S-1/A 1 b80142a4sv1za.htm QLIK TECHNOLOGIES, INC. sv1za
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As filed with the Securities and Exchange Commission on June 28, 2010.
Registration No. 333-165844
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Amendment No. 4
to
Form S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
QLIK TECHNOLOGIES INC.
(Exact Name of Registrant as Specified in its Charter)
 
         
Delaware   7372   20-1643718
(State or Other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)
 
150 Radnor Chester Road
Suite E220
Radnor, Pennsylvania 19087
(888) 828-9768
(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)
 
Lars Björk
President and Chief Executive Officer
150 Radnor Chester Road
Suite E220
Radnor, Pennsylvania 19087
(888) 828-9768
(Name, address, including zip code and telephone number, including area code, of agent for service)
 
Copies to:
 
     
Jay K. Hachigian, Esq.
Richard R. Hesp, Esq.
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
850 Winter Street
Waltham, Massachusetts 02451
Telephone: (781) 890-8800
Telecopy: (781) 622-1622
  Richard D. Truesdell, Jr., Esq.
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Telephone: (212) 450-4000
Telecopy: (212) 701-5800
 
Approximate date of commencement of proposed sale to the public:  As soon as practicable after the effective date of this Registration Statement.
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  o
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
             
Large accelerated filer o
  Accelerated filer o   Non-accelerated filer þ   Smaller reporting company o
        (Do not check if a smaller reporting company)    
 
 
 
 
CALCULATION OF REGISTRATION FEE
 
                         
      Amount
    Proposed Maximum
    Proposed Maximum
    Amount of
Title of Each Class of
    to be
    Offering Price
    Aggregate
    Registration
Securities to be Registered     Registered(1)     Per Share     Offering Price(2)     Fee(3)
Common Stock, $0.0001 par value per share
    12,880,000     $9.50     $122,360,000.00     $8,724.27
                         
 
(1) Includes 1,680,000 shares of common stock issuable upon exercise of an option to purchase additional shares granted to the underwriters.
 
(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act, based on an estimate of the proposed maximum aggregate offering price.
 
(3) $7,130.00 previously paid.
 
 
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.
 


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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
 
 
PROSPECTUS (Subject to Completion)
Issued June 28, 2010
11,200,000 Shares
 
(COMPANY LOGO)
COMMON STOCK
 
 
 
Qlik Technologies Inc. is offering 11,200,000 shares of its common stock. We anticipate that the initial public offering price will be between $8.50 and $9.50 per share.
 
 
 
We have applied to have our common stock listed on the Nasdaq Global Market under the symbol “QLIK”.
 
 
 
Investing in our common stock involves risks. See “Risk Factors” beginning on page 10.
 
 
PRICE $      A SHARE
 
 
 
                         
        Underwriting
   
    Price to
  Discounts and
  Proceeds to
   
Public
  Commissions   QlikTech
 
Per share
    $            $            $       
Total
  $     $     $  
 
We have granted the underwriters the right to purchase up to an additional 1,680,000 shares of common stock to cover over-allotments.
 
The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
The underwriters expect to deliver the shares of common stock to purchasers on          , 2010.
 
 
MORGAN STANLEY  CITI J.P. MORGAN
 
 
JEFFERIES & COMPANY THOMAS WEISEL PARTNERS LLC
 
      , 2010


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 EX-1.1
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 EX-10.25.A
 EX-10.26.A
 EX-10.28.A
 EX-21.1
 EX-23.1
 EX-23.3
 
You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. Neither we nor the underwriters have authorized anyone to provide you with additional or different information. We and the underwriters are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock.
 
Until          , 2010 (25 days after commencement of this offering), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
 
For investors outside of the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside of the United States.
 
Unless the context indicates otherwise, as used in this prospectus, the terms “Qlik Technologies” and “QlikTech” refer to Qlik Technologies Inc. The terms “Powered by QlikView,” “Qlik,” “QlikView,” “QlikView Local Client,” “QlikView Server,” “QlikView Publisher,” “QlikCommunity” and “QlikAcademy” are our trademarks. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners.


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PROSPECTUS SUMMARY
 
This summary highlights the most important features of this offering and the information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under the heading “Risk Factors” and our consolidated financial statements and related notes included in this prospectus.
 
QLIK TECHNOLOGIES INC.
 
Overview
 
We have pioneered a powerful, easy-to-use business intelligence solution that enables our customers to make better and faster business decisions. Our software platform, QlikView, combines enterprise-class analytics and search functionality with the simplicity and ease-of-use found in office productivity software tools for a broad set of business users. We have grown our customer base from over 2,000 customers in 2005 to approximately 14,000 as of March 31, 2010 and increased our revenue at a 59% compound annual growth rate during the same period. Our solution addresses the needs of a diverse range of customers, from middle market customers to large enterprises such as BP, Campbell Soup Company, Colonial Life, The Dannon Company, Inc., Heidelberger Druckmaschinen AG, ING, Kraft Foods, Lifetime Brands, National Health Service (NHS), Qualcomm, Symantec and Volvo Car UK Limited. We have customers in over 100 countries, and approximately 75% of our revenue for the three months ended March 31, 2010 was derived internationally.
 
According to a 2009 International Data Corporation (IDC) report, the business intelligence market is projected to grow to $8.6 billion in 2010. We believe QlikView addresses a broader market opportunity than solely traditional users of business intelligence tools. According to a 2009 Gartner, Inc. report, 28% of total potential users within organizations use business intelligence software. Small businesses and medium-sized enterprises have had limited adoption of traditional business intelligence solutions due to their high cost and complexity. QlikView addresses the needs of all business users in companies of all sizes.
 
QlikView empowers business users to navigate data in a manner consistent with the fluid, associative nature of human thought. QlikView is powered by our in-memory associative search technology which has utilized rapid advances in computing power to yield significant improvement in flexibility and performance at a lower cost than traditional business intelligence solutions. Our technology platform enables users to consolidate large, disparate data sets and discover relationships within data in real time when requested by the user. QlikView also visualizes this data in a simple, intuitive user interface that enables users to interactively explore and analyze information.
 
We have a differentiated business model designed to accelerate the adoption of our product by reducing the time and cost to purchase and implement our software. Our low risk approach to product sales provides a needed alternative to costly, all-or-nothing, traditional business intelligence sales models by offering free product downloads to individuals and a 30-day money back guarantee upon purchase. We initially focus on specific business users or departments within a prospective customer’s organization and seek to solve a targeted business need. After demonstrating QlikView’s benefits to initial adopters within an organization, we work to expand sales of our product to other business units, geographies and use cases with a long-term goal of broad organizational deployment. According to a 2009 IDC survey, 44% of our customers deploy QlikView in less than one month and 77% of our customers deploy QlikView in less than three months. In comparison, our customers have indicated to us that their prior implementations of traditional business intelligence tools often take up to 18 months. We have a diversified distribution model that consists of a direct sales force and a partner network that includes resellers, original equipment manufacturers (known as OEMs) and systems integrators. Additionally, our online user community, QlikCommunity, provides us with a loyal and growing network of users who promote our software, provide support for other users and contribute valuable insights and feedback for our product development efforts.
 
For the years ended December 31, 2009, 2008 and 2007, our revenue was $157.4 million, $118.3 million and $80.6 million, representing year-over-year growth of 33% in 2009 and 47% in 2008. For the three months ended


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March 31, 2010, our revenue was $43.8 million, representing 66% growth over the same period the prior year. In addition, we generated operating income of $13.2 million, $1.6 million and $0.1 million in 2009, 2008 and 2007. For the three months ended March 31, 2010, we generated operating income of $2.0 million. For the year ended December 31, 2009 and the three months ended March 31, 2010, software license and maintenance revenue comprised 90% and professional services and training comprised 10% of our total revenue.
 
Our Industry
 
We believe that to succeed in today’s increasingly competitive markets, businesses must accelerate the rate at which they identify and respond to changing business conditions. An organization’s market agility and ultimate success are dependent upon its ability to harness the power of increasing volumes of information to make effective business decisions which can be achieved by business intelligence and data analytics software. The use and importance of this software within organizations of all sizes has significantly increased for several reasons, including:
 
Exponential Growth in Data Available for Analysis.  Over the last two decades, organizations have made significant investments in software applications that produce substantial amounts of data that is often stored in different formats, making it challenging to efficiently analyze the data and gain insight from it without using powerful data analytics solutions.
 
