloverheadexpenses.
ResearchandDevelopment.Researchanddevelopmentexpensesconsistprimarilyofpersonnelcostsandanallocationofour
generaloverheadexpenses.Wecontinuetofocusourresearchanddevelopmenteffortsonaddingnewfeaturesandproducts,and
increasing the functionality and enhancing the ease of use of our existing products. We capitalize the portion of our software
developmentcoststhatmeetthecriteriaforcapitalization.
Weplantocontinuetohireemployeesforourengineering,productmanagementanddesignteamstosupportourresearchand
developmentefforts.Asaresult,weexpectourresearchanddevelopmentexpensestocontinuetoincreaseinabsolutedollarsfor
the foreseeable future. However, we expect our research and development expenses to decrease modestly as a percentage of our
revenueoverthelongterm,althoughourresearchanddevelopmentexpensesmayfluctuatefromperiodtoperioddependingon
fluctuationsinourrevenueandthetimingandextentofourresearchanddevelopmentexpenses.
Sales and Marketing. Sales and marketing expenses consist of personnel costs for our sales, marketing and business
developmentemployeesandexecutives.Commissionsareexpensedintheperiodwhenacustomercontractisexecuted.Salesand
marketingexpensesalsoincludethecostsofourmarketingandbrandawarenessprograms.
Weplantocontinueinvestinginsalesandmarketinggloballybyincreasingthenumberofoursalespersonnel,expandingour
domesticandinternationalmarketingactivities,buildingbrandawarenessandsponsoringadditionalmarketingevents.Weexpect
our sales and marketing expenses to continue to increase in absolute dollars and continue to be our largest operating expense
categoryfortheforeseeablefuture.However,weexpectoursalesandmarketingexpensestodecreaseasapercentageofourrevenue
overthelongterm,althoughoursalesandmarketingexpensesmayfluctuatefromperiodtoperioddependingonfluctuationsin
ourrevenueandthetimingandextentofoursalesandmarketingexpenses.
GeneralandAdministrative.Generalandadministrativeexpensesconsistprimarilyofpersonnelcostsforouradministrative,
legal, human resources, information technology, finance and accounting employees and executives. Also included are non
personnelcosts,suchaslegalandotherprofessionalfees.
Weplantocontinuetoexpandourbusinessbothdomesticallyandinternationally,andweexpecttoincreasethesizeofour
generalandadministrativefunctiontosupportthegrowthofourbusiness.Wealsoexpectthatwewillincuradditionalgeneraland
administrative expenses as a result of being a publicly traded company. As a result, we expect our general and administrative
expensestocontinuetoincreaseinabsolutedollarsfortheforeseeablefuture.However,weexpectourgeneralandadministrative
expensestodecreasemodestlyasapercentageofourrevenueoverthelongterm,althoughourgeneralandadministrativeexpense
may fluctuate from period to period depending on fluctuations in our revenue and the timing and extent of our general and
administrativeexpenses,suchaslitigationcosts.
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OtherIncome(Expense),Net
Otherincome(expense),netconsistsprimarilyoftherevaluationofourconvertiblepreferredstockwarrantliability,interest
income,interestexpense,foreignexchangegainsandlosses.
ResultsofOperations
Thefollowingtablessummarizeourconsolidatedstatementsofoperationsdatafortheperiodspresentedandasapercentage
of our revenue for those periods. The periodtoperiod comparison of results is not necessarily indicative of results for future
periods.
Revenue
Costofrevenue(1)
Grossprofit
Operatingexpenses:
Lossfromoperations
Interestincome
Interestexpense
Netloss
$11,663
1,904
9,759
$ 29,664
5,078
24,586
$ 63,174
10,780
52,394
$ 26,146
4,467
21,679
2012
YearEndedMarch31,

2013
2014
(inthousands)
SixMonthsEnded,
September30,
2013
2014
4,300
10,748
2,180
17,228
(7,469)
8,565
28,365
10,053
46,983
(22,397)
16,496
58,156
17,178
91,830
(39,436)
7,734
25,007
7,161
39,902
(18,223)
(10)
(65)
$ (7,542)
(48)
(105)
$(22,541)
16
(64)
(741)
$(40,225)
10
(34)
(322)
$(18,569)
$ 47,974
9,061
38,913
10,248
37,635
10,609
58,492
(19,579)
12
(29)
201
$(19,395)
YearEndedMarch31,

2012
2013
2014
(inthousands)
SixMonthsEnded
September30,
2013
2014
Costofrevenue
Salesandmarketing
$
58
988
390
2,003
$ 3,439
11
126
143
323
603
212
1,620
2,060
4,794
8,686
159
1,425
1,373
3,263
6,220
$ 194
457
1,904
1,611
$ 4,166
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Revenue
Costofrevenue
Grossprofit
Operatingexpenses:
Salesandmarketing
Lossfromoperations
Interestincome
Interestexpense
Netloss
SixMonthsEnded,
YearEndedMarch31,
September30,
2013
2014
2013
2014
(asapercentageofrevenue)
2012
100%
16
84
37
92
19
148
(64)

(1)
(65%)
100%
17
83
29
96
34
158
(76)

(76%)
100%
17
83
26
92
27
145
(62)

(1)
(63%)
100%
17
83
30
96
27
153
(70)

(1)
(71%)
100%
19
81
21
79
22
122
(41)
(41%)
ComparisonofSixMonthsEndedSeptember30,2013and2014
Revenue
UnitedStates
EMEA
APAC
Other
Totalrevenue
SixMonthsEnded
September30,

Change
2013
2014
Amount
%
(dollarsinthousands)
$18,509
4,316
1,783
1,538
$26,146
$32,134
8,968
3,783
3,089
$47,974
$13,625
4,652
2,000
1,551
$21,828
74%
108
112
101
83%
Revenueincreased$21.8million,or83%,inthesixmonthsendedSeptember30,2014comparedtothesameperiodof2013.
Theincreasewasaresultofanincreaseinthenumberofpaidbusinessaccounts,whichincreasedfrom7,552atSeptember30,2013
to10,590atSeptember30,2014,andanincreaseinproductadoptionforexistingpaidbusinessaccounts.OurrevenuefromEMEA
increased $4.7 million, or 108%, in the six months ended September 30, 2014 compared to the same period of 2013 and our
revenuefromAPACincreased$2.0million,or112%,inthesixmonthsendedSeptember30,2014comparedtothesameperiodof
2013 as a result of an increase in the number of paid business accounts and an increase in product adoption for existing paid
businessaccountslocatedinthesegeographicregions.
CostofRevenue
CostofRevenue
SixMonthsEnded
September30,

Change
2013
2014
Amount
%
$4,467
$9,061
$4,594
103%
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Costofrevenueincreased$4.6million,or103%,forthesixmonthsendedSeptember30,2014comparedtothesameperiod
of2013.Theincreasewasprimarilyaresultofanincreaseinpersonnelrelatedcostsandtoalesserextenthostingrelatedcosts
necessarytosupportourgrowth,aswellasanincreaseinpaymentprocessingcostsduetotheincreaseinrevenue.Hostingrelated
costs, payment processing fees, depreciation, and amortization expense increased by $2.1 million, and personnelrelated costs
increasedby$2.5million,drivenbyhigherheadcount.
ResearchandDevelopment
SixMonthsEnded
September30,

Change
2013
2014
Amount
%
7,734
10,248
$2,514
33%
Researchanddevelopmentexpensesincreased$2.5million,or33%,forthesixmonthsendedSeptember30,2014compared
tothesameperiodof2013.Theincreasewasprimarilyaresultofanincreaseof$1.9millioninpersonnelrelatedcosts,drivenby
higher headcount, a $0.3 million increase in spending on outside services, and a $0.3 million increase in facilities and related
expenses.
SalesandMarketing
SixMonthsEnded
September30,

Change
2013
2014
Amount
%
Salesandmarketing
25,007
37,635
$12,628
50%
Salesandmarketingexpensesincreased$12.6million,or50%,forthesixmonthsendedSeptember30,2014comparedtothe
sameperiodof2013.Theincreasewasprimarilyaresultofanincreaseinpersonnelrelatedcostsof$9.6million,drivenbyhigher
headcountandanincreaseofsalescommissionsduetorevenuegrowth,andanincreaseof$1.4millioninmarketingprograms.The
remainingincreasewasduetoanincreaseinconsultantfeesof$1.3millionandothermiscellaneousexpenses.
GeneralandAdministrative
SixMonthsEnded
September30,

Change
2013
2014
Amount
%
7,161
10,609
$3,448
48%
Generalandadministrativeexpensesincreased$3.4million,or48%,forthesixmonthsendedSeptember30,2014compared
tothesameperiodof2013.Theincreaseingeneralandadministrativeexpenseswasprimarilyaresultofanincreaseinpersonnel
relatedcostsof$2.0million,drivenprimarilybyanincreaseinheadcount.Theremainingincreasewasduetoanincreaseof$1.0
millioninfacilitiesandrelatedexpensesandothermiscellaneousexpenses,and$0.4millionintechnologyandsoftwareexpenses.
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SixMonthsEnded
September30,

Change
2013
2014
Amount
Otherincome(expense),net
(346)
184
$ 530
(153%)
Otherincomewas$0.2millionforthesixmonthsendedSeptember30,2014,andotherexpensewas$(0.3)million,forthesix
months ended September 30, 2013. The other income for the six months ended September 30, 2014 was primarily a result of a
decreaseinthefairvalueofourconvertiblepreferredstockwarrants.
ComparisonofFiscalYearsEndedMarch31,2013and2014
Revenue
UnitedStates
EMEA
APAC
Other
Totalrevenue
YearEndedMarch31,
Change
2013
2014
Amount
%
$21,269
4,572
2,261
1,562
$29,664
$43,903
10,824
4,574
3,873
$63,174
$22,634
6,252
2,313
2,311
$33,510
106%
137
102
148
113%
Revenue increased $33.5 million, or 113%, in the fiscal year ended March 31, 2014 compared to the fiscal year ended
March31,2013.Theincreasewasaresultofanincreaseinthenumberofpaidbusinessaccounts,whichincreasedfrom5,768at
March31,2013to9,117atMarch31,2014,andanincreaseinproductadoptionforexistingpaidbusinessaccounts.Ourrevenue
fromEMEAincreased$6.3million,or137%,inthefiscalyearendedMarch31,2014comparedtothefiscalyearendedMarch31,
2013andourrevenuefromAPACincreased$2.3million,or102%,inthefiscalyearendedMarch31,2014comparedtothefiscal
yearendedMarch31,2013asaresultofanincreaseinthenumberofpaidbusinessaccountsandanincreaseinproductadoption
forexistingpaidbusinessaccountslocatedinthesegeographicregions.
CostofRevenue
YearEndedMarch31,

Change
2013
2014
Amount
Costofrevenue
5,078
10,780
$5,702
112%
Costofrevenueincreased$5.7million,or112%,inthefiscalyearendedMarch31,2014comparedtothefiscalyearended
March31,2013.Theincreasewasprimarilyaresultofanincreaseinpersonnelrelatedcostsandhostingrelatedcostsnecessaryto
support our growth, as well as an increase in payment processing costs due to the increase in revenue. Hostingrelated costs,
payment processing fees, and amortization expense increased by $2.7 million, and personnelrelated costs increased by
$2.8million,drivenbyhigherheadcount.
YearEndedMarch31,

Change
2013
2014
Amount
8,565
16,496
$7,931
93%
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Researchanddevelopmentexpensesincreased$7.9million,or93%,inthefiscalyearendedMarch31,2014comparedtothe
fiscal year ended March 31, 2013. The increase was primarily a result of an increase of $5.8 million in personnelrelated costs,
drivenbyhigherheadcount,a$1.1millionincreaseinspendingonoutsideservices,and$0.7millionincreaseinrentexpense.The
remainingincreasewasduetotravelexpensesandothermiscellaneousexpenses.
SalesandMarketing
YearEndedMarch31,
Change
2013 2014
Amount
Salesandmarketing
$28,365 $58,156 $29,791 105%
Salesandmarketingexpensesincreased$29.8million,or105%,inthefiscalyearendedMarch31,2014comparedtothe
fiscalyearendedMarch31,2013.Theincreasewasprimarilyaresultofanincreaseofpersonnelrelatedcostsof$12.8million,
drivenbyhigherheadcount,anincreaseofsalescommissionsduetorevenuegrowth,anincreaseof$12.4millioninadvertising
andmarketingprograms,andanincreaseof$2.6millioninofficerentexpense.Theremainingincreasewasduetoanincreasein
consultantfeesof$0.5million,anincreaseintravelexpensesof$0.5million,andothermiscellaneousexpenses.
YearEndedMarch31,
Change
2013 2014 Amount %

$10,053 $17,178 $7,125 71%
Generalandadministrativeexpensesincreased$7.1million,or71%,inthefiscalyearendedMarch31,2014comparedtothe
fiscalyearendedMarch31,2013.Theincreaseingeneralandadministrativeexpenseswasprimarilyaresultofanincreaseof$5.5
millioninlegalfees,duetoongoinglitigation,andaccountingfees.Inaddition,personnelrelatedcosts,excludingstockbased
compensation expense resulting from transactions with existing investors, increased by $2.3 million, driven primarily by an
increase in headcount. Increase in personnelrelated costs was offset by a $1.5 million decrease in stockbased compensation
expenseduetoathirdpartytenderofferandcertainstocktransactionsinthefiscalyearendedMarch31,2013.Theremaining
increasewasduetoanincreaseinrentexpenseof$0.6millionduetonewfacilitiesandanincreaseininsurancefeesandother
miscellaneousexpenses.
YearEndedMarch31,
Change
2013
2014
Amount
$ (144)
(789)
$ (645)
448%
Otherexpenseincreased$0.6millioninthefiscalyearendedMarch31,2014comparedtothefiscalyearendedMarch31,
2013.Theincreasewasprimarilyaresultofanincreaseinthefairvalueofourconvertiblepreferredstockwarrants.
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ComparisonofFiscalYearsEndedMarch31,2012and2013
Revenue
YearEndedMarch31,
Change
2012 2013
Amount
Revenue
$11,663 $29,664 $18,001 154%
Revenue increased $18.0 million, or 154%, in the fiscal year ended March 31, 2013 compared to the fiscal year ended
March31,2012.Thisincreasewasprimarilyaresultofanincreaseinthenumberofpaidbusinessaccounts,whichincreasedfrom
2,604atMarch31,2012to5,768atMarch31,2013,aswellasourreleaseofnewproductsinthefiscalyearendedMarch31,2013.
CostofRevenue
YearEndedMarch31,
Change
2012
2013
Amount
Costofrevenue
$ 1,904
$ 5,078
$3,174
167%
Costofrevenueincreased$3.2million,or167%,inthefiscalyearendedMarch31,2013comparedtothefiscalyearended
March31,2012.Theincreasewasprimarilyaresultofanincreaseinpersonnelandhostingrelatedcostsnecessarytosupportour
growth. Personnelrelated costs increased by $1.5 million, driven by higher headcount, and hostingrelated costs increased by
$1.0million,primarilyduetoourincreaseincomputingandnetworkcapacitytosupportthegrowthofourcustomerbase.The
remainingincreasewasprimarilyattributabletoanincreaseintravel,recruiting,consultantfees,andothermiscellaneousexpenses.
YearEndedMarch31,
Change
2012
2013
Amount
$ 4,300
$ 8,565
$4,265
99%
Researchanddevelopmentexpensesincreased$4.3million,or99%,inthefiscalyearendedMarch31,2013comparedtothe
fiscal year ended March 31, 2012. The increase was primarily a result of an increase of $3.3 million in personnelrelated costs,
driven by higher headcount. The remainder of the increase was primarily attributable to an increase in rent expense, travel,
recruiting,consultingandothermiscellaneousexpenses.
SalesandMarketing
YearEndedMarch31,
Change
2012 2013
Amount
Salesandmarketing
$10,748 $28,365 $17,617 164%
Salesandmarketingexpensesincreased$17.6million,or164%,inthefiscalyearendedMarch31,2013comparedtothe
fiscal year ended March 31, 2012. The increase was primarily a result of an increase in personnelrelated costs of $9.2 million,
driven by an increase in headcount, and an increase in commission expenses, along with a $7.5 million increase in marketing
programsanda$0.5millionincreaseinrecruitingandtravelexpenses.Theremainderoftheincreasewasprimarilyattributableto
anincreaseinfacilitiesexpensesandothermiscellaneousexpenses.
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YearEndedMarch31,
Change
2012
2013
Amount
$ 2,180
$10,053
$7,873
361%
Generalandadministrativeexpensesincreased$7.9million,or361%,inthefiscalyearendedMarch31,2013comparedto
thefiscalyearendedMarch31,2012.Theincreasewasprimarilyaresultofanincreaseof$6.5millioninpersonnelrelatedcosts,
drivenprimarilybyanincreaseinstockbasedcompensationexpenseand,toalesserextent,byhigherheadcount.Theremainderof
theincreasewasprimarilyattributabletoanincreaseinconsultingandprofessionalfeesof$0.7million,aswellasanincreasein
travel,facilities,insurance,andothermiscellaneousexpensestosupportourgrowth.
YearEndedMarch31,
Change
2012
2013
Amount
(73)
(144)
$ (71)
97%
Other expense, net increased $0.1 million in the fiscal year ended March 31, 2013 compared to the fiscal year ended
March31,2012.Theincreasewasprimarilyaresultofa$0.1millionleaseabandonmentcharge.
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QuarterlyResultsofOperations
The following tables set forth selected unaudited quarterly consolidated statements of operations data for each of the ten
quartersintheperiodendedSeptember30,2014,aswellasthepercentagethateachlineitemrepresentsofourrevenueforeach
quarter.Theinformationforeachofthesequartershasbeenpreparedonthesamebasisastheauditedannualconsolidatedfinancial
statementsincludedelsewhereinthisprospectusand,intheopinionofmanagement,includesalladjustmentsofanormal,recurring
naturethatarenecessaryforthefairpresentationoftheresultsofoperationsfortheseperiodsinaccordancewithgenerallyaccepted
accounting principles in the United States. This data should be read in conjunction with our audited consolidated financial
statementsandrelatednotesincludedelsewhereinthisprospectus.Thesequarterlyoperatingresultsarenotnecessarilyindicative
ofouroperatingresultsforafullfiscalyearoranyfutureperiod.
ThreeMonthsEnded
Jun.30,
Sept.30,
Dec.31,
Mar.31,
Jun.30,
Sept.30,
Dec.31,
Mar.31,
Jun.30,
Sep.30,
2012 2012 2012
2013 2013
2013
2013 2014
2014 2014
(inthousands)
ConsolidatedStatements
ofOperationsData:
Revenue
$ 5,133 $ 6,649 $ 8,052 $ 9,830 $11,858 $ 14,288 $ 17,185 $19,843 $ 22,613 $25,361
(1)
Costofrevenue
866 1,103 1,263 1,846 2,058 2,409 2,935 3,378 4,032 5,029
Grossprofit
4,267 5,546 6,789 7,984 9,800 11,879 14,250 16,465 18,581 20,332
Operatingexpenses:
Researchand
development(1) 1,456 1,281 1,793 4,035 3,133 4,601 4,478 4,284 4,912 5,336
Salesand
marketing (1)
4,685 5,448 7,178 11,054 12,038 12,969 17,084 16,065 18,616 19,019
Generaland
administrative(1) 967 1,256 1,561 6,269 2,606 4,555 4,396 5,621 5,360 5,249
Totaloperatingexpenses 7,108 7,985 10,532 21,358 17,777 22,125 25,958 25,970 28,888 29,604
Lossfromoperations
(2,841) (2,439) (3,743) (13,374) (7,977) (10,246) (11,708) (9,505) (10,307) (9,272)
Interestincome
1
1
1
6
5
5
3
3
5
7
Interestexpense
(2)
(15)
(16)
(15)
(18)
(16)
(15)
(15)
(15)
(14)
Other(expense)
income,net
(3)
(11)
(12)
(79) (190)
(132)
(181) (238)
134
67
Netloss
$(2,845)
$(2,464)
$
(3,770)
$(13,462)
$
(8,180)
$(10,389)
$(11,901)
$
(9,755)
$(10,183)
$
(9,212)
Jun.30,
Sept.30,
2012
2012
Costofrevenue
$
4 $
5

44
64
Salesandmarketing

54
65

172
233
Totalstockbasedcompensation
expense
$
274 $
367
ThreeMonthsEnded
Dec.31,
Mar.31,
Jun.30,
Sept.30,
2012
2013
2013
2013
(inthousands)
$
11 $
192 $
27 $
31
92 1,420
98
890
100 1,841
178
212
242 4,147
229 1,775
$
445 $ 7,600 $
532 $
Dec.31,
Mar.31,
Jun.30,
Sep.30,
2013
2014
2014
2014
$
43 $
58 $
93 $ 101
206
231
202
255
609
374
849 1,055
426
833
787
824
2,908 $ 1,284 $ 1,496 $ 1,931 $ 2,235
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Jun.30,
2012
Sept.30,
2012
Dec.31,
2012
Mar.31,
2013
Consolidated
Statementsof
OperationsData:
Revenue
Costofrevenue
Grossprofit
Operatingexpenses:
Researchand
development
Salesand
marketing
Generaland
administrative
Totaloperating
expenses
Lossfromoperations
Otherincome
(expense):
Interestincome
Interestexpense
Other(expense)
income,net
Netloss
100%
17
83
ThreeMonthsEnded
Jun.30,
Sept.30,
Dec.31,
2013
2013
2013
(asapercentageofrevenue)
100% 100% 100% 100%

17 16
19 17
83 84
81 83
Mar.31,
2014
Jun.30,
2014
Sep.30,
2014
100% 100% 100% 100% 100%

17 17
17 18 20
83 83
83 82 80
28
19
22
41
26
32
26
22
22
21
91
82
89
112
102
91
99
81
82
75
19
19
19
64
22
32
26
28
24
21
138
(55)
120
(37)
131
(47)
217
(136)
150
(67)
155
(72)
151
(68)
131
(48)
128
(46)
117
(37)

(55%)

(1)
(37%) (47%) (137%)
(2)
(69%)
(1)
(1)
(73%) (69%)
(1)
(49%)
1
(45%)
(37%)
QuarterlyRevenueTrends
Ourquarterlyrevenueincreasedineachperiodpresentedduetoincreasedsalestonewcustomers,aswellasincreasingsalesto
existingcustomers.Wecannotassureyouthatthistrendwillcontinue,andwebelievethatwemayexperienceseasonalityinour
businessinthefuture.
QuarterlyGrossMarginTrends
Our gross margin has remained relatively consistent over all periods presented, with the fluctuations primarily due to the
timingandextentofourinvestmentsinouroperationsandglobalcustomersupportpersonnel,hostingrelatedcosts.
QuarterlyExpenseTrends
Researchanddevelopment,salesandmarketing,andgeneralandadministrativeexpensesgenerallyincreasedsequentially
overtheperiodsasweincreasedourheadcounttosupportcontinuedinvestmentinourproducts.Theincreaseinpersonnelcosts
wasrelatedtoincreasesinheadcount,alongwithhigherstockbasedcompensationexpense.Expensesforthethreemonthsended
March31,2013andthethreemonthsendedSeptember30,2013wereunusuallyhigherduetoatenderofferthatweconductedand
secondary sales of common stock, which increased stockbased compensation expense. The decrease in sales and marketing
expensesfromthethreemonthsendedDecember31,2013tothethreemonthsendedMarch31,2014wasprimarilyduetoanon
recurringexpenseonaconferenceorganizedbyusandsecondarysalesofcommonstock.Weincurrednonrecurringexpensesof
$7.3 million and $2.2 million in the three months ended March 31, 2013 and the three months ended September 30, 2013,
respectively,inconnectionwiththistenderofferandthesesecondarysales.
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LiquidityandCapitalResources
Cashusedinoperatingactivities
Cashusedininvestingactivities
Cashprovidedbyfinancingactivities
Netincrease(decrease)incashandcashequivalents
2012
YearEndedMarch31,

2013
2014
(inthousands)
$ (5,133)
(2,132)
15,028
$ 7,763
$ (7,200)
(13,171)
60,022
$ 39,651
$(20,713)
(17,227)
294
$(37,646)
SixMonthsEnded
September30,
2013
2014
$ (9,471)
(9,486)
118
$(18,839)
$(13,174)
(10,389)
96,480
$ 72,917
To date, we have financed our operations primarily through private sales of equity securities. From our inception through
September 30, 2014, we have completed several rounds of equity financing through the sale of shares of our Series A through
Series F convertible preferred stock for total cash proceeds to us of $193.2 million. We believe that our existing cash and cash
equivalents balance, together with the proceeds of this offering, will be sufficient to meet our working capital and capital
expenditurerequirementsforatleastthenext12months.
Ourfuturecapitalrequirementswilldependonmanyfactors,includingourgrowthrate,thetimingandextentofspendingto
supportresearchanddevelopmentefforts,thecontinuedexpansionofsalesandmarketingactivities,theintroductionofnewand
enhancedproducts,andthecontinuedmarketacceptanceofourproducts.Intheeventthatadditionalfinancingisrequiredfrom
outsidesources,wemaynotbeabletoraisesuchfinancingontermsacceptabletousoratall.Ifweareunabletoraiseadditional
capitalwhendesired,ourbusiness,operatingresultsandfinancialconditionwouldbeadverselyaffected.
CashUsedinOperatingActivities
DuringthesixmonthsendedSeptember30,2014,operatingactivitiesused$13.2millionincashasaresultofanetlossof
$19.4 million, adjusted by noncash charges of $7.6 million and a net decrease of $1.4 million in our net operating assets and
liabilities.Thenetdecreaseinournetoperatingassetsandliabilitieswasprimarilytheresultofa$5.4millionincreaseindeferred
revenueasaresultofincreasedsalesofsubscriptions,anda$0.7millionincreaseinaccruedcompensationandbenefitsandother
liabilities duetoincreasedheadcount. This netincreaseinour net operatingassets andliabilitieswas partiallyoffset by a $3.4
million increase in accounts receivable due to increased sales of subscriptions, a $3.5 million increase in prepaid expenses and
otherassets,anda$0.6milliondecreaseinaccountspayable.
DuringthesixmonthsendedSeptember30,2013,operatingactivitiesused$9.5millionincashasaresultofanetlossof
$18.6 million, adjusted by noncash charges of $5.7 million and a net increase of $3.4 million in our net operating assets and
liabilities.Thenetincreaseinournetoperatingassetsandliabilitieswasprimarilytheresultofa$2.5millionincreaseindeferred
revenue as a result of increased sales of subscriptions, a $1.5 million increase in accounts payable due to an increase in
expenditures,a$1.1millionincreaseinaccruedcompensationandbenefitsandotherliabilitiesduetoincreasedheadcount,anda
$1.0 million increase in deferred rent due to new office leases. This net increase in our net operating assets and liabilities was
partiallyoffsetbya$2.4millionincreaseinaccountsreceivableduetoincreasedsalesofsubscriptionsanda$0.3millionincrease
inprepaidexpensesandotherassets.
DuringthefiscalyearendedMarch31,2014,operatingactivitiesused$20.7millionincashasaresultofanetlossof$40.2
million,adjustedbynoncashchargesof$11.7millionandanetincreaseof$7.8millioninournetoperatingassetsandliabilities.
Thenetincreaseinournetoperatingassetsandliabilitieswasprimarilytheresultofa$5.4millionincreaseindeferredrevenueasa
resultofincreasedsalesofsubscriptions,a$2.3millionincreaseinaccountspayableduetoincreasedexpenditures,a$2.1million
increase in accrued compensation and benefits and other liabilities due to increased headcount, and a $1.9 million increase in
deferredrentduetonew
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officeleases.Thisnetincreaseinournetoperatingassetsandliabilitieswaspartiallyoffsetbya$3.0millionincreaseinaccounts
receivableduetoincreasedsalesofsubscriptionsanda$0.8millionincreaseinprepaidexpensesandotherassets.
During the fiscal year ended March 31, 2013, operating activities used $7.2 million in cash as a result of a net loss of
$22.5million,adjustedbynoncashchargesof$10.7millionandanetincreaseof$4.6millioninournetoperatingassetsand
revenue as a result of increased sales of subscriptions, a $2.0 million increase in deferred rent due to new office leases, a $1.2
millionincreaseinaccruedcompensationandbenefitsandotherliabilitiesduetoincreasedheadcount,anda$0.7millionincrease
inaccountspayableduetoincreasedexpenditures.Thisnetincreaseinournetoperatingassetsandliabilitieswaspartiallyoffset
bya$1.3million increase in accountsreceivabledue toincreased sales of subscriptionsanda $0.8million increasein prepaid
expensesandotherassets.
During the fiscal year ended March 31, 2012, operating activities used $5.1 million in cash as a result of a net loss of
$7.5 million, adjusted by noncash charges of $1.8 million and a net increase of $0.6 million in our net operating assets and
revenue as a result of increased sales of subscriptions, a $0.3 million increase in accrued compensation and benefits and other
liabilities due to increased headcount, and a $0.2 million increase in accounts payable due to increased expenditures. This net
increase in our net operating assets and liabilities was partially offset by a $0.9 million increase in accounts receivable due to
increasedsalesofsubscriptionsanda$0.7millionincreaseinprepaidexpensesandotherassets.
CashUsedinInvestingActivities
CashusedininvestingactivitiesduringthefiscalyearsendedMarch31,2012,2013,and2014,andforthesixmonthsended
September 30, 2013 and 2014, was $2.1 million, $13.2 million, $17.2 million, $9.5 million, and $10.4 million, respectively,
primarilyasaresultofincreasesincapitalexpenditurestopurchasepropertyandequipmenttosupportadditionalofficespaceand
siteoperations,increasesincapitalizationofsoftwaredevelopmentcosts,andincreasestorestrictedcashinrelationtonewoffice
space.
CashProvidedbyFinancingActivities
Cash provided by financing activities for the fiscal years ended March 31, 2012 and 2013, and for the six months ended
September30,2014,was$15.0million,$60.0million,and$96.5million,respectively,andwasprimarilytheresultofproceeds
fromoursaleofpreferredstock,netofissuancecosts,andtheexerciseofstockoptions.Cashprovidedbyfinancingactivitiesfor
the fiscal year ended March 31, 2014 and for the six months ended September 30, 2013 was $0.3 million and $0.1 million,
respectively,andwasprimarilytheresultoftheexerciseofstockoptions.
ContractualObligationsandCommitments
Ourprincipalcontractualcommitmentsprimarilyconsistofobligationsunderleasesforofficespace.AsofMarch31,2014,
the future noncancelable minimum lease payments under these obligations, and our future noncancelable minimum payments
underourothercontractualobligations,wereasfollows:
Operatingleaseobligations
Otherobligations
Total
Total
$35,606
616
$36,222
Paymentsduebyperiod
Lessthan
1to3
3to5
1year
years
years
(inthousands)
$ 5,573
523
$ 6,096
$10,999
93
$11,092
$11,367
$11,367
After5
years
$7,667
$7,667
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DuringthesixmonthsendedSeptember30,2014,weenteredintoadditionalcontractualobligations.Ourtotalfuturenon
cancelableminimumpaymentsunderthesecontractualobligationswere,asofSeptember30,2014,$13.4millionovernineyears,
whichconsistedof$10.1millionofoperatingleasesand$3.3millionofotherobligations.
OffBalanceSheetArrangements
AsofMarch31,2014andSeptember30,2014,wedidnothaveanyrelationshipswithunconsolidatedentitiesorfinancial
partnerships,suchasstructuredfinanceorspecialpurposeentitiesthatwereestablishedforthepurposeoffacilitatingoffbalance
sheetarrangementsorotherpurposes.
QualitativeandQuantitativeDisclosureaboutMarketRisk
ForeignCurrencyExchangeRisk
Our subscription agreements are primarily denominated in U.S. dollars. A portion of our operating expenses are incurred
outside the United States and are denominated in foreign currencies and are subject to fluctuations due to changes in foreign
currencyexchangerates,particularlychangesintheEuro.Additionally,fluctuationsinforeigncurrencyexchangeratesmaycause
ustorecognizetransactiongainsandlossesinourstatementsofoperations.Todate,foreigncurrencytransactiongainsandlosses
havenotbeenmaterialtoourfinancialstatements,andwehavenotengagedinanyforeigncurrencyhedgingtransactions.Asour
internationaloperationsgrow,wewillcontinuetoreassessourapproachtomanagingtherisksrelatingtofluctuationsincurrency
rates.
InterestRateRisk
Wehadcashandcashequivalentsof$57.1million,$19.5million,and$92.4millionasofMarch31,2013and2014and
September30,2014,respectively,consistingofbankdepositsandmoneymarketfunds.Theseinterestearninginstrumentscarrya
degreeofinterestraterisk.Todate,fluctuationsinourinterestincomehavenotbeensignificant.Wealsohadnooutstandingdebt
for any of the periods presented. We have an agreement to maintain cash balances at a financial institution of no less than
$5.6millionascollateralfortwolettersofcreditinfavorofourlandlords.Thelettersofcreditcarryafixedinterestrateof1%.
Wedonotenterintoinvestmentsfortradingorspeculativepurposesandhavenotusedanyderivativefinancialinstrumentsto
manageourinterestrateriskexposure.Wehavenotbeenexposedto,nordoweanticipatebeingexposedto,materialrisksdueto
changesininterestrates.Ahypothetical10%changeininterestratesduringanyoftheperiodspresentedwouldnothavehada
materialimpactonourfinancialstatements.
InflationRisk
Wedonotbelievethatinflationhashadamaterialeffectonourbusiness,financialcondition,orresultsofoperations.
CriticalAccountingPoliciesandEstimates
OurconsolidatedfinancialstatementshavebeenpreparedinaccordancewithU.S.generallyacceptedaccountingprinciples.
Thepreparationoftheseconsolidatedfinancialstatementsrequiresustomakeestimatesandassumptionsthataffectthereported
amounts of assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on
variousotherassumptionsthatwebelievearereasonableunderthecircumstances.Weevaluateourestimatesandassumptionson
an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these
estimatesandouractualresults,ourfuturefinancialstatementswillbeaffected.
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Thecriticalaccountingpoliciesrequiringestimates,assumptions,andjudgmentsthatwebelievehavethemostsignificant
impactonourconsolidatedfinancialstatementsaredescribedbelow.
RevenueRecognition
We generate revenue from subscriptionbased arrangements that allow our customers to access our products. Our sales
agreementshavecontracttermstypicallyforoneyearinlengthorless.
Werecognizerevenuewhenthefollowingcriteriaaremet:(i)thereispersuasiveevidenceofanarrangement(ii)subscriptions
havebeenorarebeingprovidedtothecustomer(iii)theamountoffeetobepaidbythecustomerisfixedanddeterminableand
(iv)collectionisreasonablyassured.
Werecognizesubscriptionrevenueonastraightlinebasisoverthecontractualperiod.Amountsthathavebeeninvoicedand
thatareduearerecordedindeferredrevenueorrevenue,dependingonwhethertherevenuerecognitioncriteriahavebeenmet.
StockBasedCompensationExpense
Wemeasureandrecognizecompensationexpenserelatedtostockbasedtransactions,includingemployeeandnonemployee
directorstockoptions,inourfinancialstatementsbasedonthefairvalueoftheawardsgranted.Weestimatethefairvalueofeach
optionawardonthegrantdateusingtheBlackScholesoptionpricingmodelandasingleoptionawardapproach.Werecognize
stockbasedcompensationexpense,netofforfeitures,overtherequisiteserviceperiodsoftheawards,whichisgenerallyfouryears.
Our use of the BlackScholes optionpricing model requires the input of highly subjective assumptions, including the fair
valueoftheunderlyingcommonstock,theexpectedtermoftheoption,theexpectedvolatilityofthepriceofourcommonstock,
riskfreeinterestrates,andtheexpecteddividendyieldofourcommonstock.Theassumptionsweuseinouroptionpricingmodel
represent managements best estimates. These estimates involve inherent uncertainties and the application of managements
judgment.Iffactorschangeanddifferentassumptionsareused,ourstockbasedcompensationexpensecouldbemateriallydifferent
inthefuture.
Theseassumptionsandestimatesareasfollows:
commonstock,asdiscussedinCommonStockValuationsbelow.
ExpectedVolatility.Wedeterminethepricevolatilityfactorbasedonthehistoricalvolatilitiesofourpubliclytraded
peergroupaswedonothaveatradinghistoryforourcommonstock.Industrypeersconsistofseveralpubliccompanies
inthetechnologyindustrythataresimilartousinsize,stageoflifecycle,andfinancialleverage.Weusedthesamesetof
peergroupcompaniesinalltherelevantvaluationestimates.Wedidnotrelyonimpliedvolatilitiesoftradedoptionsin
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
informationregardingthevolatilityofourowncommonstocksharepricebecomesavailable,orunlesscircumstances
change such that the identified companies are no longer similar to us, in which case, more suitable companies whose
sharepricesarepubliclyavailablewouldbeutilizedinthecalculation.
ExpectedTerm.Theexpectedtermrepresentstheperiodthatourstockbasedawardsareexpectedtobeoutstanding.We
base the expected term assumption on our historical exercise behavior combined with estimates of the postvesting
holdingperiod.
RiskFreeInterestRate.WebasetheriskfreeinterestrateusedintheBlackScholesoptionpricingmodelontheimplied
yield available on U.S. Treasury zerocoupon issues with a remaining term equivalent to that of the options for each
optiongroup.
FairValueofCommonStock.Becauseourcommonstockisnotyetpubliclytraded,wemustestimatethefairvalueof
DividendYield.Theexpecteddividendassumptionisbasedonourcurrentexpectationsaboutouranticipateddividend
policy.Consequently,weusedanexpecteddividendyieldofzero.
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ThefollowingtablesummarizestheassumptionsusedintheBlackScholesoptionpricingmodeltodeterminethefairvalue
ofourstockoptionsasfollows:
Fairvalueofcommonstock
Expectedterm(years)
Expectedvolatility
Riskfreeinterestrate
Dividendyield
2012
$1.01$2.98
510
5054%
0.772.56%
YearEndedMarch31,
2013
2014
$3.51$4.68
56
5053%
0.670.97%
$6.54$18.83
56
4752%
0.741.87%
SixMonths
EndedSeptember30,
2013
2014
$6.54$6.93
56
5052%
0.741.69%
$16.93$17.51
56
4551%
1.552%
In addition to the assumptions used in the BlackScholes optionpricing model, we must also estimate a forfeiture rate to
calculatethestockbasedcompensationexpenseforourawards.Ourforfeiturerateisbasedonananalysisofouractualforfeitures.
Wewillcontinuetoevaluatetheappropriatenessoftheforfeitureratebasedonactualforfeitureexperience,analysisofemployee
turnover, and other factors. Quarterly changes in the estimated forfeiture rate can have a significant impact on our stockbased
compensationexpenseasthecumulativeeffectofadjustingtherateisrecognizedintheperiodtheforfeitureestimateischanged.
Wewillcontinuetousejudgmentinevaluatingtheassumptionsrelatedtoourstockbasedcompensationonaprospective
basis.Aswecontinuetoaccumulateadditionaldatarelatedtoourcommonstock,wemayhaverefinementstoourestimates,which
couldmateriallyimpactourfuturestockbasedcompensationexpense.
CommonStockValuations
Prior to this offering, the fair value of the common stock underlying our stock options was determined by our board of
directors. The valuations of our common stock were determined in accordance with the guidelines outlined in the American
Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of PrivatelyHeldCompany Equity
SecuritiesIssuedasCompensation.Theassumptionsusedinthevaluationmodelswerebasedonfutureexpectationscombined
with management judgment. Members of our board of directors and management team have extensive business, financial, and
investing experience. Because there had been no public market for our common stock, the board of directors with input from
managementexercisedsignificantjudgmentandconsiderednumerousobjectiveandsubjectivefactorstodeterminethefairvalue
ofcommonstockasofthedateofeachoptiongrant,includingthefollowingfactors:
contemporaneousvaluationsperformedbyunrelatedthirdpartyspecialists
theprices,rights,preferences,andprivilegesofourconvertiblepreferredstockrelativetothoseofourcommonstock
ouractualoperatingandfinancialperformance
ourcurrentbusinessconditionsandprojections
ourhiringofkeypersonnelandtheexperienceofourmanagement
ourhistoryandthetimingoftheintroductionofnewproductsandservices
ourstageofdevelopment
ourlikelihoodofachievingaliquidityevent,suchasaninitialpublicofferingoramergeroracquisitionofourcompany,
givenprevailingmarketconditions
thelackofmarketabilityinvolvingsecuritiesinaprivatecompany
themarketperformanceofcomparablepubliclytradedcompaniesand
theU.S.andglobalcapitalmarketsconditions.
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Invaluingourcommonstock,ourboardofdirectorsdeterminedtheenterprisevalue,addednetcash,andthenallocatedthe
equityvaluetoeachclassofequitysecuritiesoutstanding(preferredstock,commonstockandoptions)initiallyusinganoption
pricingmethod,orOPM.Theboardofdirectorsdeterminedtheenterprisevalueofourbusinessusingtheincomeapproachandthe
marketapproachvaluationmethods.
TheOPMtreatscommonstockandconvertiblepreferredstockascalloptionsonabusiness,withexercisepricesbasedonthe
liquidationpreferenceoftheconvertiblepreferredstock.TheOPMusestheBlackScholesoptionmodeltopricethecalloption.
Estimates of the volatility applied in the BlackScholes option model were based on available information on the volatility of
commonstockofcomparable,publiclytradedcompanies.Additionally,weappliedadiscountforlackofmarketability.
Theincomeapproachestimatesthefairvalueoftheenterprisebasedonthepresentvalueofourfutureestimatednetcash
flowsandourresidualvaluebeyondtheforecastperiod.Thefuturenetcashflowsandresidualvaluearediscountedtotheirpresent
valuetoreflecttherisksinherentinusachievingtheseestimatednetcashflows.Thediscountratewasbasedonamarketderived
weightedaveragecostofcapital.
Inthemarketapproach,weutilizedthecomparablecompanymethodwhichestimatesthefairvaluebasedonacomparisonof
our size, growth, profitability and operating risks to comparable publiclytraded companies in a similar line of business. We
selectedothersoftwarepubliccompaniesbasedontheirsimilarityofbusinessmodel,beingprimarilySaaSbusinesses.Duringthe
year, we expanded our peer group companies to include new publiclytraded companies and companies with similar growth
profiles.Fromthecomparablecompanies,wecalculatedbusinessenterprisevalue,orBEV,torevenuemultiples.Inourvaluations,
weutilizedtheBEVmultiplesandappliedittothetrailing12monthsrevenuesandtotheforecastednext12monthsrevenues.As
someofthecomparablecompaniesweresignificantlylargerandhaddifferentratesofrevenuegrowthandprofitabilitythanus,we
generally selected multiples that were near the median of these selected companies to account for our lower profitability and
expectedhigherratesofrevenuegrowth.
BeginninginSeptember2013,weutilizedacombinationoftheOPMandtheprobabilityweightedexpectedreturnmethod,
orPWERM.UnderthePWERM,thevalueofthecommonstockisestimatedbasedonanalysisoffuturevaluesfortheenterprise
assumingvariouspossibleoutcomes,suchastimingaswellastherightsofeachshareclass.Thefuturevaluewasdiscountedto
their present value using the discount rate applied in the income approach. Additionally, we applied a discount for lack of
marketability.
InconnectionwiththepreparationofourfinancialstatementsforthefiscalyearendedMarch31,2014,weestimatedthefair
valueofourcommonstockforfinancialreportingpurposesinlightofourrapidlyimprovingfinancialperformanceandprospects,
ourevolvingbeliefthataninitialpublicofferingwasincreasinglyviableandthegenerallyimprovingconditionsinthecapital
markets.Asaresult,wedeterminedthat,solelyforfinancialreportingpurposes,thefairvalueofourcommonstockwashigherthan
thefairmarketvaluesdeterminedingoodfaithbyourboardofdirectorsforeachoftheoptiongrantdatesfromAugust8,2013
throughFebruary5,2014.
Insomecases,wealsoconsideredtheamountoftimebetweenthevaluationdateandthegrantdatetodeterminewhetherto
usethelatestcommonstockvaluationdeterminedpursuanttooneofthemethodsdescribedaboveorastraightlinecalculation
betweenthetwovaluationdates.Thisdeterminationincludedanevaluationofwhetherthesubsequentvaluationindicatedthatany
significantchangeinvaluationhadoccurredbetweenthepreviousvaluationandthegrantdate.
Followingthisoffering,valuationmodels,includingtheestimatesandassumptionsusedinsuchmodels,willnotbenecessary
todeterminethefairvalueofourcommonstock,assharesofourcommonstockwillbetradedinthepublicmarket.
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BetweenApril1,2013andthedateofthisprospectus,wegrantedstockoptionsasfollows:
GrantDate
April11,2013
August8,2013
October3,2013
December11,2013
February5,2014
May15,2014
July31,2014
November25,2014
Numberof
CommonShares
Underlying
OptionsGranted
Exercise
PricePerShare
FairValue
PerSharefor
Financial
Reporting
Purposes
455,400
352,470
606,750
1,281,300
150,500
1,485,000
545,100
777,450
6.54
6.93
7.99
11.29
15.97
16.93
17.51
19.00
6.54
9.37
10.52
13.77
18.83
16.93
15.53
19.00
Inadditiontothestockoptionsgranted,wealsograntedrestrictedstockawardstotwodirectorsforanaggregateof100,000
sharesofourcommonstockinAugust2013and40,000sharesofcommonstockinMay2014,withagrantdatefairvaluepershare
of$9.37and$16.93,respectively,eachofwhichvestsoverfouryears.
Basedontheassumedinitialpublicofferingpricepershareof$19.00,themidpointofthepricerangesetforthonthecover
pageofthisprospectus,theaggregateintrinsicvalueofouroutstandingstockoptionsasofSeptember30,2014was$92.3million,
with$64.7millionrelatedtovestedstockoptions.
Warrants
Warrantstopurchasesharesofourconvertiblepreferredstockareclassifiedasaliabilityonourconsolidatedbalancesheetsat
fairvalue.Thefairvalueofthewarrantsisestimatedusinganoptionvaluationmodelateachreportingdate.Thechangeinfair
valueofthewarrantsisthenrecordedonourconsolidatedstatementsofoperationsasotherexpense.Weusemanagementjudgment
toestimatethefairvalueofthesewarrants,andtheseestimatescoulddiffersignificantlyinthefuture.Wedeterminedthefairvalue
oftheoutstandingconvertiblepreferredstockwarrantsutilizinganoptionvaluationmodelwiththefollowingassumptionsasof
March31,2013and2014andSeptember30,2014:
Remainingcontractualterm(inyears)
Volatility
Dividendyield
Asof
September30,
2014
4.48.4
1.52.5%
50%
3.97.9
1.42.4%
45%
AsofMarch31,
2013
5.49.3
0.91.7%
57%
2014
The above assumptions are subjective and the fair value of these warrants may have differed significantly had we used
differentassumptions.
The fair value of the warrants was recorded as a warrant liability upon issuance. Changes in the fair value of the warrant
liabilityarereflectedinotherexpense,net.Upontheearlieroftheexerciseofthewarrantsorthecompletionofaliquidationevent,
includingthecompletionofaninitialpublicofferinginwhichthesharesunderlyingthewarrantswouldconvertfromtherelated
sharesofconvertiblepreferredstockintosharesofcommonstock,thepreferredstockwarrantliabilitywillberemeasuredtofair
valueonefinaltime,andanyremainingliabilitywillbereclassifiedtoadditionalpaidincapital.Weexpectthefairvalueofthe
warrantstoincreaseleadinguptothisoffering,butwedonotexpectanyfuturechargesfollowingthecompletionofthisoffering.
DuringtheyearsendedMarch31,2012,2013,and2014,andforthesixmonthsendedSeptember30,2013,werecognized
chargesintheamountof$36,000,$23,000,$0.7million,and$0.3million,respectively,fromthe
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remeasurementofthefairvalueofthewarrants,whichwerecordedasotherexpenseinourconsolidatedstatementsofoperations.
ForthesixmonthsendedSeptember30,2014,werecognizedotherincomeof$0.3millionfromtheremeasurementofthefairvalue
ofthewarrants.
IncomeTaxes
Deferredtaxassetsandliabilitiesaredeterminedbasedonthedifferencesbetweenfinancialreportingandthetaxbasesof
assetsandliabilitiesandaremeasuredusingthetaxratesthatwillbeineffectwhenthedifferencesareexpectedtoreverse.Future
tax benefits are recognized to the extent that realization of such benefits is considered to be more likely than not. A valuation
allowanceisprovidedondeferredtaxassetsifitisdeterminedthatitismorelikelythannotthatthedeferredtaxassetwillnotbe
realized.Wehaveconsideredourfutureanticipatedmarketgrowth,historicalandforecastedearnings,futuretaxableincomeand
themixofearningsinthejurisdictionsinwhichweoperatealongwithprudent,feasibleandpermissibletaxplanningstrategiesin
determiningtheextenttowhichourdeferredtaxassetsmayberealizable.Projectionsinherentlyincludealevelofuncertaintythat
couldresultinlowerorhigherthanexpectedfuturetaxableincome.Whenwedeterminethatthedeferredtaxassetsforwhichthere
iscurrentlyavaluationallowancewouldberealizedinthefuture,therelatedvaluationallowancewillbereducedandabenefitto
operationswillberecorded.Conversely,ifweweretomakeadeterminationthatwewillnotbeabletorealizeaportionofournet
deferred tax assets in the future (using the more likely than not criteria), we would record an adjustment to our valuation
allowanceandachargetooperationsintheperiodinwhichsuchdeterminationismade.
Weuseatwostepapproachtorecognizingandmeasuringuncertaintaxpositions.Thefirststepistoevaluatethetaxposition
for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be
sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax
benefitasthelargestamountwhichismorethan50%likelyofbeingrealizeduponultimatesettlement.Weconsidermanyfactors
when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may not
accurately forecast actual outcomes. We do not have any unrecognized tax benefits. If interest and penalties related to
unrecognizedtaxbenefitswereincurred,suchamountswouldbeincludedinourprovisionforincometaxes.
RecentAccountingPronouncements
InFebruary2013,theFASBissuedguidancewhichaddressesthepresentationofamountsreclassifiedfromaccumulatedother
comprehensiveincome.Thisguidancedoesnotchangecurrentfinancialreportingrequirements,insteadanentityisrequiredto
crossreference to other required disclosures that provide additional detail about amounts reclassified out of accumulated other
comprehensiveincome.Inaddition,theguidancerequiresanentitytopresentsignificantamountsreclassifiedoutofaccumulated
othercomprehensiveincomebylineitemofnetincomeiftheamountreclassifiedisrequiredtobereclassifiedtonetincomeinits
entirety in the same reporting period. Adoption of this standard is required for periods beginning after December 15, 2012 for
publiccompanies.Theadoptionofthisguidancedidnotimpactourconsolidatedfinancialstatements,aswedidnothaveother
comprehensiveincomefortheperiodspresented.
InJuly2013,theFASBissuedanewaccountingstandardupdateonthefinancialstatementpresentationofunrecognizedtax
benefits.Thenewguidanceprovidesthataliabilityrelatedtoanunrecognizedtaxbenefitwouldbepresentedasareductionofa
deferredtaxassetforanetoperatinglosscarryforward,asimilartaxlossorataxcreditcarryforwardifsuchsettlementisrequiredor
expectedintheeventtheuncertaintaxpositionisdisallowed.ThenewguidancebecameeffectiveforusonApril1,2014andit
should be applied prospectively to unrecognized tax benefits that exist at the effective date with retrospective application
permitted.Wearecurrentlyassessingtheimpactofthisnewguidance.
InApril2014,theFASBissuedanaccountingstandardupdatethatchangesthecriteriaforreportingdiscontinuedoperations
andexpandsrelateddisclosurerequirements.Thisaccountingstandardwillbeeffective
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for us beginning in our first quarter of fiscal 2016. The effects of this guidance will depend on the nature and significance of
discontinuedoperationsoccurringaftertheeffectivedate.
In May 2014, the FASB issued new guidance related to the recognition and reporting of revenue that establishes a
comprehensivenewrevenuerecognitionmodeldesignedtodepictthetransferofgoodsorservicestoacustomerinanamountthat
reflectstheconsiderationtheentityexpectstoreceiveinexchangeforthosegoodsorservices.Theguidanceallowsfortheuseof
eitherthefullormodifiedretrospectivetransitionmethod,andthestandardwillbeeffectiveforusinthefirstquarterofourfiscal
year 2018 early adoption is not permitted. We are currently evaluating the impact of this new standard on our consolidated
financialstatements,aswellaswhichtransitionmethodweintendtouse.
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LETTERFROMTHEFOUNDER
IfirstdiscoveredmypassionforbuildingsoftwarewhenmyparentsboughtmemyfirstcomputerforChristmasin1982.Iwas
twelveyearsold,buteventhenIknewwhatIwantedtodoprofessionallyfortherestofmylife.Iamandalwayswillbeabuilderof
software.
Thereareover18milliondevelopersouttherelikeme,doingwhattheylove,creatingsomethingoutofnothing.Creating
software.Andthatsoftwareistransformingeverybusinessofeverysize,ineveryindustry.Softwarehaseatentheworld.
Butthosedevelopersandtheircompanieshaveaseriouschallenge:Theyneedvisibilityintowhattheirsoftwareisdoingin
real time. At a bare minimum, they need to see if the software is working. When software is slow or failing, people cant book
reservations,depositchecks,purchaseitems,communicatewithpeers,signupforhealthcare,orperformscientificresearch.
But beyond that, businesses want to know how their customers are using their software and who their customers are.
eCommerce sites need to know who their big spenders are, and what differentiates their behavior from the tire kickers. SaaS
companiesneedtoknowhowmanyfreetrialsarecurrentlyunderway,andwhichofthoseprospectsisusingtheirproductthemost
a strong buying signal. And consumer Internet companies need to know how recent changes to the layout of the home page
increaseordecreaseconversionrates.
Enter New Relic. We provide deep visibility into live software applications, measuring every transaction that runs on the
mobiledevice,ontheserverorinthewebbrowser.Wedothisatamassivescale,withaverysimple,easytousecloudservicethat
istrustedbythousandsofcustomers.Wecollectbillionsofmetricsfrommillionsofsoftwareprocesses,andmoreimportantlywe
makesenseofthismassofdata.Wehelpdevelopersandbusinesspeoplemakebetterdecisions,fueledbyrealtimedataextracted
livefromtheheartoftheirbusiness:theirsoftware.
It brings me immense joy to know that we build software that our customers not only use, but love. That is rare in the
enterprisesoftwarebusiness.Peopledontusuallyraveabouttheiranalyticsormonitoringsoftwarethewaytheydoabouttheir
smartphonesortheirgameconsoles.ButNewReliccustomersdo.Thatgetsmeexcitedtocomeintoworkeveryday.
ButwhatmattersevenmoreisthatImblessedtoworkwithwonderfulpeople.Thosewhoknowmehearmesayrepeatedly
thatIlovemyMondays,becauseIlovewhatwedoforourcustomers,andIlovethepeoplewithwhomIgettodomybestandmost
challengingwork.
Lifeisshort.Nogreatendeavorisworthundertakingunlessyoudosoinpartnershipwithpeopleyouloveandrespect,and
whobringoutthebestofyou.NewRelicisnotonlyagrowingcompanyweareacompanyfullofkindanddecentpeopleofhigh
integrityandpositiveenergy.Thismattersdeeplytome,andistheprimaryreasonwhywecontinuetorecruitandretainthebest
people,inthemostimportantsenseoftheword.
AgoodfriendtoldmethathethinksthatIamabuilderofproducts,andthatmymostimportantproductisthecompany,New
Relic. I like that. Great companies arent simply assembled or manufactured any more than great products are designed by
committee.Companiesthattrulymakeanimpactfocusonbuildinganddeliveringproductsofimmensevalueoverthecourseof
decades.WeaspiretobeoneofthegreatsoftwarecompaniesandImthrilledandhonoredtoparticipateinthejourney.
Sincerely,
LewCirne
Founder&CEO
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BUSINESS
OurMission
Softwareisbecomingthelifebloodofalmosteveryorganization,largeandsmall,aroundtheworld.Ourmissionistoempower
organizationstobuildthebestmodernsoftwarepossibleandtoimprovetheirbusinessintelligenceusingthedataflowingthrough
andaboutthatsoftware.Thisdatacontainsmassiveamountsofinformationaboutcustomerbehaviors,userexperiences,andoverall
softwareperformance.NewRelicenablesorganizationstogainvisibilityintothissoftwaredatatomakebetter,faster,datadriven
decisions.
Overview
WearebuildinganewcategoryofenterprisesoftwarewecallSoftwareAnalytics.Ourcloudbasedsuiteofproductsenables
organizationstocollect,store,andanalyzemassiveamountsofsoftwaredatainrealtime.Wedesignallourproductstobehighly
intuitive and frictionless they are easy to deploy, and customers can rapidly, often within minutes, realize benefits and results.
Withourproducts,technologyuserscanquicklyfindandfixperformanceproblemsaswellaspredictandpreventfutureissues.
Business users such as product managers can get answers to how their new product launch is being received, or how a pricing
changeimpactedcustomerretention,withoutwaitingforhelpfromIT.Softwaredeveloperscanbuildbetterapplicationsfaster,as
they can see how their software will perform and is actually performing for endusers. As of September 30, 2014, we collected,
stored, and analyzed over 690 billion data points daily across more than 4 million application instances and monitored user
experiencesonoveramillionwebsitedomainsandfromoveronebillionmobileapplicationinstalls.AsofSeptember30,2014,we
hadover250,000users.Wedefineauserasanemailaddressassociatedwithanaccountthathasdeployedoursoftwarecode,called
agents, and from which we receive data from at least one application. As of September 30, 2014, we had 10,590 paid business
accounts.
Softwarehasbecomecriticaltobusinessesandconsumersworldwide,fromonlineretailingtosocialnetworkingtocustomer
relationshipmanagement.Thissoftwareisfoundinapplicationsandthroughoutthearchitecturesonwhichthoseapplicationsrun:
servers,websites,operatingsystems,mobiledevices,andotherITassets.Theuseofthissoftwaregenerateshugevolumesofdata
abouthowitisperforming,theenduserexperience,andthetransactionsflowingthroughit.Historically,organizationscollected
and analyzed only a small fraction of this data due to technology and business constraints, including high costs and limited
benefits, except for specific use cases such as application performance management, clickstream analysis, and web traffic
measurement.Legacysoftwareproductsweretypicallycustomized,expensive,requiredtraining,andwerethuslimitedtobusiness
criticalapplicationswithinlargeorganizations.Asaresult,thevastmajorityofsoftwaredatahasbeenunderutilized.
Several fundamental technology and business trends are enabling Software Analytics today. As software has become
increasinglycritical,itcontainsmoreofthedatathatorganizationsneedtomakekeydecisions.Ascloudcomputingandsoftware
asaservicereplaceonpremisearchitectures,moredataisbeinggeneratedandanalyzed.Softwaredevelopersarerapidlyincreasing
instatureandinfluencewithinorganizations,andabletoshapeITtrendssuchascloudadoption.Newtechnologieshavebeen
developedtoenablegreaterstorageandfasteranalysisofmassivequantitiesofunstructuredandstructureddatawithspeedand
flexibility.
Inlightofthesetrends,wesawtheopportunityforSoftwareAnalyticstoempowertechnologyandbusinessuserstomakeuse
ofthisunderutilizedsoftwaredata.Weprovidedeveloperswithoursoftwarecode,calledagents,toaddtotheirapplicationsand
infrastructurequicklyandeasily.Theseintelligentagentscancollectvastamountsofdata,asdefinedbytheuser,andsendittoour
cloudbased, big data database. Our database collects and organizes our users data for analysis through a simple dashboard
interfacethatuserscaneasilyconfiguretomonitortheirkeymetricsandquicklymakequeriesusingsimplephrases.Ourintuitive
andfrictionlessproductdesignresultsinusersbeingabletoquicklyreceiveanalysisoftheirdata.Withthisvisibility,developers
cansignificantlyimprovethequalityoftheirsoftware,andbusinessandtechnologyuserscangetrealtimeinsightsintotheirdata.
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OurSoftwareAnalyticssolutioniscomprisedofanintegratedsuiteofproducts,abigdatadatabase,andanopenplatform.All
ofourproductshaveasimpleuserinterface,andrequireminimaltrainingorintegration.Ourproductsfortechnologyusersfocuson
software performance management and monitoring and consist of New Relic APM, New Relic Mobile, New Relic Servers, New
RelicBrowser,andNewRelicSynthetics.NewRelicInsightsprovidesbigdataanalyticstobothbusinessandtechnologyusersthat
enable them to easily extract actionable information from the massive quantities of unstructured and structured data flowing
throughtheirsoftware.NewRelicPlatformoffersapluginarchitectureincludingapplicationprogramminginterfaces,orAPIs,and
softwaredevelopmentkits,orSDKs,forcustomersandpartnerstoembedandextendoursolutionintotheirproducts.Today,there
areover475NewRelicPlatformpluginstoextendourfunctionalitytootherapplicationsandinfrastructuresincludingAmazon
WebServices,MicrosoftAzure,MongoDB,andOraclemySQL.
Our gotomarket strategy combines grassroots user adoption with both lowtouch and hightouch sales approaches. Our
productsareeasytodownloadanduse,whichhasallowedustobuildalargebaseofusersandsmallerorganizationswithoutan
enterprisesalesorganization.Overtime,userswithinlargerorganizationsbegantogrowourfootprintwithintheircompanies,as
theyoftenpurchaseourproductsforaspecificusecaseandsubsequentlyexpandtheiruseofourproducts.Wearebuildingadirect
enterprise sales and support operation in order to better market to and support larger organizations, which represent a growing
portionofourrevenue.
Wehaveachievedrapidcustomeradoption,highcustomerretention,andsignificantgrowthsinceourfounding.Forourfiscal
years ended March 31, 2012, 2013, and 2014, our revenue was $11.7 million, $29.7 million, and $63.2 million, respectively,
representingyearoveryeargrowthof154%fromthefiscalyearendedMarch31,2012tothefiscalyearendedMarch31,2013,
and113%fromthefiscalyearendedMarch31,2013tothefiscalyearendedMarch31,2014.ForthesixmonthsendedSeptember
30,2013and2014,ourrevenuewas$26.1millionand$48.0million,respectively,representingyearoveryeargrowthof83%.We
had net losses of $7.5 million, $22.5 million, and $40.2 million for our fiscal years ended March 31, 2012, 2013, and 2014,
respectively,and$18.6millionand$19.4millionforthesixmonthsendedSeptember30,2013and2014,respectively.
IndustryBackground
ImportanceofSoftwareforBusinessesandConsumers
Softwarehasbecomeacentralelementofbusinessandconsumerlife,representingagrowingproportionofeconomicactivity
worldwide.Businessesofalltypesrelyupontheirsoftwareapplicationstointeractwiththeircustomers,employees,andpartnersto
increaserevenueandimproveoperationalefficiency.Businessesandconsumersusesoftwareonavarietyofdevicesinmoreoftheir
daytoday activities. According to IDC, in 2013 businesses spent approximately $392 billion globally on packaged software,
whichwasthefastestgrowingportionofoverallITspending.Inaddition,newchannelsareemergingforbusinessandconsumer
software including cloudbased app stores from many vendors including Apple, Google, and others which enable instant
application purchases and downloads. Historical barriers to entry for software development and adoption have been removed
resultinginadramaticincreaseinthenumberofsoftwareapplicationsavailable.Usersincreasinglyexpecttheirsoftwaretobefast
andreliable,andtheycanquicklyreplacetheapplicationstheyuseiftheyareunsatisfiedwiththeirexperience.
AdventofCloudArchitecturesandSaaS
Thisincreasingpenetrationofsoftwareintothelivesofbusinessesandconsumershasbeenenabledbytheadventofcloud
architecturesandSaaS.Historically,legacyonpremisearchitecturesrequiredcompaniestopurchaseandmaintainthecompleteIT
stackincludingstorage,servers,networking,andapplications.Incontrast,cloudarchitecturesenablecompaniestosubscribefor
and access computing resources as needed. This has provided a wide range of economic and technology benefits including
applicationsthatareeasiertodeploy,maintain,use,andintegrate.Asaresult,businessesandconsumersnowusesoftwaremore
broadlyanddeeplythantheycouldwithlegacyonpremisearchitectures.
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ExplosionofMobility
Thegreatlyincreasedfunctionalityofsmartphonesandtablets,andtheubiquityofhighbandwidthInternetaccess,haveled
to an explosion in mobile devices and mobile applications. According to IDC, more than 1.3 billion smartphones, tablets, and
laptopswereshippedworldwidein2013.Thesedevicesandtheapplicationstheyrunneedtobesupportedbycompletelynew
software architectures that are fundamentally different and separate from legacy, onpremise IT architectures. As business and
consumermobileusersincreasinglyexpecttheirapplicationstorunwell,notonlydoexistingapplicationsneedtorunbetteron
mobiledevices,butanewcategoryofnativemobilefirstapplicationshasarisenspecificallytoworkbestonmobiledevices.This
mobility has both increased pressures on software performance and greatly expanded the variety, velocity, and volume of data
availableforanalysis.
GrowingImportanceofDevelopers
Theincreasingubiquityofsoftwarehasledtogreaterimportanceandrolesforthedeveloperswhobuildandmaintainthat
software.AccordingtoEvansData,aglobalresearchfirm,therewereover18millionsoftwaredevelopersworldwidein2013and
there were expected to be over 26 million by 2019. These developers are increasingly able to create and influence major
technology trends such as adoption of cloud architectures, open source, and new programming languages and frameworks to
improvethetimetomarketandperformanceoftheirapplications.WhileinthepastcorporateITdepartmentshavedictatedthe
technologieswhichdeveloperscoulduse,developersareincreasinglyabletoworkwiththetechnologiestheyprefer.Inaddition,a
growingproportionofsoftwareisbeingbuiltbyoutsidedeveloperswhoarenotconstrainedbylegacycorporateITpractices.Their
useofemergingtechnologies,suchasnewprogramminglanguagesincludingRuby,Python,Node.js,andPHP,hasacceleratedthe
increasingcomplexityoftheITlandscape.
EmergenceofBigDataTechnologiesforUnstructuredandStructuredData
Historically,companieshavereliedononpremisedatabasesfromvendorssuchasOracle,IBM,andMicrosofttoanalyzetheir
businessdata.Thesetechnologiesrequirecollectingandindexingdata,storingitinahighlystructuredformatinrowsorcolumns,
and programming customized queries to generate reports from the data. These are useful to generate periodic reports from
applications such as enterprise resource planning, or ERP, or customer relationship management, or CRM, applications which
produce transactional data. According to Gartner, the volume of enterprise information is growing at an incredible rate, but
approximately 80% of this information is unstructured. Over the past few years, a wide variety of technologies have been
introducedtogreatlyincreasetheabilitytocollectandanalyzetherapidlygrowingvariety,velocity,andvolumeofdata.These
technologiesandtheirimpactonexpandingtheabilitytocollectandanalyzedataarecommonlyreferredtoasbigdata.Today,an
increasing number of companies are investing in technology and personnel to gain a competitive advantage using big data to
enablerealtime,datadrivendecisions.
NewComplexitiesforTechnologyUsers,BusinessUsers,andSoftwareDevelopers
Thelandscapeofsoftwareanddataworldwideisrapidlychanging.Businessandconsumerapplicationsarerunningonboth
cloud and legacy architectures and are built with a multitude of programming languages. This in turn has created significant
challenges and complexities for technology users, business users, and software developers who oversee the performance,
availability, and overall health of software applications and the related infrastructure deployed to enable those applications. As
softwareapplicationssuchasconsumerfacingwebsitesandmobileapplicationshavebecomethefoundationofmanybusinesses,
thesuccessorfailureofthosebusinessesisincreasinglydeterminedbytheavailability,accessibility,responsetime,andqualityof
the user experience of their software applications. Increasing global competition require organizations to have better business
intelligenceandvisibilityfromthesoftwaredataabouttheirbusinessoperations.
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OurSolution
WehavedevelopedourSoftwareAnalyticssuiteofproducts,bigdatadatabase,andopenplatformtohelptechnologyand
business users make realtime, datadriven decisions to improve business and IT performance. In addition, developers can build
bettersoftware,builditfaster,andkeepitrunningoptimallyforenduserexperiences.Oursolutioncollects,stores,andanalyzes
vastquantitiesofunstructuredandstructureddataflowingthroughandaboutouruserssoftware.
Wecurrentlyofferanintegratedsuiteofsevenproductsthatwecontinuetoenhanceandexpand:
NewRelicAPM:Applicationperformancemanagement
NewRelicMobile:Mobileapplicationperformancemanagement
NewRelicServers:Servermonitoringforcloudanddatacenters
NewRelicBrowser:Enduserexperiencemonitoringandperformancemonitoring
NewRelicSynthetics:Softwaretestingthroughsimulatedusage
NewRelicPlatform:Platformthatextendsourfunctionalityintootherapplications
NewRelicInsights:Realtimebigdataanalyticsforbusinessmanagers
Thissuiteofproductsusesacommoninfrastructuretoenablecustomersto:
infrastructure,includingphysicalandvirtualservers,browsers,andmobiledevices.Theseagentsconfigureautomatically
to their particular IT environment and collect and send event and performance data securely to our proprietary cloud
database.Ouragentstypicallysendthisinformationonceaminute,andaredesignedtocauseminimallatencyonthe
application.
Collect. Our intelligent agents are software code that developers easily deploy into their applications and related IT
Store. Data collected from our agents is stored in our highly secure and scalable cloudbased, big data database. Our
databasehasbeencraftedsothatourcustomersdonotneedtobuildormaintaintheirownbigdatasolutionforSoftware
Analytics. We optimized this database to store unstructured and structured data as well as handle the analytics and
queries that we believe are important to drive decision making. Customers can easily define which data they want to
collectandstoreforanalysis.
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Analyze. Our simple and intuitive user interface consists of a dashboard of graphical charts for key performance
indicators, which are easily configurable and enable deep drilldown and root cause analysis. Our New Relic Insights
productalsoincludesafieldforqueriesutilizingtheNewRelicQueryLanguage,orNRQL,similartothecommonly
usedStructuredQueryLanguage,orSQL.UserscantypeasimplequeryintotheNRQLfieldandreceivetheanswerina
rangeofvisualandgraphicalformats.Wealsointendtoreleasefeaturesforoursolutionsthatenableuserstocreateand
publishcustomizeddataappsandmakethemavailabletonontechnicalbusinessusers.
KeyElementsofOurSolution
Integrated Suite. Our suite currently consists of seven products that are integrated, share a common design and user
interface, and access the same cloudbased database structure. Users can move seamlessly among different analytic
categoriesandusecasesfortheirsoftwaredata.Usersareabletoeasilyaddadditionalproductstoextendtheirabilityto
obtaininsightsfromtheirsameornewportionsoftheirsoftwaredata.
LowTotalCostofOwnership.Wepriceourproductsonamonthlysubscriptionbasis,withflexiblepricingplanssoeach
customer is only paying for the products and usage they are consuming. Our customers do not need to invest in
additionalhardware,infrastructure,orservicestoutilizeourproducts.
EasyandIntuitive.Wedesignourproductstobesimple,intuitive,anduserfriendly.Usersareabletolearn,deploy,and
beginusingourproductswithminimalornotraining,oftenwithinafewminutes.Thisisimportantfordeveloperswho
donotneedtodoextracodingorconfigurationtouseourproducts.ItisalsoimportantforbusinessandITuserswhocan
leverageourproductstoaugmenttheirexistingknowledgeofapplicationsandinfrastructure.
Big Data Database and Analytics. Our proprietary, cloudbased database leverages modern big data technologies,
includinginmemorystorageanddistributedclusteringtechniques,whichenablecollectionandstorageofbillionsof
events and metrics each day. Our database structure allows customers to easily build dashboards or make queries to
deliverrealtimeinsights.
MobileEnabled.WeprovideanativemobileversionofourSoftwareAnalyticsproductswithnearlyallfunctionality
accessible and usable through mobile devices. Our products are designed to anticipate and handle the complexity of
mobilearchitectures,suchasmobilecarrierperformanceanduserlocation.
Built for Modern Software. We support a broad range of software development languages and frameworks from the
widelyusedJavaand.NET,tomorerecentandemerginglanguagessuchasRuby,PHP,Python,andNode.js,aswellas
mobileoperatingsystemsincludingiOSandAndroid.Ouragentsareeasilyembeddedintoapplicationsbuiltusingallof
theselanguages,withouttheneedforcustomizedcoding.
Flexibility to Manage Cloud, Hybrid, and OnPremise Architectures. In addition to modern cloud architectures, our
SaaSsolutioncanalsomanagehybridcloudandheterogeneousarchitectures,includingonpremisesoftware.Usersare
abletorapidlydeployouragentsgloballyacrosstheirITenvironment.
BuiltonCloudArchitecture.WedesignedourproductsbasedonacloudarchitectureandaSaaSdeliverymodel.Weare
able to provide frequent updates to our software enabling us to continuously improve it to reflect technology
developments.Thisdeliversawiderangeoftechnologyandfinancialbenefitsoveronpremisearchitectures.
ExtensiblePlatform.We provide APIs and SDKs for customers, partners, and developers to easily build applications
whichintegratewithandembedourproductfunctionalityintootherapplications.Thereareover475pluginsdeveloped
internallyorbythirdpartiesmakingiteveneasiertoembedourproductsintospecificusecasesincludingAmazonWeb
Services,MicrosoftAzure,MongoDB,and
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OraclemySQL.Thisenablesouruserstotailorourproductstospecificusecasesandindustriesbeyondtheprogramming
languages,frameworks,andoperatingsystemsthatwesupport.
EnterpriseScalabilityandSecurity.Ourproductsaredesignedtobescalableandsecure.AsofSeptember30,2014,we
collected, stored, and analyzed over 690 billion data points per day. By default, our software data transmissions are
encryptedintransitandstoredinoursecuretier3SSAE16certifieddatacenter.WealsoperformanannualSOC2type2
audit. In addition, our management tools provide administrators with highly granular security controls including user
provisioning,access,andprivileges.
BenefitsofOurSolution
BusinessUsers.Businessuserscanuseourproductstoobtaindeeprealtimeanalyticsabouttheirbusiness.Theyareable
toaccessandanalyzefarmoreunstructuredsoftwaredatathantraditionalonpremiseanalyticssolutionsthatrelyupon
structureddatafromtransactionalapplications.Businessusersarealsoabletoeasilyconfiguretheirgraphicaldashboards
of key performance indicators, or quickly make queries using NRQL, without needing to wait for a data scientist to
designanewreportorprogramanewquery.
Technology Users. Technology users can easily deploy our products across their IT architectures to monitor overall
health and performance. They can more rapidly identify problems, isolate root causes, and address problems. Our
analyticstoolsalsoenablethemtopredictandpreventfutureissues.
Software Developers. Software developers can use our products for a broad range of traditional and emerging
development languages and frameworks. With our products, they can better monitor software performance to
continuouslyimproveitaswellasfixandpreventproblems.Developerscanbuildbettersoftware,builditfaster,and
keepitrunningoptimallyforenduserexperiences.
LimitationsofExistingSolutions
A number of legacy and emerging companies provide products to collect and analyze software data for business and
technologymanagers.However,thesesufferfromarangeoflimitationsincluding:
undergoupfrontandongoingusertrainingtolearn.Thesolutionsareoftencustomizedandprovisionedoverthecourse
ofseveralmonthsthroughthecentralITfunction.Anychangestothecollection,storage,oranalysisofdataneedstogo
throughtheITgrouporspecializeddatascientists.
OnPremise Architectures. Solutions built for legacy, onpremise architectures are highly customized, expensive to
purchase and operate, and require frequent upgrades and maintenance. In addition, they are fundamentally unable to
adapttocloudarchitecturesandSaaSmodels.Theytypicallyrelyonsystemstocollect,store,andanalyzedatawhichare
highlyspecifictotheparticularcustomerssoftwareapplicationsandenvironmentatapointintime.Forexample,the
agentsforcollectingdataneedtobehighlycustomizedandtypicallyinvolvesignificantlatencytosenddata.
HighTotalCostofOwnership.Themajorityofexistingproductshasbeendeployedonpremise,requiringsubstantial
upfront investments in IT infrastructure and extensive implementation, customization, maintenance, and training
costs.Organizationsoftenchoosenottodeploytheseproducts,orpostponeimplementationsofupgradedversions,due
toconcernsrelatingtothesubstantialcostsinvolved.
DifficultandTimeConsuming. Existing solutions typically require developers and technology and business users to
SupportLimitedtoLegacySoftware.Developersusingnewlanguagesandframeworkstobuildmodernsoftwareneed
solutions which understand them. Most legacy solutions were built to understand COBOL, C++, Java, and .NET.
However, modern languages and frameworks such as Ruby, PHP, Python, and Node.js represent a large and growing
proportionofapplicationsandwebsites.
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technologyusersittingattheirdesktop.Todaysusersincreasinglyexpectandneedtobeabletodotheirjobsoutside
their office, wherever and whenever they want, on a variety of mobile devices. In addition, both legacy applications
runningonmobiledevicesandnativemobileapplicationsinvolveddifferentarchitecturesandareverydifficulttobe
managedbysystemsdesignedtoworkonpremise.
LackofBigDataandAnalytics.Existingsolutionstypicallyusestructuredtransactionaldata,representingasmalland
shrinkingportionofsoftwaredata.Thissignificantlylimitedthetypes,timeliness,andflexibilityofanalysestheycould
support.Bigdataanalyticsaretypicallycostprohibitiveforallbutthelargestorganizations.
Lack of Support for Mobile Devices and Applications. Legacy solutions were typically designed for business or
Fragmented Point Solutions. Existing solutions were built for a wide range of specific use cases which had to be
business or technology critical, such as traditional application performance management, CRM or ERP analytics, or
clickstreamanalysis.Theseproductsaddressedlimitedusecasesandwerenotintegratedwithotherapplications,forcing
businessestoselectandintegratesolutionsfromavarietyofvendors,resultinginsiloedanalytics.