Disparate Data Sources.  In today’s highly competitive marketplace, companies are expanding operations through geographic diversification, acquisitions and partnerships, while more closely integrating their systems with those of their customers, partners and suppliers. As a result, organizations often deploy a number of tools, including data integration software, data warehouses and business intelligence tools, to gain insight from this disparate business data.
 
Decentralized Decision-Making.  We believe that many organizations are shifting towards decentralized decision-making in order to more efficiently respond to changing industry trends and competitive threats. This shift has created the need for intuitive data analysis tools that support employees at all levels of the organization as they assume more responsibility for making critical business decisions.
 
Although these trends have led to increased adoption of business intelligence and data analytics tools, we believe that most traditional tools are inadequate to meet the needs of users and face the following limitations:
 
Analysis Tools Not Designed for Business Users.  Most traditional business intelligence tools were developed specifically for data analysts and other quantitative professionals and require sophisticated programming in order to build pre-defined data sets and conduct analysis. A typical business user does not possess the skills or authority needed to modify the underlying data set and therefore receives static reports. As a result, these users lack access to critical data in a timely manner and may miss important insights needed to make business decisions.
 
Highly Inflexible Solutions are Difficult to Implement and Maintain.  Traditional business intelligence solutions require the integration and summarization of large volumes of data stored across an organization, which can be a time-consuming process that requires significant professional services support. In addition, a substantial investment of time and money can be required to refresh the data summarization as the underlying data sources evolve and change.
 
Substantial Total-Cost-of-Ownership.  Organizations incur significant hardware, software and professional services costs to deploy and maintain traditional business intelligence solutions. According to a 2009 report, Gartner estimates that the cost of development for business intelligence and data warehouse applications is about three to five times the cost of the software.
 
Spreadsheets Not Suited for Data Analysis and Lack Reliability.  Spreadsheets have been widely adopted by business users for data analysis because they are readily available. However, spreadsheets are general purpose business productivity tools designed for data input and calculation that do not scale to support large data sets and lack auditing capabilities, sophisticated data security features and multi-user collaboration tools.


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Our Market Opportunity
 
QlikView addresses a broader market opportunity than just traditional users of business intelligence tools. According to a 2009 IDC report, the business intelligence market is projected to grow to $8.6 billion in 2010. We believe that published market size estimates exclude the vast majority of business users, as most of these individuals do not use traditional business intelligence solutions due to their cost and complexity.
 
The market for our software platform extends beyond large enterprises which have historically been the most frequent adopters of traditional business intelligence tools. The substantial cost and complexity of these traditional tools have limited adoption by small businesses and medium-sized enterprises. These potential users and customer segments represent a large, underpenetrated market opportunity that we believe will increasingly deploy powerful, enterprise-class software platforms if they are lower cost and easy to use. In addition to the business intelligence market, we also believe QlikView can be used to satisfy business users’ needs in adjacent markets, such as search and discovery software which according to a 2009 IDC report is projected to grow to $2.4 billion in 2010.
 
Our Solution
 
QlikView is an innovative business intelligence solution that combines enterprise-class analytics with the simplicity and ease-of-use found in office productivity software tools. We designed QlikView to enable business users in organizations of all sizes to make faster and better decisions. The key differentiators of our solution include:
 
Intuitive Experience Drives Broad Adoption.  Unlike traditional business intelligence tools, QlikView empowers business users with sophisticated analytic capabilities delivered through an easy-to-use, intuitive user interface. QlikView extends the power of data analytics to the business users by allowing them to search associatively and define visual charts through simple point-and-click technology without the help of information technology (or IT) staff.
 
Faster Decision Cycles Increase Business Agility.  QlikView can be installed and implemented throughout an organization in less than three months, compared to traditional business intelligence tools which we believe on average can take up to 18 months to implement. In addition, a customer’s analysis can be rapidly updated as underlying data evolves and analytic requirements change which enables business users to intuitively interrogate and analyze data in real time and reduce decision cycles.
 
Lower Total Cost-of-Ownership Yields Higher ROI.  QlikView can be implemented in a self-service manner and requires less expenditures on hardware, software, services and ongoing IT support as compared to traditional business intelligence solutions.
 
Highly Scalable In-Memory Architecture Leverages Hardware Advances.  QlikView benefits from two important computer hardware trends: 64-bit computing, which increases the amount of memory available on computers, and multi-core central processing units, or CPUs, which allow for parallel processing of complex calculations. The expected improvements in memory capacity and CPU performance will drive QlikView’s future performance with minimal incremental investment.
 
Open Platform Focus.  QlikView is designed to be the easiest and fastest business intelligence platform on which business users can develop analytic applications. We license our platform to partners, such as independent software vendors and systems integrators, to create a wide variety of purpose-specific analytic applications.
 
Our Business Model
 
To complement QlikView, we have developed a differentiated business model that has the following attributes:
 
Broad User Focus.  We seek to market and sell directly to the business user by providing an intuitive software platform that can be installed and used with minimal training. Unlike most existing business intelligence tools, QlikView is designed for business users and does not require substantial IT support to install, integrate and maintain.
 
Low Risk Rapid Product Adoption.  To facilitate rapid adoption of our platform, we allow our customers to purchase licenses in the way that best meets their needs, including on an individual, workgroup, departmental or


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enterprise-wide basis. In addition, we offer free product downloads to individual users and a 30-day money back guarantee upon purchase.
 
“Land and Expand” Customer Penetration.  We seek to initially “land” within the organization of a new customer by solving a business need of specific business users or departments. We then work to “expand” the use of our solution across the organization by targeting other business units, geographies and use cases. Our customer penetration strategy is focused on creating a loyal user base that promotes adoption through tangible results and powerful, word-of-mouth marketing, which facilitate incremental sales.
 
Globally Diversified Distribution Model.  We seek to maximize the reach of the QlikView platform by employing a multi-pronged sales approach that leverages a direct sales force and partner network which includes resellers, OEM relationships and systems integrators. We typically enter new markets through partnerships and reseller agreements to minimize cost and risk while assessing demand in the new market. We currently have distribution capabilities in over 100 countries and a network of over 1,100 channel partners worldwide to help generate demand for QlikView.
 
Community-Based Marketing and Support.  We have established QlikCommunity, our user community, to augment our development, marketing and support efforts. This community of over 26,000 registered users as of March 31, 2010 promotes the use of our software within their organizations as well as to other organizations.
 
Our Growth Strategy
 
We intend to make QlikView the primary platform on which business users, in companies of all sizes, make critical business decisions. The key elements of our growth strategy include:
 
Increase Our Global Market Penetration.  We intend to expand our presence in targeted geographies by growing our direct sales force and global partner network. We began our operations in Sweden, have established a substantial foothold in Western Europe and will continue to seek to expand globally, particularly in the United States, Japan, Australia, China, Russia and Brazil.
 
Further Penetrate Our Existing Customer Base.  We intend to increase penetration of existing customers by capitalizing on current users’ satisfaction to promote QlikView to other users and departments within their organizations. Historically, we have effectively migrated new customers from single project and departmental deployments to multi-department deployments over time.
 
Extend Our Software Platform to Provide New Business Solutions.  We plan to enhance our current platform by adding new functionality that extends our analytics, visualization and search capabilities to broader use cases. We believe that QlikView’s capabilities can be extended to adjacent areas where data-driven decisions are critical including website navigation, content search and information management, external data communication, product configuration and e-commerce applications.
 
Expand Our OEM Alliances and Strategic Relationships.  We have an ongoing effort to increase our number of OEM alliances with other independent software vendors that license our technology to embed within and enhance their solutions. We believe we have a significant opportunity to expand the use of QlikView through our OEM relationships, which accounted for approximately 6% of our sales in 2009 and 5% of our sales for the three months ended March 31, 2010, as well as through other distribution relationships. In addition, we seek to expand our strategic reseller agreements and relationships with systems integrators and consultants and to use this channel to generate additional inbound customer prospects.
 
Enhance Adoption of QlikView by Offering a Robust Mobile Solution.  We intend to offer a variety of delivery options that enable our customers to use our software from any location over any device. QlikView is available for many popular mobile platforms, including Apple iPhone, Android, BlackBerry and Symbian-based smart phones.