OurMarketOpportunity
Fortechnologyusers,webelieveGartnerscategoryofITOperationsManagement,orITOM,capturesasubsetofourmarket
opportunity.AccordingtoGartner,Inc.,aglobalmarketresearchfirm,theworldwideITOMmarketwas$19.1billionin2013andis
projectedtogrowto$27.9billionin2018.Webelievethisgenerallycapturesthepurchasesbylargerenterprisesofexistinglegacy
solutions,butdoesnotincludetheopportunitywithsmallerenterprisesthatcannotaffordsuchsolutionsorpotentialdeployments
bylargerenterprisesmadefeasiblebyemergingsolutionslikeours.
Webelieveourmarketopportunitywithbusinessusersislargelyuntapped.AccordingtoGartner,theworldwidemarketfor
businessintelligencesoftwarewas$14.4billionin2013andisprojectedtogrowto$21.9billionin2018.However,webelievethe
majorityofourmarketopportunitywithbusinessusersexistswithusecasesforwhichaviablesolutionhasnotbeenhistorically
available.
OurGrowthStrategy
believe we have a competitive advantage at each of the three Software Analytics layers collecting, storing, and
analyzingsoftwaredataandwillcontinuetoinvestinthatarchitecture.Wealsobelieveourcurrentsevenproductsare
uniqueintheirindividualcapabilitiesaswellastheirlevelofintegration.Weplantocontinuetoimproveourexisting
productsaswellasdevelopnewproducts.
GrowOurBaseofLargeandSmallCustomers.Webelievethatthenumberofpaidbusinessaccountsrepresentsasmall
fraction of our potential customer base. We plan to grow our base of paid business accounts from larger businesses
throughourdirectsalesorganization,whichwillfocusonleveragingexistinguserswithinthepotentialcustomer.We
also plan to grow our base of paid business accounts from smaller businesses by continuing our marketing and sales
programs,partnerships,andgrassrootsadoption.
Deepen Existing Customer Relationships. As of September 30, 2014, we had 10,590 paid business accounts that
subscribedtoatleastoneofourapplicationsforatleastoneuser.Wehaveobservedthatouraccountstypicallymakean
initial purchase for a specific and immediate need, such as website or application performance problems, and then
subsequentlyexpandtoadditionalusersorapplications.Wemakeitsimpleforpotentialandexistingaccountstotry
newapplications.
Maintain Our Technology Leadership. We will continue to invest in building the Software Analytics category. We
IncreaseOurFootprint.AsofSeptember30,2014,wecollected,stored,andanalyzedover690billiondatapointsdaily
acrossmorethan4millionapplicationinstancesandmonitoreduserexperiencesonoveramillionwebsitedomainsand
fromoveronebillionmobileapplicationinstalls.AsofSeptember30,2014,wehadover250,000users.Webelievethis
representsthelargestfootprintof
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deployedagentsofanytechnologyvendor.Wecurrentlyofferandplantocontinueofferingfreeversionsofourproducts
socustomerscontinuetospreadourfootprintrapidlyandglobally.Webelievethislargeglobalfootprintandvisibility
intomuchoftheworldsapplicationandITinfrastructureprovidesusanadvantageinunderstandingtechnologytrends
andissueswhichweseektocontinuetobuildupon.
integratewithotherapplicationsandservices.PlatformproductsandmarketplacessuchasourPluginCentralprogram
enableourfunctionalitytoberapidlyextendedtousecases,customers,geographies,andarchitectureswithouttheneed
forincrementalinvestmentbyus.OurNewRelicConnectprogramallowsuserstoleverageourapplicationperformance
andeventdataandcombineitwithinformationfromothersources.Wealsointendtoreleasefeaturesforoursolutions
thatenableuserstocreateandpublishcustomizeddataappsandmakethemavailabletonontechnicalbusinessusers.
ExpandOurPlatformandEcosystem.WeintendtoexpandourofferingofAPIsandSDKsthatallowspartnerstoeasily
Extend Our International Footprint. Approximately 31% of our revenue was generated outside the United States in
fiscal2014.WecurrentlyofferourproductsinEMEAandAPACandourrevenuefromthoseregionsconstituted17%
and7%,respectively,ofourrevenueforthefiscalyearendedMarch31,2014,andwehad12employeeslocatedoutside
oftheUnitedStatesasofMarch31,2014.Webelievethereisfurtheropportunitytoincreaseourinternationalbusiness
overallaswellasaproportionofourrevenue.Weareincreasinglyinvestinginourinternationaloperationsandintendto
investinfurtherexpandingourfootprintininternationalmarkets.
OurTechnology
IntelligentSoftwareAgents
We have developed a library of purposebuilt intelligent software agents that supports a wide variety of programming
languages, mobile platforms, and operating systems. Our agent software code is deployed easily and quickly onto application
servers, browsers, mobile devices, and operating systems. We currently provide intelligent software agents that support the
following:
ProgrammingLanguages
.NET
Java
JavaScript
Node.js
PHP
Python
Ruby
MobilePlatforms
Android
iOS
OperatingSystems
JoyentSmartOS
Linux
Windows
Once integrated, our agents quickly recognize their IT environment and configure themselves automatically. They then
collect performance and event data that is defined by the customer and report it each minute, on average, to our cloudbased
databaseforstorageandanalysis.
BigDataDatabaseandAnalytics
Ourcloudbased,bigdatadatabasecanstoreandpreparemassiveamountsofbothunstructuredandstructureddataforrapid
analysisandflexiblequerying.Oursuiteofproductswasinitiallysupportedbyadatabaseoptimizedforstructuredmachinedata
and was built with a structure to support common analytics such as our application performance management and Server
Monitoringproducts.InMarch2014,weintroducedourNewRelicInsightsapplication,whichutilizesaflexibleandschemaless
databasearchitectureoptimizedforunstructureddata.Thisnewdatabaseallowsseamlessstorageofnewdatatypesincludingdata
collected by agents and through our APIs, does not require indexing, and runs in a supercluster with massive amounts of
computingresourcestoquerybillionsofeventsinrealtime.
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We provide a single pane of glass view into all of our applications with diagnostic capabilities including transaction
details,databasedetails,errordetails,topologymaps,codedeploymentreports,andservicelevelreports.Ouruserinterfaceswere
builtinternallyusingmodernwebandmobiletechnologies,includingHTML5andJavaScripttodeliverbeautiful,interactive,and
actionabledatavisualizationsuchaschartsandgraphsthatcontinuouslyrefreshtoproviderealtimevisibility.Usersinteractwith
NewRelicInsightsusingNRQL,whichisamodifiedversionofSQL,alanguagewithwhichdevelopersandmanybusinessanalysts
are already familiar. Users also have the choice of electing to integrate data collected and stored by us into other analytics
applicationsanduserinterfacesoftheirchoice.
OurProducts
We offer four tiers of our products to our customers. Our Lite version is offered at no charge to users and has basic
functionality,24hourretentionofdata,andcommunitysupport.OurStandardandProversionsarepaidversionsthatincludemore
functionality, storage, and support. Our Enterprise version is also a paid version and includes the highest level of product
functionality, our highest levels of support, a dedicated technical account manager, and defined service levels. Our suite of
productsiscomprisedofthefollowing:
NewRelicAPM
New Relic APM provides visibility into the performance and usage of serverbased applications, collecting data such as
responsetime,transactionthroughput,errorrates,toptransactions,andusersatisfaction.OtherelementsofNewRelicAPMinclude:
Xray Sessions, Cross Application Tracing, Thread Profiling, Database Diagnostics, and Slow SQL Traces. These give
usersvisibilityintotheunderlyingsourcecodewhichcansignificantlyreducethetimeneededtoidentifyandfixthe
rootcauseofproblemsbyhelpinguserspinpointtheexactlinesofcodecausingtheproblem.
Application Speed Index. Our Application Speed Index, or ASI, is our proprietary benchmarking report comparing
application performance with those of competitors. The ASI leverages the data stored in our cloud database to
anonymouslycompareapplicationperformance.
ReportingandAlerting.NewRelicAPMprovidesreportingandalertingfunctionalitythroughstandardconfigurations
as well as customerdefined policy configurations. These alerts include application performance degradation, falling
traffic,anddecliningusersatisfactionmetrics.Alertscanbedeliveredthroughavarietyofchannelsincludingemail,text
messages, push notifications, and social channels and can be integrated with bug tracking systems and group chat
applications.
ComprehensiveDiagnostics.NewRelicAPMprovidesacomprehensivesetoffeatures,includingTransactionTracing,
Business Transaction Monitoring. Within New Relic APM, our Key Transactions feature enables business users to
collectandanalyzedatageneratedbybusinesstransactionsseparatelyfromdataaboutapplicationperformance.
NewRelicMobile
NewRelicMobileprovidescodelevelvisibilityintotheperformanceandhealthofmobileapplicationsrunningontheiOS
andAndroidmobileoperatingsystems.OtherelementsofNewRelicMobileinclude:
EndtoEndVisibility.WhencombinedwithNewRelicAPM,NewRelicMobileprovidesendtoendvisibilityintothe
ITinfrastructureaffectingmobileapplicationperformance.Nativemobileapplicationsdependoncoderunningonthe
deviceandoncommunicationswithbackendservices,suchasmobileapplicationservers,bothinternalandthirdparty.
New Relic Mobile provides codelevel diagnostics for native app code running on the mobile device and enables
performance,throughput,crashreporting,anderroranalysisfortheinteractionsbetweenthemobileapplicationandthe
supportingbackendservices.
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MobileDeviceMetrics.NewRelicMobileprovidesdetailonusageofmobiledeviceresources,includingCPU,memory,
and network bandwidth from actual user devices. This visibility helps developers understand how their applications
affectstheircustomersdevices,andhowtooptimizethem.
UserInteractions.TheUserInteractionsfeatureprovidesdetailedbreakdownsoftimespentinthecoderunningonthe
device,includingviewloading,methodcalls,anddatastoreactivity.Mobileapplicationdevelopersleveragethisfeature
topinpointproblematiccodeandresolveproblems.
NewRelicServers
New Relic Servers, which is currently included with New Relic APM, provides visibility into server and operating system
performance for physical and virtual servers, including servers that are deployed onpremise or in the cloud, by analyzing key
metrics which include CPU usage, physical memory, network activity, and disk I/O utilization and capacity. Other elements of
NewRelicServersinclude:
360PerformanceMonitoring.IncombinationwithNewRelicAPM,NewRelicServersprovidesendtoendvisibility
intohowserverresourcesandutilizationlevelsimpacttheapplicationsbeingrun.
CrossFunctional Collaboration. New Relic Servers enables greater crossfunctional cooperation among software
developers,IToperations,qualityassurance,andothertypicalITdepartmentswithincompanies.Bypresentingserver
performance with application performance in a shared user interface, New Relic Servers enables these departments to
collaboratebetterinidentifyingandaddressingunderlyingperformanceissues.
NewRelicBrowser
NewRelicBrowser,whichiscurrentlyincludedwithNewRelicAPMandisavailableasastandaloneproduct,monitorsthe
pageviewexperiencesofactualendusersfordesktopandmobilebrowserbasedapplicationsandprovidescodeleveldiagnostics
forJavaScriptcoderunningdirectlyinthebrowser.OtherelementsofNewRelicBrowserinclude:
on how time is spent during each page load, including network time, request queuing, document object model
processing, and page rendering. Customers utilize this data to improve the user experience by implementing caching
techniques,reducingassetsizes,andleveragingcontentdeliverynetworkservices.
JavaScript Code Diagnostics. Web applications increasingly embed application logic into JavaScript code running
withintheusersbrowsertobuildricher,browserbasedapplications.NewRelicBrowserprovidesdeveloperswithcode
levelvisibilityintotheperformanceofJavaScriptcodewithinusersbrowsers.
EndUserExperienceMonitoring.NewRelicBrowsermonitorsthepageloadtimeforuserinteractions,providingdata
BrowserComparison.Developerscancomparehowtheirsoftwareperformsonvariousdesktopandmobilebrowsersand
versions,inordertoidentifybrowserspecificproblems.
GeographicPerformance.NewRelicBrowsercanautomaticallyidentify,track,andanalyzethegeographiclocationof
eachpageviewtoprovideperformanceanalyticsbygeography,includingresponsetime,usersatisfaction,application
adoption,andusagetrends.
NewRelicSynthetics
New Relic Synthetics simulates usage and reproduces businesscritical functionality that enables our users to test their
softwarethroughouttheentiredevelopmentlifecycle.Usersbenefitfromenhancedvisibility,availability,andreliabilityoftheir
softwarewithoutdependingoninteractionsfromrealusers.OtherelementsofNewRelicSyntheticsinclude:
StandardsBased.NewRelicSyntheticsusesopenstandards,includingtheopensourcescriptinglanguageSelenium,to
makeiteasytoquicklygetstartedandautomatetests.
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Deep Integration. New Relic Synthetics is integrated into our product suite, including New Relic APM, New Relic
Browser,andNewRelicInsights.
GlobalTestLocations.Userscanselectwhatregiontheywanttheirtestscriptstorunfrom,givingthemvisibilityinto
theglobalperformanceoftheirwebapplication.
PreemptiveVisibility.Userscanresolveissueswithbusinesscriticaltransactionsbeforeendusersexperiencethem.
NewRelicPlatform
The New Relic Platform, which is currently included with New Relic APM, provides customers, partners, and thirdparty
developers with APIs and SDKs to build plugins that extend our functionality and data into almost any application or IT
environment.Forexample,whileourfocusisonsupportingmodernprogramminglanguagesandframeworkswithouragents,some
customersanddevelopershavebuiltpluginstoaddresscustomorlegacyonpremiseapplicationsandarchitectures.Inaddition,
pluginscanalsoextendthefunctionalityanddatafromotherapplicationsandsourcesintoourdatabases.TheNewRelicPlugin
Centralmarketplaceofferseasilydownloadablepluginstousers.Otherelementsinclude:
Extensibility. We provide APIs and SDKs to allow developers to easily and quickly integrate and embed the
functionalityofourproductsanddatawithotherapplicationsanddatasources.Wealsoofferaclickanddragdashboard
creationtoolthatallowsuserstocustomizetheiruserexperience.
Plugins.PluginshavebeenbuilttomonitorITarchitectureelementsincludingdatabases,networks,queuingsystems,
and communication tools, enabling customers to monitor their entire application stack. In general, data from other
sourcesthanouragentsispresentedinthesamedashboardalongsidethemonitoringdatafromouragents.Manyplugins
arebuiltandusedwithintheworkday.Pluginscanbekeptproprietaryorsharedwiththebroaderpubliccommunity.As
ofSeptember30,2014,developershadbuiltover475pluginsinourmarketplace.
NewRelicInsights
NewRelicInsightsenablestechnologyandbusinessuserstoperformrealtimeanalysisinordertomakefaster,datadriven
decisionsabouttheirorganizations.TheNewRelicInsightsdatabasecollectsandstorestrillionsofdatapoints.Otherelementsof
NewRelicInsightsinclude:
NewRelicQueryLanguage.WedevelopedNRQLasaSQLlikequerylanguageoptimizedforrealtimeanalytics.Users
withexperiencewithSQLareabletouseNRQLimmediately.Thelanguageisalsoeasytolearnfornontechnicalusers
anduserswithnoSQLexperience.NRQLhasautocompletecapabilitiesthatassistusersbyprovidingpropersyntaxas
theytype,suggestingbuiltinanalyticsfunctions,andcanlisttheattributesandeventtypesavailableforquerying.
IterativeBusinessIntelligenceandAnalytics.NewRelicInsightsisbuiltonaproprietaryeventdatabasethatrunsina
cloudhosted, highly distributed supercluster. The database was built to query billions of data points in less than a
second,enablingadhocanalyticsofbusinessdatainrealtime.
DataVisualizationsandDashboards.NewRelicInsightsproducesintuitivedatavisualizationswitheveryquery,with
prebuiltchartsandgraphstomaketheanalysiseasiertounderstandandshare.Dashboardsautomaticallyupdateand
refreshinrealtimebycontinuouslyexecutingNRQLqueries.
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OurCustomers
As of September 30, 2014, we had over 250,000 users and we had 10,590 paid business accounts worldwide. We define a
customer as a single organization that purchases our products and services. A single customer may have multiple paid business
accountsforseparatedivisions,segments,orsubsidiaries.Eachoftheseistreatedasaseparatepaidbusinessaccount.Thefollowing
isalistofrepresentativecustomersasofSeptember30,2014byindustrysegment.
BusinessSoftwareandServices
OnDeck
Optimizely
Zendesk
HealthandFitness
Phreesia
PracticeFusion
Wellcentive
Mobile
MyFitnessPal
Tango
Tapjoy
eCommerce
BigCommerce
SmugMug
UrbanOutfitters
Internet
Airbnb
Answers.com
Twitter
Technology
DNNSoftware
GitHub
Rackspace
GamingandEntertainment
GREEInternational,Inc.
IGNEntertainment,Inc.
Rd.io
Media
CondNast
DowJones
NPR
TravelandRealEstate
CarnivalCruiseLine
HotelTonight
realestate.com.au
CustomerStudies
Airbnb
TheSituation
Foundedin2008,Airbnbisarapidlygrowingcommunitydrivenhospitalitycompanywherepeoplecanlist,discover,and
book unique spaces around the world through mobile devices or web applications. As of September 2014, Airbnb had 800,000
listingsin34,000citieslocatedinover190countries.Airbnbrequiredanapplicationperformancemonitoringsolutiontoensureits
webandmobileusersaroundtheglobecouldeasilyaccessandbookspaceatanytime.
TheSolution
Airbnb was an early customer and deployed our Ruby agent in 2009. Since then, Airbnb has expanded its usage of our
productstoincludetheJavaandNode.jsagents,NewRelicServer,NewRelicBrowser,NewRelicMobile,andplatformplugins.In
2013,theymovedtoasitelicenseencompassingtheusageofallofourproducts.WemonitorAirbnbstechnologyinfrastructure
includingservers,multiplehightrafficapplications,andmillionsofmobileapplicationuserseachmonthtoquicklyidentifyand
resolveperformanceproblems.
BleacherReport
TheSituation
Launchedin2007,BleacherReport,nowadivisionofTurnerBroadcasting,deliversdigitalmediacontentthroughweband
mobile applications to sports fans around the world. Major sports events, including the World Cup, the Super Bowl, the World
Series,MarchMadness,andtheNFLDraft,inadditiontounexpectedsportsrelatedevents,resultinsignificanttrafficsurgesasfans
bombardBleacherReportlookingforuptotheminuteinformationanddialogue.Withahighlyengagedaudienceof80million
visitorsacrossallplatforms,thesesurgescangrowquickly.BleacherReportsminimumuptimegoalfortheirapplicationsis99.9%.
Initsearliestdays,BleacherReportusedlogsandevenconsideredwritingtheirownapplicationperformancemanagementtool
internallytominimizedowntimeandmaintaintheperformanceoftheirapplications.
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TheSolution
Oneofourearlycustomers,BleacherReportinstalledourRubyagentin2008andhassinceusedNewRelictosolvesoftware
problemsthataffectcustomerexperiences.Mostrecently,theyhavestartedusingNewRelicBrowserandbegunevaluatingNew
RelicInsights.ResultsfromusingNewRelicinclude:
Continuousperformancemonitoringandmanagement
PrioritizationofdevelopmenteffortsbasedonAPManalytics
ConsistentabilitytomeetorexceedSLAgoalsduringpredictedandspontaneoustrafficspikes
Abilitytotrackthroughputpeakingover500,000requestsperminuteandmonitorresponsetimesandperformanceto
proactivelyaddressissues
MercadoLibre
TheSituation
MercadoLibre, with over 2,000 employees, is the largest eCommerce platform and marketplace in Latin America. In 2013,
theygenerated$7.3billioningrossmerchandisevolume,up28%overthepreviousyear,andaveragedover18millionlistings
dailyacrossmorethan3,000differentproductcategorieswith100millionusers.Theyalsoprocessedapproximately$2.5billionin
payments with Mercado Pago, boasted over 100,000 stores in MercadoShops, and had their mobile application downloaded
10milliontimes.
In 2011, MercadoLibre outgrew its monolithic systems and decentralized them to a reengineered, serviceoriented
architecturewithanopenAPIbasedplatform,comprisedofsmallindependentapplicationssupportingtheirfourbusinessunits,
including the core business, payments, advertising, and stores. MercadoLibre applications are built by their developers and are
writteninRuby,Java,PHP,Python,andNode.js.
TheSolution
Tosupportthereengineeringeffort,MercadoLibreselectedourNewRelicAPM,NewRelicServer,NewRelicBrowser,New
RelicMobile,andNewRelicPlatform.MercadoLibrehasapproximately300peoplelookingatapplicationproblemsandusesour
products to detect issues with the HTTP protocol, their primary monitoring metric. MercadoLibre has also standardized on the
usage of our products, requiring the installation of New Relic APM on all development and production systems. Using our
products,MercadoLibre:
Gainedtechnicalagilityacrossitsecosystemandoperations,andaccelerateddevelopmentanddeploymentcyclestimes
Addedhundredsofnewapplicationinstanceseachmonth,whilestillmeetingperformancegoals
Hastheabilitytomonitorcomplexapplicationsthathandle3.2millionrequestspersecond
DucksboardAcquisition
In October 2014, we acquired Ducksboard, a Barcelonabased softwareasaservice provider of realtime dashboards for
trackingbusinessmetricsfromabroadsetofapplicationsources.Ducksboardbringstogetherandvisualizesfromawiderangeof
applicationsandcustomerdatasources,suchasSalesforce.com,Zendesk,andTwitter.Ducksboardenablesuserstovisualizedata
frommultipleexternalapplicationsalongsidetheirinternalmetrics,andtocreatedashboardsthroughAPIcalls.Ducksboardisused
byhundredsofbusinessesanditscustomershavecreatedtensofthousandsofdashboards.WeintendtointegrateDucksboardinto
ourproductsuite.
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CultureandEmployees
Weendeavortohire,develop,andinspireouremployeessotheycandothebestworkoftheircareersanddevelopsoftware
thatenablesorganizationstogainvisibilityintotheirdata.Webelievepeopledotheirgreatestworkwhentheyareinspired.We
devote management and organizational focus and resources to ensure that our culture and brand remain highly attractive to
potential and existing employees. We operate in a highly competitive hiring environment for software engineering talent. We
believethatourproductfirstcultureandvisiontoempowerdevelopersaroundtheworldtomakebettersoftwareandforsoftware
datatoenablebetterdecisionsareattractivetodevelopers.
Wehavethreecorevaluesthatwereinforcewithouremployees:
CustomerTrustandSuccess
GrowthExcelsior!
TeamBeBold,YoureNotAlone
AsofSeptember30,2014,wehad534employees,includingtemporaryemployees.Wealsoengageconsultants.Noneofour
employeesiscoveredbycollectivebargainingagreementsandweconsiderourrelationswithouremployeestobegood.
Operations
WehostourapplicationsandserveallourcustomersfromadatacenterlocatedinChicago,Illinois.Weutilizethirdpartiesto
provide our data center infrastructure and manage the hardware on which our products operate. We utilize industry standard
hardwareinredundantconfigurationstominimizeserviceinterruptions.Wemaintainaformalandcomprehensivesecurityprogram
designedtoensurethesecurityandintegrityofourdata,protectagainstsecuritythreatsordatabreaches,andpreventunauthorized
accesstothedataofourcustomers.Ourtechnologyusesmultitenantarchitecture,enablingallourcustomerstosharethesame
versionofourproductswhilesecurelypartitioningtheirdata.
Our research and development organization is responsible for the design, development, and testing of all aspects of our
SoftwareAnalyticsplatformandsuiteofproducts.Weinvestheavilyintheseeffortstocontinuouslyimprove,innovate,andadd
newfeaturestooursolutions.
Wedeploynewfeatures,functionality,andtechnologiesthroughdailyandweeklysoftwarereleasesorupdatesinorderto
minimizedisruptionandprovideforconstantimprovement.Ourproductmanagersregularlyengagewithcustomers,partners,and
industryanalysts,aswellasotherstakeholders,infunctionssuchassales,customersuccess,marketing,andbusinessdevelopment
tounderstandcustomerneedsaswellasgeneraltrendsinourindustry.Onceproductimprovementsareidentified,thedevelopment
organizationworkscloselytogethertodesign,develop,test,andlaunchasolution.
The majority of our research and development team is based in our Portland, Oregon office, as well as our San Francisco,
Californiaoffice.Tofosterrapidinnovation,ourteamisfurtherapportionedintosmaller,agiledevelopmentteams.
As of September 30, 2014, we had 155 employees in our research and development organization. Our research and
developmentexpenseswere$4.3million,$8.6million,and$16.5millionforthefiscalyearsendedMarch31,2012,2013,and
2014,respectively,and$7.7millionand$10.2millionforthesixmonthsendedSeptember30,2013and2014,respectively.
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SalesandMarketing
Oursalesandmarketingorganizationsworktogethercloselytodrivemarketawareness,createandmanageuserandcustomer
leads,providequalifiedleadstooursalespipeline,andbuildcustomerrelationshipstodriverevenuegrowth.
Sales
Wesellourproductstobusinessesofallsizeslargelythroughourdirectsalesorganization.Ourdirectsalesorganizationis
comprisedofinsidesalesandfieldsalespersonnelorganizedbysizeofcustomerandgeographyandfocusedongrowingaccounts
andusageforprovideabroadersetofsolutions.
Oursalesorganizationhasseparateteamsfocusedonsmallercompanies,midmarketorganizations,andlargeenterprises.Our
specific sales strategy is based on the size of account and the target user at an organizationsoftware developers, business or
productmanagers,orITmanagers.
Marketing
Ourmarketingstrategytargetssoftwaredevelopers,ITleaders,andtechnologyexecutivesacrossmanyindustriesandregions.
Additionally,ourevents,demandgeneration,customerprograms,corporatecommunications,andproductmarketingteamsfocus
on building brand, engagement, and demand with our target markets. We utilize both online and offline marketing initiatives,
includingsearchengineandemailmarketing,onlinebannerandvideoadvertising,blogs,corporatecommunications,whitepapers,
casestudies,userevents,andwebinars.Webelieveaneffectivemethodtomarketoursuiteofproductsisforuserstoactivelyuse
and explore its capabilities. A central focus of the marketing team is to drive and encourage free trials of one or more of our
productsandthesuccessfulconversionoftrialstopaidsubscriptions.Weoffer14dayand30dayfreetrialsofourpaidproducts.
AsofSeptember30,2014,wehad242employeesinoursalesandmarketingorganization.
CustomerSupport
Ourproductsaredesignedtominimizetheneedforcustomersupport,asuserscaneasilydownload,install,anddeployour
software agents without needing support. However, as we increase our customer account base with larger enterprises, these
customerstypicallyexpectandrequiremoresupportandaccountability.Wecurrentlyoffer,andareexpanding,arangeofcustomer
supportoptionswithmultiplelevelsofsupport.Theseincludefreecommunitysupport,emailsupport,andphonesupport,uptoour
enterprise customer support organization that provides dedicated customer success representatives, onsite support, with global
capabilitiesandisavailable24x7x365.
PartnershipsandStrategicRelationships
Wehavebuiltmarketingrelationshipswithanumberoftechnologycompaniestohelppromoteandgrowouruserbaseand
footprint.WealsohavedevelopedpartnershipswithseveralcloudprovidersincludingAmazonWebServices,MicrosoftAzure,
Rackspace, and others where we collaborate to ensure our products work well on applications running on their clouds. These
providersofferaccesstoourproductsthroughlinksontheirwebsites,referdevelopersandotherpotentialuserstous,andexpand
ourmarketingreach.WealsohaveapartnershipwithSalesforce.comwheredevelopersusingtheSalesforce1developmentplatform
caneasilydeployourproductsintotheirapplications.Wehavebeenabletoexposeover50,000userstoourproducts,expanding
our footprint and adoption by the broader development community, in particular with the Heroku development community of
Salesforce.
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Competition
We operate in a highly competitive industry that is characterized by constant change and innovation. Changes in the
applicationsandtheprograminglanguagesusedtodevelopapplications,devices,operatingsystems,andtechnologylandscape
resultinevolvingcustomerrequirements.
Ourcompetitorsfallintofourprimarycategories:
diversifiedtechnologycompaniessuchasHP,IBM,Microsoft,andOracle
largeenterprisesoftwareandservicecompaniessuchasBMCSoftware,CA,Inc.,Compuware,RiverbedTechnology,and
SAP
softwareperformanceproviderssuchasAppDynamicsandSplunkand
companiesofferinganalyticsproductscompetingwithourNewRelicInsightsproduct,includingGoogleandWebtrends.
Theprincipalcompetitivefactorsinourmarketinclude:
productfeatures,architecturereliability,performance,andeffectiveness
productextensibilityandabilitytointegratewithothertechnologyinfrastructures
softwareanalyticsexpertise:
easeofuseofproducts
totalcostofownership
adherencetoindustrystandardsandcertifications
strengthofsalesandmarketingefforts
brandawarenessandreputationand
focusoncustomersuccess.
Webelievewegenerallycompetefavorablywithourcompetitorsonthebasisofthesefactors.Manyofourcompetitorshave
substantiallygreaterfinancial,technical,andotherresources,greaternamerecognition,largersalesandmarketingbudgets,broader
distribution,andlargerandmorematureintellectualpropertyportfolios.
IntellectualProperty
Werelyonfederal,state,commonlaw,andinternationalrights,aswellascontractualrestrictions,toprotectourintellectual
property. We control access to our proprietary technology and algorithms by entering into confidentiality and invention
assignmentagreementswithouremployeesandcontractors,andconfidentialityagreementswiththirdparties.
Inadditiontothesecontractualarrangements,wealsorelyonacombinationoftradesecrets,copyrights,trademarks,service
marks,anddomainnamestoprotectourintellectualproperty.AsofSeptember30,2014,wehadonepatentapplicationpendingin
theUnitedStatesandtwotrademarkregistrationsforNewRelic.
Circumstancesoutsideourcontrolcouldposeathreattoourintellectualpropertyrights.Forexample,effectiveintellectual
propertyprotectionmaynotbeavailableintheUnitedStatesorothercountriesinwhichweoperate.Also,theeffortswehavetaken
toprotectourproprietaryrightsmaynotbesufficientoreffective.Anysignificantimpairmentofourintellectualpropertyrights
couldharmourbusinessorourabilitytocompete.Also,protectingourintellectualpropertyrightsiscostlyandtimeconsuming.
Any unauthorized disclosure or use of our intellectual property could make it more expensive to do business and harm our
operatingresults.
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CompaniesinInternetrelatedindustriesmayownlargenumbersofpatents,copyrights,andtrademarksandmayfrequently
requestlicenseagreements,threatenlitigation,orfilesuitagainstusbasedonallegationsofinfringementorotherviolationsof
intellectual property rights. We are currently subject to, and expect to face in the future, allegations that we have infringed the
trademarks,copyrights,patents,andotherintellectualpropertyrightsofthirdparties,includingourcompetitorsandnonpracticing
entities.Aswefaceincreasingcompetitionandasourbusinessgrows,wewilllikelyfacemoreclaimsofinfringement.
Facilities
Our corporate headquarters, which includes sales, marketing, business operations, and executive offices, is located in San
Francisco,Californiaandconsistsofapproximately73,591squarefeetofspaceunderaleasethatexpiresinJuly2020.Inaddition
toourheadquarters,weleasespaceinPortland,Oregonasourprimarydevelopmentofficeunderaleasethatisexpectedtoexpirein
2023.WealsoleasespaceforadditionalresearchanddevelopmentinSeattle,Washington.WeleasespaceinDublin,Irelandfor
ourEuropeanheadquarters,whichincludessalesandbusinessoperations.
Weleaseallofourfacilitiesanddonotownanyrealproperty.Weintendtoprocureadditionalspaceasweaddemployees
andexpandgeographically.Webelieveourfacilitiesareadequateandsuitableforourcurrentneedsandthat,shoulditbeneeded,
suitableadditionaloralternativespacewillbeavailabletoaccommodateanysuchexpansionofouroperations.
GeographicInformation
Foradescriptionofourrevenueandlonglivedassetsbygeographiclocation,seenote14ofthenotestoourconsolidated
financialstatementsincludedelsewhereinthisprospectus.
LegalProceedings
On November 5, 2012, CA, Inc. filed an action against us in the U.S. District Court for the Eastern District of New York
alleging that we willfully infringe certain of its U.S. patents. CA, Inc. asserts that a portion of our application performance
management software the .NET and Java agents infringes certain claims of those patents. Among other things, CA, Inc. has
soughtpermanentinjunctivereliefagainstusanddamagesinanamounttobedeterminedattrial.Discoveryiscompleteinthe
case,andpartialdispositivemotionshavebeenservedandarguedbybothpartiesalthoughthecourthasnotyetruledonthose
motions.ThecasewasreassignedtoanewjudgeinMarch2014andatrialdateisnotcurrentlyset.
Weintendtocontinuetocontestthislawsuitvigorously.Ifthismatterhasanadverseoutcome,itmayhaveanimpactonour
financial position, results from operations, or cash flows. Should CA, Inc. prevail on its claims, we could be required to pay
substantial damages for past sales of such products, enjoined from using and selling such products if a license or other right to
continue selling our products is not made available to us, and required to pay substantial ongoing royalties and comply with
unfavorabletermsifsuchalicenseismadeavailabletous.Anyoftheseoutcomescouldresultinamaterialadverseeffectonour
business.However,wecannotatthistimepredictthelikelyoutcomeofthisproceedingorestimatetheamountorrangeoflossor
possible loss that may arise from it. Even if we were to prevail, litigation is costly and timeconsuming, and could divert the
attentionofourmanagementandkeypersonnelfromourbusinessoperationsanddissuadepotentialcustomersfrompurchasingour
products,eitherofwhichcouldmateriallyharmourbusiness.
During the course of litigation, we anticipate announcements of the results of hearings and motions, and other interim
developments related to the litigation, which our competitors could try to use to their competitive advantage by creating
uncertaintyamongstourcustomers.Ifsecuritiesanalystsorinvestorsregardtheseannouncementsasnegative,themarketpriceof
ourcommonstockmaydecline.
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Inaddition,fromtimetotime,weareinvolvedinlegalproceedingsandaresubjecttoclaimsarisingintheordinarycourseof
ourbusiness.Althoughtheresultsoflitigationandclaimscannotbepredictedwithcertainty,wecurrentlybelievethatthefinal
outcome of these ordinary course matters will not have a material adverse effect on our business, operating results, financial
condition,orcashflows.Regardlessoftheoutcome,litigationcanhaveanadverseimpactonusbecauseofdefenseandsettlement
costs,diversionofmanagementresources,andotherfactors.
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MANAGEMENT
ExecutiveOfficersandDirectors
ThefollowingtableprovidesinformationregardingourexecutiveofficersanddirectorsasofSeptember30,2014:
Name
Age Position(s)
ExecutiveOfficers
LewisCirne
44 ChiefExecutiveOfficerandDirector
ChrisCook
52 PresidentandChiefOperatingOfficer
JimGochee
44 SeniorVicePresidentofProductStrategyandChiefTechnologyOfficer
HilarieKoplowMcAdams
51 ChiefRevenueOfficer
PatrickMoran
40 ChiefMarketingOfficer
RobinJ.Schulman
41 VicePresident,GeneralCounsel,andSecretary
MarkSachleben
49 ChiefFinancialOfficer
NonemployeeDirectors
PeterL.S.Currie(1)(2)
58 Director
PeterFenton (2)
42 DirectorandChairman
SarahFriar(1)
41 Director
AdamMessinger(3)
42 Director
DanScholnick (1)(3)
36 Director
(1) Memberoftheauditcommittee.
(2) Memberofthecompensationcommittee.
(3) Memberofnominatingandcorporategovernancecommittee.
ExecutiveOfficers
LewisCirnefoundedourcompanyandhasservedasourChiefExecutiveOfficersinceFebruary2008andasamemberofour
boardofdirectorssinceFebruary2008.From1998to2001,Mr.CirnewasfounderandChiefExecutiveOfficer,andfrom2001to
2006, he was Chief Technology Officer, of Wily Technology, Inc. Prior to Wily Technology, Inc., Mr. Cirne held engineering
positionsatAppleInc.andHummingbirdLtd.Mr.CirneholdsanA.B.inComputerSciencefromDartmouthCollege.
WebelievethatMr.Cirneisqualifiedtoserveasamemberofourboardofdirectorsbecauseofhisoperationalandhistorical
expertisegainedfromservingasourChiefExecutiveOfficer.Asoneofourfoundersandthelongestservingmemberofourboard
ofdirectors,wealsovaluehisdeepunderstandingofourbusinessasithasevolvedovertime.
ChrisCookhasservedasourPresidentandChiefOperatingOfficersinceSeptember2011.FromMarch2006toJuly2011,
Mr.CookservedasCorporateSeniorVicePresidentandGeneralManager,ServiceAssuranceatCA,Inc.,asoftwareandservices
company.FromMarch2005toMarch2006,Mr.CookwasSeniorVicePresident,WorldwideFieldOperationsatWilyTechnology,
Inc.,anapplicationperformancecompany.Mr.CookholdsaB.S.inMechanicalEngineeringfromtheUniversityofColoradoat
Boulder.
JimGocheehasservedasourSeniorVicePresidentofProductStrategyandChiefTechnologyOfficersinceJuly2014.From
January 2011 to July 2014, Mr. Gochee served as our Senior Vice President of Product, and he joined us as Vice President of
EngineeringinMay2008.FromOctober2007toApril2008,hewastheLead
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Architect for Introscope at Wily Technology, Inc., an application performance company. Mr. Gochee also served as Chief
Technology Officer of FoodUSA.com, an internetbased trading system for the wholesale food industry, from 1999 to 2000.
Mr.GocheeholdsanA.B.inComputerSciencefromDartmouthCollege.
HilarieKoplowMcAdamshasbeenourChiefRevenueOfficersinceDecember2013.FromApril2013toNovember2013,
Ms.KoplowMcAdamsservedasPresidentofGlobalSalesatsalesforce.com,inc.,asoftwarecompany.Ms.KoplowMcAdamsalso
heldavarietyofotherpositionsatsalesforce.com,includingPresidentoftheCommercialandSMBunitfromFebruary2012to
April2013,ExecutiveVicePresidentofWorldwideSalesfromMay2010toFebruary2012,andExecutiveVicePresidentofGlobal
CorporateSalesfromMay2008toMay2010.From2006to2008,Ms.KoplowMcAdamsservedasVicePresidentofDirectSales
at Intuit Inc., a software company. In addition, Ms. KoplowMcAdams previously served in various senior sales roles at Oracle
Corporation, a computer technology company. Her last position held was Senior Vice President of Oracle Direct. Ms. Koplow
McAdamsholdsaB.A.inSociologyfromMillsCollegeandaMastersinPublicPolicyfromtheUniversityofChicago.
PatrickMoranhasservedasourChiefMarketingOfficersinceOctober2013,andjoinedusasVicePresident,Marketingin
November 2010. Prior to that, Mr. Moran served as Chief Marketing Officer at Fuze, Inc., a unified communications solutions
company,fromFebruary2009toOctober2010,andwasChiefMarketingOfficeratMzinga,Inc.,asocialenterpriseapplication
company, from August 2008 to March 2009. Prior to that, Mr. Moran held marketing leadership positions at WebEx
Communications,Inc.andCiscoSystems,Inc.,anetworkingcompany.Mr.MoranholdsaB.S.inCommunications,Marketingand
AudioEngineeringfromEmersonCollege.
Robin J. Schulman has served as our Vice President, General Counsel, and Secretary since December 2013. Prior to that,
Ms.SchulmanwasLegalCounselforAdobeSystemsIncorporated,acomputersoftwarecompany,fromMay2010toDecember
2013.Ms.SchulmanwasanassociateatFenwick&WestLLP,alawfirm,fromOctober2006toApril2010.Ms.Schulmanholdsa
B.F.A.indramaticwritingfromNewYorkUniversityandaJ.D.fromRutgersSchoolofLaw.
Mark Sachleben has served as our Chief Financial Officer since April 2008. From December 1999 to March 2006,
Mr.SachlebenservedasVicePresidentofFinanceatWilyTechnology,Inc.,anapplicationperformancecompany.Mr.Sachleben
holdsanM.B.A.fromStanfordUniversityandanA.B.inEngineeringScienceandB.S.inFluidandMechanicalEngineeringfrom
DartmouthCollege.
NonemployeeDirectors
PeterL.S.CurriehasservedasamemberofourboardofdirectorssinceMarch2013.SinceApril2004,Mr.Curriehasserved
asPresidentofCurrieCapitalLLC,aprivateinvestmentfirm.Mr.CurriepreviouslyservedasExecutiveVicePresidentandChief
AdministrativeOfficerofNetscapeCommunicationsCorporation,asoftwarecompany,andasExecutiveVicePresidentandChief
FinancialOfficerofMcCawCellularCommunications,Inc.,awirelesscommunicationscompany.Mr.Curriecurrentlyservesonthe
boardsofdirectorsofSchlumbergerLimited,Twitter,Inc.,andanumberofprivatelyheldcompanies.Mr.Curriepreviouslyserved
on the boards of directors of Clearwire Corporation, CNET Networks, Inc., Safeco Corporation, and Sun Microsystems, Inc.
Mr.CurriecurrentlyservesasPresidentoftheboardoftrusteesofPhillipsAcademy.Mr.CurrieholdsaB.A.inEconomicsand
FrenchLiteraturefromWilliamsCollegeandanM.B.A.fromStanfordUniversity.
WebelieveMr.Currieisqualifiedtoserveasmemberofourboardofdirectorsbecauseofhisstrongfinancialandoperational
expertise as a result of his service on the boards of directors of numerous other companies and experience serving in senior
operatingrolesinhighgrowth,technologydrivencompanies.
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PeterFenton has served as a member of our board of directors since February 2008 and has served as our Chairman since
November2008.SinceSeptember2006,Mr.FentonhasservedasaGeneralPartnerofBenchmark,aventurecapitalfirm.From
October1999toMay2006,Mr.FentonservedasaManagingPartneratAccelPartners,aventurecapitalfirm.Mr.Fentoncurrently
servesontheboardsofdirectorsofYelpInc.,Twitter,Inc.,Zendesk,Inc.,andanumberofprivatelyheldcompanies.Mr.Fenton
holdsaB.A.inPhilosophyandanM.B.A.fromStanfordUniversity.
WebelieveMr.Fentonisqualifiedtoserveasamemberofourboardofdirectorsbecauseofhisextensiveexperienceinthe
venturecapitalindustryandhisknowledgeoftechnologycompanies.
SarahFriarhasservedasamemberofourboardofdirectorssinceDecember2013.SinceJuly2012,Ms.Friarhasservedas
theChiefFinancialOfficerofSquare,Inc.,aproviderofpaymentprocessingandpointofsalesystemsforbusinessesandmobile
paymentofferingsforconsumers.FromApril2011toJuly2012,sheservedastheSeniorVicePresident,Finance&Strategyat
salesforce.com,inc.,asoftwarecompany.FromJuly2000toApril2011,shewasemployedbyTheGoldmanSachsGroup,Inc.,an
investmentbankingcompany,mostrecentlyasaManagingDirectorintheEquityResearchDivisioncoveringsoftwareandasthe
BusinessLeaderfortheTechnologyResearchBusinessUnit.Ms.Friaralsocurrentlyservesasamemberoftheboardofdirectorsof
ModelN,Inc.Ms.FriarholdsaM.Eng.inMetallurgy,EconomicsandManagementfromtheUniversityofOxfordandanM.B.A.
fromStanfordUniversity.
WebelieveMs.Friarisqualifiedtoserveasamemberofourboardofdirectorsbecauseofherstrongfinancialandoperational
expertiseandherknowledgeoftechnologycompanies.
AdamMessingerhasservedasamemberofourboardofdirectorssinceApril2014.SinceMarch2013,Mr.Messingerhas
served as the Chief Technology Officer of Twitter, Inc., an online social media company, where he previously served as Vice
President of Application Development from April 2012 to March 2013, and Vice President of Platform Development from
November2011toApril2012.Priortothat,Mr.MessingerwasVicePresidentofDevelopmentatOracleCorporation,acomputer
technologycompany,fromJanuary2008toNovember2011.Mr.MessingerholdsaB.S.inPhysicsandComputerSciencefrom
WillametteUniversityandanM.S.inManagementfromStanfordUniversity.
WebelieveMr.Messingerisqualifiedtoserveasamemberofourboardofdirectorsbecauseofhisextensiveexperiencein
the software development industry, both as a developer of tools for other developers and of large online services and as an
executiveatavarietyofsoftwaredevelopmentorganizations.
DanScholnickhasservedasamemberofourboardofdirectorssinceOctober2008.Mr.ScholnickservedasanAssociateat
Trinity Ventures, a venture capital firm, since September 2007, and has served as General Partner since 2010. Prior to that, he
workedatSVBCapital,theventurecapitalinvestmentarmofSVBFinancialGroup,from2004to2005,andfoundedFlurry,Inc.,a
mobileanalyticssoftwarecompany,in2005.Mr.ScholnickholdsanA.B.inComputerSciencefromDartmouthCollegeandan
M.B.A.fromHarvardBusinessSchool.
WebelieveMr.Scholnickisqualifiedtoserveasamemberofourboardofdirectorsbecauseofhisextensiveexperienceinthe
venturecapitalindustryandhisknowledgeoftechnologycompanies.
ElectionofOfficers
Each executive officer serves at the discretion of our board of directors and holds office until his or her successor is duly
electedandqualifiedoruntilhisorherearlierresignationorremoval.Therearenofamilyrelationshipsamonganyofourdirectors
orexecutiveofficers.
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CodeofBusinessConductandEthics
Inconnectionwiththisoffering,ourboardofdirectorswilladoptacodeofbusinessconductandethicsthatappliestoallof
ouremployees,officers,anddirectors,includingthoseofficersresponsibleforfinancialreporting.Uponcompletionofthisoffering,
our code of business conduct and ethics will be available on our website at www.newrelic.com. We intend to disclose any
amendments to the code, or any waivers of its requirements, on our website to the extent required by the applicable rules and
exchangerequirements.
BoardComposition
Ourboardofdirectorsmayestablishtheauthorizednumberofdirectorsfromtimetotimebyresolution.Ourboardofdirectors
currentlyconsistsofsixauthorizedmembers.Inaccordancewithouramendedandrestatedcertificateofincorporationtobefiled
uponthecompletionofthisoffering,ourboardofdirectorswillbedividedintothreeclasseswithstaggeredthreeyearterms.At
eachannualgeneralmeetingofstockholders,thesuccessorstodirectorswhosetermsthenexpirewillbeelectedtoservefromthe
timeofelectionandqualificationuntilthethirdannualmeetingfollowingelection.Ourdirectorswillbedividedamongthethree
classesasfollows:
the Class I directors will be Adam Messinger and Sarah Friar, and their terms will expire at the annual meeting of
stockholderstobeheldin2015
theClassIIdirectorswillbePeterL.S.CurrieandDanScholnick,andtheirtermswillexpireattheannualmeetingof
stockholderstobeheldin2016and
the Class III directors will be Lewis Cirne and Peter Fenton, and their terms will expire at the annual meeting of
stockholderstobeheldin2017.
Weexpectthatanyadditionaldirectorshipsresultingfromanincreaseinthenumberofdirectorswillbedistributedamongthe
threeclassessothat,asnearlyaspossible,eachclasswillconsistofonethirdofthedirectors.Thedivisionofourboardofdirectors
intothreeclasseswithstaggeredthreeyeartermsmaydelayorpreventachangeofourmanagementorachangeincontrol.
Currently, Peter Fenton serves on our board of directors as nominee of Benchmark, Dan Scholnick serves on our board of
directors as nominee of Trinity Ventures, and Lewis Cirne serves on our board of directors by virtue of his position as Chief
ExecutiveOfficer,ineachcasepursuanttothetermsofavotingagreementamongusandourstockholders.Thevotingagreement
willterminateuponcompletionofthisoffering.
DirectorIndependence
Generally,underthelistingrequirementsandrulesoftheNewYorkStockExchange,independentdirectorsmustcomprisea
majorityofalistedcompanysboardofdirectorswithinoneyearofthecompletionofthisoffering.
Ourboardofdirectorshasundertakenareviewofitscomposition,thecompositionofitscommitteesandtheindependenceof
eachdirector.Ourboardofdirectorshasdeterminedthat,otherthanMr.Cirne,byvirtueofhispositionasChiefExecutiveOfficer,
none of our directors has a relationship that would interfere with the exercise of independent judgment in carrying out the
responsibilitiesofadirectorandthateachisindependentasthattermisdefinedundertheapplicablerulesandregulationsofthe
SEC and the listing requirements and rules of the New York Stock Exchange. Accordingly, a majority of our directors are
independent,asrequiredunderapplicableNewYorkStockExchangerules.Inmakingthisdetermination,ourboardofdirectors
considered the current and prior relationships that each nonemployee director has with our company and all other facts and
circumstancesourboardofdirectorsdeemedrelevantindeterminingtheirindependence,includingthebeneficialownershipofour
capitalstockbyeachnonemployeedirector.
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CommitteesoftheBoardofDirectors
Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate
governancecommittee.Ourboardofdirectorsmayestablishothercommitteestofacilitatethemanagementofourbusiness.The
compositionandfunctionsofeachcommitteearedescribedbelow.Membersserveonthesecommitteesuntiltheirresignationor
untilotherwisedeterminedbyourboardofdirectors.
AuditCommittee
Immediatelyfollowingtheclosingofthisoffering,ourauditcommitteewillconsistofPeterL.S.Currie,DanScholnick,and
Sarah Friar, with Mr. Currie serving as Chairperson. The composition of our audit committee meets the requirements for
independenceundercurrentNewYorkStockExchangelistingstandardsandSECrulesandregulations.Eachmemberofouraudit
committeemeetsthefinancialliteracyrequirementsoftheNewYorkStockExchangelistingstandards.Mr.Currie,Mr.Scholnick,
and Ms. Friar are each an audit committee financial expert within the meaning of Item 407(d) of Regulation SK under the
SecuritiesActof1933,asamended,ortheSecuritiesAct.Ourauditcommitteewill,amongotherthings:
managementandtheindependentregisteredpublicaccountingfirm,ourinterimandyearendoperatingresults
selectaqualifiedfirmtoserveastheindependentregisteredpublicaccountingfirmtoauditourfinancialstatements
helptoensuretheindependenceandperformanceoftheindependentregisteredpublicaccountingfirm
discuss the scope and results of the audit with the independent registered public accounting firm, and review, with
developproceduresforemployeestosubmitconcernsanonymouslyaboutquestionableaccountingorauditmatters
reviewourpoliciesonriskassessmentandriskmanagement
reviewrelatedpartytransactions
obtain and review a report by the independent registered public accounting firm at least annually, that describes our
internalcontrolprocedures,anymaterialissueswithsuchprocedures,andanystepstakentodealwithsuchissuesand
approve(or,aspermitted,preapprove)allauditandallpermissiblenonauditservices,otherthandeminimisnonaudit
services,tobeperformedbytheindependentregisteredpublicaccountingfirm.
Ourauditcommitteewilloperateunderawrittencharter,tobeeffectivepriortotheclosingofthisoffering,thatsatisfiesthe
applicablerulesoftheSECandthelistingstandardsoftheNewYorkStockExchange.
CompensationCommittee
Immediatelyfollowingtheclosingofthisoffering,ourcompensationcommitteewillconsistofPeterL.S.CurrieandPeter
Fenton, with Mr. Fenton serving as Chairperson. The composition of our compensation committee meets the requirements for
independence under the New York Stock Exchange listing standards and SEC rules and regulations. Each member of the
compensationcommitteeisalsoanonemployeedirector,asdefinedpursuanttoRule16b3promulgatedundertheExchangeAct,
andanoutsidedirector,asdefinedpursuanttoSection162(m)oftheInternalRevenueCodeof1986,asamended,ortheCode.The
purposeofourcompensationcommitteeistodischargetheresponsibilitiesofourboardofdirectorsrelatingtocompensationofour
executiveofficers.Ourcompensationcommitteewill,amongotherthings:
review,approve,anddetermine,ormakerecommendationstoourboardofdirectorsregarding,thecompensationofour
executiveofficers
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administerourstockandequityincentiveplans
reviewandapprove,ormakerecommendationstoourboardofdirectorsregardingincentivecompensationandequity
plansand
establishandreviewgeneralpoliciesrelatingtocompensationandbenefitsofouremployees.
Our compensation committee will operate under a written charter, to be effective prior to the closing of this offering, that
satisfiestheapplicablerulesoftheSECandthelistingstandardsoftheNewYorkStockExchange.
NominatingandCorporateGovernanceCommittee
Immediatelyfollowingtheclosingofthisoffering,ournominatingandcorporategovernancecommitteewillconsistofAdam
Messinger and Dan Scholnick, with Mr. Scholnick serving as Chairperson. The composition of our nominating and corporate
governancecommitteemeetstherequirementsforindependenceunderNewYorkStockExchangelistingstandardsandSECrules
andregulations.Ournominatingandcorporategovernancecommitteewill,amongotherthings:
identify,evaluate,andselect,ormakerecommendationstoourboardofdirectorsregarding,nomineesforelectiontoour
boardofdirectorsanditscommittees
evaluatetheperformanceofourboardofdirectorsandofindividualdirectors
considerandmakerecommendationstoourboardofdirectorsregardingthecompositionofourboardofdirectorsandits
committees
reviewdevelopmentsincorporategovernancepractices
evaluatetheadequacyofourcorporategovernancepracticesandreportingand
developandmakerecommendationstoourboardofdirectorsregardingcorporategovernanceguidelinesandmatters.
Thenominatingandcorporategovernancecommitteewilloperateunderawrittencharter,tobeeffectivepriortotheclosing
ofthisoffering,thatsatisfiestheapplicablelistingrequirementsandrulesoftheNewYorkStockExchange.
CompensationCommitteeInterlocksandInsiderParticipation
Noneofthemembersofthecompensationcommitteeiscurrentlyorhasbeenatanytimeoneofourofficersoremployees.
None of our executive officers currently serves, or has served during the last year, as a member of the board of directors or
compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or
compensationcommittee.
PeterFenton,amemberofourcompensationcommittee,isaffiliatedwithBenchmarkCapitalPartnersVI,L.P.Wehavesold
sharesofourSeriesA,SeriesB,SeriesC,SeriesD,andSeriesEconvertiblepreferredstocktoBenchmarkCapitalPartnersVI,L.P.
Allpurchasersoftheseseriesofpreferredstock,includingBenchmarkCapitalPartnersVI,L.P.,arepartiestoourinvestorrights
agreementandareentitledtospecifiedregistrationrightsthereunder.InMarch2013,certainholdersofourcapitalstock,including
BenchmarkCapitalPartnersVI,L.P.purchasedsharesofourcapitalstockfromcertainofourstockholderspursuanttoatenderoffer.
WehavedescribedeachofthesetransactionsinmoredetailunderthesectioncaptionedCertainRelationshipsandRelatedParty
Transactions.
NonemployeeDirectorCompensation
Fromtimetotime,wehavegrantedstockawardsandoptionstocertainofournonemployeedirectorsascompensationfor
theirservices.Thefollowingtablesetsforthinformationregardingawardsgrantedtoour
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nonemployeedirectorsduringourfiscalyearendedMarch31,2014.Mr.FentonandMr.Scholnickdidnotreceiveawardsdueto
theiraffiliationswithBenchmarkandTrinity,respectively.
Name
PeterL.S.Currie(2)
PeterFenton
SarahFriar(3)
DanScholnick
StockAwards
($)(1)

OptionAwards
($)(1)

937,000
872,349
Total($)
937,000
872,349
(1) The amounts in these columns represent the aggregate grant date fair values of option and stock awards granted to nonemployee directors, computed in accordance with
FASBASCTopicNo.718.Seenote10ofthenotestoourconsolidatedfinancialstatementsforadiscussionoftheassumptionsmadebyusindeterminingthegrantdate
fairvalueofourequityawards.
(2) Mr. Currie was granted a restricted stock award of 100,000 shares of our common stock on August 8, 2013, all of which remained outstanding at March 31, 2014.
Restrictionsonthisawardlapsedasto1/8thofthetotalsharessubjecttotheawardaftersixmonths,andinequalmonthlyamountsforthefollowing42months.Upona
changeofcontrol,asdefinedunderthe2008Plan,allofthesharessubjecttotheawardwillbecomefullyvested.
(3) Ms. Friar was granted an option to purchase 115,000 shares of our common stock on December 11, 2013, at an exercise price of $11.29 per share, which was the fair
marketvalueofourcommonstockonthedateofgrant,whichoptionwasunvestedandunexercisableinitsentiretyatMarch31,2014.Thisawardwillvestasto1/4thof
thesharesafteroneyear,andinequalmonthlyamountsforthefollowing36months.
InMay2014,wegrantedMr.Messingerarestrictedstockawardof40,000sharesofourcommonstockascompensationfor
Mr.Messingersserviceasamemberofourboardofdirectors.Restrictionsonthisawardlapseasto1/8thofthetotalsharessubject
totheawardaftersixmonths,andinequalmonthlyamountsforthefollowing42months.Uponachangeofcontrol,asdefined
underthe2008Plan,allofthesharessubjecttotheawardwillbecomefullyvested.
Followingtheclosingofthisoffering,weintendtoimplementaformalpolicypursuanttowhichournonemployeedirectors
willbeeligibletoreceivecompensationforserviceonourboardofdirectorsandcommitteesofourboardofdirectors.
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EXECUTIVECOMPENSATION
SummaryCompensationTable
Thefollowingtablesetsforthinformationregardingthecompensationawardedtoorearnedbytheexecutiveofficerslisted
below during the fiscal year ended March 31, 2014. As an emerging growth company, we may comply with the executive
compensationdisclosurerulesapplicabletosmallerreportingcompanies,assuchtermisdefinedintherulespromulgatedunder
theSecuritiesAct.Throughoutthisprospectus,theseofficersarereferredtoasournamedexecutiveofficers.
NameandPrincipalPosition
LewisCirne
ChrisCook
PresidentandChiefOperatingOfficer
PatrickMoran
ChiefMarketingOfficer
MarkSachleben
ChiefFinancialOfficer
Year
NonEquity
IncentivePlan
Compensation

($)(2)

2014 243,756
Total
($)
127,435 367,435
113,782 382,537
2014 239,838 1,578,000
2014 268,755
2014 240,000
Salary
($)
Option
Awards
($)(1)
37,476 1,855,314
45,513 289,269
(1) Amountshowninthiscolumndoesnotreflectdollaramountsactuallyreceivedbyournamedexecutiveofficer.Instead,thisamountreflectstheaggregategrantdatefair
valueofthestockoptiongrantedinthefiscalyearendedMarch31,2014,computedinaccordancewiththeprovisionsofFASBASCTopic718.Assumptionsusedinthe
calculation of these amounts are included in note 10 of the notes to our consolidated financial statements. As required by SEC rules, the amounts shown exclude the
impactofestimatedforfeituresrelatedtoservicebasedvestingconditions.Ournamedexecutiveofficerwillonlyrealizecompensationiftheoptionisexercisedwhenthe
priceofourcommonstockisgreaterthantheexerciseprice.
(2) Amounts in this column represent accumulated quarterly payouts for the fiscal year ended March 31, 2014 based on achievement of metrics related to annual recurring
revenue,deployments,andoperatingcashflow.
OutstandingEquityAwardsasofMarch31,2014
Thefollowingtablesetsforthinformationregardingoutstandingstockoptionsheldbyournamedexecutiveofficersasof
March31,2014:
Name
LewisCirne
ChrisCook
PatrickMoran
MarkSachleben
Numberof
Securities
Underlying
Unexercised
Options(#)
Exercisable
Numberof
Securities
Underlying
Unexercised
Options(#)
Unexercisable
Option
Exercise
Price($)

1,110,834 (1)
250,000 (2)
301,751 (3)
6,250 (4)
250,000 (5)
143,750
1.10
3.19
1.01
7.99
3.19
Option
Expiration
Date
10/4/2021
6/5/2022
11/17/2020
10/2/2023
6/5/2022
(1) Optionsvestedasto1/4thofthesharesonSeptember6,2012,withtheremaindervestinginequalmonthlyincrementsthereafteroverthreeadditionalyearsoptionsare
earlyexercisable.
(2) Options vest as to 150,000 shares in equal monthly increments over the first three years starting September 1, 2012 and as to the remaining 100,000 shares in equal
monthlyincrementsinthefourthyearoptionsareearlyexercisable.
(3) Optionsvestedasto1/4thofthesharesonNovember1,2011,withtheremaindervestinginequalmonthlyincrementsthereafteroverthreeadditionalyearsoptionsare
earlyexercisable.
(4) Optionsvestasto1/4thofthesharesonOctober1,2014,withtheremaindervestinginequalmonthlyincrementsthereafteroverthreeadditionalyears.
(5) OptionsvestinequalmonthlyinstallmentsoverfouryearsstartingApril1,2012optionsareearlyexercisable.
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InMay2014,wegrantedMr.Cirneanoptiontopurchase715,000sharesofourcommonstockatanexercisepriceof$16.93
pershare,whichwasthefairmarketvalueofourcommonstockonthedateofgrant.Theoptionsvestinequalmonthlyincrements
over60monthsstartingApril1,2014.
ExecutiveEmploymentArrangements
We currently do not have employment agreements with any of our named executive officers. All of our named executive
officers are employed on an atwill basis, with no fixed term of employment. Three of our named executive officers joined us
pursuanttothetermsoftheirrespectiveofferletters,eachofwhichisdescribedbelow.Eachofferletteralsocontainsstandardterms
relatedtovacationandparticipationinouremployeebenefitplans,andinaddition,requiresexecutionofourformofconfidential
informationandproprietaryinformationagreement.
Lewis Cirne. As a founder, Mr. Cirne did not join us pursuant to an offer letter or any other formal arrangement or
understandingregardinghisemployment.WecurrentlyhavenoemploymentagreementwithMr.Cirne,andwecurrentlydonot
anticipateenteringintooneinthefuture.Mr.Cirneisanatwillemployee.Hiscurrentbasesalaryis$300,000andhistargetannual
bonusis67%ofhisbasesalary,payablequarterlyonthebasisofachievementofindividual,group,andcorporategoals.
ChrisCook.Mr.CookisapartytoanofferletterwithusdatedJune14,2011pursuanttowhichheagreedtoserveasour
PresidentandChiefOperatingOfficer.Hiscurrentbasesalaryis$300,000andhistargetannualbonusis50%ofhisbasesalary,
payable quarterly on the basis of achievement of individual, group, and corporate goals. Under this offer letter, Mr. Cook was
grantedanoptiontopurchase1,200,000sharesofourcommonstockatanexercisepriceof$1.10pershare,withvestingtooccur
overafouryearperiod.
PatrickMoran.Mr.MoranisapartytoanofferletterwithusdatedOctober7,2010pursuanttowhichheagreedtoserveas
ourVicePresident,Marketing.Hiscurrentbasesalaryis$260,000andhistargetannualbonusis30%ofhisbasesalary,payable
quarterlyonthebasisofachievementofindividual,group,andcorporategoals.Underthisofferletter,Mr.Moranwasgrantedan
optiontopurchase340,000sharesofourcommonstockatanexercisepriceof$1.01pershare,withvestingtooccuroverafour
yearperiod.
MarkSachleben.Mr.SachlebenisapartytoanofferletterwithusdatedFebruary4,2008pursuanttowhichheservesasour
ChiefFinancialOfficer.Hiscurrentbasesalaryis$300,000andhistargetannualbonusis33%ofhisbasesalary,payablequarterly
onthebasisofachievementofindividual,group,andcorporategoals.Underthisofferletter,Mr.Sachlebenwasgrantedanoption
topurchase1,225,000sharesofourcommonstockatanexercisepriceof$0.06pershare,withvestingtooccuroverafouryear
period.
OnNovember25,2014,ourcompensationcommitteeapprovedchangeincontrolandseveranceagreementsforcertainofour
officers,includingournamedexecutiveofficers.Undertheagreements,severancebenefitsarepayableinconnectionwithorwithin
12monthsfollowingachangeincontroluponanexecutivesinvoluntaryterminationofemploymentbyuswithoutcause(other
thanasaresultofdeathordisability)ortheexecutivesterminationofemploymentforgoodreasonandforterminationsnotin
connectionwithachangeofcontrol,uponanexecutivesinvoluntaryterminationofemploymentbyuswithoutcause(otherthan
as a result of death or disability). Under the agreements, benefit levels are based on tiers, with executives in higher positions
generallyreceivinggreaterbenefits.Inallcases,receiptofbenefitsissubjecttotheexecutiveexecutingareleaseandwaiverof
claimsinfavorofus.
Foraqualifyingterminationnotinconnectionwithachangeincontrol,thebenefitsconsistofasalarycontinuationpayment
determinedasanumberofmonthsofbasesalary,andcontinuation(orreimbursement)ofhealthbenefitpremiumsforthatsame
period.ForourCEO(inTier1),thesalaryandbenefitcontinuationperiodis12monthsforexecutivesinTier2(includingMr.
CookandMr.Sachleben),thesalaryandbenefitcontinuationperiodissixmonthsandforexecutivesinTier3(includingMr.
Moran),thesalaryandbenefitcontinuationperiodisthreemonths.
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Foraqualifyingterminationinconnectionwithorwithin12monthsafterachangeincontrol,thebenefitsconsistofalump
sumcashpaymentdeterminedasanumberofmonthsofbasesalary,continuationorreimbursementofhealthbenefitpremiumsfor
thenumberofmonthsusedtodeterminethelumpsumcashpayment,plusacceleratedvestingofalloutstandingequityawardsthen
heldbytheexecutive.ForourCEO(inTier1),thecashlumpsumpaymentisequalto18monthsofbasepay,with18monthsof
benefitcontinuationforexecutivesinTier2(includingMr.CookandMr.Sachleben),thecashlumpsumpaymentisequalto12
monthsofbasepay,with12monthsofbenefitcontinuationandforexecutivesinTier3(includingMr.Moran),thecashlumpsum
paymentisequaltosixmonthsofbasepay,withsixmonthsofbenefitcontinuation.
Undertheagreements,thetermchangeincontrolhasthesamemeaningasunderour2014EquityIncentivePlan.Theterm
causeisdefinedastheexecutives(i)willfulfailuresubstantiallytoperformhisdutiesandresponsibilitiestousordeliberate
violationofourpolicies(ii)commissionofanyactoffraud,embezzlement,dishonestyoranyotherwillfulmisconductthathas
caused or is reasonably expected to result in material injury to us (iii) unauthorized use or disclosure by the executive of any
proprietaryinformationortradesecretsofoursoranyotherpartytowhomtheexecutiveowesanobligationofnondisclosureasa
resultofhisrelationshipwithusor(iv)willfulbreachofanyofhisobligationsunderanywrittenagreementorcovenantwithus.
Undertheagreements,thetermgoodreasonisdefinedastheexecutivesresignationofhisorheremploymentfollowingthe
occurrenceofanyofthefollowingwithouttheexecutiveswrittenconsent:(i)amaterialreductioninjobduties,responsibilities,or
authorityinconsistentwiththeexecutivespositionwithusprovided,however,thatanysuchreductionorchangeafterachangein
controlwillnotconstitutegoodreasoniftheexecutiveretainsreasonablycomparableduties,position,andresponsibilitieswith
respecttoourbusinesswithinthesuccessorentityfollowingachangeincontrol(ii)amaterialreductionoftheexecutivesthen
currentbasesalary,representingareductionofmorethan10%oftheexecutivesthencurrentbasesalaryprovided,thatanacross
theboardreductioninthesalarylevelofallofourexecutiveofficersbythesamepercentageamountaspartofageneralsalary
level reduction will not constitute such a material salary reduction (iii) the relocation of the executives principal place of
employmenttoaplacethatincreasestheexecutivesonewaycommutebymorethan50milesascomparedtotheexecutivesthen
current principal place of employment immediately prior to such relocation (iv) any material breach by us of the severance
agreement or any other written agreement between us and the executive or (v) the failure by any successor to our company to
assumetheobligationsoftheseveranceagreementprovided,thattheexecutivegiveswrittennoticetousoftheeventformingthe
basisoftheseveranceterminationforgoodreasonwithin30daysafterthedateonwhichwegivewrittennoticetotheexecutiveof
ouraffirmativedecisiontotakeanactionsetforthinclause(i),(ii),(iii),(iv)or(v)above,wefailtocuresuchbasisforthegood
reason resignation within 30 days after receipt of the executives written notice, and the executive terminates his employment
within30daysfollowingtheexpirationofthecureperiod.
Ifthetotalvalueofbenefitspayabletoanexecutiveinconnectionwithachangeincontrolterminationwouldexceedthe
deductibilitylimitsunderSection280GoftheCodewithrespecttoexcessparachutepayments,wewillpayeitherthefullamount
ofthebenefits,orareducedamount,whicheverresultsinthegreateraftertaxbenefittotheexecutive.
EmployeeBenefitPlans
Ournamedexecutiveofficersareeligibletoparticipateinouremployeebenefitplans,includingourmedical,dental,vision,
grouplife,andaccidentaldeathanddismembermentinsuranceplans,ineachcase,onthesamebasisasallofourotheremployees.
Wemaintaina401(k)planforthebenefitofoureligibleemployees,includingournamedexecutiveofficers,asdiscussedinthe
sectionbelowentitled401(k)Plan.
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401(k)Plan
Wemaintainaretirementsavingsplan,or401(k)plan,thatprovideseligibleU.S.employeeswithanopportunitytosavefor
retirement on a tax advantaged basis. Under our 401(k) plan, eligible employees may defer eligible compensation subject to
applicableannualcontributionlimitsimposedbytheCode.Employeespretaxcontributionsareallocatedtoeachparticipants
individual account. Participants are immediately and fully vested in their contributions. We expect to initiate an employer
matching contribution program on employee contributions in the first quarter of fiscal 2015. The 401(k) plan is intended to be
qualifiedunderSection401(a)oftheCodewiththe401(k)plansrelatedtrustintendedtobetaxexemptunderSection501(a)of
theCode.Asataxqualifiedretirementplan,contributionstothe401(k)planandearningsonthosecontributionsarenottaxableto
theemployeesuntildistributedfromthe401(k)plan.
EquityIncentivePlans
Theprincipalfeaturesofourequityincentiveplansaresummarizedbelow.Thesesummariesarequalifiedintheirentiretyby
referencetotheactualtextoftheplans,whicharefiledasexhibitstotheregistrationstatementofwhichthisprospectusisapart.
2008EquityIncentivePlan
Ourboardofdirectorsadoptedandourstockholderssubsequentlyapprovedour2008PlaninFebruary2008.The2008Plan
wasmostrecentlyamendedbyourboardofdirectorsandapprovedbyourstockholdersinNovember2014.Our2008Planprovides
forthegrantofincentivestockoptions,orISOs,withinthemeaningofSection422oftheCode,toouremployees,andforthegrant
ofnonstatutorystockoptions,orNSOs,stockappreciationrights,orSARs,restrictedstockawardsandrestrictedstockunitawards,
orRSUs,toouremployees,directors,andconsultants.Aftertheclosingofthisoffering,nofurthergrantswillbemadeunderour
2008Plan,andthe2008Planwillterminate.Outstandingawardsgrantedunderthe2008Planwillremainsubjecttoitstermsand
applicableawardagreementsuntilsuchawardsareexercisedorotherwiseterminateorareforfeitedbytheirterms.
AuthorizedShares.AsofSeptember30,2014,themaximumnumberofsharesofourcommonstockthatcouldbeissuedunder
our 2008 Plan was 12,583,675, which includes (i) 8,251,617 shares of our common stock issuable upon the exercise of stock
optionsoutstandingasofSeptember30,2014,and(ii)618,383sharesofourcommonstockreservedforfutureissuanceunderthe
2008PlanasofSeptember30,2014.OnNovember25,2014,ourboardofdirectorsamendedandrestatedour2008Plantoincrease
thenumberofsharesreservedforissuancepursuanttothe2008Planby1,600,000sharestoanaggregateof14,183,675shares.
Sharesissuableunderour2008Planincludeanyauthorizedbutunissuedorreacquiredsharesofourcommonstock.Sharessubject
tostockawardsgrantedunderour2008Planthatexpireorterminatewithoutbeingexercisedinfullorsettledincashwillagainbe
availableforissuanceunderour2008Plan.
PlanAdministration.Ourboardofdirectors,oradulyauthorizedcommitteeofourboardofdirectors,administersour2008
Plan. Any reference to the board of directors in our 2008 Plan will also mean any committee or subcommittee of our board of
directorstowhomourboardofdirectorshasassignedaparticularadministrativefunction.Subjecttothetermsofour2008Plan,the
boardofdirectorshastheauthoritytodeterminethetermsoftheawards,includingrecipients,theexerciseorpurchasepriceofthe
awards,ifany,thenumberofsharessubjecttoeachstockaward,thefairmarketvalueofourcommonstock,thevestingschedule
applicabletotheawards,theformsofconsideration,ifany,payableuponexerciseorsettlementoftheaward,andtheplacementof
anytransferrestrictionsorrightsofrepurchase,ifany.Theboardofdirectorshasfullauthorityanddiscretiontotakeanyactionsit
deemsnecessaryoradvisablefortheadministrationofthe2008Plan.Alldeterminations,interpretations,andconstructionsmade
bytheboardofdirectorsingoodfaithwillbefinal,binding,andconclusive.
CorporateTransactions.Our2008Planprovidesthatintheeventofacorporatetransaction,asdefinedunderour2008Plan,
anysurvivingoracquiringcorporation(or,ineithercase,itsparentcompany)mayassumeor
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continue any part or all of the stock awards outstanding under the 2008 Plan, or may substitute similar stock awards and any
reacquisitionorrepurchaserightsheldbyusmaybeassignedtooursuccessor(orthesuccessorsparentcompany).Inconnection
withacorporatetransaction,ingeneral,thevestingofstockawardsnotassumedinconnectionwithacorporatetransactionshall
notbeacceleratedandshallterminateifnotexercised(ifapplicable)priortotheeffectivetimeofthecorporatetransaction,except
that any reacquisition or repurchase rights held by us will not terminate and may continue to be exercised notwithstanding the
corporatetransaction.
ChangeinControl.Our2008Planprovidesthatintheeventofachangeincontrol,asdefinedunderour2008Plan,stock
awardsmaybesubjecttoadditionalaccelerationofvestingandexercisabilityasmaybeprovidedinthestockawardagreement
coveringtheoptionsoranyotherwrittenagreementwithus,butintheabsenceofsuchprovision,nosuchaccelerationshalloccur.
PlanAmendmentorTermination.Ourboardofdirectorshastheauthoritytosuspendorterminateour2008Plan,providedthat
suchactiondoesnotmateriallyimpairtheexistingrightsofanyparticipantwithoutsuchparticipantswrittenconsent.Ourboardof
directorsmayamendthe2008Planinanyrespectitdeemsnecessaryoradvisable,butitmustseekstockholderapprovaltothe
extentrequiredbyapplicablelaw.
2014EquityIncentivePlan
Weexpectthatourboardofdirectorswilladopt,andourstockholderswillapprove,our2014Planinconnectionwiththis
offering.The2014Planwillbecomeeffectiveatthetimeofexecutionoftheunderwritingagreementforthisoffering.The2014
Planwillbethesuccessortoour2008Plan,whichisdescribedabove.Oncethe2014Planbecomeseffective,nofurthergrantswill
bemadeunderthe2008Plan.
StockAwards.Our2014PlanprovidesforthegrantofISOstoouremployeesandforthegrantofNSOs,SARs,restrictedstock
awards, RSUs, performancebased stock awards, performancebased cash awards and other forms of equity compensation to our
employees,directors,andconsultants.
AuthorizedShares.Theaggregatenumberofsharesofourcommonstockthatmaybeissuedpursuanttostockawardsunder
the2014Planwillnotexceedthesumof:(i)5,000,000shares(ii)thenumberofsharesremainingavailableforissuanceunderour
2008Planatthetimethe2014Planbecomeseffectiveand(iii)anysharessubjecttooutstandingstockoptionsorotherstock
awardsthatwouldhaveotherwisereturnedtoour2008Plan(suchasupontheexpirationorterminationofastockoptionunder
suchplanpriortoitsexercise).Additionally,thenumberofsharesofourcommonstockreservedforissuanceunderour2014Plan
willautomaticallyincreaseonApril1ofeachyear,beginningonApril1,2015andendingonandincludingApril1,2024,by5%
ofthetotalnumberofsharesofourcapitalstockoutstandingonMarch31oftheprecedingfiscalyear,oralessernumberofshares
determinedbyourboardofdirectors.ThemaximumnumberofsharesthatmaybeissuedupontheexerciseofISOsunderour2014
Planis30,000,000.
Sharesissuedunderour2014Planincludeauthorizedbutunissuedorreacquiredsharesofourcommonstock.Sharessubject
tostockawardsgrantedunderour2014Planthatexpireorterminatewithoutbeingexercisedinfull,orthatarepaidoutincash
ratherthaninshares,donotreducethenumberofsharesavailableforissuanceunderour2014Plan.Additionally,sharesissued
pursuanttostockawardsunderour2014Planthatwerepurchaseorthatareforfeited,aswellassharesusedtopaytheexerciseprice
ofastockawardortosatisfythetaxwithholdingobligationsrelatedtoastockaward,becomeavailableforfuturegrantunderour
2014Plan.
PlanAdministration.Ourboardofdirectors,oradulyauthorizedcommitteeofourboardofdirectors,willadministerour2014
Plan.Ourboardofdirectorsmayalsodelegatetooneormoreofourofficerstheauthorityto(i)designateemployees(otherthan
officers)toreceivespecifiedstockawards,and(ii)determinethenumberofsharesofourcommonstocktobesubjecttosuchstock
awards.Subjecttothetermsofour2014Plan,theboardofdirectorshastheauthoritytodeterminethetermsofawards,including
recipients,theexercise,purchase,or
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strikepriceofstockawards,ifany,thenumberofsharessubjecttoeachstockaward,thefairmarketvalueofashareofourcommon
stock,thevestingscheduleapplicabletotheawards,togetherwithanyvestingacceleration,andtheformofconsideration,ifany,
payableuponexerciseorsettlementoftheaward,andthetermsoftheawardagreements.
The board of directors has the power to modify outstanding awards under our 2014 Plan. The board of directors has the
authoritytorepriceanyoutstandingoptionorSAR,cancelanyoutstandingstockawardinexchangefornewstockawards,cashor
otherconsideration,ortakeanyotheractionthatistreatedasarepricingundergenerallyacceptedaccountingprinciples,withthe
consentofanyadverselyaffectedparticipant.
Section162(m)Limits. At such time as necessary for compliance with Section 162(m) of the Code, no participant may be
grantedstockawardscoveringmorethan4,000,000sharesofourcommonstock(subjecttoadjustmenttoreflectanysplitofour
commonstock)underour2014Planduringanycalendaryearpursuanttostockoptions,SARs,andotherstockawardswhosevalue
is determined by reference to an increase over an exercise price or strike price of at least 100% of the fair market value of our
common stock on the date of grant. Additionally, no participant may be granted in a calendar year a performance stock award
coveringmorethan2,000,000sharesofourcommonstock(subjecttoadjustmenttoreflectanysplitofourcommonstock)ora
performancecashawardhavingamaximumvalueinexcessof$4,000,000underour2014Plan.Theselimitationsareintendedto
give us the flexibility to grant compensation to covered employees that may qualify for the qualified performancebased
compensationexceptiontothe$1,000,000annuallimitationontheincometaxdeductibilityimposedbySection162(m)ofthe
Code.
Nonemployee Director Limits. Stock awards granted during a single fiscal year to any nonemployee director, shall not
exceedthegreaterof(a)100,000shares,and(b)$350,000invalue(calculatingthevalueofanysuchstockawardsbasedonthe
grantdatefairvalueofsuchstockawardsforfinancialreportingpurposesandexcluding,forthispurpose,thevalueofanydividend
equivalentpaymentspaidpursuanttoanystockawardgrantedinapreviousfiscalyear).
PerformanceAwards. Our 2014 Plan permits the grant of performancebased stock and cash awards intended to qualify as
performancebasedcompensationsoasnottobesubjecttothe$1,000,000limitationontheincometaxdeductibilityimposedby
Section162(m)oftheCode.Ourcompensationcommitteemaystructureawardssothatthestockorcashwillbeissuedorpaidonly
followingtheachievementofcertainpreestablishedperformancegoalsduringadesignatedperformanceperiod.However,oncewe
becomesubjecttoSection162(m)oftheCodeafterthephaseinperiodfornewlypubliccompanies,notallawardsintendedto
qualifyasperformancebasedawardsfor purposes of Section162(m)ofthe Codemay so qualify,and inaddition,we retain the
discretiontograntawardsunderthe2014Planthatmaynotqualifyforfullorpartialdeductibility.
Ourcompensationcommitteemayestablishperformancegoalsbyselectingfromoneormoreperformancecriteriasetforthin
the2014Plan,including,butnotlimitedto:earningsbeforeinterest,taxes,depreciationandamortizationtotalstockholderreturn
returnonequityoraveragestockholdersequityreturnonassets,investment,orcapitalemployedstockpricemargin(including
grossmargin)income(beforeoraftertaxes)operatingincome(beforeoraftertaxes)pretaxprofitoperatingcashflowsalesor
revenuetargetsincreasesinrevenueexpensesandcostreductiongoalsimprovementinorattainmentofworkingcapitallevels
economicvalueaddedmarketsharecashflow(includingcashflowpershare)sharepriceperformancedebtreductionstrategic
partnerships and transactions stockholders equity capital expenditures operating profit or net operating profit growth of net
incomeoroperatingincomebudgetmanagementandtotheextentthatanawardisnotintendedtocomplywithSection162(m)of
theCode,othermeasuresofperformanceselectedbyourboardofdirectors.
CorporateTransactionsChangeinControl.Our2014Planprovidesthatintheeventofcertaincorporatetransactions,as
definedinthe2014Plan,thefollowingprovisionswillapplytooutstandingstockawards,unless
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otherwiseprovidedinastockawardagreementoranyotherwrittenagreementbetweenusandaparticipant,orunlessotherwise
expresslyprovidedbyourboardofdirectorsatthetimeofgrantofastockaward:
totheextentthatoutstandingstockawardsarenotsoassumed,continued,orsubstituted,thevestingand,ifapplicable,
exercisabilityofanysuchstockawardswillnotbeacceleratedandsuchstockawardswillterminateifnotexercised(if
applicable)atorpriortotheeffectivetimeofsuchcorporationtransaction,exceptthatanyreacquisitionorrepurchase
rightsheldbyuswillnotterminateandmaycontinuetobeexercisednotwithstandingthecorporatetransactionor
the surviving or acquiring corporation (or its parent) may assume, continue, or substitute similar stock awards for
outstandingstockawardsunderthe2014Planandanyreacquisitionorrepurchaserightsheldbyusmaybeassignedto
thesurvivingoracquiringcorporation(oritsparent)
totheextentastockawardwillterminateifnotexercisedpriortotheeffectivetimeofacorporatetransaction,ourboard
ofdirectorsmayprovidethattheholderofthestockawardmaynotexercisethestockaward,butinsteadwillreceivea
payment,insuchformasmaybedeterminedbyourboardofdirectors,equalinvaluetotheexcess,ifany,ofthevalueof
thepropertytheparticipantwouldhavereceiveduponexerciseofthestockawardoveranyexercisepricepayableby
suchholderinconnectionwithsuchexercise.
Astockawardmaybesubjecttoadditionalaccelerationofvestingandexercisabilityuponorafterachangeincontrol,as
definedinthe2014Plan,asmaybeprovidedinthestockawardagreementforsuchstockawardorinanyotherwrittenagreement
betweenusandaparticipant,butintheabsenceofsuchaprovision,nosuchaccelerationwilloccur.
Plan Amendment or Termination. Our board of directors has the authority to amend, suspend, or terminate our 2014 Plan,
provided that such action does not materially impair the existing rights of any participant without such participants written
consent.NoISOsmaybegrantedafterthetenthanniversaryofthedateourboardofdirectorsadoptedour2014Plan.
2014EmployeeStockPurchasePlan
Weexpectthatourboardofdirectorswilladopt,andourstockholderswillapprove,our2014ESPPinconnectionwiththis
offering. The 2014 ESPP will become effective on the date the registration statement of which this prospectus forms a part is
declaredeffectivebytheSEC.
Themaximumaggregatenumberofsharesofourcommonstockthatmaybeissuedunderour2014ESPPis1,000,000shares
(subjecttoadjustmenttoreflectanysplitofourcommonstock).Additionally,thenumberofsharesofourcommonstockreserved
forissuanceunderour2014ESPPwillincreaseautomaticallyeachyear,beginningonApril1,2015andcontinuingthroughand
includingApril1,2024,bythelesserof(i)1%ofthetotalnumberofsharesofourcommonstockoutstandingonMarch31ofthe
precedingfiscalyearand(ii)500,000sharesofcommonstock(subjecttoadjustmenttoreflectanysplitofourcommonstock).Our
boardofdirectorsmayactpriortothefirstdayofanyfiscalyeartoprovidethattherewillbenoApril1increaseorthattheincrease
willbeforalessernumberofsharesthanwouldotherwiseoccur.Sharessubjecttopurchaserightsgrantedunderour2014ESPPthat
terminatewithouthavingbeenexercisedinfullwillnotreducethenumberofsharesavailableforissuanceunderour2014ESPP.
Ourboardofdirectorswilladministerour2014ESPP.Ourboardofdirectorsmaydelegateauthoritytoadministerour2014
ESPPtoourcompensationcommittee.
Ouremployees,includingexecutiveofficers,mayhavetosatisfyoneormoreofthefollowingservicerequirementsbefore
participatinginour2014ESPP,asdeterminedbytheadministrator:(i)customaryemploymentformorethan20hoursperweekand
morethanfivemonthsperfiscalyear,or(ii)continuousemploymentforaminimumperiodoftime,nottoexceedtwoyears.An
employeemaynotbegrantedrightstopurchasestockunderour2014ESPPifsuchemployee(i)immediatelyafterthegrantwould
ownstock
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possessing5%ormoreofthetotalcombinedvotingpowerorvalueofourcommonstock,or(ii)holdsrightstopurchasestock
underour2014ESPPthatwouldaccrueataratethatexceeds$25,000worthofourstockor2,000sharesforeachfiscalyearthatthe
rightsremainoutstanding.
Theadministratormayapproveofferingswithadurationofnotmorethan27months,andmayspecifyoneormoreshorter
purchaseperiodswithineachoffering.Eachofferingwillhaveoneormorepurchasedatesonwhichsharesofourcommonstock
willbepurchasedfortheemployeeswhoareparticipatingintheoffering.Theadministrator,initsdiscretion,willdeterminethe
termsofofferingsunderour2014ESPP.Noofferingshavebeenapprovedatthistime.
Our2014ESPPpermitsparticipantstopurchasesharesofourcommonstockthroughpayrolldeductionswithupto15%of
theirearnings.Thepurchasepriceoftheshareswillbenotlessthan85%ofthelowerofthefairmarketvalueofourcommonstock
onthefirstdayofanofferingoronthedateofpurchase.
Aparticipantmaynottransferpurchaserightsunderour2014ESPPotherthanbywill,thelawsofdescentanddistribution,or
asotherwiseprovidedunderour2014ESPP.
Intheeventofaspecifiedcorporatetransaction,suchasamergerorsaleofallorsubstantiallyallofourassets,asuccessor
corporation may assume, continue, or substitute each outstanding purchase right. If the successor corporation does not assume,
continue, or substitute for the outstanding purchase rights, the offering in progress will be shortened and the participants
accumulated contributions will be used to purchase shares within 10 business days prior to the effective date of the corporate
transaction.
Our2014ESPPwillremainineffectuntilterminatedbytheadministratorinaccordancewiththetermsofthe2014ESPP.Our
boardofdirectorshastheauthoritytoamend,suspend,orterminateour2014ESPP,atanytimeandforanyreason.
LimitationonLiabilityandIndemnificationMatters
Our amended and restated certificate of incorporation and amended and restated bylaws, each to be effective upon the
completionofthisoffering,willprovidethatwewillindemnifyourdirectorsandofficers,andmayindemnifyouremployeesand
other agents, to the fullest extent permitted by the Delaware General Corporation Law. However, Delaware law prohibits our
amendedandrestatedcertificateofincorporationfromlimitingtheliabilityofourdirectorsforthefollowing:
anybreachofthedirectorsdutyofloyaltytousortoourstockholders
actsoromissionsnotingoodfaithorthatinvolveintentionalmisconductoraknowingviolationoflaw
unlawfulpaymentofdividendsorunlawfulstockrepurchasesorredemptionsand
anytransactionfromwhichthedirectorderivedanimproperpersonalbenefit.
IfDelawarelawisamendedtoauthorizecorporateactionfurthereliminatingorlimitingthepersonalliabilityofadirector,
thentheliabilityofourdirectorswillbeeliminatedorlimitedtothefullestextentpermittedbyDelawarelaw,assoamended.Our
amendedandrestatedcertificateofincorporationdoesnoteliminateadirectorsdutyofcareand,inappropriatecircumstances,
equitableremedies,suchasinjunctiveorotherformsofnonmonetaryrelief,remainavailableunderDelawarelaw.Thisprovision
alsodoesnotaffectadirectorsresponsibilitiesunderanyotherlaws,suchasthefederalsecuritieslawsorotherstateorfederallaws.
Underouramendedandrestatedbylaws,wewillalsobeempoweredtoenterintoindemnificationagreementswithourdirectors,
officers, employees, and other agents and to purchase insurance on behalf of any person whom we are required or permitted to
indemnify.
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Inadditiontotheindemnificationrequiredinouramendedandrestatedcertificateofincorporationandamendedandrestated
bylaws,wehaveenteredintoindemnificationagreementswitheachofourcurrentdirectors,officers,andsomeemployees.These
agreementsprovidefortheindemnificationofsuchpersonsforallreasonableexpensesandliabilitiesincurredinconnectionwith
anyactionorproceedingbroughtagainstthembyreasonofthefactthattheyareorwereservinginsuchcapacity.Webelievethat
thesebylawprovisionsandindemnificationagreementsarenecessarytoattractandretainqualifiedpersonsasdirectors,officers,
andemployees.Furthermore,wehaveobtaineddirectorandofficerliabilityinsurancetocoverliabilitiesourdirectorsandofficers
mayincurinconnectionwiththeirservicestousandexpecttoincreasetheleveluponcompletionofthisoffering.
The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and
amendedandrestatedbylawsmaydiscouragestockholdersfrombringingalawsuitagainstdirectorsforbreachoftheirfiduciary
duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if
successful, mightbenefitusand ourstockholders.Astockholdersinvestment may beharmedto theextent wepay the costs of
settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as
indemnificationforliabilitiesarisingundertheSecuritiesActmaybepermittedtoourdirectors,officers,andcontrollingpersons
pursuanttotheforegoingprovisions,orotherwise,wehavebeenadvisedthat,intheopinionoftheSEC,suchindemnificationis
against public policy as expressed in the Securities Act, and is, therefore, unenforceable. There is no pending litigation or
proceedingnaminganyofourdirectorsorofficersastowhichindemnificationisbeingsought,norareweawareofanypendingor
threatenedlitigationthatmayresultinclaimsforindemnificationbyanydirectororofficer.
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CERTAINRELATIONSHIPSANDRELATEDPARTYTRANSACTIONS
Otherthancompensationarrangementsforourdirectorsandnamedexecutiveofficers,whicharedescribedelsewhereinthis
prospectus,belowwedescribetransactionssinceApril1,2011towhichwewereapartyorwillbeaparty,inwhich:
theamountsinvolvedexceededorwillexceed$120,000and
anyofourdirectors,executiveofficers,orholdersofmorethan5%ofourcapitalstock,oranymemberoftheimmediate
family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material
interest.
SeriesDPreferredStockFinancing
InNovember2011,wesoldanaggregateof1,566,696sharesofourSeriesDconvertiblepreferredstockatapurchasepriceof
$9.5743pershareforanaggregatepurchasepriceof$15.0milliontoatotalofteninvestors.
AllpurchasersofourSeriesDconvertiblepreferredstockareentitledtospecifiedregistrationrights.Seethesectiontitled
DescriptionofCapitalStockRegistrationRightsformoreinformationregardingtheseregistrationrights.
ThefollowingtablesummarizestheSeriesDconvertiblepreferredstockpurchasedbymembersofourboardofdirectorsor
theiraffiliatesandholdersofmorethan5%ofouroutstandingcapitalstock:
NameofStockholder
BenchmarkCapitalPartnersVI,L.P.(1)
EntitiesaffiliatedwithTenayaCapital(2)
EntitiesaffiliatedwithTrinityVentures(3)
SharesofSeries
D
PreferredStock
TotalPurchasePrice
208,893
208,893
208,893
2,000,004
2,000,004
2,000,004
(1) Peter Fenton, a member of our board of directors, is a managing member of Benchmark Capital Management Co. VI, L.L.C., the general partner of Benchmark Capital
PartnersVI,L.P.
(2) AffiliatesofTenayaCapitalwhosesharesareaggregatedforreportingshareownershipinformationareTenayaCapitalV,L.P.andTenayaCapitalVP,L.P.
(3) Affiliates of Trinity Ventures whose shares are aggregated for purposes of reporting share ownership information are Trinity Ventures IX, L.P., Trinity IX Entrepreneurs
Fund,L.P.,andTrinityIXSideBySideFund,L.P.Mr.Scholnick,amemberofourboardofdirectors,isaMemberofTrinityTVLIX,L.L.C.,thegeneralpartnerof
eachoftheseentities.
SeriesEPreferredStockFinancing
InJanuary2013,wesoldanaggregateof3,446,511sharesofourSeriesEconvertiblepreferredstockatapurchasepriceof
$17.4089pershareforanaggregatepurchasepriceof$60.0milliontoatotalof23investors.
All purchasers of our Series E convertible preferred stock are entitled to specified registration rights. See the section titled
DescriptionofCapitalStockRegistrationRightsformoreinformationregardingtheseregistrationrights.
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ThefollowingtablesummarizestheSeriesEconvertiblepreferredstockpurchasedbymembersofourboardofdirectorsor
theiraffiliatesandholdersofmorethan5%ofouroutstandingcapitalstock.
NameofStockholder
EntitiesaffiliatedwithInsightVenturePartners(4)
SharesofSeries
E
PreferredStock
TotalPurchasePrice
129,244
65,050
159,411
1,723,256
2,249,996
1,132,449
2,775,170
29,999,991
(1) Peter Fenton, a member of our board of directors, is a managing member of Benchmark Capital Management Co. VI, L.L.C., the general partner of Benchmark Capital
PartnersVI,L.P.
(2) AffiliatesofTenayaCapitalwhosesharesareaggregatedforreportingshareownershipinformationareTenayaCapitalV,L.P.andTenayaCapitalVP,L.P.
(3) Affiliates of Trinity Ventures whose shares are aggregated for purposes of reporting share ownership information are Trinity Ventures IX, L.P., Trinity IX Entrepreneurs
Fund,L.P.,andTrinityIXSideBySideFund,L.P.Mr.Scholnick,amemberofourboardofdirectors,isaMemberofTrinityTVLIX,L.L.C.,thegeneralpartnerof
eachoftheseentities.
(4) AffiliatesofInsightVenturePartnerswhosesharesareaggregatedforreportingshareownershipinformationareInsightVenturePartnersVII,L.P.,InsightVenturePartners
(Cayman)VII,L.P.,InsightVenturePartners(Delaware)VII,L.P.,InsightVenturePartnersVII(CoInvestors),L.P.,andInsightVenturePartnersCoinvestmentFundII,
L.P.
ThirdPartyTenderOfferandStockTransaction
InFebruary2013,inconnectionwithourSeriesEPreferredStockFinancing,weenteredintoastockpurchaseagreementwith
certain holders of our capital stock, including Benchmark Capital Partners VI, L.P. and entities affiliated with Tenaya Capital,
TrinityVentures,andInsightVenturePartners,pursuanttowhichweagreedtowaivecertaintransferrestrictionsinconnectionwith,
andassistintheadministrationof,atenderoffer.InFebruary2013,theseholderscommencedatenderoffertopurchasesharesof
our capital stock from certain of our stockholders. Messrs. Cirne, Cook, and Moran, each of whom is one of our directors or
executiveofficersoraholderofmorethan5%ofouroutstandingcapitalstock,soldsharesofourcapitalstockinthetenderoffer.
Approximately862,000sharesofourcapitalstockweretenderedandsoldpursuanttothetenderofferatapriceof$17.4089per
share.
In August 2013 and December 2013, certain of our existing investors acquired approximately 347,000 shares of our
outstandingcommonstockfromemployees,includingMessrs.SachlebenandGochee,eachofwhomisanexecutiveofficer,andan
existingcommonstockholderforaggregateconsiderationof$6.0million.Theshareswerepurchasedfromthestockholdersata
purchase price of $17.4089 per share. We agreed to waive certain transfer restrictions in connection with, and assist in the
administrationof,thisstocktransaction.
InvestorRightsAgreement
InApril2014,weenteredintoanAmendedandRestatedInvestorRightsAgreement,whichwerefertoasourinvestorrights
agreement,withcertainholdersofouroutstandingconvertiblepreferredstock,includingBenchmarkCapitalPartnersVI,L.P.and
entities affiliated with Trinity Ventures, entities with which our directors Peter Fenton and Dan Scholnick, respectively, are
affiliated,aswellasentitiesaffiliatedwithInsightVenturePartnersandentitiesaffiliatedwithTenayaCapital.AsofSeptember30,
2014, the holders of 24,813,343 shares of our common stock, including our common stock issuable in connection with the
automaticconversionofalloutstandingsharesofourconvertiblepreferredstockintocommonstockandcommonstockissuable
uponexerciseofoutstandingconvertiblepreferredstockwarrants,wereentitledtorightswithrespecttotheregistrationoftheir
sharesfollowingthisofferingundertheSecuritiesAct.SeethesectiontitledDescriptionofCapitalStockRegistrationRights
formoreinformationregardingtheseregistrationrights.
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PoliciesandProceduresforTransactionswithRelatedPersons
Weintendtoadoptapolicythatourexecutiveofficers,directors,nomineesforelectionasadirector,beneficialownersof
morethan5%ofanyclassofourcommonstock,andanymembersoftheimmediatefamilyofanyoftheforegoingpersonsarenot
permittedtoenterintoarelatedpersontransactionwithuswithoutthepriorconsentofourauditcommittee.Anyrequestforusto
enterintoatransactionwithanexecutiveofficer,director,nomineeforelectionasadirector,beneficialownerofmorethan5%of
any class of our common stock, or any member of the immediate family of any of the foregoing persons, in which the amount
involvedexceeds$120,000andsuchpersonwouldhaveadirectorindirectinterest,mustfirstbepresentedtoourauditcommittee
forreview,consideration,andapproval.Inapprovingorrejectinganysuchproposal,ourauditcommitteeistoconsiderthematerial
factsofthetransaction,including,butnotlimitedto,whetherthetransactionisontermsnolessfavorablethantermsgenerally
availabletoanunaffiliatedthirdpartyunderthesameorsimilarcircumstancesandtheextentoftherelatedpersonsinterestinthe
transaction.Allofthetransactionsdescribedabovewereenteredintoafterpresentation,consideration,andapprovalbyourboard
of directors. As of the date of this prospectus, we have not adopted any formal standards, policies, or procedures governing the
reviewandapprovalofrelatedpartytransactions,butweexpectthatourauditcommitteewilldosointhefuture.
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PRINCIPALSTOCKHOLDERS
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of
September30,2014,andasadjustedtoreflectthesaleofcommonstockofferedbyusinthisofferingassumingnoexerciseofthe
underwritersoverallotmentoption,for:
eachofournamedexecutiveofficers
eachofourdirectors
allofourdirectorsandexecutiveofficersasagroupand
eachpersonknownbyustobethebeneficialownerofmorethan5%ofanyclassofourvotingsecurities.
WehavedeterminedbeneficialownershipinaccordancewiththerulesoftheSEC,andthereforeitrepresentssoleorshared
votingorinvestmentpowerwithrespecttooursecurities.Unlessotherwiseindicatedbelow,toourknowledge,thepersonsand
entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned,
subjecttocommunitypropertylawswhereapplicable.Wehavedeemedsharesofourcommonstocksubjecttooptionsthatare
currentlyexercisableorexercisablewithin60daysofSeptember30,2014tobeoutstandingandtobebeneficiallyownedbythe
person holding the option for the purpose of computing the percentage ownership of that person but have not treated them as
outstandingforthepurposeofcomputingthepercentageownershipofanyotherperson.
Wehavebasedpercentageownershipofourcommonstockbeforethisofferingon41,095,833sharesofourcommonstock
outstanding as of September 30, 2014, which includes, (i) 24,931,796 shares of common stock resulting from the automatic
conversion of all outstanding shares of our convertible preferred stock immediately upon the closing of this offering, as if this
conversion had occurred as of September 30, 2014, assuming an initial public offering price of $19.00 per share, which is the
midpointofthepricerangesetforthonthecoverpageofthisprospectus,andgivingeffecttotheconversionpriceadjustment
relating to our Series F convertible preferred stock described in Description of Capital Stock, and (ii) the net exercise of an
outstanding warrant into an aggregate of 10,362 shares of common stock upon the closing of this offering, assuming an initial
publicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageofthisprospectus.
Percentageownershipofourcommonstockafterthisofferingassumesoursaleof5,000,000sharesofcommonstockinthisoffering
andnoexerciseoftheunderwritersoverallotmentoption.
Unlessotherwiseindicated,theaddressofeachbeneficialownerlistedinthetablebelowisc/oNewRelic,Inc.,188Spear
Street,Suite1200,SanFrancisco,California94105.
SharesBeneficiallyOwned
PriortotheOffering
Number
Percentage
NamedExecutiveOfficersandDirectors:
LewisCirne(1)
ChrisCook (2)
PatrickMoran (3)
MarkSachleben (4)
PeterL.S.Currie(5)
PeterFenton (6)
SarahFriar
AdamMessinger(7)
DanScholnick (8)
Alldirectorsandexecutiveofficersasagroup(12persons)(9)
11,187,390
1,360,834
320,501
1,287,791
100,000
9,018,402
40,000
5,583,723
29,483,641
5%Stockholders:
EntitiesaffiliatedwithInsightVenturePartners(10)
27.2%
3.2
*
3.1
*
21.9