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Risks Associated with Our Business
 
Our business is subject to numerous risks described in the section entitled “Risk Factors” and elsewhere in this prospectus. You should carefully consider these risks before making an investment. Some of these risks include:
 
  •  we have limited experience in targeting a global marketplace which impedes our ability to forecast quarterly and annual revenues accurately
 
  •  our quarterly operating results are subject to fluctuations which could cause our stock price to decline
 
  •  we are dependent on a single product platform, QlikView
 
  •  the market for business intelligence software is still evolving and if this market or our market share fail to grow, our business would be harmed
 
  •  our success is dependent on maintaining successful relationships with strategic channel partners and expanding our direct sales capabilities
 
  •  management of our international operations is complex
 
  •  demand for our software platform may be adversely affected by changing industry standards
 
  •  we are dependent on our customers’ renewal of their maintenance contracts
 
  •  we face intense competition, and most of our competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical, sales, marketing and other resources than we have
 
Our Corporate Information
 
We were founded in Sweden in 1993. From 1993 until 1999, our activities were focused on software research and development that resulted in QlikView’s core technology, and from 1999 until 2004 we focused on the commercialization of our technology primarily in the Nordic market and limited regions of Europe. In 2004, we reincorporated in Delaware and began to broaden our marketing and sales activities in the United States and continued our expansion globally. Our principal executive offices are located at 150 Radnor Chester Road, Suite E220, Radnor, Pennsylvania 19087 and our telephone number is (888) 828-9768. Our website address is www.qlikview.com. The information on, or that can be accessed through, our website is not part of this prospectus.


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THE OFFERING
 
Common stock offered 11,200,000 shares
 
Over-allotment option
1,680,000 shares
 
Common stock to be outstanding after this offering
74,957,594 shares
 
Use of proceeds We expect our net proceeds from this offering will be $89.7 million, assuming the sale of 11,200,000 shares of common stock in this offering at an assumed initial public offering price of $9.00 per share, the mid-point of the range reflected on the cover page of the prospectus. We intend to use approximately $6.1 million of the net proceeds of this offering to repay in full the principal and accrued interest and to pay any applicable prepayment fee on our outstanding debt facility from Stiftelsen Industrifonden. We expect to use the remaining net proceeds of this offering for general corporate purposes, including working capital and potential capital expenditures and acquisitions. See “Use of Proceeds.”
 
Proposed Nasdaq Global Market symbol
“QLIK”
 
The number of shares of our common stock to be outstanding after the offering is based on 63,757,594 shares of common stock outstanding as of March 31, 2010, which assumes:
 
  •  the renaming of our Series A common stock as common stock;
 
  •  the conversion of 19,846,279 shares of Series A preferred stock into 19,846,279 shares of common stock; and
 
  •  the conversion of 26,875,145 shares of Series AA preferred stock into 26,875,145 shares of common stock.
 
Except where stated otherwise herein, the number of shares of our common stock to be outstanding after this offering does not take into account:
 
  •  12,441,041 shares issuable upon exercise of options outstanding as of March 31, 2010 at a weighted average exercise price of approximately $1.68 per share;
 
  •  1,161,905 shares reserved as of March 31, 2010 for future issuance under our stock-based compensation plans; and
 
  •  568,263 shares issuable upon the exercise of warrants outstanding as of March 31, 2010 at a weighted average exercise price of approximately $1.43 per share.
 
Unless otherwise indicated, the information we present in this prospectus assumes and reflects the following:
 
  •  the renaming of our Series A common stock as common stock prior to the closing of this offering;
 
  •  the conversion of all outstanding shares of our Series A preferred stock and Series AA preferred stock into shares of our common stock and all outstanding warrants to purchase preferred stock into warrants to purchase common stock upon the closing of this offering;
 
  •  the filing of our restated certificate of incorporation and the adoption of our amended and restated bylaws to be effective upon the closing of this offering; and
 
  •  no exercise by the underwriters of their option to purchase additional shares.


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SUMMARY CONSOLIDATED FINANCIAL DATA
 
The tables below summarize our consolidated financial data. The following summary financial data should be read together with our consolidated financial statements and related notes, “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. The data for each of the three years ended December 31, 2007, 2008 and 2009 have been derived from our audited consolidated financial statements appearing elsewhere in this prospectus. The data for the three month periods ended March 31, 2009 and 2010 have been derived from our unaudited consolidated financial statements appearing elsewhere in this prospectus.
                                         
          Three Months
 
    Year Ended December 31,     Ended March 31,  
Consolidated Statement of Operations Data:   2007     2008     2009     2009     2010  
                      (unaudited)  
    (in thousands, except for share and per share amounts)  
 
Revenue:
                                       
License revenue
  $ 51,482     $ 74,446     $ 99,864     $ 14,759     $ 26,222  
Maintenance revenue
    17,747       29,401       41,390       7,969       13,069  
Professional services revenue
    11,357       14,417       16,105       3,676       4,474  
                                         
Total revenue
    80,586       118,264       157,359       26,404       43,765  
Cost of revenue:
                                       
License revenue
    2,949       3,071       3,663       587       679  
Maintenance revenue
    580       1,365       1,635       376       695  
Professional services revenue
    8,177       9,562       11,802       2,817       2,912  
                                         
Total cost of revenue(1)
    11,706       13,998       17,100       3,780       4,286  
                                         
Gross profit
    68,880       104,266       140,259       22,624       39,479  
Operating expenses:
                                       
Sales and marketing(1)
    48,249       74,267       93,349       19,562       25,413  
Research and development(1)
    5,419       8,258       8,735       2,223       2,664  
General and administrative(1)
    15,154       20,190       25,009       7,219       9,393  
                                         
Total operating expenses
    68,822       102,715       127,093       29,004       37,470  
                                         
Income (loss) from operations
    58       1,551       13,166       (6,380 )     2,009  
Other income (expense)
    (463 )     3,304       (4,529 )     670       (2,174 )
                                         
Income (loss) before benefit for income taxes
    (405 )     4,855       8,637       (5,710 )     (165 )
Benefit (provision) for income taxes
    40       (1,860 )     (1,776 )     1,409       46  
                                         
Net income (loss)
  $ (365 )   $ 2,995     $ 6,861     $ (4,301 )   $ (119 )
                                         
Net income (loss) per common share(2):
                                       
Basic
  $ (0.03 )   $ 0.01     $ 0.07     $ (0.27 )   $ (0.01 )
Diluted
  $ (0.03 )   $ 0.01     $ 0.06     $ (0.27 )   $ (0.01 )
Weighted average number of shares outstanding:
                                       
Basic
    13,526,926       14,552,999       16,267,186       15,992,623       16,846,798  
Diluted
    13,526,926       16,523,443       20,778,448       15,992,623       16,846,798  
Pro forma net income per common share (unaudited)(3):
                                       
Basic
                  $ 0.13             $ 0.01  
Diluted
                  $ 0.12             $ 0.01  
Weighted average number of shares used in pro forma computation (unaudited)(3):
                                       
Basic
                    62,988,610               63,568,222  
Diluted
                    67,606,341               70,834,602  
Pro forma as adjusted net income per common share (unaudited)(4)
                                       
Basic
                  $ 0.12             $ 0.01  
Diluted
                  $ 0.11             $ 0.01  
Weighted average number of shares used in pro forma as adjusted computation (unaudited)(4)
                                       
Basic
                    74,188,610               74,768,222  
Diluted
                    78,806,341               82,034,602  


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(1) Includes stock-based compensation expense as follows:
                                         
                                         
          Three Months
 
    Year Ended December 31,     Ended March 31,  
    2007     2008     2009     2009     2010  
                      (unaudited)  
    (in thousands, except for share and per share amounts)  
 
Cost of revenue
  $ 12     $ 39     $ 82     $ 19     $ 26  
Sales and marketing
    103       285       733       157       260  
Research and development
    6       19       79       8       21  
General and administrative
    69       388       585       155       193  
                                         
    $ 190     $ 731     $ 1,479     $ 339     $ 500  
                                         
 
(2) We applied the two-class method to compute net income (loss) per common share which requires that earnings attributable to common stockholders for the period be allocated between common and participating securities based upon their respective rights to receive distributed and undistributed earnings. See Note 2 of the notes to each of our consolidated financial statements.
 
(3) The pro forma basic and diluted net income per share have been calculated assuming (i) the renaming of our Series A common stock as common stock prior to the closing of this offering, (ii) the conversion of all outstanding shares of Series A and Series AA preferred stock into an aggregate of 46,721,424 shares of our common stock prior to the close of this offering and (iii) the reclassification of outstanding preferred stock warrants from long term liabilities to additional paid-in capital as of the beginning of the period. The numerator of the pro forma net income per share calculation is derived by adding the approximately $1.372 million and $0.554 million charge for the year ended December 31, 2009 and the three months ended March 31, 2010 related to the preferred stock warrant liability to net income (loss) as reported of approximately $6.861 million and ($0.119 million) for the year ended December 31, 2009 and the three months ended March 31, 2010 to arrive at net income attributable to common shares of approximately $8.233 million and $0.435 million for the year ended December 31, 2009 and the three months ended March 31, 2010.
 