*
13.6
68.2
11,187,390
1,360,834
320,501
1,287,791
100,000
9,018,402
40,000
5,583,723
29,483,641
21.9
5.6
4.8
13.6
9,018,402
2,297,675
1,988,062
5,583,723
SharesBeneficiallyOwned
AftertheOffering
Number
Percentage
24.2%
2.9
*
2.8
*
19.6
*
12.1
61.1
19.6
5.0
4.3
12.1
9,018,402
2,297,675
1,988,062
5,583,723
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* Lessthanonepercent(1%).
(1) Consistsof250,000sharesheldbyJ.P.MorganTrustCompanyofDelaware,asTrusteeoftheCirneFamily2012IrrevocableTrust,10,853,974sharesheldbyLewis
Cirneandhisspouse,asTrusteesoftheCirneFamilyRevocableTrustUADMarch20,2012,and83,416sharesofcommonstockissuablepursuanttoastockoption
exercisablewithin60daysofSeptember30,2014.
(2) Consists of 1,360,834 shares of common stock issuable pursuant to stock options exercisable within 60 days after September 30, 2014, of which 391,667 shares were
unvested,butwereearlyexercisable,asof60daysafterSeptember30,2014.
(3) Consistsof320,501sharesofcommonstockissuablepursuanttostockoptionsexercisablewithin60daysafterSeptember30,2014.
(4) Consists of 1,037,791 shares held by trusts for which Mr. Sachleben and his spouse are the trustees and 250,000 shares of common stock issuable pursuant to stock
optionsexercisablewithin60daysafterSeptember30,2014,ofwhich88,543shareswereunvested,butwereearlyexercisable,asof60daysafterSeptember30,2014.
(5) Consistsof100,000sharesofcommonstockheldbyMr.Currie,ofwhich60,417shareswouldbesubjecttorepurchasebyusasof60daysafterSeptember30,2014.
(6) Consists of 9,018,402 shares held directly by Benchmark Capital Partners VI, L.P. for itself and as nominee for Benchmark Founders Fund VI, L.P., Benchmark
Founders Fund VIB, L.P., and related individuals. Benchmark Capital Management Co. VI, L.L.C. is the general partner of each of Benchmark Capital Partners VI,
L.P.,BenchmarkFoundersFundVI,L.P.,andBenchmarkFoundersFundVIB,L.P.Mr.Fenton,amemberofourboardofdirectors,AlexandreBalkanski,Matthew
R, Cohler, Bruce W. Dunlevie, J. William Gurley, Kevin R. Harvey, Robert C. Kagle, Steven M. Spurlock, and Mitchell H. Lasky are the managing members of
BenchmarkCapitalManagementCo.VI,L.L.C.and,therefore,maybedeemedtoholdvotinganddispositivepoweroverthesharesheldbyBenchmarkCapitalPartners
VI,L.P.Theaddressforeachoftheseentitiesis2965WoodsideRoad,Woodside,California94062.
(7) Consists of 40,000 shares of common stock held by Mr. Messinger, of which 35,000 shares would be subject to repurchase by us as of 60 days after September 30,
2014.
(8) Consistsof5,434,232sharesheldbyTrinityVenturesIX,L.P.,84,978sharesheldbyTrinityIXEntrepreneursFund,L.P.,and64,513sharesheldbyTrinityIXSide
BySide Fund, L.P. Mr. Scholnick, a member of our board of directors, is a Member of Trinity TVL IX, L.L.C., the general partner of each of these entities and,
therefore,maybedeemedtoholdvotinganddispositivepowerwithrespecttothesharesheldbyTrinityVenturesIX,L.P.,TrinityIXEntrepreneursFund,L.P.,and
TrinityIXSideBySideFund,L.P.TheaddressforeachoftheTrinityVenturesentitiesis2480SandHillRoad,Suite200,MenloPark,California94025.
(9) Consists of 27,343,890 shares of common stock and 2,139,751 shares of common stock issuable pursuant to options exercisable within 60 days after September 30,
2014, of which 480,210 shares were unvested, but were early exercisable, as of 60 days after September 30, 2014, and of which 95,417 shares would be subject to
repurchasebyusasof60daysafterSeptember30,2014.
(10) Consists of 940,672 shares held by Insight Venture Partners VII, L.P., 414,103 shares held by Insight Venture Partners (Cayman) VII, L.P., 59,500 shares held by
Insight Venture Partners (Delaware) VII, L.P., 21,772 shares held by Insight Venture Partners VII (CoInvestors), L.P., and 861,628 shares held by Insight Venture
Partners Coinvestment Fund II, L.P. The general partner of Insight Venture Partners VII, L.P., Insight Venture Partners (Cayman) VII, L.P., Insight Venture Partners
(Delaware)VII,L.P.,andInsightVenturePartnersVII(CoInvestors),L.P.,collectivelyFundVII,isInsightVentureAssociatesVII,L.P.ThegeneralpartnerofInsight
Venture Associates VII, L.P. is Insight Venture Associates VII, Ltd., the sole shareholder of which is Insight Holdings Group, LLC. The general partner of Insight
VenturePartnersCoinvestmentFundII,L.P.isInsightVentureAssociatesCoinvestmentII,L.P.InsightHoldingsGroup,LLCisthegeneralpartnerofInsightVenture
AssociatesCoinvestmentII,L.P.JeffreyHoring,DevenParekh,andPeterSobiloffarethemembersoftheboardofmanagersofInsightHoldingsGroup,LLCandmay
be deemed to hold voting and dispositive power over the shares held by Fund VII and Insight Venture Partners Coinvestment Fund II, L.P. The foregoing is not an
admissionbyInsightVentureAssociatesVII,L.P.,InsightVentureAssociatesVII,Ltd.,InsightVentureAssociatesCoinvestmentII,L.P.,orInsightHoldingsGroup,
LLCthatitisthebeneficialownerofthesharesheldbyFundVIIorInsightVenturePartnersCoinvestmentFundII,L.P.TheaddressforFundVIIandInsightVenture
CoinvestmentFundII,LP.isc/oInsightVenturePartners,680FifthAvenue,8thFloor,NewYork,NewYork10019.
(11) Consists of 1,558,056 shares held by Tenaya Capital V, L.P. and 430,006 shares held by Tenaya Capital VP, L.P. The general partner of each of Tenaya Capital V,
L.P.andTenayaCapitalVP,L.P.isTenayaCapitalVGP,LP.ThegeneralpartnerofTenayaCapitalVGP,LPisTenayaCapitalVGP,LLC.Messrs.TomBanahan,
BenBoyer,StewartGollmer,BrianMelton,andBrianPaularethemanagingmembersofTenayaCapitalVGP,LLCandsuchmanagingmembersequallysharevoting
and dispositive power over the holdings of each of Tenaya Capital V, L.P. and Tenaya Capital VP, L.P. The address for each of the Tenaya entities is 3280 Alpine
Road,PortolaValley,California94208.
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DESCRIPTIONOFCAPITALSTOCK
General
Thefollowingdescriptionsummarizesthemostimportanttermsofourcapitalstock,astheyareexpectedtobeineffectupon
the closing of this offering. We expect to adopt an amended and restated certificate of incorporation and amended and restated
bylawsinconnectionwiththisoffering,andthisdescriptionsummarizestheprovisionsthatareexpectedtobeincludedinsuch
documents.Becauseitisonlyasummary,itdoesnotcontainalltheinformationthatmaybeimportanttoyou.Foracomplete
descriptionofthematterssetforthinthisDescriptionofCapitalStock,youshouldrefertoouramendedandrestatedcertificateof
incorporation and amended and restated bylaws and investor rights agreement, which are or will be included as exhibits to the
registration statement of which this prospectus forms a part, and to the applicable provisions of Delaware law. Immediately
followingtheclosingofthisoffering,ourauthorizedcapitalstockwillconsistof100,000,000sharesofcommonstock,$0.001par
valuepershare,and10,000,000sharesofundesignatedpreferredstock,$0.001parvaluepershare.
Assuming(i)theautomaticconversionofallsharesofourconvertiblepreferredstockoutstandingasofSeptember30,2014,
whichconversionwilloccurimmediatelyupontheclosingofthisoffering,assuminganinitialpublicofferingpriceof$19.00per
share,whichisthemidpointofthepricerangesetforthonthecoverpageofthisprospectus,andgivingeffecttotheconversion
priceadjustmentrelatingtoourSeriesFconvertiblepreferredstockdescribedinDescriptionofCapitalStock,and(ii)thenet
exerciseofanoutstandingwarrantintoanaggregateof10,362sharesofcommonstockupontheclosingofthisoffering,therewere
41,095,833 shares of our common stock outstanding and no shares of our convertible preferred stock outstanding. As of
September30,2014,wehad145stockholdersofrecord.Ourboardofdirectorsisauthorized,withoutstockholderapprovalexcept
asrequiredbythelistingstandardsoftheNewYorkStockExchangetoissueadditionalsharesofourcapitalstock.
CommonStock
VotingRights
Eachholderofourcommonstockisentitledtoonevoteforeachshareofcommonstockheldonallmatterssubmittedtoa
voteofstockholders,exceptasotherwiseexpresslyprovidedinouramendedandrestatedcertificateofincorporationorrequiredby
applicablelaw.Wehavenotprovidedforcumulativevotingfortheelectionofdirectorsinouramendedandrestatedcertificateof
incorporation.
EconomicRights
DividendsandDistributions.Subjecttothepriorrightsofholdersofallclassesandseriesofstockatthetimeoutstanding
havingpriorrightsastodividends,theholdersofcommonstockwillbeentitledtoreceive,when,asandifdeclaredbytheboardof
directors,outofanyassetslegallyavailabletherefor,suchdividendsasmaybedeclaredfromtimetotimebytheboardofdirectors.
Liquidation Rights. In the event of our liquidation, dissolution, or windingup, upon the completion of the distributions
required with respect to any series of preferred stock that may then be outstanding, the remaining assets legally available for
distributiontostockholdersshallbedistributedratablyamongtheholdersofcommonstock.
PreferredStock
AsofSeptember30,2014,therewere24,813,343sharesofourconvertiblepreferredstockoutstanding.Immediatelyuponthe
completionofthisoffering,alloutstandingsharesofourconvertiblepreferredstockasofSeptember30,2014willconvertinto
24,931,796sharesofourcommonstock,includingtheconversionofallofouroutstandingsharesofSeriesA,SeriesB,SeriesC,
SeriesD,andSeriesEconvertiblepreferredstockinto
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21,357,203sharesofourcommonstockandtheconversionofallofouroutstandingsharesofSeriesFconvertiblepreferredstock
into3,574,593sharesofourcommonstock,baseduponanassumedinitialpublicofferingpriceof$19.00pershare,whichisthe
midpointofthepricerangesetforthonthecoverpageofthisprospectus,andtheadjustmentprovisionsrelatingtoourSeriesF
convertiblepreferredstock.Thenumberofsharesofourcommonstocktobeissuedupontheconversionofalloutstandingshares
ofourSeriesFconvertiblepreferredstockdepends,inpart,ontheinitialpublicofferingpriceofourcommonstock.Weexpectthe
initialpublicofferingpriceofourcommonstocktobebetween$18.00and$20.00pershare,assetforthonthecoverpageofthis
prospectus.However,theactualinitialpublicofferingpricemaybelowerorhigher,whichwouldincreaseordecrease,respectively,
thenumberofsharesofourcommonstocktobeissuedupontheconversionofourSeriesFconvertiblepreferredstock,asdescribed
inmoredetailbelow.Wewillnotknowtheinitialpublicofferingpriceand,asaresult,thetotalnumberofsharesofcommonstock
tobeissuedupontheconversionofthesesharesofSeriesFconvertiblepreferredstock,untilthedeterminationoftheactualprice
persharefollowingtheeffectivenessoftheregistrationstatementofwhichthisprospectusformsapart.Theratioatwhicheach
shareofourSeriesFconvertiblepreferredstockautomaticallyconvertsintosharesofourcommonstockinconnectionwiththis
offeringisitsoriginalissuepricedividedbyaconversionpricedeterminedbyaformulaasdescribedbelow.Iftheinitialpublic
offeringpricepershare,beforedeductingunderwritingdiscountsandcommissionsandestimatedofferingexpensespayablebyus,
islessthan$28.9340,theSeriesFconversionpricewillbereducedtothepriceobtainedbymultiplying(i)thecurrentconversion
priceof$28.9340by (ii) the quotient obtainedbydividing (a)thenumber ofshares ofourcommon stockdeemed outstanding
immediatelypriortotheclosingofthisofferingplusthenumberofsharesofourcommonstockthattheaggregateofferingpricefor
the shares to be issued in this offering would purchase at $28.9340, by (b) the number of shares of our common stock deemed
outstandingimmediatelypriortothisofferingplusthetotalnumberofsharesofourcommonstockissuedinthisoffering.Basedon
anassumedinitialofferingpublicpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageof
thisprospectus,ourSeriesFconvertiblepreferredstockwouldconverttocommonstockataratioof1:1.0343.
Uponthecompletionofthisoffering,ourboardofdirectorsmay,withoutfurtheractionbyourstockholders,fixtherights,
preferences, privileges, and restrictions of up to an aggregate of 10,000,000 shares of preferred stock in one or more series and
authorizetheirissuance.Theserights,preferences,andprivilegescouldincludedividendrights,conversionrights,votingrights,
terms of redemption, liquidation preferences, sinking fund terms, and the number of shares constituting any series or the
designationofsuchseries,anyorallofwhichmaybegreaterthantherightsofourcommonstock.Theissuanceofourpreferred
stockcouldadverselyaffectthevotingpowerofholdersofourcommonstockandthelikelihoodthatsuchholderswillreceive
dividendpaymentsandpaymentsuponliquidation.Inaddition,theissuanceofpreferredstockcouldhavetheeffectofdelaying,
deferring,orpreventingachangeofcontrolorothercorporateaction.Uponthecompletionofthisoffering,nosharesofpreferred
stockwillbeoutstanding,andwehavenopresentplantoissueanysharesofpreferredstock.
OptionsandWarrants
As of September 30, 2014, options to purchase a total of 8,251,617 shares of our common stock were outstanding, and
618,383additionalsharesofourcommonstockwerereservedforfutureissuanceunderour2008Plan.Afterthisoffering,weintend
toceasegrantingawardsunderour2008Plan,andinsteadwewillgrantawards,includingoptions,underour2014Planwhichwill
become effective at the time of execution of the underwriting agreement for this offering. We have reserved an aggregate of
5,618,383sharesofcommonstockforfutureissuanceunderour2014Planwhich(i)includes618,383sharesofcommonstockasof
September 30, 2014 reserved for future grants under our 2008 Plan, (ii) does not reflect the issuance of the stock options and
restrictedstockunitsgrantedafterSeptember30,2014,and(iii)excludesanincreasetothe2008Planreserveof1,600,000shares
ofcommonstockinNovember2014,whichshares,inthecaseof(i)and(iii),willbeaddedtothesharesreservedforfutureissuance
underour2014Planuponeffectivenessofthatplanifthesharesarenotissuedorsubjecttooutstandinggrantsunderthe2008Plan
atthattime.Foramorecompletediscussionofourequityincentiveplans,pleaseseeExecutiveCompensationEquityIncentive
Plans.
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AsofSeptember30,2014,awarranttopurchaseuptoanaggregateof28,000sharesofourcommonstock,whichexpiresin
September 2018, was outstanding at an exercise price of $0.50 per share after giving effect to the conversion of that warrant to
purchaseSeriesAconvertiblepreferredstockintoawarranttopurchasesharesofourcommonstock,whichwilloccuruponthe
consummationofthisoffering.Upontheclosingofthisoffering,aSeriesDconvertiblepreferredstockwarrantwillautomatically
benetexercisedforanaggregateof10,362sharesofcommonstockassuminganinitialpublicofferingpriceof$19.00pershare,
whichisthemidpointofthepricerangesetforthonthecoverpageofthisprospectus.
RegistrationRights
We are party to an investor rights agreement that provides that holders of our convertible preferred stock and warrants to
purchaseourconvertiblepreferredstock,includingcertainholdersof5%ofourcapitalstockandentitiesaffiliatedwithcertainof
ourdirectors,havecertainregistrationrights,assetforthbelow.Theregistrationofsharesofourcommonstockpursuanttothe
exerciseofregistrationrightsdescribedbelowwouldenabletheholderstoselltheseshareswithoutrestrictionundertheSecurities
Act when the applicable registration statement is declared effective. We will pay the registration expenses, other than the
underwritingdiscountsandcommissions,ofthesharesregisteredpursuanttothedemand,piggyback,andFormS3registrations
describedbelow.
Generally,inanunderwrittenoffering,themanagingunderwriter,ifany,hastheright,subjecttospecifiedconditions,tolimit
the number of shares such holders may include. The demand, piggyback, and Form S3 registration rights described below will
expireupontheearlieroffiveyearsfollowingthecompletionofthisoffering,orwhenallinvestors,consideredwiththeiraffiliates,
cansellalloftheirsharesinathreemonthperiodunderRule144.
DemandRegistrationRights
After the closing of this offering, the holders of 24,970,158 shares of our common stock, including 28,000 shares issuable
uponexerciseofawarrant,willbeentitledtocertaindemandregistrationrights.Atanytimebeginningontheearlierofthefifth
anniversary of the date of the investor rights agreement or 180 days following the completion of this offering, the holders of a
majorityofthesesharesmay,onnotmorethantwooccasions,requestthatweregisteralloraportionoftheirshares,subjectto
certain specified exceptions. Such request for registration must cover at least fifty percent of the registrable securities then
outstandingforanaggregateofferingprice,netoftheunderwritingdiscountsandcommissions,equalorgreaterthan$15.0million.
PiggybackRegistrationRights
Inconnectionwiththisoffering,certainholderswereentitledto,andthenecessarypercentageofholderswaived,theirrights
tonoticeofthisofferingandtoincludetheirsharesofregistrablesecuritiesinthisoffering.Intheeventthatweproposetoregister
anyofoursecuritiesundertheSecuritiesActinanotheroffering,eitherforourownaccountorfortheaccountofothersecurity
holders,theholdersoftheseshareswillbeentitledtocertainpiggybackregistrationrightsallowingthemtoincludetheirshares
in such registration, subject to certain marketing and other limitations. As a result, whenever we propose to file a registration
statementundertheSecuritiesAct,includingaregistrationstatementonFormS3asdiscussedbelow,otherthanwithrespecttoa
registrationstatementrelatedtoanyemployeebenefitplan,issuanceorresaleofsecuritiesissuedinacorporatereorganizationor
transactionunderRule145oftheSecuritiesAct,orrelatedtostockissueduponconversionofdebtsecurities,theholdersofthese
sharesareentitledtonoticeoftheregistrationandhavetheright,subjecttolimitationsthattheunderwritersmayimposeonthe
numberofsharesincludedintheregistration,toincludetheirsharesintheregistration.
S3RegistrationRights
Aftertheclosingofthisofferingtheholdersof24,970,158sharesofourcommonstock,including28,000sharesissuableupon
exerciseofawarrant,willbeentitledtocertainFormS3registrationrights.Holdersofatleast30%ofthesesharescanmakea
requestthatweregistertheirsharesonFormS3ifwearequalifiedtofilearegistrationstatementonFormS3,subjecttospecified
exceptions.SuchrequestforregistrationonFormS3
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mustcoversecuritiestheaggregateofferingpriceofwhichequalsorexceeds$2.0million.Wewillnotberequiredtoeffectmore
thantworegistrationsonFormS3withinany12monthperiod.
AntiTakeoverProvisions
DelawareLaw
We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from
engaging in any business combination with any interested stockholder for a period of three years after the date that such
stockholderbecameaninterestedstockholder,withthefollowingexceptions:
thatresultedinthestockholderbecominganinterestedstockholder
upon closing of the transaction that resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began,
excludingforpurposesofdeterminingthevotingstockoutstanding(butnottheoutstandingvotingstockownedbythe
interestedstockholder)thosesharesownedby(i)personswhoaredirectorsandalsoofficersand(ii)employeestockplans
inwhichemployeeparticipantsdonothavetherighttodetermineconfidentiallywhethersharesheldsubjecttotheplan
willbetenderedinatenderorexchangeofferor
beforesuchdate,theboardofdirectorsofthecorporationapprovedeitherthebusinesscombinationorthetransaction
on or after such date, the business combination is approved by the board of directors and authorized at an annual or
special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the
outstandingvotingstockthatisnotownedbytheinterestedstockholder.
Ingeneral,Section203definesbusinesscombinationtoincludethefollowing:
anymergerorconsolidationinvolvingthecorporationandtheinterestedstockholder
anysale,transfer,pledge,orotherdispositionof10%ormoreoftheassetsofthecorporationinvolvingtheinterested
stockholder
subjecttocertainexceptions,anytransactionthatresultsintheissuanceortransferbythecorporationofanystockofthe
corporationtotheinterestedstockholder
anytransactioninvolvingthecorporationthathastheeffectofincreasingtheproportionateshareofthestockorany
classorseriesofthecorporationbeneficiallyownedbytheinterestedstockholderor
the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges, or other financial
benefitsbyorthroughthecorporation.
Ingeneral,Section203definesaninterestedstockholderasanentityorpersonwho,togetherwiththepersonsaffiliatesand
associates,beneficiallyowns,orwithinthreeyearspriortothetimeofdeterminationofinterestedstockholderstatusdidown,15%
ormoreoftheoutstandingvotingstockofthecorporation.
AmendedandRestatedCertificateofIncorporationandAmendedandRestatedBylawProvisions
Becauseourstockholdersdonothavecumulativevotingrights,ourstockholdersholdingamajorityofthevotingpowerof
our shares of common stock outstanding will be able to elect all of our directors. Our amended and restated certificate of
incorporation and amended and restated bylaws to be effective upon the completion of this offering will provide that all
stockholder actions mustbeeffectedatadulycalled meeting of stockholders and notbywritten consent.A special meeting of
stockholdersmaybecalledbythemajorityofourwholeboardofdirectors,chairoftheboardofdirectors,orourchiefexecutive
officer.
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As described in ManagementBoard Composition, in accordance with our amended and restated certificate of
incorporationeffectiveuponthecompletionofthisoffering,ourboardofdirectorswillbedividedintothreeclasseswithstaggered
threeyearterms.
In addition, our amended and restated certificate of incorporation and amended and restated bylaws will provide that the
numberofdirectorsconstitutingourboardofdirectorswillbepermittedtobesetonlybyaresolutionadoptedbyamajorityvoteof
our entire board of directors, and that our directors may be removed only for cause. Our amended and restated certificate of
incorporation and amended and restated bylaws will also provide that vacancies occurring on our board of directors and newly
createddirectorshipsresultingfromanincreaseintheauthorizednumberofdirectorsmaybefilledonlybyvoteofamajorityofthe
remainingmembersofourboardofdirectors,eventhoughlessthanaquorum.Ouramendedandrestatedcertificateofincorporation
andamendedandrestatedbylawswillprovidethatourboardofdirectorsisexpresslyauthorizedtoadopt,amend,orrepealour
bylaws,andrequireasupermajoritystockholdervotetoamendourbylawsandcertainprovisionsofourcertificateofincorporation.
Ouramendedandrestatedbylawswillprovideadvancenoticeproceduresforstockholdersseekingtobringbusinessbefore
ourannualmeetingofstockholdersortonominatecandidatesforelectionasdirectorsatourannualmeetingofstockholders.Our
amendedandrestatedbylawswillalsospecifycertainrequirementsregardingtheformandcontentofastockholdersnotice.These
provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making
nominationsfordirectorsatourannualmeetingofstockholdersiftheproperproceduresarenotfollowed.Weexpectthatthese
provisionsmayalsodiscourageordeterapotentialacquirerfromconductingasolicitationofproxiestoelecttheacquirersown
slateofdirectorsorotherwiseattemptingtoobtaincontrolofourcompany.
Theforegoingprovisionswillmakeitmoredifficultforourexistingstockholderstoreplaceourboardofdirectorsaswellas
foranotherpartytoobtaincontrolofusbyreplacingourboardofdirectors.Sinceourboardofdirectorshasthepowertoretainand
discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to effect a
changeinmanagement.Inaddition,theauthorizationofundesignatedpreferredstockmakesitpossibleforourboardofdirectorsto
issuepreferredstockwithvotingorotherrightsorpreferencesthatcouldimpedethesuccessofanyattempttochangeourcontrol.
Theseprovisionsareintendedtoenhancethelikelihoodofcontinuedstabilityinthecompositionofourboardofdirectors
anditspoliciesandtodiscouragecertaintypesoftransactionsthatmayinvolveanactualorthreatenedacquisitionofus.These
provisionsarealsodesignedtoreduceourvulnerabilitytoanunsolicitedacquisitionproposalandtodiscouragecertaintacticsthat
maybeusedinproxyfights.However,suchprovisionscouldhavetheeffectofdiscouragingothersfrommakingtenderoffersfor
our shares and may have the effect of deterring hostile takeovers or delaying changes in our control or management. As a
consequence,theseprovisionsalsomayinhibitfluctuationsinthemarketpriceofourstockthatcouldresultfromactualorrumored
takeoverattempts.
ChoiceofForum
OuramendedandrestatedcertificateofincorporationwillprovidethattheCourtofChanceryoftheStateofDelawarewillbe
theexclusiveforumforanyderivativeactionorproceedingbroughtonourbehalfanyactionassertingabreachoffiduciaryduty
any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated
certificateofincorporationorourbylawsoranyactionassertingaclaimagainstusthatisgovernedbytheinternalaffairsdoctrine.
Theenforceabilityofsimilarchoiceofforumprovisionsinothercompaniescertificatesofincorporationhasbeenchallengedin
legalproceedings,anditispossiblethatacourtcouldfindthesetypesofprovisionstobeinapplicableorunenforceable.
LimitationsofLiabilityandIndemnification
SeethesectiontitledExecutiveCompensationLimitationonLiabilityandIndemnificationMatters.
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TransferAgentandRegistrar
Upontheclosingofthisoffering,thetransferagentandregistrarforourcommonstockwillbeComputershareTrustCompany,
N.A.
Listing
WehaveappliedforthelistingofourcommonstockontheNewYorkStockExchangeunderthesymbolNEWR.
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SHARESELIGIBLEFORFUTURESALE
Priortothecompletionofthisoffering,therehasbeennopublicmarketforourcapitalstock.Futuresalesofourcommon
stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices
prevailingfromtimetotime.Asdescribedbelow,onlyalimitednumberofshareswillbeavailableforsaleshortlyfollowingthe
completionofthisofferingduetocontractualandlegalrestrictionsonresale.Nevertheless,salesofourcommonstockinthepublic
marketaftersuchrestrictionslapse,ortheperceptionthatthosesalesmayoccur,couldadverselyaffecttheprevailingmarketprice
atsuchtimeandourabilitytoraiseequitycapitalinthefuture.
BasedonthenumberofsharesoutstandingasofSeptember30,2014,uponthecompletionofthisoffering,46,095,833shares
ofcommonstockwillbeoutstanding,assumingnoexerciseoftheunderwritersoptiontopurchaseadditionalsharesofcommon
stocktocoveroverallotments.Oftheoutstandingshares,allofthesharessoldinthisofferingwillbefreelytradable,exceptthat
anysharesheldbyouraffiliates,asthattermisdefinedinRule144undertheSecuritiesAct,mayonlybesoldincompliancewith
thelimitationsdescribedbelow.
Theremainingsharesofourcommonstockoutstandingfollowingthecompletionofthisofferingarerestrictedsecuritiesas
suchtermisdefinedinRule144undertheSecuritiesActandaresubjecttolockupandmarketstandoffagreementswithusas
described below. Following the expiration of the lockup period, restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rule 144 or 701 promulgated under the Securities Act,
describedingreaterdetailbelow.
Rule144
In general, a person who has beneficially owned restricted shares of our common stock for at least six months would be
entitledtoselltheirsecuritiesprovidedthat(i)suchpersonisnotdeemedtohavebeenoneofouraffiliatesatthetimeof,oratany
timeduringthe90dayspreceding,asaleand(ii)wearesubjecttotheExchangeActperiodicreportingrequirementsforatleast90
daysbeforethesale.Personswhohavebeneficiallyownedrestrictedsharesofourcommonstockforatleastsixmonthsbutwhoare
ouraffiliatesatthetimeof,oranytimeduringthe90dayspreceding,asale,wouldbesubjecttoadditionalrestrictions,bywhich
suchpersonwouldbeentitledtosellwithinanythreemonthperiodonlyanumberofsecuritiesthatdoesnotexceedthegreaterof
eitherofthefollowing:
1%ofthenumberofsharesofourcommonstockoutstandingfollowingthecompletionofthisoffering,whichwillequal
460,958sharesassumingnoexerciseoftheunderwritersoptiontopurchaseadditionalsharesofcommonstocktocover
overallotmentsor
the average weekly trading volume of our common stock on the New York Stock Exchange during the four calendar
weeksprecedingthefilingofanoticeonForm144withrespecttothesale
provided,ineachcase,thatwearesubjecttotheExchangeActperiodicreportingrequirementsforatleast90daysbeforethesale.
Suchsalesbothbyaffiliatesandbynonaffiliatesmustalsocomplywiththemannerofsale,currentpublicinformation,andnotice
provisionsofRule144.
Rule701
Rule701undertheSecuritiesAct,asineffectonthedateofthisprospectus,permitsresalesofsharesinrelianceuponRule
144 but without compliance with certain restrictions of Rule 144, including the holding period requirement. Most of our
employees,executiveofficers,directors,orconsultantswhopurchasedsharesunderawrittencompensatoryplanorcontractmaybe
entitledtorelyontheresaleprovisionsofRule701,butallholdersofRule701sharesarerequiredtowaituntil90daysafterthe
dateofthisprospectusbeforesellingtheirshares.However,allRule701sharesaresubjecttolockupagreementsormarketstand
offagreementsasdescribedbelowandunderthesectiontitledUnderwritingandwillbecomeeligibleforsaleattheexpirationof
thoseagreements.
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LockUpandMarketStandOffAgreements
We,ourexecutiveofficers,directors,andholdersofsubstantiallyallofourcommonstockandsecuritiesconvertibleintoor
exchangeableforourcommonstock,haveagreedorwillagreethat,subjecttocertainexceptions,foraperiodof180daysfromthe
dateofthisprospectus,weandtheywillnot,withoutthepriorwrittenconsentofMorganStanley&Co.LLC,disposeoforhedge
anysharesoranysecuritiesconvertibleintoorexchangeableforsharesofourcapitalstock.MorganStanley&Co.LLCmay,inits
discretion, release any of the securities subject to these lockup agreements at any time. There are no contractually specified
conditions for the waiver of lockup restrictions and any waiver is at the discretion of Morgan Stanley & Co. LLC. When
determiningwhetherornottoreleasesharesfromtheselockupagreements,MorganStanley&Co.LLCmayconsider,amongother
factors,thereasonsgivenbyusorthesecurityholder,asapplicable,forrequestingtherelease,thenumberofsharesforwhichthe
releaseisbeingrequested,andmarketconditionsatsuchtime.
Inadditiontotherestrictionscontainedinthelockupagreementsdescribedabove,wehaveenteredintoagreementswith
stockholders,includingourinvestorrightsagreementandourstandardformofstockoptionagreement,thatcontaincertainmarket
standoffprovisionsimposingrestrictionsontheabilityofsuchstockholderstooffer,sell,ortransferourequitysecuritiesfora
periodof180daysfollowingthedateofthisprospectus.
RegistrationRights
Onthedatebeginning181daysafterthedateofthisprospectus,theholdersof24,970,158shares,including28,000shares
issuableuponexerciseofawarrant,ofourcommonstock,ortheirtransferees,willbeentitledtocertainrightswithrespecttothe
registrationofthosesharesundertheSecuritiesAct.Foradescriptionoftheseregistrationrights,seethesectiontitledDescription
of Capital StockRegistration Rights. If these shares are registered, they will be freely tradable without restriction under the
SecuritiesAct.
EquityIncentivePlans
Assoonaspracticableafterthedateofthisprospectus,weintendtofileaFormS8registrationstatementundertheSecurities
Acttoregistersharesofourcommonstockissuedorreservedforissuanceunderourequitycompensationplansandagreements.
Thisregistrationstatementwillbecomeeffectiveimmediatelyuponfiling,andsharescoveredbythisregistrationstatementwill
thereuponbeeligibleforsaleinthepublicmarkets,subjecttovestingrestrictions,thelockupagreementsdescribedabove,and
Rule 144 limitations applicable to affiliates. For a more complete discussion of our equity compensation plans, see the section
titledExecutiveCompensationEquityIncentivePlans.
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MATERIALU.S.FEDERALINCOMEANDESTATETAXCONSEQUENCES
TONONU.S.HOLDERSOFOURCOMMONSTOCK
ThefollowingisasummaryofcertainmaterialU.S.federalincometaxconsiderationsrelatingtotheacquisition,ownership,
anddispositionofcommonstockpursuanttothisoffering.Thissummarydealsonlywithcommonstockheldasacapitalasset
(within the meaning of Section 1221 of the Code) by a holder and does not discuss the U.S. federal income tax considerations
applicabletoaholderthatissubjecttospecialtreatmentunderU.S.federalincometaxlaws,including,butnotlimitedto:adealer
in securities or currencies a financial institution a regulated investment company a real estate investment trust a taxexempt
organization an insurance company a person holding common stock as part of a hedging, integrated, conversion, or straddle
transactionorapersondeemedtosellcommonstockundertheconstructivesaleprovisionsoftheCodeatraderinsecuritiesthat
haselectedthemarktomarketmethodofaccountingapersonliableforalternativeminimumtaxanentitythatistreatedasa
partnershipforU.S.federalincometaxpurposesapersonthatreceivedsuchcommonstockinconnectionwithservicesprovideda
U.S.personwhosefunctionalcurrencyisnottheU.S.dollaracontrolledforeigncorporationapassiveforeigninvestment
companyoraU.S.expatriate.
ThissummaryisbaseduponprovisionsoftheCode,applicableU.S.Treasuryregulationspromulgatedthereunder,published
rulings,andjudicialdecisions,allasineffectasofthedatehereof.Wehavenotsought,andwillnotseek,anyrulingfromthe
InternalRevenueService,orIRS,withrespecttothetaxconsequencesdiscussedherein,andtherecanbenoassurancethattheIRS
will not take a position contrary to the tax consequences discussed below or that any position taken by the IRS would not be
sustained. Those authorities may be changed, perhaps retroactively, or may be subject to differing interpretations, which could
resultinU.S.federalincometaxconsequencesdifferentfromthosediscussedbelow.Thissummarydoesnotaddressallaspectsof
U.S.federalincometax,doesnotdealwithalltaxconsiderationsthatmayberelevanttostockholdersinlightoftheirpersonal
circumstances,anddoesnotaddresstheMedicaretaximposedoncertaininvestmentincomeoranystate,local,foreign,gift,estate,
oralternativeminimumtaxconsiderations.
Forpurposesofthisdiscussion,aU.S.holderisabeneficialholderofcommonstockthatis:anindividualcitizenorresident
of the United States a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or
organizedinorunderthelawsoftheUnitedStates,anystatethereofortheDistrictofColumbiaanestatetheincomeofwhichis
subjecttoU.S.federalincometaxationregardlessofitssourceoratrustifit(i)issubjecttotheprimarysupervisionofacourt
withintheUnitedStatesandoneormoreU.S.personshavetheauthoritytocontrolallsubstantialdecisionsofthetrustor(ii)hasa
validelectionineffectunderapplicableU.S.TreasuryregulationstobetreatedasaU.S.person.
ForpurposesofthisdiscussionanonU.S.holderisabeneficialholderofcommonstockthatisneitheraU.S.holdernora
partnership(oranyotherentityorarrangementthatistreatedasapartnership)forU.S.federalincometaxpurposes.Ifapartnership
(or an entity or arrangement that is treated as a partnership for U.S. federal income tax purposes) holds common stock, the tax
treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. A partner of a
partnershipholdingcommonstockisurgedtoconsultitsowntaxadvisors.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THEIR
PARTICULARU.S.FEDERALINCOMETAXCONSEQUENCESINLIGHTOFTHEIRSPECIFICSITUATIONS,ASWELL
ASTHETAXCONSEQUENCESARISINGUNDERANYSTATE,LOCAL,ORNONU.S.TAXLAWSANDANYOTHERU.S.
FEDERALTAXLAWS(INCLUDINGTHEU.S.FEDERALESTATEANDGIFTTAXLAWS).
DistributionsonourCommonStock
Distributionswithrespecttocommonstock,ifany,generallywillconstitutedividendsforU.S.federalincometaxpurposesto
theextentpaidoutofcurrentoraccumulatedearningsandprofits,asdeterminedforU.S.federalincometaxpurposes.Anyportion
ofadistributioninexcessofcurrentoraccumulatedearningsand
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profitswillbetreatedasareturnofcapitalandwillfirstbeappliedtoreducetheholderstaxbasisinitscommonstock,butnot
belowzero.Anyremainingamountwillthenbetreatedasgainfromthesaleorexchangeofthecommonstockandwillbetreated
asdescribedunderthesectionentitledDispositionofourCommonStockbelow.
DistributionstreatedasdividendsthatarepaidtoanonU.S.holder,ifany,withrespecttosharesofourcommonstockwillbe
subject to U.S. federal withholding tax at a rate of 30% (or lower applicable income tax treaty rate) of the gross amount of the
dividendsunlessthedividendsareeffectivelyconnectedwiththenonU.S.holdersconductofatradeorbusinessintheUnited
States.IfanonU.S.holderisengagedinatradeorbusinessintheUnitedStatesanddividendswithrespecttothecommonstock
are effectively connected with the conduct of that trade or business and, if required by an applicable income tax treaty, are
attributable to a U.S. permanent establishment, then although the nonU.S. holder will generally be exempt from the 30% U.S.
federalwithholdingtax,providedcertaincertificationrequirementsaresatisfied,thenonU.S.holderwillbesubjecttoU.S.federal
incometaxonthosedividendsonanetincomebasisatregulargraduatedU.S.federalincometaxratesinthesamemannerasif
suchholderwerearesidentoftheUnitedStates.Anysucheffectivelyconnectedincomereceivedbyaforeigncorporationmay,
undercertaincircumstances,besubjecttoanadditionalbranchprofitstaxequalto30%(orlowerapplicableincometaxtreatyrate)
of its effectively connected earnings and profits for the taxable year, as adjusted under the Code. To claim the exemption from
withholdingwithrespecttoanysucheffectivelyconnectedincome,thenonU.S.holdermustgenerallyfurnishtousorourpaying
agentaproperlyexecutedIRSFormW8ECI(orapplicablesuccessorform).
AnonU.S.holderofsharesofcommonstockwhowishestoclaimthebenefitofareducedrateofwithholdingtaxunderan
applicabletreatymustfurnishtousorourpayingagentavalidIRSFormW8BEN(orapplicablesuccessorform)certifyingsuch
holdersqualificationfortheexemptionorreducedrate.IfanonU.S.holderiseligibleforareducedrateofU.S.withholdingtax
pursuanttoanincometaxtreaty,itmayobtainarefundofanyexcessamountswithheldbytimelyfilinganappropriateclaimfor
refundwiththeIRS.NonU.S.holdersareurgedtoconsulttheirtaxadvisorsregardingtheirentitlementtobenefitsunderarelevant
incometaxtreaty.
DispositionofourCommonStock
NonU.S. holders may recognize gain upon the sale, exchange, redemption, or other taxable disposition of common stock.
SuchgaingenerallywillnotbesubjecttoU.S.federalincometaxunless:(i)thatgainiseffectivelyconnectedwiththenonU.S.
holdersconductofatradeorbusinessintheUnitedStates(and,ifrequiredbyanapplicableincometaxtreaty,isattributabletoa
U.S.permanentestablishmentmaintainedbythenonU.S.holder)(ii)thenonU.S.holderisanonresidentalienindividualwhois
presentintheUnitedStatesfor183daysormoreinthetaxableyearofthatdisposition,andcertainotherconditionsaremetor
(iii)weareorhavebeenaU.S.realpropertyholdingcorporationforU.S.federalincometaxpurposesatanytimeduringthe
shorterofthefiveyearperiodprecedingthedateofdispositionortheholdersholdingperiodforourcommonstock,andcertain
other requirements are met. We believe that we are not and we do not anticipate becoming a U.S. real property holding
corporationforU.S.federalincometaxpurposes.
IfanonU.S.holderisanindividualdescribedinclause(i)oftheprecedingparagraph,thenonU.S.holderwillgenerallybe
subjecttotaxonanetincomebasisattheregulargraduatedU.S.federalindividualincometaxratesinthesamemannerasifsuch
holderwerearesidentoftheUnitedStates,unlessanapplicableincometaxtreatyprovidesotherwise.IfthenonU.S.holderisan
individualdescribedinclause(ii)oftheprecedingparagraph,thenonU.S.holderwillgenerallybesubjecttoaflat30%taxonthe
gain,whichmaybeoffsetbyU.S.sourcecapitallosseseventhoughthenonU.S.holderisnotconsideredaresidentoftheUnited
States,providedthatthenonU.S.holderhastimelyfiledU.S.federalincometaxreturnswithrespecttosuchlosses.IfanonU.S.
holderisaforeigncorporationthatfallsunderclause(i)oftheprecedingparagraph,itwillbesubjecttotaxonanetincomebasisat
theregulargraduatedU.S.federalcorporateincometaxratesinthesamemannerasifitwerearesidentoftheUnitedStatesand,in
addition,thenonU.S.holdermaybesubjecttothebranchprofitstaxatarateequalto30%(orlowerapplicableincometaxtreaty
rate)ofitseffectivelyconnectedearningsandprofits.
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U.S.FederalEstateTax
The estate of a nonresident alien individual is generally subject to U.S. federal estate tax on property having a U.S. situs.
BecauseweareaU.S.corporation,ourcommonstockwillbeU.S.situspropertyandthereforewillbeincludedinthetaxableestate
of a nonresident alien decedent, unless an applicable estate tax treaty between the United States and the decedents country of
residenceprovidesotherwise.
InformationReportingandBackupWithholdingTax
WereporttoournonU.S.holdersandtheIRStheamountofdividendspaidduringeachfiscalyearandtheamountofanytax
withheld. All distributions to holders of common stock are subject to any applicable withholding. Information reporting
requirements apply even if no withholding was required because the distributions were effectively connected with the nonU.S.
holdersconductofaU.S.tradeorbusinessorwithholdingwasreducedbyanapplicableincometaxtreaty.Thisinformationalso
maybemadeavailableunderaspecifictreatyoragreementwiththetaxauthoritiesinthecountryinwhichthenonU.S.holder
residesorisestablished.UnderU.S.federalincometaxlaw,interest,dividends,andotherreportablepaymentsmay,undercertain
circumstances, be subject to backup withholding at the then applicable rate (currently, 28%). Backup withholding, however,
generallywillnotapplytodistributionsonourcommonstocktoanonU.S.holder,providedthenonU.S.holderfurnishestousor
ourpayingagenttherequiredcertificationastoitsnonU.S.status,suchasbyprovidingavalidIRSFormW8BENorIRSFormW
8ECI, or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our
payingagenthasactualknowledge,orreasontoknow,thattheholderisaU.S.personthatisnotanexemptrecipient.Backup
withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an
overpaymentoftaxandtheappropriateinformationistimelysuppliedtotheIRS.
ForeignAccountTaxComplianceAct
NewrulesintheCodemayimposewithholdingtaxesoncertaintypesofpaymentsmadetoforeignfinancialinstitutions(as
speciallydefinedundertheserules)andcertainothernonU.S.entitiesifcertification,informationreportingandotherspecified
requirementsarenotmet.Thelegislationpotentiallyimposesa30%withholdingtaxonwithholdablepaymentsiftheyarepaid
toaforeignfinancialinstitutionortoaforeignnonfinancialentity,unless(i)theforeignfinancialinstitutionundertakescertain
diligence and reporting obligations and other specified requirements are satisfied or (ii) the foreign nonfinancial entity either
certifiesitdoesnothaveanysubstantialU.S.ownersorfurnishesidentifyinginformationregardingeachsubstantialU.S.ownerand
otherspecifiedrequirementsaresatisfied.Withholdablepaymentgenerallymeans(i)anypaymentofinterest,dividends,rents,
andcertainothertypesofgenerallypassiveincomeifsuchpaymentisfromsourceswithintheUnitedStates,and(ii)anygross
proceedsfromthesaleorotherdispositionofanypropertyofatypethatcanproduceinterestordividendsfromsourceswithinthe
UnitedStates(including,forexample,stockanddebtofU.S.corporations).Ifthepayeeisaforeignfinancialinstitution,itmust
enterintoanagreementwiththeU.S.Treasuryrequiring,amongotherthings,thatitundertaketoidentifyaccountsheldbycertain
U.S. persons or U.S.owned foreign entities, annually report certain information about such accounts and withhold 30% on
paymentstoaccountholderswhoseactionspreventitfromcomplyingwiththesereportingandotherrequirements.Ifaninvestor
doesnotprovideuswiththeinformationnecessarytocomplywiththelegislation,itispossiblethatdistributionstosuchinvestor
that are attributable to withholdable payments, such as dividends, will be subject to the 30% withholding tax. Withholding on
certain passive income, such as dividends and interest, will is currently scheduled to begin July 1, 2014. The IRS has issued
guidanceindicatingthatwithholdingwithrespecttoallotherwithholdablepaymentswillberequiredafterDecember31,2016.
Prospectiveinvestorsshouldconsulttheirowntaxadvisersregardingthislegislation.
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UNDERWRITING
Underthetermsandsubjecttotheconditionsinanunderwritingagreementdatedthedateofthisprospectus,theunderwriters
namedbelow,forwhomMorganStanley&Co.LLCandJ.P.MorganSecuritiesLLCareactingasrepresentatives,haveseverally
agreedtopurchase,andwehaveagreedtoselltothem,severally,thenumberofsharesindicatedbelow:
Name
Numberof
Shares
MorganStanley&Co.LLC
J.P.MorganSecuritiesLLC
Allen&CompanyLLC
UBSSecuritiesLLC
JMPSecuritiesLLC
RaymondJames&Associates,Inc.
Total
5,000,000
The underwriters and the representatives are collectively referred to as the underwriters and the representatives,
respectively.Theunderwritersareofferingthesharesofcommonstocksubjecttotheiracceptanceofthesharesfromusandsubject
topriorsale.Theunderwritingagreementprovidesthattheobligationsoftheseveralunderwriterstopayforandacceptdeliveryof
thesharesofcommonstockofferedbythisprospectusaresubjecttotheapprovalofcertainlegalmattersbytheircounselandto
certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this
prospectusifanysuchsharesaretaken.However,theunderwritersarenotrequiredtotakeorpayforthesharescoveredbythe
underwritersoverallotmentoptiondescribedbelow.Theunderwritingagreementalsoprovidesthatifanunderwriterdefaults,the
purchasecommitmentsofnondefaultingunderwritersmayalsobeincreasedortheofferingmaybeterminated.
Theunderwritersinitiallyproposetoofferpartofthesharesofcommonstockdirectlytothepublicattheofferingpricelisted
onthecoverpageofthisprospectusandparttocertaindealers.Aftertheinitialofferingofthesharesofcommonstock,theoffering
priceandothersellingtermsmayfromtimetotimebevariedbytherepresentatives.
Wehavegrantedtotheunderwritersanoption,exercisablefor30daysfromthedateofthisprospectus,topurchaseupto
750,000 additional shares of common stock at the public offering price listed on the cover page of this prospectus, less
underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over
allotments,ifany,madeinconnectionwiththeofferingofthesharesofcommonstockofferedbythisprospectus.Totheextentthe
optionisexercised,eachunderwriterwillbecomeobligated,subjecttocertainconditions,topurchaseaboutthesamepercentageof
theadditionalsharesofcommonstockasthenumberlistednexttotheunderwritersnameintheprecedingtablebearstothetotal
numberofsharesofcommonstocklistednexttothenamesofallunderwritersintheprecedingtable.
The following table shows the per share and total public offering price, underwriting discounts and commissions, and
proceedsbeforeexpensestous.Theseamountsareshownassumingbothnoexerciseandfullexerciseoftheunderwritersover
allotmentoption.
Publicofferingprice
Underwritingdiscountsandcommissions
Proceeds,beforeexpenses

PerShare
NoExercise
FullExercise
$
$
$
$
$
$
$
$
Total
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Theestimatedofferingexpenses,exclusiveoftheunderwritingdiscountsandcommissions,areapproximately$2.7million.
We have agreed to reimburse the underwriters for expenses relating to clearance of this offering with the Financial Industry
RegulatoryAuthorityupto$30,000.
Theunderwritershaveinformedusthattheydonotintendsalestodiscretionaryaccountstoexceed5%ofthetotalnumberof
sharesofcommonstockofferedbythem.
WehaveappliedtohaveourcommonstocklistedontheNewYorkStockExchangeunderthetradingsymbolNEWR.
Weandallofour directorsandofficersand theholders of substantially all ofouroutstanding securitieshave agreed that,

withoutthepriorwrittenconsentofMorganStanley&Co.LLConbehalfoftheunderwriters,weandtheywillnot,duringthe
periodending180daysafterthedateofthisprospectus,orrestrictedperiod:
inourcase,fileanyregistrationstatementwiththeSecuritiesandExchangeCommissionrelatingtotheofferingofany
sharesofcommonstockoranysecuritiesconvertibleintoorexercisableorexchangeableforcommonstock,exceptfor
thefilingofaregistrationstatementonFormS8withrespecttotheemployeebenefitplansdescribedinthisprospectus
or
enterintoanyswaporotherarrangementthattransferstoanother,inwholeorinpart,anyoftheeconomicconsequences
ofownershipofthecommonstock,whetheranysuchtransactiondescribedinthesefirsttwobulletpointsistobesettled
bydeliveryofcommonstockorothersecurities,incash,orotherwise
offer,pledge,sell,contracttosell,sellanyoptionorcontracttopurchase,purchaseanyoptionorcontracttosell,grant
any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of
commonstockoranysecuritiesconvertibleintoorexercisableorexchangeableforsharesofcommonstock
inourcase,makeanypublicannouncementofanyintentiontodoanyoftheforegoing.
whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or
otherwise.Inaddition,weandeachsuchpersonagreesthat,withoutthepriorwrittenconsentofMorganStanley&Co.LLCon
behalfoftheunderwriters,weorsuchotherpersonwillnot,duringtherestrictedperiod,makeanydemandfor,orexerciseanyright
withrespectto,theregistrationofanysharesofcommonstockoranysecurityconvertibleintoorexercisableorexchangeablefor
commonstock.
Therestrictionsdescribedintheimmediatelyprecedingparagraphdonotapplyto:
securitiesacquiredinthisofferingorinopenmarkettransactionsafterthecompletionofthisoffering,providedthatno
filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with
subsequentsalesofcommonstockorothersecuritiesacquiredinthisofferingorinsuchopenmarkettransactions
thesaleofsharesofcommonstockpursuanttotheunderwritingagreement
in the case of our directors, officers, and security holders, transactions relating to shares of common stock or other
inthecaseofourdirectors,officers,andsecurityholders,transfersofsharesofcommonstockoranysecurityconvertible
intoorexercisableorexchangeableforcommonstockas(i)abonafidegiftorforbonafideestateplanningpurposes,
(ii) upon death or by will, testamentary document or intestate succession, (iii) to an immediate family member of the
lockeduppartyortoanytrustforthedirectorindirectbenefitofthelockeduppartyortheimmediatefamilyofthe
lockedup party (for purposes of this agreement, immediate family shall mean any relationship by blood, current or
formermarriageoradoption,notmoreremotethanfirstcousin),(iv)notinvolvingachangeinbeneficialownership,or
(v)ifthelockeduppartyisatrust,toanybeneficiaryofthelockeduppartyortheestateofanysuchbeneficiary
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convertibleintoorexercisableorexchangeableforcommonstocktostockholders,directorindirectaffiliates(withinthe
meaning set forth in Rule 405 under the Securities Act of 1933, as amended), current partners (general or limited),
membersormanagersofthelockedupparty,asapplicable,ortotheestatesofanysuchpartners,membersormanagers
inthecaseofourdirectors,officers,andsecurityholders,anytransferofcommonstocktouspursuanttoarrangements
underwhichwehavetheoptiontorepurchasesuchsharesorarightoffirstrefusalwithrespecttotransfersofsuchshares
inthecaseofourdirectors,officers,andsecurityholders,theconversionofouroutstandingpreferredstockintosharesof
commonstockinconnectionwiththeconsummationofthisoffering,providedthatanysuchsharesofcommonstock
receiveduponsuchconversionshallbesubjecttothetermsofthelockupagreement
inthecaseofourdirectors,officers,andsecurityholders,thetransferofcommonstockoranysecurityconvertibleintoor
exercisableorexchangeableforcommonstockthatoccursbyoperationoflawpursuanttoaqualifieddomesticorderin
connectionwithadivorcesettlementorothercourtorder
theestablishmentofatradingplanpursuanttoRule10b51undertheExchangeActforthetransferofsharesofcommon
stock,providedthat(i)suchplandoesnotprovideforthetransferofcommonstockduringtherestrictedperiodand(ii)to
theextentapublicannouncementorfilingundertheExchangeAct,ifany,isrequiredoforvoluntarilymadebyoron
behalfofthelockeduppartyorusregardingtheestablishmentofsuchplan,suchannouncementorfilingshallincludea
statementtotheeffectthatnotransferofcommonstockmaybemadeundersuchplanduringtherestrictedperiod
in the case of our directors, officers, and security holders, (i) the receipt by the lockedup party from us of shares of
commonstockupontheexerciseofoptionsorwarrants,insofarassuchoptionsorwarrantsareoutstandingasofthedate
ofthisprospectus,or(ii)thetransferofsharesofcommonstockoranysecuritiesconvertibleintocommonstockbythe
lockeduppartytousuponavestingeventofoursecuritiesorupontheexerciseofoptionsorwarrantstopurchaseour
securitiesonacashlessornetexercisebasistotheextentpermittedbytheinstrumentsrepresentingsuchoptionsor
warrantssolongassuchcashlessexerciseornetexerciseiseffectedsolelybythesurrenderofoutstandingoptionsor
warrants to us and our cancellation of all or a portion thereof to pay the exercise price and/or withholding tax
obligations,butfortheavoidanceofdoubt,excludingallmethodsofexercisethatwouldinvolveasaleofanysharesof
commonstockrelatingtooptionsorwarrants,whethertocovertheapplicableexerciseprice,withholdingtaxobligations
orotherwise,providedthatinthecaseof(i)thesharesofcommonstockdelivereduponsuchexercisearesubjecttothe
restrictionssetforthabove,andprovidedfurtherthatinthecaseofeither(i)or(ii),nofilingunderSection16(a)ofthe
ExchangeAct,oranyotherpublicfilingordisclosureofsuchreceiptortransferbyoronbehalfofthelockedupparty
shallberequiredorshallbevoluntarilymadewithin60daysafterthedateofthisprospectus,andaftersuch60thday,
anyfilingunderSection16(a)oftheExchangeActshallclearlyindicateinthefootnotestheretothat(A)thefilingrelates
tothecircumstancesdescribedin(i)or(ii),asthecasemaybe,(B)nosharesweresoldbythereportingpersonand(C)in
thecaseof(i),thesharesreceiveduponexerciseoftheoptionaresubjecttoalockupagreementwiththeunderwritersof
thisoffering
in the case of our directors, officers, and security holders, distributions of shares of common stock or any security
in the case of our directors, officers, and security holders, the transfer of shares of common stock or any security
convertible into or exercisable or exchangeable for common stock pursuant to a bona fide thirdparty tender offer,
merger, consolidation, or other similar transaction that is approved by our board of directors, made to all holders of
commonstockinvolvingachangeofcontrol,provided,thatintheeventthatthetenderoffer,merger,consolidation,or
other such transaction is not completed, the common stock owned by the lockedup party shall remain subject to the
restrictionscontainedinthelockupagreement
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theconversionofasecurityoutstandingasofthedateofthisprospectus
theissuancebyusofoptionstopurchasesharesofcommonstockorrestrictedstockunitsorrestrictedstockawardsto
our employees, officers, directors, advisors, or consultants pursuant to employee benefit plans described in this
prospectus,providedthat,priortosuchissuance,totheextentthatanysuchsharesoranysuchoptionsorrestrictedstock
unitswillbecomevestedduringtherestrictedperiod,weshallcauseeachrecipientofsuchgrantorissuancetoexecute
anddeliveralockupagreement
theissuancebyusofsharesofcommonstockupontheexercise(includinganynetexercise)ofanoptionorwarrantor
the filing by us of a registration statement on Form S8 with respect to the employee benefit plans described in this
prospectusand
our sale or issuance of or entry into an agreement to sell or issue shares of common stock in connection with our
acquisition of one or more businesses, products, or technologies (whether by means of merger, stock purchase, asset
purchase, or otherwise) or in connection with joint ventures, commercial relationships, or other strategic transactions,
provided,that,theaggregatenumberofsharesofcommonstockthatwemaysellorissueoragreetosellorissueinsuch
atransactionshallnotexceed10%ofthetotalnumberofsharesofcommonstockissuedandoutstandingimmediately
followingourinitialpublicofferingandprovidedfurtherthatweshallcauseeachrecipientofsuchsharestosignand
deliveracopyofthelockupagreementpriortosuchissuance
providedthatinthecaseofanytransferordistributionpursuanttothethird,fourth,orseventhclauseabove,eachtransferee,
doneeordistributeeshallsignanddeliveralockupletter
providedfurtherthatinthecaseofanytransferordistributionpursuanttothethirdorfourthclauseabove,suchtransfershall
notinvolveadispositionofvalueandnofilingunderSection16(a)oftheExchangeAct,oranyotherpublicfilingordisclosureof
suchtransferbyoronbehalfofthelockedupparty,reportingareductioninbeneficialownershipofsharesofcommonstock,shall
berequiredorshallbevoluntarilymadeduringtherestrictedperiodand
providedfurtherthatinthecaseofanytransferpursuanttotheseventhoreighthclauseabove,anyfilingsunderSection16(a)
oftheExchangeActshallstatethatthetransferisbyoperationoflaw,courtorder,inconnectionwithadivorcesettlement,ora
repurchasebyus,asthecasemaybe.
MorganStanley&Co.LLC,initssolediscretion,mayreleasethecommonstockandothersecuritiessubjecttothelockup
agreementsdescribedaboveinwholeorinpartatanytimewithorwithoutnotice,providedthat,whenandasrequiredbyFINRA
Rule5131,atleasttwobusinessdaysbeforethereleaseorwaiverofanyapplicablelockup,MorganStanley&Co.LLCwillnotify
usoftheimpendingreleaseorwaiverandannouncetheimpendingreleaseorwaiverthroughamajornewsservice,exceptwhere
thereleaseorwaiveriseffectedsolelytopermitatransferofsecuritiesthatisnotforconsiderationandwherethetransfereehas
agreedinwritingtobeboundbythesamelockupagreementtermsinplaceforthetransferor.
Inordertofacilitatetheofferingofthecommonstock,theunderwritersmayengageintransactionsthatstabilize,maintain,or
otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to
purchaseundertheunderwritingagreement,creatingashortposition.Ashortsaleiscoverediftheshortpositionisnogreaterthan
thenumberofsharesavailableforpurchasebytheunderwritersundertheoverallotmentoption.Theunderwriterscancloseouta
coveredshortsalebyexercisingtheoverallotmentoptionorpurchasingsharesintheopenmarket.Indeterminingthesourceof
shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares
compared to the price available under the overallotment option. The underwriters may also sell shares in excess of the over
allotmentoption,creatinganakedshortposition.Theunderwritersmustcloseoutanynakedshortpositionbypurchasingsharesin
theopenmarket.Anakedshortpositionismorelikelytobecreatediftheunderwritersareconcernedthattheremaybedownward
pressureonthepriceofthecommonstockintheopenmarketafterpricingthatcould
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adverselyaffectinvestorswhopurchaseinthisoffering.Asanadditionalmeansoffacilitatingthisoffering,theunderwritersmay
bidfor,andpurchase,sharesofcommonstockintheopenmarkettostabilizethepriceofthecommonstock.Theseactivitiesmay
raiseormaintainthemarketpriceofthecommonstockaboveindependentmarketlevelsorpreventorretardadeclineinthemarket
priceofthecommonstock.Theunderwritersarenotrequiredtoengageintheseactivitiesandmayendanyoftheseactivitiesatany
time.
We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the
SecuritiesAct.
Aprospectusinelectronicformatmaybemadeavailableonwebsitesmaintainedbyoneormoreunderwriters,orsellinggroup
members,ifany,participatinginthisoffering.Therepresentativesmayagreetoallocateanumberofsharesofcommonstockto
underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to
underwritersthatmaymakeInternetdistributionsonthesamebasisasotherallocations.
Theunderwritersandtheirrespectiveaffiliatesarefullservicefinancialinstitutionsengagedinvariousactivities,whichmay
includesecuritiestrading,commercialandinvestmentbanking,financialadvisory,investmentmanagement,investmentresearch,
principalinvestment,hedging,financing,andbrokerageactivities.Certainoftheunderwritersandtheirrespectiveaffiliateshave,
fromtimetotime,performed,andmayinthefutureperform,variousfinancialadvisoryandinvestmentbankingservicesforus,for
whichtheyreceivedorwillreceivecustomaryfeesandexpenses.
Inaddition,intheordinarycourseoftheirvariousbusinessactivities,theunderwritersandtheirrespectiveaffiliatesmaymake
orholdabroadarrayofinvestmentsandactivelytradedebtandequitysecurities(orrelatedderivativesecurities)andfinancial
instruments(includingbankloans)fortheirownaccountandfortheaccountsoftheircustomersandmayatanytimeholdlongand
short positions in such securities and instruments. Such investment and securities activities may involve our securities and
instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express
independentresearchviewsinrespectofsuchsecuritiesorinstrumentsandmayatanytimehold,orrecommendtoclientsthatthey
acquire,longorshortpositionsinsuchsecuritiesandinstruments.
Intheordinarycourseofbusiness,wesold,andmayinthefuturesell,solutionstooneormoreoftheunderwritersortheir
respectiveaffiliatesinarmslengthtransactionsonmarketcompetitiveterms.
WepaidAllen&CompanyLLC,whichactedasplacementagentinconnectionwithoursaleofsharesofSeriesFpreferred
stockinApril2014,acashfeeof$2.5million.
PricingoftheOffering
Prior to this offering, there has been no public market for our common stock. The initial public offering price will be
determined by negotiations between us and the representatives. Among the factors to be considered in determining the initial
publicofferingpriceareourfutureprospectsandthoseofourindustryingeneral,oursales,earningsandcertainotherfinancialand
operating information in recent periods, and the priceearnings ratios, pricesales ratios, market prices of securities, and certain
financialandoperatinginformationofcompaniesengagedinactivitiessimilartoours.
SellingRestrictions
OtherthanintheUnitedStates,noactionhasbeentakenbyusortheunderwritersthatwouldpermitapublicofferingofthe
securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this
prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or
advertisementsinconnectionwiththeofferandsaleofanysuchsecuritiesbedistributedorpublishedinanyjurisdiction,except
undercircumstancesthatwillresultin
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compliancewiththeapplicablerulesandregulationsofthatjurisdiction.Personsintowhosepossessionthisprospectuscomesare
advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this
prospectus.Thisprospectusdoesnotconstituteanoffertosellorasolicitationofanoffertobuyanysecuritiesofferedbythis
prospectusinanyjurisdictioninwhichsuchanofferorasolicitationisunlawful.SalesofsharesmadeoutsideoftheUnitedStates
maybemadebyaffiliatesoftheunderwriters.
EuropeanEconomicArea
InrelationtoeachMemberStateoftheEuropeanEconomicAreawhichhasimplementedtheProspectusDirective,each,a
RelevantMemberState,anoffertothepublicofanysharesofourcommonstockmaynotbemadeinthatRelevantMemberState,
exceptthatanoffertothepublicinthatRelevantMemberStateofanysharesofourcommonstockmaybemadeatanytimeunder
thefollowingexemptionsundertheProspectusDirective,iftheyhavebeenimplementedinthatRelevantMemberState:
(a)
toanylegalentitywhichisaqualifiedinvestorasdefinedintheProspectusDirective
(b) tofewerthan100or,iftheRelevantMemberStatehasimplementedtherelevantprovisionofthe2010PDAmending
Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as
permittedundertheProspectusDirective,subjecttoobtainingthepriorconsentoftherepresentativesforanysuchoffer
or
(c)
inanyothercircumstancesfallingwithinArticle3(2)oftheProspectusDirective,providedthatnosuchofferofsharesof
ourcommonstockshallresultinarequirementforthepublicationbyusoranyunderwriterofaprospectuspursuantto
Article3oftheProspectusDirective.
Forthepurposesofthisprovision,theexpressionanoffertothepublicinrelationtoanysharesofourcommonstockinany
RelevantMemberStatemeansthecommunicationinanyformandbyanymeansofsufficientinformationonthetermsoftheoffer
andanysharesofourcommonstocktobeofferedsoastoenableaninvestortodecidetopurchaseanysharesofourcommonstock,
asthesamemaybevariedinthatMemberStatebyanymeasureimplementingtheProspectusDirectiveinthatMemberState,the
expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending
Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the
RelevantMemberState,andtheexpression2010PDAmendingDirectivemeansDirective2010/73/EU.
UnitedKingdom
Eachunderwriterhasrepresentedandagreedthat:
(a)
ithasonlycommunicatedorcausedtobecommunicatedandwillonlycommunicateorcausetobecommunicatedan
invitationorinducementtoengageininvestmentactivity(withinthemeaningofSection21oftheFinancialServices
andMarketsAct2000,orFSMA,receivedbyitinconnectionwiththeissueorsaleofthesharesofourcommonstockin
circumstancesinwhichSection21(1)oftheFSMAdoesnotapplytousand
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in
relationtothesharesofourcommonstockin,fromorotherwiseinvolvingtheUnitedKingdom.
Switzerland
As notice to prospective investors in Switzerland, this prospectus does not constitute an issue prospectus pursuant to
Article652aorArticle1156oftheSwissCodeofObligations,orCO,andtheshareswillnotbelistedontheSIXSwissExchange.
Therefore,thisprospectusmaynotcomplywiththedisclosurestandardsoftheCOorthelistingrules(includinganyprospectus
schemes)oftheSIXSwissExchange.Accordingly,thesharesmaynotbeofferedtothepublicinorfromSwitzerland,butonlytoa
selectedandlimitedcircleofinvestors,whichdonotsubscribetotheshareswithaviewtodistribution.
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LEGALMATTERS
CooleyLLP,SanFrancisco,California,whichhasactedasourcounselinconnectionwiththisoffering,willpassuponthe
validityofthesharesofcommonstockbeingofferedbythisprospectus.Asofthedateofthisprospectus,GC&HInvestments,LLC,
anentitycomprisedofpartnersandassociatesofCooleyLLP,beneficiallyowns140,879sharesofourconvertiblepreferredstock,
whichwillbeconvertedinto140,879sharesofourcommonstockimmediatelyupontheclosingofthisoffering.
TheunderwritershavebeenrepresentedbyFenwick&WestLLP,MountainView,California.
EXPERTS
TheconsolidatedfinancialstatementsofNewRelic,Inc.asofMarch31,2013and2014andforeachofthethreeyearsinthe
periodendedMarch31,2014includedinthisprospectusandregistrationstatementhavebeenauditedbyDeloitte&ToucheLLP,
anindependentregisteredpublicaccountingfirm,asstatedintheirreportappearingherein.Suchconsolidatedfinancialstatements
havebeensoincludedinrelianceuponthereportofsuchfirmgivenupontheirauthorityasexpertsinaccountingandauditing.
ADDITIONALINFORMATION
WehavefiledwiththeSECaregistrationstatementonFormS1undertheSecuritiesActwithrespecttothesharesofcommon
stockofferedbythisprospectus.Thisprospectus,whichconstitutesapartoftheregistrationstatement,doesnotcontainallofthe
informationsetforthintheregistrationstatement,someofwhichiscontainedinexhibitstotheregistrationstatementaspermitted
by the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the
registrationstatement,includingtheexhibitsfiledasapartoftheregistrationstatement.Statementscontainedinthisprospectus
concerningthecontentsofanycontractoranyotherdocumentisnotnecessarilycomplete.Ifacontractordocumenthasbeenfiled
asanexhibittotheregistrationstatement,pleaseseethecopyofthecontractordocumentthathasbeenfiled.Eachstatementisthis
prospectusrelatingtoacontractordocumentfiledasanexhibitisqualifiedinallrespectsbythefiledexhibit.Youmayobtain
copiesofthisinformationbymailfromthePublicReferenceSectionoftheSEC,100FStreet,N.E.,Room1580,Washington,D.C.
20549, at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at
1800SEC0330.TheSECalsomaintainsanInternetwebsitethatcontainsreports,proxystatementsandotherinformationabout
issuers,likeus,thatfileelectronicallywiththeSEC.Theaddressofthatwebsiteiswww.sec.gov.
Asaresultofthisoffering,wewillbecomesubjecttotheinformationandreportingrequirementsoftheExchangeAct,and,in
accordancewiththislaw,willfileperiodicreports,proxystatementsandotherinformationwiththeSEC.Theseperiodicreports,
proxystatementsandotherinformationwillbeavailableforinspectionandcopyingattheSECspublicreferencefacilitiesandthe
websiteoftheSECreferredtoabove.Wealsomaintainawebsiteatwww.newrelic.com.Upontheclosingofthisoffering,youmay
accessthesematerialsfreeofchargeassoonasreasonablypracticableaftertheyareelectronicallyfiledwith,orfurnishedto,the
SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this
prospectusisaninactivetextualreferenceonly.
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NEWRELIC,INC.
INDEXTOCONSOLIDATEDFINANCIALSTATEMENTS
ReportofIndependentRegisteredPublicAccountingFirm
F2
ConsolidatedBalanceSheets
F3
ConsolidatedStatementsofOperations
F4
ConsolidatedStatementsofConvertiblePreferredStockandStockholdersDeficit
F5
ConsolidatedStatementsofCashFlows
F6
NotestoConsolidatedFinancialStatements
F7
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ReportofIndependentRegisteredPublicAccountingFirm
TotheBoardofDirectorsandStockholdersof
NewRelic,Inc.
SanFrancisco,California
WehaveauditedtheaccompanyingconsolidatedbalancesheetsofNewRelic,Inc.anditssubsidiary(theCompany)asof
March 31, 2013 and 2014, and the related consolidated statements of operations, convertible preferred stock and stockholders
deficit,andcashflowsforeachofthethreeyearsintheperiodendedMarch31,2014.Theseconsolidatedfinancialstatementsare
the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial
statementsbasedonouraudits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethertheconsolidated
financialstatementsarefreeofmaterialmisstatement.TheCompanyisnotrequiredtohave,norwereweengagedtoperform,an
auditofitsinternalcontroloverfinancialreporting.Ourauditsincludedconsiderationofinternalcontroloverfinancialreporting
asabasisfordesigningauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinion
ontheeffectivenessoftheCompanysinternalcontroloverfinancialreporting.Accordingly,weexpressnosuchopinion.Anaudit
alsoincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresintheconsolidatedfinancialstatements,
assessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancial
statementpresentation.Webelievethatourauditsprovideareasonablebasisforouropinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the
CompanyasofMarch31,2013and2014,andtheresultsofitsoperationsanditscashflowsforeachofthethreeyearsintheperiod
endedMarch31,2014,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.
/s/DELOITTE&TOUCHELLP
SanJose,California
June3,2014
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NEWRELIC,INC.
CONSOLIDATEDBALANCESHEETS
(Inthousands,exceptparvalue)
2014
$ 19,453
Proforma
asof
September30,
September30,
2014
2014
(unaudited)
$
92,370
2,628
1,682
61,409
10,352
4,600
546
$ 76,907
$ 1,278
1,473
2,572
4,970
10,293
1,773
163
12,229
Convertiblepreferredstock:
Convertiblepreferredstock,$0.001parvalue22,323sharesauthorizedatMarch31,
2013and2014,and24,962sharesauthorizedatSeptember30,2014(unaudited)
21,357sharesissuedandoutstandingatMarch31,2013and2014,and24,813
sharesissuedandoutstandingatSeptember30,2014(unaudited)Aggregate
liquidationpreferenceof$96,383atMarch31,2013and2014,and$196,383at
September30,2014(unaudited)nosharesissuedandoutstanding,proforma
(unaudited)
Stockholdersequity(deficit):
Commonstock,$0.001parvalue49,000sharesauthorizedatMarch31,2013and
2014,and55,000sharesauthorizedatSeptember30,2014(unaudited)15,756
and16,063sharesissuedatMarch31,2013and2014,respectively,and16,414
sharesissuedatSeptember30,2014(unaudited)and15,496and15,803shares
outstandingatMarch31,2013and2014,respectively,and16,154shares
outstandingatSeptember30,2014,(unaudited)41,356sharesissuedand
41,096sharesoutstanding,proforma(unaudited)
Treasurystockatcost(260shares)
Additionalpaidincapital
Accumulateddeficit
Totalstockholdersequity(deficit)
95,917
95,917
16
(263)
10,234
(41,226)
(31,239)
16
(263)
17,033
(81,451)
(64,665)
$ 76,907
$ 55,208
Assets
Currentassets:
Accountsreceivable,netofallowancefordoubtfulaccountsof$38,$84,and$179,
respectively
Prepaidexpensesandothercurrentassets
Totalcurrentassets
Propertyandequipment,net
Restrictedcash
Otherassets
Totalassets
Liabilities,convertiblepreferredstockandstockholdersdeficit
Currentliabilities:
Accountspayable
Accruedcompensationandbenefits
Othercurrentliabilities
Deferredrevenue
Totalcurrentliabilities
Deferredrent,noncurrent
Otherliabilities,noncurrent
Totalliabilities
Commitmentsandcontingencies(Note5)
Totalliabilities,convertiblepreferredstockandstockholdersdeficit
March31,
2013
$ 57,099
5,532
2,491
27,476
20,183
5,601
1,948
55,208
4,109
2,822
2,160
10,359
19,450
3,606
900
23,956
8,786
5,932
107,088
28,537
5,626
2,211
143,462
3,509
3,634
2,030
15,660
24,833
3,784
700
29,317
122
28,739
193,160
16
(263)
22,078
(100,846)
(79,015)
41
(263)
215,791
(100,846)
114,723
143,462
Seenotestoconsolidatedfinancialstatements.
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NEWRELIC,INC.
CONSOLIDATEDSTATEMENTSOFOPERATIONS
(Inthousands,exceptpersharedata)
Revenue
Costofrevenue
Grossprofit
Operatingexpenses:
Salesandmarketing
Lossfromoperations
Interestincome
Interestexpense
Netloss
2012
YearEndedMarch31,