(4) The pro forma as adjusted basic and diluted net income per share have been calculated assuming (i) the renaming of our Series A common stock as common stock prior to the closing of this offering, (ii) the conversion of all outstanding shares of Series A and Series AA preferred stock into an aggregate of 46,721,424 shares of our common stock prior to the close of this offering, (iii) the reclassification of outstanding preferred stock warrants from long-term liabilities to additional paid-in capital, (iv) the sale by us of the 11,200,000 shares of common stock offered by this prospectus, (v) the filing of our restated certificate of incorporation, which will occur immediately upon closing of this offering, and (vi) the use of approximately $6.1 million of the net proceeds of this offering to repay in full the principal and accrued interest and to pay any applicable prepayment fee on our outstanding debt facility from Stiftelsen Industrifonden as of the beginning of the period. The numerator of the pro forma as adjusted net income per share calculation is derived by adding the approximately $1.372 million and $0.554 million charge related to the preferred stock warrant liability for the year ended December 31, 2009 and the three months ended March 31, 2010 and the interest recorded related to the Stiftelsen Industrifonden debt facility of approximately $0.8 million and $0.2 million for the year ended December 31, 2009 and the three months ended March 31, 2010 to net income (loss) as reported of approximately $6.861 million and ($0.119 million) for the year ended December 31, 2009 and the three months ended March 31, 2010 to arrive at net income attributable to common shares of approximately $9.033 million and $0.635 million for the year ended December 31, 2009 and the three months ended March 31, 2010.
 
The following table presents our summary consolidated balance sheet data as of March 31, 2010:
 
  •  on an actual basis;
 
  •  on a pro forma basis to give effect to (i) the renaming of our Series A common stock as common stock; (ii) the conversion of all outstanding shares of our Series A preferred stock and Series AA preferred stock into shares of our common stock and all outstanding warrants to purchase preferred stock into warrants to purchase common stock; and (iii) the reclassification of our outstanding preferred stock warrants from long-term liabilities to additional paid-in capital; and

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  •  on a pro forma as adjusted basis to give effect to (i) the renaming of our Series A common stock as common stock; (ii) the conversion of all outstanding shares of our Series A preferred stock and Series AA preferred stock into shares of our common stock and all outstanding warrants to purchase preferred stock into warrants to purchase common stock; (iii) the reclassification of our outstanding preferred stock warrants from long-term liabilities to additional paid-in capital; (iv) the sale by us of the shares of common stock offered by this prospectus at an initial public offering price of $9.00 per share, the mid-point of the range reflected on the cover of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us; (v) the filing of our restated certificate of incorporation, which will occur immediately upon closing of this offering, and (vi) the use of approximately $6.1 million of the net proceeds of this offering to repay in full the principal and accrued interest and to pay any applicable prepayment fee on our outstanding debt facility from Stiftelsen Industrifonden.
 
                         
    As of March 31, 2010
            Pro Forma As
Consolidated Balance Sheet Data:
  Actual   Pro Forma   Adjusted
    (unaudited)
    (in thousands)
 
Cash and cash equivalents
  $ 37,366     $ 37,366     $ 121,470  
Working capital
    14,909       12,989       101,512  
Deferred revenue
    36,480       36,480       36,480  
Total assets
    100,223       98,303       182,407  
Long-term obligations, including current portion
    11,006       8,240       2,266  
Convertible preferred stock
    23,901              
Total stockholders’ equity (deficit)
    (7,118 )     17,629       109,139  


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RISK FACTORS
 
Investing in our common stock involves a high degree of risk. The risks described below are not the only ones facing us. Additional risks that we do not yet know of or that we currently think are immaterial may also impair our business operations. If any of the following risks actually occur, our business, operating results or financial condition could be materially harmed. In such cases, the trading price of our common stock could decline and you may lose all or part of your investment. Before investing in our common stock, you should carefully consider each of the following risk factors and all of the other information set forth in this prospectus, including the financial statements and the notes thereto.
 
Risks Related to Our Business and Industry
 
We have limited experience in targeting a global marketplace and compete in a rapidly evolving industry which makes our future operating results difficult to predict.
 
We have limited experience in targeting the global business intelligence marketplace. In addition, we have a limited operating history in an industry characterized by rapid technological innovation, changing customer needs, evolving industry standards and frequent introductions of new products, enhancements and services. Any of these factors can render our existing software platform and services obsolete or unmarketable. We believe that our future success will depend in large part on our ability:
 
  •  to support current and future releases of popular hardware, operating systems, computer programming languages, databases and software applications
 
  •  to develop new products that achieve market acceptance in a timely manner
 
  •  to meet an expanding range of customer requirements
 
As we encounter increasing competitive pressures, we will likely be required to modify, enhance, reposition or introduce new products and service offerings. We may not be successful in doing so in a timely, cost-effective and appropriately responsive manner, or at all. All of these factors make it difficult to predict our future operating results which may impair our ability to manage our business and your ability to assess our prospects.
 
We may experience quarterly fluctuations in our operating results due to a number of factors which make our future results difficult to predict and could cause our operating results to fall below expectations or our guidance.
 
Our operating results may fluctuate due to a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future performance. If our revenue or operating results fall below the expectations of investors or securities analysts or below any guidance we may provide to the market, the price of our common stock could decline substantially.
 
Our operating results have varied in the past. In addition to other risk factors listed in this “Risk Factors” section, factors that may affect our quarterly operating results, business and financial condition include the following:
 
  •  demand for our software platform and services and the size and timing of orders
 
  •  market acceptance of our current and future products
 
  •  a slowdown in spending on information technology and software by our current and/or prospective customers
 
  •  sales cycles and performance of our indirect channel partners and original equipment manufacturers (known as OEMs)
 
  •  budgeting cycles of our customers
 
  •  the management, performance and expansion of our international operations
 
  •  the rate of renewals of our maintenance agreements
 
  •  changes in the competitive dynamics of our markets
 
  •  our ability to control costs, including our operating expenses


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  •  customers delaying purchasing decisions in anticipation of new products or product enhancements by us or our competitors
 
  •  the outcome or publicity surrounding any pending or threatened lawsuits
 
  •  the timing of recognizing revenue in any given quarter as a result of revenue recognition rules
 
  •  an increase in the rate of product returns
 
  •  foreign currency exchange rate fluctuations
 
  •  failure to successfully manage any acquisitions
 
  •  general economic and political conditions in our domestic and international markets
 
In addition, we may in the future experience fluctuations in our gross and operating margins due to changes in the mix of our direct and indirect sales, domestic and international revenues, and license and service revenues.
 
We may implement changes to our license pricing structure for all of our products including increased prices and modified licensing parameters. If these changes are not accepted by our current or future customers, our business, operating results and financial condition could be harmed.
 
Based upon all of the factors described above, we have a limited ability to forecast the amount and mix of future revenues and expenses, and it is likely that at some time our operating results will fall below our estimates or the expectations of public market analysts and investors.
 
We depend on revenue from a single product platform.
 
We are dependent on a single product platform, QlikView. Our business would be harmed by a decline in demand for, or in the price of, our software platform as a result of, among other factors:
 
  •  any change in our pricing model
 
  •  increased competition
 
  •  support, research and development or other expenditures undertaken in attempts, whether or not successful, to develop new products
 
  •  a maturation in the markets for our products
 
Our financial results would suffer if the market for business intelligence software does not continue to grow or if we are unable to further penetrate this market.
 
Nearly all of our revenues to date have come from sales of business intelligence software and related maintenance services. We expect these sales to account for substantially all of our revenues for the foreseeable future. Although demand for business intelligence software has grown in recent years, the market for business intelligence software applications is still evolving. We cannot be sure that this market will continue to grow or, even if it does grow, that customers will purchase our software platform or services. We have spent, and intend to keep spending, considerable resources to educate potential customers about business intelligence software in general and our software platform in particular. However, we cannot be sure that these expenditures will help our software platform achieve any additional market acceptance or enable us to attract new customers or new users at existing customers. A reduction in the demand for our services and software platform could be caused by, among other things, lack of customer acceptance, weakening economic conditions, competing technologies and services or decreases in software spending. If the market and our market share fail to grow or grow more slowly than we currently expect, our business, operating results and financial condition would be harmed.
 