2013

$11,663
1,904
9,759
$ 29,664
5,078
24,586
2014
SixMonthsEnded,
September30,
2013
2014
(unaudited)
$ 63,174
10,780
52,394
$ 26,146
4,467
21,679
4,300
10,748
2,180
17,228
(7,469)
8,565
28,365
10,053
46,983
(22,397)
16,496
58,156
17,178
91,830
(39,436)
7,734
25,007
7,161
39,902
(18,223)
$ 47,974
9,061
38,913
10,248
37,635
10,609
58,492
(19,579)
(48)
(105)
$(22,541)
16
(64)
(741)
$(40,225)
10
(34)
(322)
$(18,569)
12
(29)
201
$(19,395)
(10)
(65)
$ (7,542)
anddiluted
$ (0.51)
attributabletocommonstockholders,basicanddiluted
14,683
15,096
stockholders,basicanddiluted(unaudited)
(1.07)
Proformaweightedaveragesharesusedtocomputenetlossper
diluted(unaudited)
37,082
40,859
(1.49)
(2.58)
15,596
(1.20)
15,515
(1.22)
15,917
(0.48)
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NEWRELIC,INC.
CONSOLIDATEDSTATEMENTSOFCONVERTIBLEPREFERREDSTOCKANDSTOCKHOLDERSDEFICIT
(Inthousands)
Additional
Total
TreasuryStock
PaidIn
Accumulated Stockholders
Shares Amount Shares Amount Capital Shares Amount
Deficit
Deficit
ConvertiblePreferredStock
BalancesatMarch31,2011
IssuanceofSeriesDconvertible
preferredstocknetof
issuancecostof$41
Issuanceofcommonstockupon
exerciseofstockoptions
Vestingofearlyexercisedoptions
Stockbasedcompensation
Netloss
IssuanceofSeriesEconvertible
preferredstocknetof
issuancecostof$233
Netloss
Issuanceofrestrictedstockawards
subjectto
vesting
Netloss
IssuanceofSeriesFconvertible
preferredstocknetof
issuancecostof$2,757
(unaudited)
(unaudited)
Issuanceofrestrictedstockawards
subjecttovesting(unaudited)
(unaudited)
Netloss(unaudited)
BalancesatSeptember30,2014
(unaudited)
16,344 $
1,566

17,910
3,447

21,357

CommonStock
21,191 14,418 $
14 $
14,959
400 260 $ (263) $ (11,143) $ (10,992)

834

36,150 15,252
1
129

70

603

15 1,202
59,767
504

95,917 15,756
207

(7,542)
260 (263) (18,685)
130
70
603
(7,542)
(17,731)
1
254

12

8,766

(22,541)
16 10,234 260 (263) (41,226)
255
12
8,766
(22,541)
(31,239)
294
100

95,917 16,063

6,505

(40,225)
16 17,033 260 (263) (81,451)
6,505
(40,225)
(64,665)
3,456
97,243
311
567
567
40
4,478

(19,395)
4,478
(19,395)
24,813 $ 193,160 16,414 $
294

21,357
16 $ 22,078 260 $ (263) $(100,846) $ (79,015)
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NEWRELIC,INC.
CONSOLIDATEDSTATEMENTSOFCASHFLOWS
(Inthousands)
Cashflowsfromoperatingactivities:
Netloss
Adjustmentstoreconcilenetlosstonetcashusedinoperating
activities:
Depreciationandamortization
Stockbasedcompensationexpense
Changeinfairvalueofpreferredstockwarrantliability
Other
Changesinoperatingassetsandliabilities:
Accountsreceivable
Prepaidexpensesandotherassets
Accountspayable
Accruedcompensationandbenefitsandother
liabilities
Deferredrevenue
Deferredrent
Netcashusedinoperatingactivities
Cashflowsfrominvestingactivities:
Purchasesofpropertyandequipment
Downpaymentforpropertyandequipment
Increaseinrestrictedcash
Capitalizedsoftwaredevelopmentcosts
Netcashusedininvestingactivities
Cashflowsfromfinancingactivities:
Proceedsfromissuancesofpreferredstock,netofissuancecosts
Paymentofcostsrelatedtoinitialpublicoffering
Repaymentofdebt
Proceedsfromissuanceofcommonstock
Netcashprovidedbyfinancingactivities
Netincrease(decrease)incashandcashequivalents
Cashandcashequivalents,beginningofperiod
Cashandcashequivalents,endofperiod
YearEnded
March31,
2013
$ (7,542)
$(22,541)
$(40,225)
$(18,569)
2012
1,166
603
36
38
2014
1,916
8,686
13
125
4,536
6,220
718
225
SixMonthsEnded
September30,
2013
2014

$(19,395)
1,899
3,439
288
119
3,490
4,166
(252)
163
(857)
(736)
220
(1,285)
(791)
701
(3,036)
(754)
2,284
(2,399)
(289)
1,473
(3,397)
(3,495)
(572)
348
1,583
8
(5,133)
1,194
2,776
2,006
(7,200)
2,069
5,388
1,862
(20,713)
1,082
2,546
940
(9,471)
717
5,371
30
(13,174)
(774)

(1,358)
(2,132)
(5,698)

(4,600)
(2,873)
(13,171)
(9,758)
(1,269)
(1,001)
(5,199)
(17,227)
14,959
(61)
130
15,028
7,763
9,685
$17,448
(6,027)

(1,268)
(2,191)
(9,486)
59,767

255
60,022
39,651
17,448
57,099
294
294
(37,646)
57,099
$ 19,453
118
118
(18,839)
57,099
$ 38,260
Supplementaldisclosureofcashflowinformation:
Cashpaidforinterest
9 $
66
$
Noncashinvestingandfinancingactivities:
IssuanceofSeriesDwarrantsinconnectionwithfacilitylease $
$
10
70 $
12
$
Propertyandequipmentpurchasedbutnotpaidyet
50 $ 1,479
$
Accruedinitialofferingcosts
$

$
52

619
237
97,243
(1,330)
567
96,480
72,917
19,453
92,370
52
$
$
$
$
725
213
$
$
$
$
(5,739)
(180)
(27)
(4,443)
(10,389)
52
$
$
$
$

964

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NEWRELIC,INC.
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS
1.DescriptionofBusinessandSummaryofSignificantAccountingPolicies
DescriptionofBusinessNew Relic, Inc. (the Company or New Relic) was incorporated in Delaware on February 20,
2008. The Company is a softwareasaservice provider of software analytics products which allow users to monitor software
performancewith.NET,Java,JavaScript,Node.js,PHP,Python,andRubyapplicationsdeployedinacloudorinadatacenter.New
Relics software analytics products enable developers and operation teams to monitor, troubleshoot, and optimize their
applications.
BasisofPresentationandConsolidationTheconsolidatedfinancialstatementsincludetheaccountsofNewRelicandits
whollyownedsubsidiaries.Theseconsolidatedfinancialstatementshavebeenpreparedinaccordancewithaccountingprinciples
generally accepted in the United States of America (U.S. GAAP). All intercompany balances and transactions have been
eliminatedinconsolidation.SubsequenteventswereevaluatedfromthebalancesheetdateofMarch31,2014throughtheaudited
consolidatedfinancialstatementsoriginalissuancedateofJune3,2014.ForthesixmonthsendedSeptember30,2014,subsequent
eventswereevaluatedthroughOctober31,2014,thedateonwhichtheinterimconsolidatedfinancialstatementswereissued,and
thereissuanceoftheinterimconsolidatedfinancialstatementsonNovember28,2014astoNote15.
Unaudited Interim Financial InformationThe accompanying interim consolidated balance sheet as of September 30,
2014,therelatedinterimconsolidatedstatementsofoperationsandcashflowsforthesixmonthperiodsendedSeptember30,2013
and2014,thestatementofconvertiblepreferredstockandstockholdersdeficitforthesixmonthperiodendedSeptember30,2014,
andtherelatedfootnotedisclosuresareunaudited.Theseunauditedinterimconsolidatedfinancialstatementshavebeenprepared
in accordance with U.S. GAAP. In managements opinion, the unaudited interim consolidated financial statements have been
preparedonthesamebasisastheannualconsolidatedfinancialstatementsandincludealladjustments,whichincludeonlynormal
recurringadjustments,necessaryforthefairpresentationoftheCompanysfinancialpositionasofSeptember30,2014andthe
CompanysconsolidatedresultsofoperationsandcashflowsforthesixmonthsendedSeptember30,2013and2014.Theresults
forthesixmonthsendedSeptember30,2014arenotnecessarilyindicativeoftheresultsexpectedforthefullfiscalyear.
Unaudited Pro Forma Consolidated Balance SheetUpon the consummation of the initial public offering (IPO)
contemplatedbytheCompany,alloftheoutstandingsharesofconvertiblepreferredstockwillautomaticallyconvertintosharesof
common stock, assuming the Company raises at least $100 million. The September 30, 2014 unaudited pro forma consolidated
balance sheet data has been prepared assuming the conversion of the convertible preferred stock outstanding into
24,813,343 shares of common stock and the related conversion of the preferred stock underlying outstanding warrants, which
resultsinthereclassificationofthewarrantliabilitytoadditionalpaidincapital.
Use of EstimatesThe preparation of the consolidated financial statements in accordance with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingentassetsandliabilitiesatthedateofthefinancialstatements,andthereportedamountsofincomeandexpenseduringthe
reportingperiod.Suchmanagementestimatesinclude,butarenotlimitedto,fairvalueoftheCompanyscommonandpreferred
stock, stock options, and preferred stock warrant liability. The Company bases its estimates on historical experience and also
assumptionsthattheCompanybelievesarereasonable.Actualresultscoulddifferfromthoseestimates.
SegmentsTheCompanyschiefoperatingdecisionmakeristheChiefExecutiveOfficer,whoreviewsfinancialinformation
presentedonaconsolidatedbasis,accompaniedbyinformationaboutrevenuebygeographicregion.Accordingly,theCompany
hasdeterminedthatithasasinglereportablesegment.
CashandCashEquivalentsTheCompanyconsidersallhighlyliquidinvestmentswithanoriginalmaturityofthreemonths
orlessatthedateofpurchasetobecashandcashequivalents.
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NEWRELIC,INC.
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS(CONTINUED)
RestrictedCashTheCompanyhasanagreementtomaintaincashbalancesatafinancialinstitutionascollateralfortwo
lettersofcreditrelatingtotheCompanyspropertylease.
Property and EquipmentProperty and equipment are stated at cost. Depreciation is calculated using the straightline
methodovertheestimatedusefullivesoftheassets.TheCompanyusesanestimatedusefullifeoftwoyearsforemployeerelated
computers and software, three years for other office equipment and siterelated computer hardware, and five years for furniture.
Leasehold improvements are amortized over the shorter of the leaseterm or the estimated useful life of the related asset. Down
paymentsforpropertyandequipmentarerecordedatcostandincludedinotherassetsintheaccompanyingconsolidatedbalance
sheet.Oncethecorrespondingpropertyandequipmentitemhasbeenreceived,itwillbereclassifiedtopropertyandequipmentand
amortized.
Convertible Preferred Stock Warrant LiabilityFreestanding warrants to purchase convertible preferred stock are
accountedforasliabilityawardsandrecordedatfairvalueontheirinitialissuancedateandadjustedtofairvalueateachbalance
sheetdate,withthechangeinfairvaluebeingrecordedinotherexpense,net.Upontheearlieroftheexerciseofthewarrantsorthe
completion of a liquidation event, including the completion of an IPO in which shares underlying the warrants convert from
preferredstockintosharesofcommonstock,theSeriesApreferredstockwarrantliabilitywillberemeasuredtofairvalueandany
remaining liability will be reclassified into stockholders deficit and the Series D preferred stock warrant will automatically net
exerciseforcommonshares.
RevenueRecognitionTheCompanygeneratesrevenuefromsubscriptionbasedarrangementsthatallowcustomerstoaccess
itsproducts.TheCompanyrecognizesrevenuewhenallfourofthefollowingcriteriaaremet:
Thereispersuasiveevidenceofanarrangement.
Thesubscriptionshavebeenorisbeingprovidedtothecustomer.
Theamountoffeetobepaidbythecustomerisfixedordeterminable.
Thecollectionisreasonablyassured.
Revenuefromsubscriptionbasedarrangementsisrecognizedratablyoverthecontractualperiod,generallyfromonetotwelve
months.AlloftheCompanyssubscriptionbasedarrangementsarepricedonafixedfeebasis.
DeferredRevenueDeferredrevenueconsistsofbillingsorpaymentsreceivedinadvanceofrevenuebeingrecognized.The
Companygenerallyinvoicesitscustomersmonthly,quarterly,orannually.Deferredrevenuerepresentstheamountthatisexpected
toberecognizedasrevenuewithinoneyearofthebalancesheetdate.
Cost of RevenueCost of revenue consists of expenses relating to data center operations, hostingrelated costs, payment
processing fees, depreciation and amortization, consulting costs, and salaries and benefits of operations and global customer
supportpersonnel.
AccountsReceivableandAllowanceforDoubtfulAccountsAccountsreceivablearerecordedattheinvoicedamount,net
of allowances for doubtful accounts. The allowance for doubtful accounts is based on the Companys assessment of the
collectabilityofaccounts.TheCompanyregularlyreviewstheadequacyoftheallowancefordoubtfulaccountsbyconsideringthe
age of each outstanding invoice and the collection history of each customer to determine whether a specific allowance is
appropriate.Accountsreceivabledeemed
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NEWRELIC,INC.
uncollectablearechargedagainsttheallowancefordoubtfulaccountswhenidentified.Forallperiodspresented,theallowancefor
doubtfulaccountsactivitywasnotsignificant.
SoftwareDevelopmentCostsTheCompanycapitalizescertaindevelopmentcostsincurredinconnectionwithitsinternal
usesoftwareandwebsite.ThesecapitalizedcostsareprimarilyrelatedtoitssoftwareanalyticstoolsthatarehostedbytheCompany
and accessed by its customers on a subscription basis. Costs incurred in the preliminary stages of development are expensed as
incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental, are
capitalizeduntilthesoftwareissubstantiallycompleteandreadyforitsintendeduse.Capitalizationceasesuponcompletionofall
substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the
expenditureswillresultinadditionalfeaturesandfunctionality.Maintenancecostsareexpensedasincurred.Internalusesoftware
is amortized on a straightline basis over its estimated useful life, generally three years. The Company capitalized $1.4 million,
$3.0million,and$5.5millionininternalusesoftwareduringthefiscalyearsendedMarch31,2012,2013,and2014,respectively,
and $2.2 million and $4.7 million during the six months ended September 30, 2013 and 2014, respectively. Included in the
capitalizeddevelopmentcostsare$0.1million,$0.3million,and$0.6millionofstockbasedcompensationcostsasofMarch31,
2013 and 2014 and September 30, 2014, respectively. Capitalized stockbased compensation costs for the fiscal year ended
March31,2012werenegligible.Amortizationexpensetotaled$0.9million,$1.1million,and$2.1millionduringthefiscalyears
endedMarch31,2012,2013,and2014,respectively,and$0.9millionand$1.5millionduringthesixmonthsendedSeptember
30, 2013 and 2014, respectively. The net book value of capitalized internal use software as of March 31, 2013 and 2014 and
September 30, 2014, which is recorded in property and equipment on the accompanying consolidated balance sheets, was
$3.2million,$6.5million,and$9.8million,respectively.
DeferredOfferingCostsDeferredofferingcosts,consistingoflegal,accounting,outsideservices,andfilingfeesrelatedto
theinitialpublicofferingarecapitalized.Thedeferredofferingcostswillbeoffsetagainstproceedsfromtheinitialpublicoffering
upon the effectiveness of the offering. In the event the offering is terminated, all capitalized deferred offering costs will be
expensed.AsofMarch31,2013,theCompanyhadcapitalizednocosts,andasofMarch31,2014andSeptember30,2014,$0.2
million and $1.5 million, respectively, of deferred offering costs which are included in other assets in the accompanying
consolidatedbalancesheets.
CommissionsSales and marketing commissions are recognized as an expense at the time of the customer order.
Substantiallyalloftheeffortbythesalesandmarketingorganizationisexpendedthroughthetimeofclosingthesale.
AdvertisingExpensesAdvertisingisexpensedasincurred.Advertisingexpensewas$3.3million,$10.0million,and$22.4
millionforthefiscalyearsendedMarch31,2012,2013,and2014,respectively,and$9.3millionand$10.7millionduringthesix
monthsendedSeptember30,2013and2014,respectively.
Operating LeasesThe Company leases office space and data center facilities under operating leases. Certain lease
agreementscontainrentholidays,allowances,andrentescalationprovisions.TheCompanyrecognizesrentexpenseundersuch
leases on a straightline basis over the term of the lease. Lease renewal periods are considered on a leasebylease basis in
determiningtheleaseterm.
Impairment of LongLived AssetsLonglived assets, such as property and equipment and capitalized software
developmentcostssubjecttoamortization,arereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethat
the carrying amount of the asset may not be recoverable. If circumstances require a longlived asset be tested for possible
impairment,theCompanyfirstcomparesundiscountedcashflows
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expectedtobegeneratedbytheassettoitscarryingvalue.Ifthecarryingvalueofthelonglivedassetisnotrecoverableonan
undiscountedcashflowbasis,animpairmentisrecognizedtotheextentthatthecarryingvalueexceedsitsfairvalue.Fairvalueis
determinedthroughvariousvaluationtechniques,includingdiscountedcashflowmodels,quotedmarketvalues,andthirdparty
independentappraisals,asconsiderednecessary.ThroughMarch31,2014andSeptember30,2014,theCompanyhadnotimpaired
anyofitslonglivedassets.
IncomeTaxesTheCompanyaccountsforincometaxesusingtheassetandliabilitymethod,whichrequirestherecognition
ofdeferredtaxassetsandliabilitiesfortheexpectedfuturetaxconsequencesofeventsthathavebeenrecognizedintheCompanys
financialstatementsortaxreturns.Inaddition,deferredtaxassetsarerecordedforthefuturebenefitofutilizingnetoperatinglosses
andresearchanddevelopmentcreditcarryforwards.Valuationallowancesareprovidedwhennecessarytoreducedeferredtaxassets
totheamountexpectedtoberealized.
The Company applies the authoritative accounting guidance prescribing a threshold and measurement attribute for the
financialrecognitionandmeasurementofataxpositiontakenorexpectedtobetakeninataxreturn.TheCompanyrecognizes
liabilitiesforuncertaintaxpositionsbasedonatwostepprocess.Thefirststepistoevaluatethetaxpositionforrecognitionby
determiningiftheweightofavailableevidenceindicatesthatitismorelikelythannotthatthepositionwillbesustainedonaudit,
including resolution of related appeals or litigation processes, if any. The second step requires the Company to estimate and
measurethetaxliabilityasthelargestamountthatismorelikelythannottoberealizeduponultimatesettlement.
StockBasedCompensationTheCompanyestimatesthefairvalueofsharebasedawardsonthedateofgrant.Thevalueof
the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the
statementsofoperations.TheCompanyrecognizescompensationexpenseoverthevestingperiodoftheentireawardusingthe
straightlineattributionmethod.Theseamountsarereducedbyanestimatedforfeiturerate.Theforfeiturerateisestimatedbasedon
actualcancellationexperienceandisappliedtoallsharebasedawards.Therateisestimatedatthetimeofgrantandrevised,if
necessary,insubsequentperiodsifactualforfeituresdifferfromthoseestimates.
The Company selected the BlackScholes optionpricing model as the method for determining the estimated fair value for
stock options. The BlackScholes optionpricing model requires the use of highly subjective and complex assumptions, which
determine the fair value of sharebased awards, including the options expected term and the price volatility of the underlying
stock.
Theauthoritativeguidanceprohibitstherecognitionofadeferredtaxassetforanexcesstaxbenefitthathasnotyetbeen
realized.Asaresult,theCompanywillonlyrecognizeabenefitfromstockbasedcompensationinadditionalpaidincapitalifan
incrementaltaxbenefitisrealizedorrealizableafterallothertaxattributescurrentlyavailablehavebeenutilized.
Compensationexpenserelatedtoequityinstrumentsissuedtononemployeesisrecognizedastheequityinstrumentsvest.At
eachreportingdate,theCompanyrevaluesthefairvalueandexpenserelatedtotheunvestedportionofsuchnonemployeeawards.
Asaresult,compensationexpenserelatedtounvestedequityinstrumentsissuedtononemployeesfluctuatesasthefairvalueofthe
Companyscommonstockfluctuates.
FairValueMeasurementsTheCompanydefinesfairvalueasthepricethatwouldbereceivedfromsellinganassetorpaid
to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair
valuemeasurementsforassetsandliabilitieswhicharerequiredtoberecordedatfairvalue,theCompanyconsiderstheprincipalor
most advantageous market in which to transact and the marketbased risk. The Company applies fair value accounting for all
financialassetsandliabilitiesthatarerecognizedordisclosedatfairvalueinthefinancialstatementsonarecurringbasis.The
carryingamountsreportedintheconsolidatedfinancialstatementsapproximatethefairvalueforcashandcashequivalents,
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accounts receivable, accounts payable, and accrued liabilities, due to their shortterm nature. The carrying amount of the
Companyspreferredstockwarrantliabilityrepresentsitsfairvalue(seeNote2).
ConcentrationsofCreditRiskFinancialinstrumentsthatpotentiallysubjecttheCompanytoconcentrationsofcreditrisk
consist primarily of cash and cash equivalents and trade accounts receivable. The Company invests its excess cash in lowrisk,
highly liquid money market funds and certificates of deposit with a major financial institution. Management believes that the
financialinstitutionsthatholdtheCompanysinvestmentsarefinanciallysoundand,accordingly,aresubjecttominimalcredit
risk.Therewerenocustomersthatindividuallyexceeded10%oftheCompanysrevenueforthefiscalyearsendedMarch31,2012,
2013,and2014,orforthesixmonthsendedSeptember30,2013and2014.Therewerenocustomersthatindividuallyexceeded
10%oftheCompanysaccountsreceivableasofMarch31,2013and2014andSeptember30,2014.
NetLossandProFormaNetLossPerShareAttributabletoCommonStockholdersTheCompanycalculatesitsbasicand
dilutednetlosspershareattributabletocommonstockholdersinconformitywiththetwoclassmethodrequiredforcompanieswith
participating securities. Under the twoclass method, in periods when the Company has net income, net income attributable to
commonstockholdersisdeterminedbyallocatingundistributedearnings,calculatedasnetincomelesscurrentperiodconvertible
preferredstocknoncumulativedividends,betweencommonstockandtheconvertiblepreferredstock.Incomputingdilutednet
income attributable to common stockholders, undistributed earnings are reallocated to reflect the potential impact of dilutive
securities. The Companys basic net loss per share attributable to common stockholders is calculated by dividing the net loss
attributabletocommonstockholdersbytheweightedaveragenumberofsharesofcommonstockoutstandingfortheperiod.The
dilutednetlosspershareattributabletocommonstockholdersiscomputedbygivingeffecttoallpotentialdilutivecommonstock
equivalentsoutstandingfortheperiod.Forpurposesofthiscalculation,convertiblepreferredstock,optionstopurchasecommon
stock, and convertible preferred stock warrants are considered common stock equivalents but have been excluded from the
calculationofdilutednetlosspershareattributabletocommonstockholdersastheireffectisantidilutive.Incontemplationofan
IPO,theCompanyhaspresentedtheunauditedproformabasicanddilutednetlosspershareattributabletocommonstockholders
forthefiscalyearendedMarch31,2014andthesixmonthsendedSeptember30,2014,whichhasbeencomputedtogiveeffectto
the automatic conversion of the convertible preferred stock into shares of common stock as of the beginning of the respective
period,assuminganinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecover
pageofthisprospectus,andgivingeffecttotheconversionpriceadjustmentrelatingtotheSeriesFconvertiblepreferredstock.
Recent Accounting PronouncementsIn February 2013, the Financial Accounting Standards Board (FASB) issued
guidancewhichaddressesthepresentationofamountsreclassifiedfromaccumulatedothercomprehensiveincome.Thisguidance
does not change current financial reporting requirements, instead an entity is required to crossreference to other required
disclosuresthatprovideadditionaldetailaboutamountsreclassifiedoutofaccumulatedothercomprehensiveincome.Inaddition,
theguidancerequiresanentitytopresentsignificantamountsreclassifiedoutofaccumulatedothercomprehensiveincomebyline
itemofnetincomeiftheamountreclassifiedisrequiredtobereclassifiedtonetincomeinitsentiretyinthesamereportingperiod.
AdoptionofthisstandardisrequiredforperiodsbeginningafterDecember15,2012forpubliccompanies.Theadoptionofthis
guidance did not impact the Companys consolidated financial statements, as the Company did not have other comprehensive
incomefortheperiodspresented.
InJuly2013,theFASBissuedanewaccountingstandardupdateonthefinancialstatementpresentationofunrecognizedtax
benefits.Thenewguidanceprovidesthataliabilityrelatedtoanunrecognizedtaxbenefitwouldbepresentedasareductionofa
deferredtaxassetforanetoperatinglosscarryforward,asimilartaxlossorataxcreditcarryforwardifsuchsettlementisrequiredor
expectedintheeventtheuncertaintaxpositionisdisallowed.ThenewguidancebecameeffectivefortheCompanyonApril1,
2014 and it should be applied prospectively to unrecognized tax benefits that exist at the effective date with retrospective
applicationpermitted.TheCompanyiscurrentlyassessingtheimpactofthisnewguidance.
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InApril2014,theFASBissuedanaccountingstandardupdatethatchangesthecriteriaforreportingdiscontinuedoperations
and expands related disclosure requirements. This accounting standard will be effective for the Company beginning in the
Companys first quarter of fiscal 2016. The effects of this guidance will depend on the nature and significance of discontinued
operationsoccurringaftertheeffectivedate.
In May 2014, the FASB issued new guidance related to the recognition and reporting of revenue that establishes a
comprehensivenewrevenuerecognitionmodeldesignedtodepictthetransferofgoodsorservicestoacustomerinanamountthat
reflectstheconsiderationtheentityexpectstoreceiveinexchangeforthosegoodsorservices.Theguidanceallowsfortheuseof
eitherthefullormodifiedretrospectivetransitionmethod,andthestandardwillbeeffectivefortheCompanyinthefirstquarterof
ourfiscalyear2018earlyadoptionisnotpermitted.TheCompanyiscurrentlyevaluatingtheimpactofthisnewstandardonthe
Companysconsolidatedfinancialstatements,aswellaswhichtransitionmethodtheCompanyintendstouse.
2.FairValueMeasurements
TheCompanyreportsassetsandliabilitiesrecordedatfairvalueontheCompanysconsolidatedbalancesheetsbasedupon
thelevelofjudgmentassociatedwithinputsusedtomeasuretheirfairvalue.Thecategoriesareasfollows:
Level1Inputsareunadjustedquotedpricesinactivemarketsforidenticalassetsorliabilities.
Level 2Inputs are quoted prices for similar assets and liabilities in active markets quoted prices for identical assets or
liabilitiesinmarketswithinsufficientvolumeorinfrequenttransactions(lessactivemarkets)orinputsotherthanquotedprices
thatareobservablefortheassetsorliabilities,eitherdirectlyorindirectlythroughmarketcorroboration,forsubstantiallythefull
termofthefinancialinstruments.
Level3InputsareunobservableinputsbasedontheCompanysownassumptionsusedtomeasureassetsandliabilitiesat
fairvalue.Theinputsrequiresignificantmanagementjudgmentorestimation.
ThefollowingtablepresentsthefairvalueoftheCompanysfinancialassetsandliabilitiesusingtheaboveinputcategories
(inthousands):
Description:
FairValueMeasurementsasof
March31,2013
Level1 Level2 Level3
Moneymarketfunds
Certificateofdeposit
Restrictedcashmoneymarketfunds
Total
$52,506
4,600
$57,106
Description:
Moneymarketfunds
Total
30
30
$ 112
$52,506
30
4,600
$57,136
$
March31,2014
Level1 Level2 Level3
$ 3,512
5,601
$ 9,113
Total
112
Total
$

$
$

$
$ 3,512
5,601
$ 9,113
$ 830
830
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Description:
Moneymarketfunds
September30,2014
Level
Level1
2 Level3
(unaudited)
Total
$69,015
5,626
$74,641
Total
$

$
$

$
$69,015
5,626
$74,641
$ 578
578
Level1investmentsconsistsolelyofmoneymarketfunds,includedincashandcashequivalentsandrestrictedcash,valued
at amortized cost which approximates fair value. Level 3 instruments consist solely of the Companys preferred stock warrant
liability, as discussed in Note 8. The preferred stock warrant liability was estimated using assumptions related to the remaining
contractualtermofthewarrants,theriskfreeinterestrate,thevolatilityofcomparablepubliccompaniesovertheremainingterm
andthefairvalueofunderlyingshares.Thesignificantunobservableinputsusedinthefairvaluemeasurementofthepreferred
stock warrant liability are the fair value of the underlying stock at the valuation date and the estimated term of the warrants.
Generally,increases(decreases)inthefairvalueoftheunderlyingstockandestimatedtermwouldresultinadirectionallysimilar
impacttothefairvaluemeasurement.
ThefollowingtablesetsforthasummaryofthechangesinthefairvalueoftheCompanysLevel3financialinstrumentsas
follows(inthousands):
BalanceatMarch31,2011
Issuanceofpreferredstockwarrant
Changeinfairvalueofpreferredstockwarrantliability(unaudited)
BalanceatSeptember30,2014(unaudited)
PreferredStock
Warrant
Liability
53
36
89
13
10
112
718
830
(252)
578
ThegainsandlossesfromremeasurementofLevel3financialliabilitiesarerecordedinotherexpense,netintheconsolidated
statementsofoperations.
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3.PropertyandEquipment
Propertyandequipment,netconsistedofthefollowing(inthousands):
Computers,software,andequipment
Siteoperationequipment
Furnitureandfixtures
Leaseholdimprovement
Capitalizedsoftwaredevelopmentcosts
Totalpropertyandequipment
Less:accumulateddepreciationandamortization
Totalpropertyandequipment,net
AsofMarch31,
2013
$ 1,118
1,417
252
5,856
5,960
14,603
(4,251)
$10,352
2014
$ 1,983
2,535
494
12,355
11,444
28,811
(8,628)
$20,183
Asof
September30,
2014
(unaudited)
$
2,319
5,090
598
16,258
16,158
40,423
(11,886)
$ 28,537
Depreciation and amortization expense related to property and equipment during the fiscal years ended March 31, 2012,
2013,and2014was$1.2million,$1.9million,and$4.5million,respectively,and$1.9millionand$3.5millionforthesixmonths
endedSeptember30,2013and2014,respectively.
4.OtherCurrentLiabilities
Othercurrentliabilitiesconsistedofthefollowing(inthousands):
Accruedconstructioncosts
Deferredtaxliability
Accruedliabilities
Deferredrent
Other
Totalothercurrentliabilities
AsofMarch31,
2013