We use indirect channel partners and if we are unable to maintain successful relationships with them, our business, operating results and financial condition could be harmed.
 
In addition to our direct sales force, we use strategic indirect channel partners such as distribution partners, value-added resellers, system integrators and OEMs to license and support our software platform. For the three months ended March 31, 2010, transactions by indirect channel partners accounted for approximately 50% of our total product licenses revenues and first years’ maintenance billings.


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Our channel partners may offer customers the products of several different companies, including products that compete with ours. Our channel partners generally do not have an exclusive relationship with us; thus, we cannot be certain that they will prioritize or provide adequate resources for selling our products. Divergence in strategy or contract defaults by any of these channel partners may harm our ability to develop, market, sell or support our software platform. In addition, establishing and retaining qualified indirect sales channel partners and training them in our software platform and services require significant time and resources. In order to develop and expand our distribution channel, we must continue to scale and improve our processes and procedures that support our channel, including investment in systems and training. These processes and procedures may become increasingly complex and difficult to manage as we grow our organization.
 
Our ability to achieve revenue growth in the future will depend in part on our success in maintaining successful relationships with our channel partners. There can be no assurance that our channel partners will continue to cooperate with us when our distribution agreements expire or are up for renewal. If we are unable to maintain our relationships with these channel partners, our business, operating results and financial condition could be harmed. In addition, there can be no assurance that actions taken or not taken by such parties will not harm us. Also, in a number of regions we rely on a limited number of resellers, and our business may be harmed if any of these resellers were to fail to effectively address their specified geographic territories.
 
In addition, we rely on our channel partners to operate in accordance with the terms of their contractual agreements with us. For example, our agreements with our channel partners limit the terms and conditions pursuant to which they are authorized to resell or distribute our software and offer technical support and related services. We also typically require our channel partners to provide us with the dates and details of product license transactions sold to end user customers. If our channel partners do not comply with their contractual obligations to us, our business, results of operations and financial condition may be harmed.
 
If we are unable to expand our direct sales capabilities, we may not be able to generate increased revenues.
 
In order to succeed, we must expand our direct sales force to generate increased revenue from new customers. As of March 31, 2010, we had a team of 127 dedicated direct sales professionals, and we intend to increase our number of direct sales professionals. New hires will require training and will take time to achieve full productivity. We cannot be certain that new hires will become as productive as necessary or that we will be able to hire enough qualified individuals in the future. Failure to hire qualified direct sales personnel will preclude us from expanding our business and growing our revenue.
 
As we pursue new enterprise customers, additional OEM opportunities or more complicated deployments, our sales cycle and deployment processes may become more unpredictable and require greater time and expense.
 
We anticipate that our sales cycle may lengthen as we pursue new enterprise customers. Enterprise customers may undertake a significant evaluation process in regard to enterprise software which can last from several months to a year or longer. If our sales cycle were to lengthen in this manner, events may occur during this period that affect the size or timing of a purchase or even cause cancellations, and this may lead to more unpredictability in our business and operating results. Additionally, sales cycles for sales of our software platform to OEMs tend to be longer, ranging from three to 12 months or more, and may involve convincing a partner’s entire organization that our software platform is the appropriate software for its applications. We may spend substantial time, effort and money on our sales efforts without any assurance that our efforts will produce any sales.
 
In addition, we may face unexpected deployment challenges with enterprise customers or more complicated installations of our software platform. It may be difficult to deploy our software platform if the customer has unexpected database, hardware or software technology issues. Additional deployment complexities may occur if a customer hires a third party to deploy our software platform or if one of our indirect channel partners leads the implementation of our solution. Any difficulties or delays in the initial implementation could cause customers to reject our software or lead to the delay or non-receipt of future orders, in which case our business, operating results and financial condition would be harmed.


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Managing our international operations is complex and our failure to do so successfully could harm our business, operating results and financial condition.
 
We receive a significant portion of our total revenues from international sales from foreign direct and indirect operations. International revenues accounted for approximately 77% of our total revenues for each of the years ended December 31, 2007, 2008 and 2009, and 73% and 75% for the three months ended March 31, 2009 and 2010. We have facilities located in Australia, Austria, Belgium, Denmark, Finland, France, Germany, India, Italy, Japan, the Netherlands, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. We expect to continue to add personnel in additional countries. Our international operations require significant management attention and financial resources.
 
There are certain risks inherent in our international business activities including, but not limited to:
 
  •  managing and staffing international offices and the increased costs associated with multiple international locations
 
  •  maintaining relationships with indirect channel partners outside the United States, whose sales and lead generation activities are very important to our international operations
 
  •  multiple legal systems and unexpected changes in legal requirements
 
  •  tariffs, export restrictions, trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets
 
  •  trade laws and business practices favoring local competition
 
  •  costs of localizing products and potential lack of acceptance of localized versions
 
  •  potential tax issues, including restrictions on repatriating earnings and multiple and conflicting tax laws and regulations
 
  •  weaker intellectual property protection in some countries
 
  •  difficulties in enforcing contracts and collecting accounts receivable, longer sales cycles and longer payment cycles, especially in emerging markets
 
  •  the significant presence of some of our competitors in certain international markets
 
  •  our ability to adapt to sales practices and customer requirements in different cultures
 
  •  political and economic instability, including war and terrorism or the threat of war and terrorism
 
We believe that, over time, a significant portion of our revenues and costs will continue to be denominated in foreign currencies. To the extent such denomination in foreign currencies does occur, gains and losses on the conversion to United States dollars of accounts receivable, accounts payable and other monetary assets and liabilities arising from international operations may contribute to fluctuations in our results of operations. Although we may in the future decide to undertake foreign exchange hedging transactions to cover a portion of our foreign currency transaction exposure, we currently do not hedge any foreign currency exposure. If we are not effective in any future foreign exchange hedging transactions in which we engage, our business, operating results and financial condition could be harmed.
 
In addition, compliance with foreign and United States laws and regulations that are applicable to our international operations is complex and may increase our cost of doing business in international jurisdictions, and our international operations could expose us to fines and penalties if we fail to comply with these regulations. These laws and regulations include import and export requirements, United States laws such as the Foreign Corrupt Practices Act, and local laws prohibiting corrupt payments to governmental officials. Although we have implemented policies and procedures designed to help ensure compliance with these laws, there can be no assurance that our employees, partners and other persons with whom we do business will not take actions in violation of our policies or these laws. Any violations of these laws could subject us to civil or criminal penalties, including substantial fines or prohibitions on our ability to offer our products and services to one or more countries, and could also materially damage our reputation, our brand and our international expansion efforts.
 
Our failure to manage any of these risks successfully could harm our international operations and reduce our international sales.


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If new industry standards emerge or if we are unable to respond to rapid technological changes, demand for our software platform may be adversely affected.
 
We believe that our future success will depend in large part on our ability:
 
  •  to support current and future industry standards, including databases and operating systems
 
  •  to maintain technological competiveness and meet an expanding range of customer requirements
 
  •  to introduce new products and features for our customers
 
The emergence of new industry standards in related fields may adversely affect the demand for our existing software platform. This could happen, for example, if new technologies emerged that were incompatible with customer deployments of our software platform. We currently support Open Database Connectivity, or ODBC, and Object Linking and Embedding Database, or OLEDB, standards in database access technology. If we are unable to adapt our software platform on a timely basis to new standards in database access technology, the ability of our software platform to access customer databases could be impaired. In addition, the emergence of new server operating systems standards could adversely affect the demand for our existing software platform. Our platform currently requires the Windows Server operating system when deployed on a server, as used in most multi-user deployments. If customers are unwilling to use Windows Server, we may not be able to achieve compatibility on a timely basis or without substantial research and development and support expense. We currently support all generally available client operating systems that run industry standard web browsers, but we cannot assure you that we will be able to support future client operating systems and web browsers in a timely and cost-effective manner, if at all.
 
The markets for our software platform and services are also characterized by rapid technological and customer requirement changes. In particular, our technology is optimized for servers utilizing the x86 and x64 families of microprocessors. If the speed and performance of these microprocessor families do not continue to increase at the rates we anticipate, our software may not attain the performance speed and capabilities that we expect. Also if a different microprocessor architecture were to gain widespread acceptance in server applications, we may not be able to achieve compatibility on a timely basis or without substantial research and development and support expense. Difficulty by us in achieving compatibility with a different microprocessor architecture or other technological change or in satisfying changing customer requirements could render our existing and future products obsolete and unmarketable. As a result, we may not be able to accurately predict the lifecycle of our software platform and services, and they may become obsolete before we receive the amount of revenues that we anticipate from them.
 