$1,357
443
317
257
198
$2,572
2014

$
392
1,167
287
314
$2,160
Asof
September30,
2014
(unaudited)
128
392
958
139
413
2,030
5.CommitmentsandContingencies
LeasesTheCompanyleasesofficespaceundernoncancelableoperatingleaseagreements,whichexpirefrom2015through
2020.
DeferredRentCertainoftheCompanysoperatingleasescontainrentholidays,allowances,andrentescalationprovisions.
Fortheseleases,theCompanyrecognizestherelatedrentalexpenseonastraightlinebasisoverthelifeoftheleasefromthedate
theCompanytakespossessionoftheofficeandrecordsthedifferencebetweenamountschargedtooperationsandamountspaidas
deferredrent.Theserentholidays,allowances,andrentescalationsareconsideredindeterminingthestraightlineexpensetobe
recordedovertheleaseterm.AsofMarch31,2013and2014andSeptember30,2014,$2.0million,$3.9million,and$3.9million,
respectively,wasrecordedasdeferredrent.
Rentexpense,netofsubleaseincome,foroperatingleasesforthefiscalyearsendedMarch31,2012,2013,and2014was$0.5
million,$1.1million,and$4.7million,respectively,andforthesixmonthsendedSeptember30,
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2013and2014was$2.2millionand$2.6million,respectively.ForthefiscalyearsendedMarch31,2013and2014,rentexpense
was offset by $23,000 and $0.7 million of sublease income, respectively, and $0.3 million and $0.4 million for the six months
endedSeptember30,2013and2014,respectively.TherewasnosubleaseincomeforthefiscalyearendedMarch31,2012.
FutureminimumleasepaymentsundernoncancelableoperatingleasesasofMarch31,2014,wereasfollows(inthousands):
YearsEndingMarch31
2015
2016
2017
2018
2019
Thereafter
Totalminimumfutureleasepayments
OperatingLeases
5,573
5,439
5,560
5,636
5,731
7,667
35,606
Future minimum sublease income under noncancelable leases is $0.4 million and $34,000 for the fiscal years ending
March31,2015and2016,respectively.
DuringthesixmonthsendedSeptember30,2014,theCompanyenteredintoadditionalnoncancelableoperatingleases.The
totalfuturenoncancelableminimumpaymentsare$10.1millionandexpirein2023.Futureminimumleasepaymentsunderthese
additionalnoncancelableoperatingleases,wereasfollows(inthousands):
YearsEndingMarch31
2015
2016
2017
2018
2019
Thereafter
Totalminimumfutureleasepayments
OperatingLeases
(unaudited)
4
308
725
859
901
7,279
10,076
PurchaseCommitmentsAsofMarch31,2014andSeptember30,2014,theCompanyhadpurchasecommitmentsof$0.6
millionand$3.3million,respectively,forspecificcontractualservices.
LegalProceedingsFrom time to time, the Company may become involved in various legal proceedings in the ordinary
courseofitsbusiness,andmaybesubjecttothirdpartyinfringementclaims.
OnNovember5,2012,CA,Inc.filedsuitagainsttheCompanyintheUnitedStatesDistrictCourt,EasternDistrictofNew
York for alleged patent infringement. CA, Inc.s complaint against the Company claims that certain aspects of the Companys
productsinfringecertainpatentsheldbyCA,Inc.TheCompanycannotatthistimepredictthelikelyoutcomeofthisproceedingor
estimatetheamountorrangeoflossorpossiblelossthatmayarisefromit.TheCompanyhasnotaccruedanylossrelatedtothe
outcomeofthiscaseasofSeptember30,2014.
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In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual
relationships,includingcustomers,lessors,andpartiestoothertransactionswiththeCompany,withrespecttocertainmatters.The
Companyhasagreed,undercertainconditions,toholdthesethirdpartiesharmlessagainstspecifiedlosses,suchasthosearising
fromabreachofrepresentationsorcovenants,otherthirdpartyclaimsthattheCompanysproductswhenusedfortheirintended
purposesinfringetheintellectualpropertyrightsofsuchotherthirdparties,orotherclaimsmadeagainstcertainparties.Todate,
the Company has not incurred any costs as a result of such obligations and has not accrued any liabilities related to such
obligationsintheconsolidatedfinancialstatements.Inaddition,theCompanyindemnifiesitsofficers,directors,andcertainkey
employeeswhiletheyareservingingoodfaithintheirrespectivecapacities.TheCompanydoesnotcurrentlybelievethereisa
reasonable possibility that a loss may have been incurred under these indemnification obligations. To date, there have been no
claimsunderanysuchindemnificationprovisions.
6.ConvertiblePreferredStock
Asofthedatesbelow,theCompanysoutstandingconvertiblepreferredstockconsistedofthefollowing(inthousands):
SeriesA
SeriesB
SeriesC
SeriesD
SeriesE
AsofMarch31,2013andMarch31,2014
Shares
SharesIssued
Liquidation
Authorized
andOutstanding
Preference
(Inthousands)
7,028
6,492
2,852
1,643
4,308
22,323
7,000
6,492
2,852
1,566
3,447
21,357
$ 3,500
7,940
9,943
15,000
60,000
$ 96,383
Thesignificantrights,preferencesandprivilegesofconvertiblepreferredstockareasfollows:
VotingEachshareofconvertiblepreferredstockhasvotingrightsequaltoanequivalentnumberofsharesofcommonstock
intowhichitisconvertibleandvotestogetherasoneclasswiththecommonstock,exceptasbelow:
HoldersofamajorityoftheSeriesAandBconvertiblepreferredstockareeachentitledtoelect,eachvotingasaseparate
class,onemembertotheCompanysboardofdirectors(theBoardofDirectors).
Holders of a majority of the common stock are entitled to elect, voting separately as a class, one member to the Board of
Directors.
Holdersofcommonstockandconvertiblepreferredstockareentitledtoelect,votingtogetherasaseparateclassonanas
convertedbasis,allremainingdirectors.
DividendsThe holders of Series A, Series B, Series C, Series D, and Series E convertible preferred stock are entitled to
receive,outofanyfundslegallyavailable,noncumulativedividendspriorandinpreferencetoanydividendspaidonthecommon
stock,attherateof8%oftheapplicableoriginalissuepricepershareperannum,asadjustedforstocksplits,stockdividends,
combinations,recapitalizations,andsimilartransactions,when,asandifdeclaredbytheBoardofDirectors.Nodividendsshallbe
paid on the common stock, unless the dividends described in the preceding sentence are paid on the preferred stock. As of
March31,2014,nodividendshadbeendeclaredorpaidontheCompanyscapitalstock.
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LiquidationPreferenceIntheeventofanyliquidation,dissolution,orwindingupoftheCompany,theholdersofSeriesD
andSeriesEconvertiblepreferredstockshallbeentitledtoreceive,ratably,aseniorpreferenceandtheholdersofSeriesA,SeriesB,
andSeriesCconvertiblepreferredstockshallbeentitledtoreceive,ratably,ajuniorpreferencetoanydistributionoftheassetsor
funds of the Company to the holders of the common stock, an amount equal to the issuance price per share of $0.50, $1.2231,
$3.4861,$9.5743,and$17.4089forSeriesA,SeriesB,SeriesC,SeriesD,andSeriesE,respectively,asadjustedforstocksplits,
stockdividends,combinations,recapitalizations,andsimilartransactions,plusanyaccruedandunpaiddividendsandanyother
declared but unpaid dividends (the Liquidation Preference). If the Company has insufficient assets to permit payment of the
LiquidationPreferenceinfulltotheseniorpreferredandjuniorpreferredholdersofconvertiblepreferredstock,thentheassetsof
theCompanyshallbedistributedratablytotheholdersofconvertiblepreferredstockinproportiontotheLiquidationPreference
suchholderswouldotherwisebeentitledtoreceive.
AfterpaymentoftheLiquidationPreferencetotheholdersofconvertiblepreferredstock,theremainingassetsoftheCompany
shallbedistributedratablytotheholdersofcommonstock.
RedemptionThe holders of the convertible preferred stock have no voluntary rights to redeem the shares. A sale of
substantially all of the Companys assets would constitute a redemption event. Although the convertible preferred stock is not
mandatorily or currently redeemable, a sale of substantially all of the Companys assets would constitute a redemption event
outsideoftheCompanyscontrol.Therefore,allsharesoftheconvertiblepreferredstockhavebeenpresentedoutsideofpermanent
equity.
ConversionEachshareofconvertiblepreferredstockisconvertibleattheoptionoftheholder,atanytimeafterthedateof
issuance of such share, into shares of common stock as is determined by dividing the original purchase price of convertible
preferredstockbytheconversionpriceineffectatthetimeofconversionforsuchseriesofconvertiblepreferredstocksubjectto
adjustment as provided in the Companys certificate of incorporation, as amended. The initial conversion price per share of
SeriesA,SeriesB,SeriesC,SeriesD,andSeriesEconvertiblepreferredstockwas$0.50,$1.2231,$3.4861,$9.5743,and$17.4089
pershare,respectively.AsofMarch31,2013and2014,theconversionratioforconvertiblepreferredstockwasonetoone.
Eachshareofconvertiblepreferredstockwillautomaticallybeconvertedintosharesofcommonstockatthetheneffective
conversionrateofsuchsharesupontheearlierof(i)theclosingofafirmcommitmentunderwrittenpublicofferingpursuanttoan
effectiveregistrationstatementundertheSecuritiesActof1933,asamended,coveringtheofferandsaleofcommonstockofthe
Company to the public with offering proceeds to the Company in excess of $100 million (net of underwriters discounts,
concessions,commissions,andexpenses)or(ii)theconsentofholdersofatleastamajorityofthethenoutstandingsharesofeach
seriesofpreferredstock.
AntidilutionProtectionSeries A, Series B, Series C, Series D, and Series E convertible preferred stock have antidilution
protection.Iftheantidilutionprotectionfortheconvertiblepreferredstockistriggered,theconversionpricewillbesubjecttoa
broadbasedweightedaverageadjustmenttoreducedilution.
In April 2014, the Companys certificate of incorporation was amended and restated to authorize the Company to issue
55,000,000sharesofcommonstockand24,961,092sharesofpreferredstock.
InApril2014,theCompanysold3,456,140sharesofSeriesFconvertiblepreferredstock(SeriesF)atapriceof$28.9340
pershare,receivingnetproceedsof$97.2million.HoldersoftheCompanysSeriesFvotetogetherwiththeholdersofourcommon
stock and convertible preferred stock, with each share of Series F having a number of votes equal to the number of shares of
commonstockissuableupontheconversionofeachshareofSeriesF.Inaliquidationevent,holdersofSeriesFwillbeentitledto
receive, ratably with the Series E convertible preferred stock and in preference to the holders of all other classes of convertible
preferredstock,an
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amountequaltotheoriginalissuancepriceoftheSeriesFplusanydeclaredbutunpaiddividends.TheholdersofSeriesFhavethe
right to convert, at any time, into shares of common stock at an initial conversion ratio of 1:1, subject to adjustment based on
antidilutionprotection,andalloutstandingSeriesFwillautomaticallyconvertintosharesofcommonstockintheeventthat(i)the
holdersofamajorityofoutstandingSeriesFconsenttoconversionor(ii)immediatelypriortotheclosingofaqualifiedIPO.The
SeriesFhasantidilutionprotectionwhich,iftriggered,willbesubjecttoanadjustmenttoreducedilution.
InconnectionwiththeclosingoftheSeriesFfinancing,theCompanyscharterwasamendedandrestatedtoreflectthatupon
the consummation of the IPO contemplated by the Company, all of the outstanding shares of convertible preferred stock will
automaticallyconvertintosharesofcommonstock,assumingtheCompanyraisesatleast$100million.
As of the September 30, 2014, the Companys outstanding convertible preferred stock consisted of the following (in
thousands):
SeriesA
SeriesB
SeriesC
SeriesD
SeriesE
SeriesF
Shares
Authorized
7,028
6,492
2,852
1,643
3,447
3,500
24,962
SharesIssued
andOutstanding
(unaudited)
7,000
6,492
2,852
1,566
3,447
3,456
24,813
Liquidation
Preference
$ 3,500
7,940
9,943
15,000
60,000
100,000
$ 196,383
7.StockTransactions
In February 2013, certain of the Companys existing investors conducted a tender offer to acquire approximately
862,000 shares of outstanding common stock from employees and other existing common stockholders at a purchase price of
$17.4089 per share. As a result of this transaction, the Company recorded a total of $7.3 million in sharebased compensation
expenseforthedifferencebetweenthepricepaidandtheestimatedfairmarketvalueonthedateofthetransaction.Ofthetotal
sharebased compensation expense, the Company recorded $0.2 million, $1.4 million, $1.8 million, and $3.9 million in cost of
revenue,researchanddevelopment,salesandmarketing,andgeneralandadministrativeexpenses,respectively,forthefiscalyear
endedMarch31,2013.
InAugust2013andDecember2013,certainoftheCompanysexistinginvestorsacquiredapproximately347,000sharesof
outstanding common stock from employees and a former employee at a purchase price of $17.4089 per share. As a result, the
Companyrecordedatotalof$2.4millioninsharebasedcompensationexpenseforthedifferencebetweenthepricepaidandthe
estimatedfairmarketvalueonthedateofthetransaction.Ofthetotalsharebasedcompensationexpense,theCompanyrecorded
$0.8 million, $0.2 million, and $1.4 million in research and development, sales and marketing, and general and administrative
expenses,respectively,forthefiscalyearendedMarch31,2014.
Inconnectionwiththesetenderoffers,theCompanywaivedanyrightsoffirstrefusalorothertransferrestrictionsapplicable
tosuchshares.
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8.Warrants
Series A Convertible Preferred Stock WarrantsIn September 2008, the Company granted warrants to purchase
28,000sharesofSeriesAconvertiblepreferredstock.Thesewarrantshaveacontractedtermof10yearsandanexercisepriceof
$0.50pershare.Thewarrantswerefullyvestedonthegrantdate.Thesepreferredstockwarrantswereissuedinconnectionwitha
loanagreement,andaportionofthenoteproceedswasallocatedtothewarrantsusingarelativefairvalueapproach.Asaresult,a
totalof$10,000wasallocatedtothewarrantsandrecordedasanoriginalissuediscounttotheloan.Upontheearlieroftheexercise
oftheSeriesAwarrantsorthecompletionofaliquidationevent,includingthecompletionofanIPOinwhichthesharesunderlying
the warrants would convert from the related shares of preferred stock into shares of common stock, the preferred stock warrant
liabilitywillberemeasuredtofairvalueandanyremainingliabilitywillbereclassifiedtoadditionalpaidincapital.
SeriesDConvertiblePreferredStockWarrantsInAugust2012,theCompanygrantedwarrantstopurchase20,889shares
ofSeriesDconvertiblepreferredstock.Thesewarrantshaveacontractedtermof10yearsandanexercisepriceof$9.5743pershare.
The warrants were fully vested on the grant date. These preferred stock warrants were issued in connection with an office lease
agreement.Thefairvalueofthewarrantsatthegrantdatewasallocatedtodeferredrentandisbeingamortizedovertheleaseterm.
TheSeriesDconvertiblepreferredstockwarrantwouldautomaticallybeexercisedintheeventofanIPO.
Thewarrantsarerecordedattheirestimatedfairvaluewithchangesinthefairvalueofthewarrantliabilityreflectedinother
expense,net.DuringthefiscalyearsendedMarch31,2012,2013,and2014andforthesixmonthsendedSeptember30,2013,the
Company recognized charges in the amount of $36,000, $23,000, $0.7 million, and $0.3 million, respectively, from the
remeasurement of the fair value of the warrants, which was recorded through other (expense) income, net in the statements of
operations.ForthesixmonthsendedSeptember30,2014,theCompanyrecognizedincomeof$0.3millionfromtheremeasurement
ofthefairvalueofthewarrants,whichwasrecordedthroughother(expense)income,netinthestatementsofoperations.
As of March 31, 2013 and 2014 and September 30, 2014, the Company determined the fair value of the outstanding
convertiblepreferredstockwarrantsutilizingthefollowingassumptions:
2013
2014
Remainingcontractualterm(inyears)
Volatility
Dividendyield
5.49.3
0.9%1.7%
57%
4.48.4
1.5%2.5%
50%
AsofMarch31,
Asof
September30,
2014
(unaudited)
3.97.9
1.4%2.4%
45%
Theaboveassumptionsweredeterminedasfollows:
Remaining Contractual TermThe remaining contractual term represents the time from the date of the valuation to the
expirationofthewarrant.
RiskFreeInterestRateTheriskfreeinterestrateisbasedontheU.S.TreasuryyieldineffectasofMarch31,2013and2014
andSeptember30,2014,andforzerocouponU.S.Treasurynoteswithmaturitiesapproximatelyequaltothetermofthewarrant.
VolatilityThe volatility is derived from historical volatilities of several unrelated publicly listed peer companies over a
periodapproximatelyequaltothetermofthewarrantbecausetheCompanyhaslimited
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information on the volatility of the preferred stock since there is currently no trading history. When making the selections of
industry peer companies to be used in the volatility calculation, the Company considered the size, operational, and economic
similaritiestotheCompanysprinciplebusinessoperations.
DividendYieldTheexpecteddividendassumptionisbasedontheCompanyscurrentexpectationsabouttheCompanys
anticipateddividendpolicy.
9.CommonStockReservedforIssuance
TheCompanyhadreservedsharesofcommonstockforfutureissuanceasfollows(inthousands):
Conversionofpreferredstock
Warrantstopurchaseconvertiblepreferredstock
Commonstockoptionsoutstanding
Commonstockoptionsavailableforfuturegrants
AsofMarch31,
2013
21,357
49
4,490
1,538
27,434
2014
21,357
49
6,923
298
28,627
Asof
September30,
2014
(unaudited)
24,813
49
8,252
618
33,732
10.StockOptionPlan
InFebruary2008,theCompanyadoptedtheNewRelic2008EquityIncentivePlan(the2008Plan)pursuanttowhichthe
BoardofDirectorsmaygrantnonstatutorystockoptionstopurchasesharesoftheCompanyscommonstocktooutsidedirectors
and consultants and either nonstatutory or incentive stock options to purchase shares of the Companys common stock to
employees.The2008Planauthorizesgrantsofawardsupto4,800,000sharesofcommonstock.AsofMarch31,2013and2014,
the2008Planwasrestatedtoauthorizeanaggregateof9,083,675sharesand10,583,675shares,respectively.Stockoptionsmust
begrantedwithanexercisepriceequaltothestocksfairmarketvalueatthedateofgrant.Stockoptionsgenerallyhave10year
termsandvestoverafouryearperiodstartingfromthedatespecifiedineachagreement.AsofMarch31,2013and2014,there
were1,537,800sharesand297,949shares,respectively,availablefortheCompanytograntunderthe2008Plan.
InApril2014,theBoardofDirectorsapprovedanincreasetothenumberofsharesreservedforissuanceunderthe2008Plan
from10,583,675sharesto11,083,675shares.InMay2014,theBoardofDirectorsapprovedanincreasetothenumberofshares
reserved for issuance under the 2008 Plan from 11,083,675 shares to 12,583,675 shares. As of September 30, 2014, there were
618,383sharesavailablefortheCompanytograntunderthe2008Plan.
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Asummaryofstockoptionactivityispresentedbelow(inthousands,exceptpershareamountsandyears):
WeightedAverage
RemainingContractual
Term(inyears)
Aggregate
Intrinsic
Value
NumberofOptions
IssuedandOutstanding
WeightedAverage
ExercisePrice
2,822
1,812
(834)
(109)
3,691
1,368
(504)
(65)
4,490
2,846
(207)
(206)
6,923
2,030
(311)
0.42
1.54
0.22
0.60
1.00
3.32
0.51
2.55
1.74
9.53
1.42
4.95
4.86
17.09
1.82
(390)
8.59
8,252
7.81
8.1
63,730
OptionsexercisableMarch31,2014
Optionsvestedandexpectedtovest
March31,2014
OptionsexercisableSeptember30,
2014(unaudited)
Optionsvestedandexpectedtovest
September30,2014(unaudited)
3,760
1.76
7.1
$ 69,523
6,582
4.75
8.1
$102,022
3,887
2.36
6.8
$ 49,390
7,284
7.40
8.0
$ 58,955
BalanceMarch31,2011
Optionsgranted
Optionsexercised
Optionscanceled/forfeited
BalanceMarch31,2012
Optionsgranted
Optionsexercised
BalanceMarch31,2013
Optionsgranted
Optionsexercised
BalanceMarch31,2014
Optionsgranted(unaudited)
Optionsexercised(unaudited)
(unaudited)
BalancesatSeptember30,2014
(unaudited)
8.3
1,679
7,374
8.5
8.2
21,536
8.1
106,539
TheweightedaveragegrantdatefairvalueofoptionsgrantedduringthefiscalyearsendedMarch31,2012,2013,and2014,
and for the six months ended September 30, 2014 was $1.69, $2.04, $6.42, and $8.13, respectively. Intrinsic value of options
exercisedduringthefiscalyearsendedMarch31,2012,2013,and2014,andforthesixmonthsendedSeptember30,2014was
$1.0million,$2.6million,$2.1million,and$4.5million,respectively.
EmployeeStockOptionsValuationTheCompanyestimatesthefairvalueofstockoptionsonthedateofgrantusingthe
BlackScholesoptionpricingmodel.EachoftheBlackScholesinputsissubjectiveandgenerallyrequiressignificantjudgmentsto
determine.TheassumptionsusedtoestimatethefairvalueofstockoptionsgrantedduringthefiscalyearsendedMarch31,2012,
2013,and2014,andthesixmonthsendedSeptember30,2013and2014,wereasfollows:
2012
YearEndedMarch31,
2013
2014
Fairvalueofcommonstock
Expectedterm(years)
Expectedvolatility
Dividendyield
$1.01$2.98
510
5054%
$3.51$4.68
56
5053%
$6.54$18.83
56
4752%
0.772.56%
0.670.97%
0.741.87%
SixMonths
EndedSeptember30,
2013
2014
(unaudited)
$6.54
$6.93
56
5052%
0.74
1.69%
0%
$16.93
$17.51
56
4551%
1.552%
0%
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FairValueofCommonStock
Given the absence of a public trading market, the Companys Board of Directors considered numerous objective and
subjectivefactorstodeterminethefairvalueoftheCompanyscommonstockateachmeetingatwhichawardswereapproved.
These factors included, but were not limited to (i) contemporaneous thirdparty valuations of common stock (ii) the rights and
preferences of convertible preferred stock relative to common stock (iii) the lack of marketability of common stock
(iv)developmentsinthebusinessand(v)thelikelihoodofachievingaliquidityevent,suchasanIPOorsaleoftheCompany,
givenprevailingmarketconditions.
RiskFreeInterestRate
TheCompanybasestheriskfreeinterestrateusedintheBlackScholesoptionpricingmodelontheimpliedyieldavailable
onU.S.Treasuryzerocouponissueswithanequivalentexpectedtermoftheoptionsforeachoptiongroup.
ExpectedTerm
The expected term represents the period that the Companys stockbased awards are expected to be outstanding. The
Companybasestheexpectedtermassumptiononitshistoricalbehaviorcombinedwithestimatesofpostvestingholdingperiod.
ExpectedVolatility
TheCompanydeterminesthepricevolatilityfactorbasedonthehistoricalvolatilitiesofourpeergroupastheCompanydid
nothavetradinghistoryforitscommonstock.
DividendYield
TheexpecteddividendassumptionisbasedontheCompanyscurrentexpectationsaboutitsanticipateddividendpolicy.
RestrictedStockAwardsDuringthefiscalyearendedMarch31,2014andforthesixmonthsendedSeptember30,2014,
theCompanygrantedrestrictedstockawardscoveringanaggregateof100,000and40,000sharesofcommonstock,respectively,
totwoboardmemberswhichvestoverfouryears,subjecttothecontinuedservicerelationshipwiththeCompanyorbecomefully
vesteduponachangeofcontrol.Thegrantdatefairvalueoftherestrictedstockawardswas$0.9millionor$9.37persharefor
awardsgrantedduringthefiscalyearendedMarch31,2014,and$0.7millionor$16.93pershareforawardsgrantedduringthesix
monthsendedSeptember30,2014.ForthefiscalyearendedMarch31,2014andforthesixmonthsendedSeptember30,2014,
$0.2millionand$0.2million,respectively,ofstockbasedcompensationexpensewasrecognizedrelatedtotheserestrictedstock
awards.TheCompanyrecognizestheexpenseusingastraightlinebasisovertherequisiteserviceperiodsoftheaward.
StockOptionsGrantedtoNonemployeesDuringthefiscalyearsendedMarch31,2012,2013,and2014,andforthesix
monthsendedSeptember30,2014,theCompanygranted17,500shares,300shares,7,000shares,and58,000shares,respectively,
tononemployeeconsultantsandrecordedstockbasedcompensationexpenseof$0.1million,$0.1million,$0.2million,and$0.1
million,respectively.
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StockBased Compensation ExpenseStockbased compensation expense for both employees and nonemployees was
$0.6million,$8.7million,and$6.2millionfortheyearsendedMarch31,2012,2013,and2014,respectively,and$3.4million
and$4.2millionforthesixmonthsendedSeptember30,2013and2014,respectively.Costofrevenue,researchanddevelopment,
salesandmarketing,andgeneralandadministrativeexpenseswereasfollows(inthousands):
YearEndedMarch31,

2012
2013
2014
Costofrevenue
Salesandmarketing
11
126
143
323
603
212
1,620
2,060
4,794
8,686
$ 159
1,425
1,373
3,263
$6,220
SixMonthsEnded
September30,
2013
2014
(unaudited)
$ 58
988
390
2,003
$3,439
$ 194
457
1,904
1,611
$4,166
AsofMarch31,2013and2014,andSeptember30,2014,unrecognizedstockbasedcompensationcostrelatedtooutstanding
unvested stock options that are expected to vest was $4.2 million, $17.6 million, and $23.9 million, respectively. This
unrecognizedstockbasedcompensationcostisexpectedtoberecognizedoveraweightedaverageperiodofapproximately3.4
years.
11.IncomeTaxes
The difference between the provision for income taxes and the income tax determined by applying the statutory federal
income tax rate of 34% was due primarily to losses generated in the United States where no benefit was recorded due to the
valuationallowance.
ThecomponentsoftheCompanysnetdeferredtaxassetsandliabilitiesasofMarch31,2013and2014,wereasfollows(in
thousands):
DeferredTaxAssets:
Accruedexpenses
Depreciationandamortization
Netoperatinglosscarryforwards
Researchanddevelopmentcredits
Grossdeferredtaxassets
Valuationallowance
Totaldeferredtaxassets
Deferredtaxliabilitiescapitalizedresearchanddevelopment
Totaldeferredtaxliabilities
Totalnetdeferredtaxassets(liabilities)
2013
AsofMarch31,

2014
$
972
236
12,693
799
14,700
(13,441)
1,259
(1,259)
(1,259)
$

$ 2,190
694
24,434
1,770
29,088
(26,848)
2,240
(2,240)
(2,240)
$
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NEWRELIC,INC.
AreconciliationofthefederalstatutorytaxratetotheCompanyseffectivetaxrateasfollows:
Federalstatutoryrate
Effectof:
Statetaxes,netoffederalbenefits
Researchanddevelopmentcredit
Valuationallowance
Effectivetaxrate
YearEndedMarch31,
2013
2014
34.0%
5.2
(11.4)
1.2
(29)
34.0%
1.7
(4.9)
1.9
(32.7)
Recognitionofdeferredtaxassetsisappropriatewhenrealizationofsuchassetsismorelikelythannot.Managementassesses
theavailablepositiveandnegativeevidencetoestimateifsufficienttaxableincomewillbegeneratedtousetheexistingdeferred
taxassets.Basedupontheweightofavailableevidence,whichincludestheCompanyshistoricaloperatingperformanceandthe
U.S.cumulativenetlossesinallpriorperiods,theCompanyhasprovidedavaluationallowanceagainstitsU.S.deferredtaxassets.
TheCompanysvaluationallowanceincreasedby$5.8millionand$13.4millionforthefiscalyearsendedMarch31,2013and
2014,respectively.
As of March 31, 2014, the Company had U.S. federal and state net operating losses of $71.2 million and $44.8 million
respectively,whichexpirebeginningintheyear2028and2024,respectively.Oftheseamounts,$5.9millionand$5.7million,
respectively,representedfederalandstatetaxdeductionsfromstockbasedcompensationwhichwillberecordedasanadjustment
toadditionalpaidincapitalwhentheyreducetaxespayable.TheCompanyalsohasfederal,California,andOregonresearchand
developmentcreditsof$1.5million,$0.6million,and$0.4million,respectively.Thefederaltaxcreditcarryforwardswillexpire
beginningin2024ifnotutilized.TheCaliforniataxcreditcarryforwardsdonotexpire.TheOregontaxcreditcarryforwardswill
expirebeginningin2014ifnotutilized.
Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership
changelimitationsprovidedbytheInternalRevenueCodeof1986,asamended(Code),andsimilarstateprovisions.Theannual
limitationmayresultintheexpirationofnetoperatinglossesandcreditsbeforeutilization.
CodeSection382(Section382)ownershipchangegenerallyoccursifoneormorestockholdersorgroupsofstockholders
who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership
percentage within a rolling threeyear period. Similar rules may apply under state tax laws. The Company did experience an
ownership change in connection with its Series C convertible preferred stock financing in October 2010 and a study has been
performed as of March 31, 2014, in this regard, the Company has determined that such an ownership change occurred and that
basedonthetimingoftheownershipchangeandthecorrespondingSection382limitation,noneofitsnetoperatinglossesorother
taxattributesappeartoexpiresubjecttosuchlimitation.
TheCompanyhasadoptedauthoritativeguidancewhichprescribesarecognitionthresholdandmeasurementattributeforthe
financialstatementrecognitionandmeasurementofuncertaintaxpositionstakenorexpectedtobetakenintheCompanysincome
tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure,andtransition.
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The total amount of unrecognized tax benefits as of March 31, 2013 was $0.6 million. The unrecognized tax benefits
increasedby$0.1millionfromMarch31,2013toMarch31,2014,duetonetadditionsof$0.4millionandnetreductionsof$0.2
million for tax positions related to the current year and prior year, respectively. As of March 31, 2014, the total amount of
unrecognizedtaxbenefitswas$0.7million,allofwhichwouldaffectincometaxexpense,ifrecognized,beforeconsiderationof
any valuation allowance. The Company does not expect the unrecognized tax benefits to change significantly over the next
12months.
Areconciliationofthebeginningandendingamountofunrecognizedtaxbenefitswasasfollows(inthousands):
Additionsbasedontaxpositionstakenduringthecurrentperiod
Additionsbasedontaxpositionstakenduringthepriorperiod
Reductionsbasedontaxpositionstakenduringthepriorperiod
Additionsbasedontaxpositionstakenduringthecurrentperiod
Additionsbasedontaxpositionstakenduringthepriorperiod
Reductionsbasedontaxpositionstakenduringthepriorperiod
$ 338
229
30

597
367
46
(275)
$ 735
TheCompanyrecognizesinterestandpenaltiesrelatedtounrecognizedtaxbenefitswithintheincometaxexpenselineinthe
consolidatedstatementofoperations.NoaccruedinterestandpenaltieshavebeenrecordedthroughMarch31,2013and2014.
TheCompanyfilesincometaxreturnsintheU.S.federal,Californiaandothervariousstatejurisdictions.Carryoverattributes
beginningMarch31,2008remainopentoadjustmentbytheU.S.andstateauthorities.
12.NetLossPerShare
Basiclosspershareiscalculatedbydividingnetlossbytheweightedaveragenumberofcommonsharesoutstandingduring
the period, less shares subject to repurchase, and excludes any dilutive effects of employee sharebased awards and warrants.
Dilutednetincomepercommonshareiscomputedgivingeffecttoallpotentialdilutivecommonshares,includingcommonstock
issuableuponexerciseofstockoptions,andunvestedrestrictedcommonstock.AstheCompanyhadnetlossesforthefiscalyears
endedMarch31,2012,2013,and2014,andforthesixmonthsendedSeptember30,2013and2014,allpotentialcommonshares
weredeterminedtobeantidilutive.
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NEWRELIC,INC.
Thefollowingtablesetsforththecomputationofnetlosspershareattributabletocommonstockholders,basicanddiluted(in
thousands,exceptpershareamounts):
YearEndedMarch31,

2012
2013
2014
SixMonthsEnded
September30,
2013
2014
(unaudited)
Numerator:
Netloss
$ (7,542)
$(22,541)
$(40,225)
$(18,569)
Denominator:
Weightedaveragesharesusedtocomputenetlossper
diluted
anddiluted
14,683
15,096
15,596
15,515
15,917
$ (0.51)
(1.49)
(2.58)
(1.20)
$(19,395)
(1.22)
The following outstanding options, unvested shares, warrants, and convertible preferred stock were excluded (as common
stockequivalents)fromthecomputationofdilutednetlosspercommonsharefortheperiodspresentedastheireffectwouldhave
beenantidilutive(inthousands):
AsofMarch31,
2012 2013 2014

Optionstopurchasecommonstock
Unvestedearlyexercisedcommonshares
Warrantstopurchasepreferredstock
Asof
September30,
2013 2014
(unaudited)
17,910 21,357 21,357 21,357 24,813

3,691 4,490 6,923 5,119 8,252
49

28
49
49
49
49
21,678 25,896 28,329 26,525 33,114
UnauditedProFormaNetLossPerShareAttributedtoCommonStockholders
Proformanetlosspershareattributabletocommonstockholders,basicanddiluted,havebeencomputedtogiveeffect,even
ifantidilutive,totheconversionofourpreferredstockandpreferredstockwarrantintocommonstockasofthebeginningofthe
periodpresentedortheoriginalissuancedate,iflater.
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NEWRELIC,INC.
Thefollowingtableshowsourcalculationoftheunauditedproformanetlosspershareattributabletocommonstockholders,
basicanddiluted(inthousands,exceptpersharedata):
YearEnded
March31,
2014

SixMonths
Ended
September
30,
2014
Netlossusedtocomputeproformanetlosspershare:
Netloss
Proformanetloss
Weightedaveragesharesusedtocomputeproformanetlosspershareattributabletocommon
stockholders:
Weightedaveragesharesusedtocomputenetlosspershareattributabletocommon
stockholders,basicanddiluted
Proformaadjustmenttoreflectassumedconversionofpreferredstockwarrants
Proformaadjustmenttoreflectassumedconversionofconvertiblepreferredstock
Weightedaveragesharesusedtocomputeproformanetlosspershareattributableto
commonstockholders,basicanddiluted
$ (40,225)
718
(39,507)
15,596
10
21,476
15,917
10
24,932
37,082
40,859
Proformanetlosspershareattributabletocommonstockholders,basicanddiluted
(1.07)
$ (19,395)
(252)
(19,647)
(0.48)
13.EmployeeBenefitPlan
The Company has established a 401(k) taxdeferred savings plan (the 401(k) Plan), which permits participants to make
contributionsbysalarydeductionpursuanttoSection401(k)oftheCode.TheCompanyisresponsibleforadministrativecostsof
the401(k)PlanandtheCompanyhasmadenocontributionstothe401(k)Plansinceinception.
14.RevenuebyGeographicLocation
The following table shows the Companys revenue by geographic areas, as determined based on the billing address of its
customers(inthousands):
YearEndedMarch31,
2013
2014
UnitedStates
EMEA
APAC
Other
Totalrevenue
$21,269
4,572
2,261
1,562
$29,664
$43,903
10,824
4,574
3,873
$63,174
SixMonthsEnded
September30,
2013
2014
(unaudited)
$18,509
4,316
1,783
1,538
$26,146
$32,134
8,968
3,783
3,089
$47,974
SubstantiallyalloftheCompanyslonglivedassetswereattributabletooperationsintheUnitedStatesasofMarch31,2014
andSeptember30,2014.TheCompanydidnothaveanyoperationsoutsideoftheUnitedStatesasofMarch31,2013.
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15.SubsequentEvents(unaudited)
On October 6, 2014, the Company completed the acquisition of Few Ducks, S.L., (Ducksboard), a provider of realtime
dashboardsfortrackingbusinessmetricsfromabroadsetofapplicationsources,pursuanttowhichtheCompanyacquiredallofthe
capitalstockofDucksboardfor121,493sharesoftheCompanyscommonstock,ofwhich108,234shareshavebeenissuedandup
to 13,259 shares will be released on the twelve month anniversary of the closing date, and $2.3 million in cash resulting in an
aggregatepreliminarypurchasepriceof$4.2million.Theacquisitionalsoincludedanobligationtoissue128,507sharesofour
commonstocktocertainemployeesofDucksboard,contingentupontheircontinuousemploymentwithus.Assuch,compensation
expensewillberecordedratablyovertherespectiveserviceperiod.
The initial purchase price accounting is not yet complete. The Company is in the process of completing a purchase price
allocationforthisacquisition.TheCompanycurrentlyexpectsbetween$1.0millionand$2.0millionofthepurchasepricetobe
allocatedtoidentifiableintangibleassetsotherthangoodwillinthefinalpurchasepriceallocation.Apreliminarypurchaseprice
allocationiscurrentlyexpectedtobeincludedintheCompanysconsolidatedfinancialstatementsforthequarterlyperiodending
December 31, 2014. Pro forma results of operations have not been presented because the acquisition was not material to the
Companysresultsofoperations.
InNovember2014,theBoardofDirectorsapprovedanincreasetothenumberofsharesreservedforissuanceunderthe2008
Planfrom12,583,675sharesto14,183,675shares.
InNovember2014,theBoardofDirectorsgrantedstockoptionsexerciseablefor777,450sharesoftheCompanyscommon
stockwithanexercisepriceof$19.00pershare.
******
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PARTII
INFORMATIONNOTREQUIREDINPROSPECTUS
Item13. OtherExpensesofIssuanceandDistribution
The following table sets forth all expenses to be paid by us, other than underwriting discounts and commissions, in
connectionwiththisoffering.AllamountsshownareestimatesexceptfortheSECregistrationfee,theFINRAfilingfee,andthe
NewYorkStockExchangelistingfee.
SECregistrationfee
FINRAfilingfee
NewYorkStockExchangelistingfee
Printingandengraving
Legalfeesandexpenses
Accountingfeesandexpenses
Transferagentandregistrarfees
Total
$ 13,363
17,750
250,000
300,000
1,300,000
850,000
3,500
$2,734,613
Item14. IndemnificationofDirectorsandOfficers
Section145oftheDelawareGeneralCorporationLawauthorizesacorporationsboardofdirectorstogrant,andauthorizesa
courttoaward,indemnitytoofficers,directors,andothercorporateagents.
Prior to the closing of this offering, we expect to adopt an amended and restated certificate of incorporation, which will
becomeeffectiveimmediatelypriortotheclosingofthisoffering,andwhichwillcontainprovisionsthatlimittheliabilityofour
directorsformonetarydamagestothefullestextentpermittedbyDelawarelaw.Consequently,ourdirectorswillnotbepersonally
liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the
following:
anybreachoftheirdutyofloyaltytoourcompanyorourstockholders
anyactoromissionnotingoodfaithorthatinvolvesintentionalmisconductoraknowingviolationoflaw
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the
DelawareGeneralCorporationLawor
anytransactionfromwhichtheyderivedanimproperpersonalbenefit.
Anyamendmentto,orrepealof,theseprovisionswillnoteliminateorreducetheeffectoftheseprovisionsinrespectofany
act,omissionorclaimthatoccurredorarosepriortothatamendmentorrepeal.IftheDelawareGeneralCorporationLawisamended
toprovideforfurtherlimitationsonthepersonalliabilityofdirectorsofcorporations,thenthepersonalliabilityofourdirectors
willbefurtherlimitedtothegreatestextentpermittedbytheDelawareGeneralCorporationLaw.
Inaddition,priortotheclosingofthisoffering,weexpecttoadoptamendedandrestatedbylawswhichwillprovidethatwe
willindemnify,tothefullestextentpermittedbylaw,anypersonwhoisorwasapartyoristhreatenedtobemadeapartytoany
action,suitorproceedingbyreasonofthefactthatheorsheisorwasoneofourdirectorsorofficersorisorwasservingatour
requestasadirectororofficerofanothercorporation,partnership,jointventure,trust,orotherenterprise.Ouramendedandrestated
bylawsareexpectedtoprovide
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thatwemayindemnifytothefullestextentpermittedbylawanypersonwhoisorwasapartyoristhreatenedtobemadeapartyto
anyaction,suit,orproceedingbyreasonofthefactthatheorsheisorwasoneofouremployeesoragentsorisorwasservingatour
request as an employee or agent of another corporation, partnership, joint venture, trust, or other enterprise. Our amended and
restatedbylawswillalsoprovidethatwemustadvanceexpensesincurredbyoronbehalfofadirectororofficerinadvanceofthe
finaldispositionofanyactionorproceeding,subjecttoverylimitedexceptions.
Further,priortotheclosingofthisoffering,weexpecttoenterintoindemnificationagreementswitheachofourdirectorsand
executiveofficersthatmaybebroaderthanthespecificindemnificationprovisionscontainedintheDelawareGeneralCorporation
Law. These indemnification agreements will require us, among other things, to indemnify our directors and executive officers
against liabilities that may arise by reason of their status or service. These indemnification agreements will also require us to
advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit, or
proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and
executiveofficers.
The limitation of liability and indemnification provisions that are expected to be included in our amended and restated
certificateofincorporation,amendedandrestatedbylaws,andinindemnificationagreementsthatweenterintowithourdirectors
andexecutiveofficersmaydiscouragestockholdersfrombringingalawsuitagainstourdirectorsandexecutiveofficersforbreach
oftheirfiduciaryduties.Theymayalsoreducethelikelihoodofderivativelitigationagainstourdirectorsandexecutiveofficers,
eventhoughanaction,ifsuccessful,mightbenefitusandotherstockholders.Further,astockholdersinvestmentmaybeharmedto
the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these
indemnificationprovisions.Atpresent,wearenotawareofanypendinglitigationorproceedinginvolvinganypersonwhoisor
wasoneofourdirectors,officers,employeesorotheragentsorisorwasservingatourrequestasadirector,officer,employee,or
agentofanothercorporation,partnership,jointventure,trust,orotherenterprise,forwhichindemnificationissought,andweare
notawareofanythreatenedlitigationthatmayresultinclaimsforindemnification.
We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our
directorsandexecutiveofficersagainstlossarisingfromclaimsmadebyreasonofbreachoffiduciarydutyorotherwrongfulactsas
adirectororexecutiveofficer,includingclaimsrelatingtopublicsecuritiesmatters,andtouswithrespecttopaymentsthatmaybe
madebyustothesedirectorsandexecutiveofficerspursuanttoourindemnificationobligationsorotherwiseasamatteroflaw.
TheunderwritingagreementfiledasExhibit1.1tothisregistrationstatementprovidesforindemnificationbytheunderwriters
oftheRegistrantanditsofficersanddirectorsforcertainliabilitiesarisingundertheSecuritiesActandotherwise.
Item15. RecentSalesofUnregisteredSecurities
SinceOctober1,2011,wemadesalesofthefollowingunregisteredsecurities:
We granted to our directors, officers, employees, consultants, and other service providers options to purchase an
aggregateof8,717,970sharesofcommonstockunderour2008Planatexercisepricesrangingfrom$1.10to$19.00per
share.
We issued and sold to our directors, officers, employees, consultants, and other service providers an aggregate of
1,294,756sharesofourcommonstockunderour2008Planupontheexerciseofoptionsatexercisepricesrangingfrom
$0.06to$16.93pershare.
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InNovember2011,wesoldanaggregateof1,566,696sharesofourSeriesDconvertiblepreferredstockatapurchase
priceof$9.5743pershareforanaggregatepurchasepriceof$15.0milliontoatotaloftenaccreditedinvestors.
InAugust2012,weissuedawarranttopurchase20,889sharesofcommonstockatanexercisepriceof$9.5743pershare
tooneaccreditedinvestorinconnectionwithanofficeleaseagreement.
InJanuary2013,wesoldanaggregateof3,446,511sharesofourSeriesEconvertiblepreferredstockatapurchaseprice
of$17.4089pershareforanaggregatepurchasepriceof$60.0milliontoatotalof23accreditedinvestors.
InAugust2013,wegrantedarestrictedstockawardforanaggregateof100,000sharesofcommonstockunderour2008
Plantoamemberofourboardofdirectorsascompensationforservicesrenderedasadirector.
InApril2014,wesoldanaggregateof3,456,140sharesofourSeriesFconvertiblepreferredstockatapurchasepriceof
$28.9340pershareforanaggregatepurchasepriceof$100milliontoatotalof33accreditedinvestors.
InMay2014,wegrantedarestrictedstockawardforanaggregateof40,000sharesofcommonstockunderour2008Plan
toamemberofourboardofdirectorsascompensationforservicesrenderedasadirector.
InOctober2014,weissued108,234sharesofourcommonstockto21accreditedinvestorsaspartoftheconsideration
forouracquisitionofDucksboard.
WebelievethesetransactionswereexemptfromregistrationundertheSecuritiesActinrelianceuponSection4(a)(2)ofthe
Securities Act or Regulation D promulgated thereunder, Rule 701 promulgated under Section 3(b) of the Securities Act as
transactionsbyanissuernotinvolvinganypublicofferingorpursuanttobenefitplansandcontractsrelatingtocompensationas
providedunderRule701orRegulationSpromulgatedundertheSecuritiesAct.Therecipientsofthesecuritiesineachofthese
transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in
connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these
transactions.Allrecipientshadadequateaccess,throughtheirrelationshipswithus,toinformationaboutourcompany.
Item16. ExhibitsandFinancialStatementSchedules
(a)Exhibits.
See the Exhibit Index on the page immediately following the signature page for a list of exhibits filed as part of this
registrationstatementonFormS1,whichExhibitIndexisincorporatedhereinbyreference.
(b)FinancialStatementSchedules.
All schedules are omitted because the required information is either not present, not present in material amounts or is
presentedwithintheconsolidatedfinancialstatementsincludedintheprospectusthatispartofthisregistrationstatement.
Item17. Undertakings
The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt
deliverytoeachpurchaser.
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InsofarasindemnificationforliabilitiesarisingundertheSecuritiesActmaybepermittedtodirectors,officersandcontrolling
personsoftheRegistrantpursuanttotheforegoingprovisions,orotherwise,theRegistranthasbeenadvisedthatintheopinionof
theSecuritiesandExchangeCommissionsuchindemnificationisagainstpublicpolicyasexpressedintheSecuritiesActandis,
therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the
Registrantofexpensesincurredorpaidbyadirector,officerorcontrollingpersonoftheRegistrantinthesuccessfuldefenseofany
action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being
registered,theRegistrantwill,unlessintheopinionofitscounselthematterhasbeensettledbycontrollingprecedent,submittoa
court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the
SecuritiesActandwillbegovernedbythefinaladjudicationofsuchissue.
TheundersignedRegistrantherebyundertakesthat:
(1)ForpurposesofdetermininganyliabilityundertheSecuritiesAct,theinformationomittedfromtheformofprospectus
filedaspartofthisregistrationstatementinrelianceuponRule430AandcontainedinaformofprospectusfiledbytheRegistrant
pursuanttoRule424(b)(1)or(4)or497(h)undertheSecuritiesAct,shallbedeemedtobepartofthisregistrationstatementasof
thetimeitwasdeclaredeffective.
(2)ForthepurposeofdetermininganyliabilityundertheSecuritiesAct,eachposteffectiveamendmentthatcontainsaform
ofprospectusshallbedeemedtobeanewregistrationstatementrelatingtothesecuritiesofferedtherein,andtheofferingofsuch
securitiesatthattimeshallbedeemedtobetheinitialbonafideofferingthereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration
Statementtobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized,intheCityofSanFrancisco,StateofCalifornia,
onDecember1,2014.
NEWRELIC,INC.
By: /s/LewisCirne
LewisCirne
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement on Form S1 has been
signedbythefollowingpersonsinthecapacitiesandonthedatesindicated.
Signature
Title
ChiefExecutiveOfficerand
Director
(PrincipalExecutiveOfficer)
/s/LewisCirne
LewisCirne
December1,2014
/s/MarkSachleben
ChiefFinancialOfficer
MarkSachleben
(PrincipalFinancialandAccountingOfficer)
*
PeterL.S.Currie
Director
Director
Director
December1,2014
*
DanScholnick
December1,2014
*
AdamMessinger
December1,2014
*
SarahFriar
December1,2014
*
PeterFenton
December1,2014
Director
Date
Director
December1,2014
*By: /s/LewisCirne
LewisCirne
AsAttorneyinFact
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EXHIBITINDEX
Exhibit
Number
Description
1.1
FormofUnderwritingAgreement.
3.1
AmendedandRestatedCertificateofIncorporationoftheRegistrant,ascurrentlyineffect.
Form of Amended and Restated Certificate of Incorporation of the Registrant effective immediately prior to the
closingofthisoffering.
3.3
AmendedandRestatedBylawsoftheRegistrant,ascurrentlyineffect.
3.4
FormofAmendedandRestatedBylawsoftheRegistranteffectiveimmediatelypriortotheclosingofthisoffering.
4.1
FormofcommonstockcertificateoftheRegistrant.
AmendedandRestatedInvestorRightsAgreementbyandamongtheRegistrantandcertainofitsstockholders,dated
asofApril17,2014.
4.3
WarranttoPurchaseStockbetweentheRegistrantandSiliconValleyBank,datedasofSeptember2008.
5.1
OpinionofCooleyLLP.
10.1
FormofIndemnificationAgreementbetweentheRegistrantandeachofitsdirectorsandexecutiveofficers.
10.2
2008EquityIncentivePlan,asamended,andrelatedformagreements.
10.3
2014EquityIncentivePlanandrelatedformagreements.
10.4
2014EmployeeStockPurchasePlanandrelatedformagreements.
10.5
OfferLetterbetweentheRegistrantandChrisCook,datedasofJune14,2011.
10.6
OfferLetterbetweentheRegistrantandHilarieKoplowMcAdams,datedasofNovember29,2013.
10.7
OfferLetterbetweentheRegistrantandPatrickMoran,datedasofOctober7,2010.
10.8
OfferLetterbetweentheRegistrantandMarkSachleben,datedasofFebruary4,2008.
10.9
OfferLetterbetweentheRegistrantandRobinJ.Schulman,datedasofNovember7,2014.
10.10
OfficeLeasebyandbetweentheRegistrantand555SWOak,LLC,datedasofJune15,2012,asamended.
10.11
OfficeLeasebyandbetweentheRegistrantand188SpearStreetLLC,datedasofJuly13,2012,asamended.
10.12
FormofChangeinControlandSeveranceAgreement.
21.1
ListofsubsidiariesofRegistrant.
23.1
ConsentofDeloitte&ToucheLLP,independentregisteredpublicaccountingfirm.
23.2
ConsentofCooleyLLP(includedinExhibit5.1).
24.1
PowerofAttorney.
3.2
4.2
Previouslyfiled.
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further amendment whichspecifically statesthatthisRegistrationStatementshall thereafterbecomeeffectiveinaccordancewithSection8(a)oftheSecuritiesAct of

The principal purposes of this offering are to increase our

(2) See note 12ofthe notestoourconsolidatedfinancialstatementsfora descriptionofhowwecomputenetlosspershareattributabletocommonstockholders,basic

$28,365 $58,156 $29,791 105%

2013 2014 Amount %

$10,053 $17,178 $7,125 71%

$11,663 $29,664 $18,001 154%

$10,748 $28,365 $17,617 164%

2,908 $ 1,284 $ 1,496 $ 1,931 $ 2,235

100% 100% 100% 100%

100% 100% 100% 100% 100%

2014 239,838 1,578,000

Weandallofour directorsandofficersand theholders of substantially all ofouroutstanding securitieshave agreed that,

400 260 $ (263) $ (11,143) $ (10,992)

24,813 $ 193,160 16,414 $

16 $ 22,078 260 $ (263) $(100,846) $ (79,015)

17,910 21,357 21,357 21,357 24,813

3,691 4,490 6,923 5,119 8,252

21,678 25,896 28,329 26,525 33,114

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