Business intelligence software is inherently complex. The development and testing of new products and product enhancements can require significant research and development expenditures. As a result, substantial delays in the general availability of such new releases or significant problems in the installation or implementation of such new releases could harm our business, operating results and financial condition. We may not successfully develop and market product enhancements or new products that respond to technological change or new customer requirements. Even if we introduce a new product, we may experience a decline in revenues of our existing products that is not fully matched by the new product’s revenue. For example, customers may delay making purchases of a new product to make a more thorough evaluation of the product, or until industry and marketplace reviews become widely available. In addition, we may lose existing customers who choose a competitor’s product rather than migrate to our new product. This could result in a temporary or permanent revenue shortfall and harm our business.
 
Our business depends on customers renewing their annual maintenance contracts and our ability to collect renewal fees.
 
Any decline in maintenance renewals could harm our future operating results. We sell our software platform pursuant to a perpetual license with a fixed upfront fee which ordinarily includes one year of maintenance as part of the initial price. Our customers have no obligation to renew their maintenance agreements after the expiration of this initial period, and they may not renew these agreements. We may be unable to predict future customer renewal rates accurately. Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our software platform, the prices of our software platform, the prices of products and services offered by our competitors or reductions in our customers’ spending levels. If our customers do not renew their maintenance and support arrangements or if they renew them on less favorable terms, our revenue may decline


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and our business will suffer. A substantial portion of our quarterly maintenance revenue is attributable to maintenance and support agreements entered into during previous quarters. As a result, if there is a decline in renewed maintenance agreements in any one quarter, only a small portion of the decline will be reflected in our maintenance revenue recognized in that quarter and the rest will be reflected in our maintenance revenue recognized in the following four quarters or more. In addition, we may have difficulties collecting renewal fees from our customers, especially in regards to customers located in emerging international markets. If we are unable to collect renewal fees from customers, our business will be harmed.
 
Our software platform could contain undetected errors, or bugs, which could cause problems with product performance and which could in turn reduce demand for our software platform, reduce our revenue and lead to product liability claims against us.
 
Software products like ours, which consist of hundreds of thousands of lines of code and incorporate licensed software from third parties, may contain errors and/or defects. Although we test our software extensively, we have in the past discovered software errors in our products after their introduction. Despite testing by us and by our current and potential customers, errors may be found in new products or releases after commercial shipment or deployment begins. This could result in lost revenue, damage to our reputation or delays in market acceptance which could harm our business, operating results and financial condition. We may also have to expend resources to correct these defects.
 
Our license agreements with customers typically contain provisions designed to limit our exposure to product liability, warranty and other claims. It is possible, however, that these provisions may not be effective as a result of existing or future laws of certain domestic or international jurisdictions or unfavorable judicial decisions in such jurisdictions, and we may be exposed to product liability, warranty and other claims. If these claims are made, our potential exposure may be substantial given the use of our products in business-critical applications. A successful product liability claim against us could harm our business, operating results and financial condition.
 
We face intense competition which may lead to reduced revenue and loss of market share.
 
The markets for business intelligence software, analytical applications and information management are intensely competitive and subject to rapidly changing technology and evolving standards. In addition, many companies in these markets are offering, or may soon offer, products and services that may compete with our software platform.
 
We face competitors in several broad categories, including business intelligence software, analytical processes, query, search and reporting tools. We compete with large software corporations, including suppliers of enterprise resource planning software that provide one or more capabilities that are competitive with our products, such as IBM (which acquired Cognos in 2008), Microsoft, Oracle (which acquired Hyperion Solutions in 2007) and SAP AG (which acquired Business Objects in 2008), and with open source business intelligence vendors, including Pentaho and JasperSoft. Open source software is software that is made widely available by its authors and is licensed “as is” for a nominal fee or, in some cases, at no charge. As the use of open source software becomes more widespread, certain open source technology could become competitive with our proprietary technology, which could cause sales of our products to decline or force us to reduce the fees we charge for our products. We also compete, or may increasingly in the future compete, with various independent competitors that are primarily focused on business intelligence products, such as Actuate, Information Builders, MicroStrategy, the SAS Institute and TIBCO. We expect additional competition as other established and emerging companies or open source vendors enter the business intelligence software market and new products and technologies are introduced.
 
Many of our competitors have longer operating histories, significantly greater financial, technical, marketing or other resources and greater name recognition than we do. In addition, many of our competitors have strong relationships with current and potential customers and extensive knowledge of the business intelligence industry. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements or devote greater resources to the development, promotion and sale of their products than us. Increased competition may lead to price cuts, fewer customer orders, reduced gross margins, longer sales cycles and loss of market share. We may not be able to compete successfully against current and future competitors, and our business, operating results and financial condition will be harmed if we fail to meet these competitive pressures.


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Current and future competitors may also make strategic acquisitions or establish cooperative relationships among themselves or with others. By doing so, these competitors may increase their ability to meet the needs of our potential customers. Our current or prospective indirect channel partners may establish cooperative relationships with our current or future competitors. These relationships may limit our ability to sell our software platform through specific distribution channels. Accordingly, new competitors or alliances among current and future competitors may emerge and rapidly gain significant market share. These developments could limit our ability to obtain revenues from new customers and to maintain technical support revenues from our installed customer base. If we are unable to compete successfully against current and future competitors, our business, operating results and financial condition would be harmed.
 
If customers demand business intelligence software to be provided via a “software as a service” business model, our business could be harmed.
 
Software as a service, or SaaS, is a model of software deployment where a software provider typically licenses an application to customers for use as a service on demand through web browser technologies. A SaaS business model can require a vendor to undertake substantial capital investments and related sales and support resources and personnel. If customers were to require business intelligence software like QlikView to be provided via a SaaS deployment, we would need to undertake these investments in order to implement this alternative business model. In addition, we would be obligated to apply new revenue recognition policies. Even if we undertook these investments, we may be unsuccessful in implementing a SaaS business model. These factors could harm our business, operating results and financial condition.
 
If we fail to develop our brand cost-effectively, our business may be harmed.
 
We believe that developing and maintaining awareness and integrity of our brand in a cost effective manner are important to achieving widespread acceptance of our existing and future products and are important elements in attracting new customers. We believe that the importance of brand recognition will increase as competition in our market further intensifies. Successful promotion of our brand will depend on the effectiveness of our marketing efforts and on our ability to provide reliable and useful products at competitive prices. Brand promotion activities may not yield increased revenue, and even if they do, the increased revenue may not offset the expenses we incur in building our brand. We also rely on our customer base and community of end-users in a variety of ways, including to give us feedback on our products and to provide user-based support to our other customers. If we fail to promote and maintain our brand successfully or to maintain loyalty among our customers and QlikCommunity, our user community, or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, we may fail to attract new customers or to retain our existing customers and our business may be harmed.
 
If we are unable to manage our growth effectively, our revenues and profits could be adversely affected.
 
We have recently expanded our operations and employee headcount significantly, and we anticipate that further significant expansion will be required. Our future operating results depend to a large extent on our ability to manage this expansion and growth successfully. Sustaining our growth will place significant demands on our management as well as on our administrative, operational and financial resources. To manage our growth, we must continue to improve our operational, financial and management information systems and expand, motivate and manage our workforce. If we are unable to manage our growth successfully without compromising our quality of service and our profit margins, or if new systems that we implement to assist in managing our growth do not produce the expected benefits, our revenues and profits could be harmed. Risks that we face in undertaking future expansion include:
 
  •  training new personnel to become productive and generate revenue
 
  •  controlling expenses and investments in anticipation of expanded operations
 
  •  implementing and enhancing our administrative infrastructure, systems and processes
 
  •  addressing new markets
 
  •  expanding operations in the United States and new international regions
 
A failure to manage our growth effectively could harm our ability to market and sell our software platform and maintenance services.


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If we are unable to recruit or retain skilled personnel, or if we lose the services of any of our key personnel, our business, operating results and financial condition could be harmed.
 
Our future success depends on our continuing ability to attract, train and retain highly skilled personnel, and we face intense competition for these employees. We may not be able to retain our current key employees or attract, train or retain other highly skilled personnel in the future. If we lose the services of one or all of these individuals, or if we are unable to attract, train and retain the highly skilled personnel we need, our business, operating results and financial condition could be harmed.
 
Future product development is dependent on adequate research and development resources.
 
In order to remain competitive, we must continue to develop new products, applications and enhancements to our existing software platform. This is particularly true as we further expand our product capabilities. Maintaining adequate research and development resources, such as the appropriate personnel, talent and development technology, to meet the demands of the market is essential. Our research and development organization is located in Lund, Sweden, and we may have difficulty hiring suitably skilled personnel in this region or expanding our research and development organization to facilities located in other geographic locations. In addition, many of our competitors expend a considerably greater amount on their respective research and development programs. Our failure to maintain adequate research and development resources or to compete effectively with the research and development programs of our competitors would present an advantage to such competitors. Further, if we are unable to develop products internally due to certain constraints, such as high employee turnover, lack of management ability or a lack of other development resources, this may force us to expand into a certain market or strategy via an acquisition for which we could potentially pay too much or unsuccessfully integrate into our operations.
 
If we fail to offer high quality customer support, our business would suffer.
 
Once our software platform and solutions are deployed to our customers, our customers rely on our support services to resolve any related issues. High quality customer support is important for the successful marketing and sale of our software platform and services and for the renewal of existing customers. The importance of high quality customer support will increase as we expand our business and pursue new enterprise customers. If we do not help our customers quickly resolve post-deployment issues and provide effective ongoing support, our ability to sell our software platform and services to existing customers would suffer and our reputation with existing or potential customers would be harmed. Also, our maintenance agreements contain service level agreements under which we guarantee specified response times. If we fail to meet our service level obligations under these agreements, we may be subject to penalties which could result in higher than expected costs, decreased revenue and decreased operating margins.
 
We currently utilize a combination of internal support personnel and third party support organizations, and we cannot assure you that actions taken or not taken by our third party support organization will not harm our reputation or business. As we expand our sales, we will be required to engage and train additional support personnel and resources. Further, our support organization will face additional challenges as we enter new international markets, including challenges associated with delivering support, training and documentation in languages required by new customers. If we fail to maintain high quality customer support or to grow our internal and external support organization to match any future sales growth, our business will suffer.
 
If we overestimate revenue, we may be unable to reduce our expenses to avoid or minimize harm to our results of operations.
 
Our revenues are difficult to forecast and are likely to fluctuate significantly from period to period. We base our operating expense budgets on expected revenue trends, and many of our expenses, such as office and equipment leases and personnel costs, will be relatively fixed in the short term and will increase over time as we make investments in our business. Our estimates of sales trends may not correlate with actual revenues in a particular quarter or over a longer period of time. Variations in the rate and timing of conversion of our sales prospects into actual licensing revenues could cause us to plan or budget inaccurately and those variations could adversely affect our financial results. In particular, delays, reductions in amount or cancellation of customers’ purchases or an increase in the number of customers exercising our 30-day money back guarantee on our software platform would adversely affect the overall level and timing of our revenues, and our business, results of operations and financial


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condition could be harmed. Due to the relatively fixed nature of many of our expenses, we may be unable to adjust spending quickly enough to offset any unexpected revenue shortfall.
 
In the course of our sales to customers, we may encounter difficulty collecting accounts receivable and could be exposed to risks associated with uncollectible accounts receivable. In the event we are unable to collect on our accounts receivable, it could negatively affect our cash flows, operating results and business.
 
Our methodologies and software solutions may infringe the intellectual property rights of third parties or be found to contain unexpected open source software, and this may create liability for us or otherwise harm our business.
 
Third parties may claim that our current or future products infringe their intellectual property rights, and such claims may result in legal claims against our customers and us. These claims may damage our reputation, harm our customer relationships and create liability for us. We expect the number of such claims will increase as the number of products and the level of competition in our industry segments grow, the functionality of products overlap and the volume of issued software patents and patent applications continues to increase. We generally agree in our customer contracts to indemnify customers for expenses or liabilities they incur as a result of third party intellectual property infringement claims associated with our products or services. To the extent that any claim arises as a result of third party technology we have licensed for use in our product, we may be unable to recover from the appropriate third party any expenses or other liabilities that we incur.
 
In addition, software products like ours that contain thousands of lines of software code at times incorporate open source software code. The use of open source software code is typically subject to varying forms of software licenses, called copyleft or open source licenses. These types of licenses may require that any person who creates a software product that redistributes or modifies open source software that was subject to an open source license must also make their own software product subject to the same open source license. This can lead to a requirement that the newly created software product be provided free of charge or be made available or distributed in source code form. Although we do not believe our software includes any open source software that would result in the imposition of any such requirement on portions of our software product, our software could be found to contain this type of open source software.
 
Responding to any infringement claim, regardless of its validity, or discovering open source software in our product could harm our business, operating results and financial condition, by, among other things:
 
  •  resulting in time-consuming and costly litigation
 
  •  diverting management’s time and attention from developing our business
 
  •  requiring us to pay monetary damages or enter into royalty and licensing agreements that we would not normally find acceptable
 
  •  causing product shipment or deployment delays
 
  •  requiring us to stop selling certain of our products
 
  •  requiring us to redesign certain of our products using alternative non-infringing or non-open source technology or practices, which could require significant effort and expense
 
  •  requiring us to disclose our software source code, the detailed program commands for our software program
 
  •  requiring us to satisfy indemnification obligations to our customers
 
Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our software platform, services and brand.
 
We currently have three issued United States patents and one pending United States patent expiring at various times ranging from 2015 to 2029 and 17 issued and eight pending foreign patents expiring at various times ranging from 2015 to 2029. We rely on a combination of copyright, trademark, patent, trade secrets, confidentiality procedures and contractual commitments to protect our proprietary information. For example, we license our software pursuant to click-wrap or signed license agreements that impose certain restrictions on a licensee’s ability to utilize the software. We also seek to avoid disclosure of our intellectual property, including by requiring those


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persons with access to our proprietary information to execute confidentiality agreements with us and by restricting access to our source code.
 
Despite our efforts, these measures can only provide limited protection. Unauthorized third parties may try to copy or reverse engineer portions of our software platform or may otherwise obtain and use our intellectual property. Any patents owned by us may be invalidated, circumvented or challenged. Any of our pending or future patent applications, whether or not being currently challenged, may not be issued with the scope of the claims we seek, if at all. Legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in other countries are uncertain and may afford little or no effective protection for our services, software, methodology and other proprietary rights. Consequently, we may be unable to prevent our intellectual property rights from being exploited abroad, which could require costly efforts to protect them. Policing the unauthorized use of our proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of management resources, either of which could harm our business. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. If we cannot protect our proprietary technology against unauthorized copying or use, we may not remain competitive.
 
Furthermore, many of our current and potential competitors have the ability to dedicate substantially greater resources to developing and protecting their technology or intellectual property rights than we do. In addition, our attempts to protect our proprietary technology and intellectual property rights may be further limited as our employees may be recruited by our current or future competitors and may take with them significant knowledge of our proprietary information. Consequently, others may develop services and methodologies that are similar or superior to our services and methodologies or may design around our intellectual property.
 
Computer “hackers” may damage our systems, services and products, and breaches of data protection could impact our business.
 
Computer programmers and hackers may be able to penetrate our network security and misappropriate our confidential information or that of third parties, create system disruptions or cause interruptions or shutdowns of our internal systems and services. If successful, any of these events could damage our computer systems or those of our customers and could disrupt or prevent us from providing timely maintenance and support for our software platform. Computer programmers and hackers also may be able to develop and deploy viruses, worms and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. The costs to us to eliminate or alleviate security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and the efforts to address these problems could result in interruptions, delays, cessation of service and loss of existing or potential customers and may impede our sales, manufacturing, distribution and other critical functions.
 
In the course of our regular business operations and providing maintenance and support services to our customers, we process and transmit proprietary information and sensitive or confidential data, including personal information of employees, customers and others. Breaches in security could expose us, our customers or the individuals affected to a risk of loss or misuse of this information, which could result in potential regulatory actions, litigation and potential liability for us, as well as the loss of existing or potential customers and damage to our brand and reputation.
 
Our business could be harmed as a result of the risks associated with our acquisitions.
 
As part of our business strategy, we may from time to time seek to acquire businesses that provide us with additional intellectual property, customer relationships and geographic coverage. We can provide no assurances that we will be able to find and identify desirable acquisition targets or that we will be successful in entering into a definitive agreement with any one target. In addition, even if we reach a definitive agreement with a target, there is no assurance that we will complete any future acquisition.
 
Any acquisitions we undertake will likely be accompanied by business risks which may include, among other things:
 
  •  the effect of the acquisition on our financial and strategic position and reputation


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  •  the failure of an acquisition to result in expected benefits, which may include benefits relating to enhanced revenues, technology, human resources, costs savings, operating efficiencies, goodwill and other synergies
 
  •  the difficulty, cost and management effort required to integrate the acquired businesses, including costs and delays in implementing common systems and procedures and costs and delays caused by communication difficulties
 
  •  the assumption of certain known or unknown liabilities of the acquired business, including litigation-related liabilities
 
  •  the reduction of our cash available for operations and other uses, the increase in amortization expense related to identifiable assets acquired, potentially dilutive issuances of equity securities or the incurrence of debt
 
  •  a lack of experience in new markets, new business culture, products or technologies or an initial dependence on unfamiliar distribution partners
 
  •  the possibility that we will pay more than the value we derive from the acquisition
 
  •  the impairment of relationships with customers, partners or suppliers of the acquired business or our customers
 
  •  the potential loss of key employees of the acquired company
 
These factors could harm our business, results of operations or financial condition.
 
In addition to the risks commonly encountered in the acquisition of a business as described above, we may also experience risks relating to the challenges and costs of closing a transaction. The risks described above may be exacerbated as a result of managing multiple acquisitions at once.
 
Business disruptions could affect our operating results.
 
A significant portion of our research and development activities and certain other critical business operations are concentrated at a single facility in Sweden. We are also a highly automated business and a disruption or failure of our systems could cause delays in completing sales and providing services. A major natural disaster, fire, act of terrorism or other catastrophic event that results in the destruction or disruption of any of our critical business operations or information technology systems could severely affect our ability to conduct normal business operations and, as a result, our future operating results could be harmed.
 
Future litigation could harm our results of operation and financial condition.
 
In addition to intellectual property litigation, from time to time, we may be subject to other litigation. We record a related liability when we can make a reasonable estimate of the liability relating to pending litigation and determine that it is probable. As additional information becomes available, we assess the potential liability and revise estimates as appropriate. However, because of uncertainties relating to litigation, the amount of our estimates could be wrong. In addition to the related cost and use of cash, pending or future litigation could cause the diversion of management’s attention and resources.
 
We will incur significant increased costs as a result of operating as a public company.
 
We have never operated as a public company. As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the Securities and Exchange Commission (SEC) and the Nasdaq Global Market impose various requirements on public companies, including requirements with respect to corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial costs to maintain the same or similar coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.


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We may need additional capital in the future and it may not be available on acceptable terms, if at all.
 
We have historically relied on outside financing and cash flow from operations to fund our operations, capital expenditures and expansion. However, we may require additional capital in the future to fund our operations and acquisitions, finance investments in equipment or personnel or respond to competitive pressures. We cannot assure you that additional financing will be available on terms acceptable to us. In addition, the terms of available financing may place limits on our financial and operational flexibility. If we are unable to obtain sufficient capital in the future, we may not be able to continue to meet customer demand for service quality, availability and competitive pricing. We also may be forced to reduce our operations or may not be able to expand or acquire complementary businesses, develop new services or otherwise respond to changing business conditions or competitive pressures.
 
Prolonged economic uncertainties or downturns could materially harm our business.
 
Current or future economic downturns could harm our business and results of operations. Negative trends in the general economy both in the United States and abroad, including trends resulting from actual or threatened military action by the United States, terrorist attacks on the United States, Europe or elsewhere, and financial and credit market fluctuations, could cause a decrease in corporate spending on business intelligence software in general and negatively affect the rate of growth of our business.
 
General worldwide economic conditions have experienced a significant downturn. These conditions make it extremely difficult for our customers and us to accurately forecast and plan future business activities, and they could cause our customers to slow spending on our products and services, which would delay and lengthen sales cycles. Furthermore, during challenging economic times our customers may face issues in gaining timely access to sufficient credit, which could result in an impairment of their ability to make timely payments to us. If that were to occur, we may be required to increase our allowance for doubtful accounts and our results would be harmed.
 
We maintain operating bank accounts at financial institutions in the United States, Sweden and other regions. In particular, a significant amount of our cash balances in the United States and Sweden are in excess of the insurance limits of the United States government’s Federal Deposit Insurance Corporation (FDIC) and Swedish government’s Swedish Deposit Insurance Scheme (Insättningsgarantin). The FDIC insures deposits in most banks and savings associations located in the United States and protects depositors against the loss of their deposits if an FDIC-insured bank or savings association fails, subject to specified monetary ceilings. Similarly, the Swedish Deposit Insurance Scheme is a state-provided guarantee of deposits in accounts at Swedish banks, subject to specified monetary ceilings. We could incur substantial losses if the underlying financial institutions in these or other regions fail or are otherwise unable to return our deposits.
 
We have a significant number of customers in the consumer products and services, manufacturing and financial services industries. A substantial downturn in these industries may cause firms to react to worsening conditions by reducing their capital expenditures in general or by specifically reducing their spending on information technology. Customers in these industries may delay or cancel information technology projects or seek to lower their costs by renegotiating vendor contracts. Also, customers with excess information technology resources may choose to develop in-house software solutions rather than obtain those solutions from us. Moreover, competitors may respond to market conditions by lowering prices and attempting to lure away our customers. In addition, the increased pace of consolidation in certain industries may result in reduced overall spending on our products.
 
We cannot predict the timing, strength or duration of any economic slowdown or recovery, generally or in the consumer products and services, manufacturing and financial services industries. If the economic condition of the general economy or markets in which we operate worsen from present levels, our business, financial condition and results of operations could be harmed.
 
If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.
 
The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal control over financial reporting and disclosure controls and procedures. If this offering were to become effective in 2010, under the SEC’s current rules, beginning with the year ending December 31, 2011, we would be required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to


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report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our independent registered public accounting firm will also be required to report on our internal control over financial reporting. Our testing and our auditor’s testing may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses and render our internal control over financial reporting ineffective. Due to the extent of our international operations, our financial reporting requires substantial international activities, resources and reporting consolidation. We expect to incur substantial accounting and auditing expense and to expend significant management time in complying with the requirements of Section 404. If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to investigations or sanctions by the SEC, FINRA or other regulatory authorities. In addition, we could be required to expend significant management time and financial resources to correct any material weaknesses that may be identified or to respond to any regulatory investigations or proceedings.
 
We have previously identified material weaknesses in our internal control over financial reporting, and if we are unable to achieve and maintain effective internal control over financial reporting, this could have a material adverse effect on our business and common stock price.
 
We produce our consolidated financial statements in accordance with the requirements of United States generally accepted accounting principles, or GAAP, but our internal accounting controls may not currently meet all standards applicable to companies with publicly traded securities. Effective internal controls are necessary for us to provide reliable financial reports to help mitigate the risk of fraud and to operate successfully as a publicly traded company.
 
In connection with the preparation of our consolidated financial statements for the year ended December 31, 2009, we identified a material weakness in the design and operation of our internal controls over financial reporting relating to the accounting for expenses in one of our European operating subsidiaries. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. Specifically, we determined that we had insufficient reconciliation and oversight of our accounting for accrued and prepaid expenses in one of our European operating subsidiaries during our financial statement close process which would have resulted in the overstatement of our assets and liabilities in the consolidated balance sheet and an overstatement of operating expenses and understatement of net income. During 2010 we have implemented procedures and controls designed to improve communication and overview of financial reporting by our geographic territories, including the affected operating subsidiary noted above, during our reporting consolidation processes. These procedures and controls include a monthly review of each of our territory’s financial results by financial controllers outside of the respective territory; increased communications, including monthly videoconferences among all regional financial controllers to address any material topics; and a quarterly requirement for all reporting territories to provide detailed commentary and analysis of material balance sheet positions and operating results for internal review purposes. We believe we have remediated this material weakness. In addition, our plans include the expansion of our finance staff in the affected territory with the hiring of a local senior financial executive which is currently in process.
 
In connection with the preparation of our consolidated financial statements for the year ended December 31, 2008, we identified a material weakness in our formal financial statement closing process. We remediated this material weakness during 2009 by implementing additional controls, including increasing our corporate accounting staff, implementing additional system controls and establishing a formalized closing calendar.
 
Although we believe we have addressed the internal control deficiencies that led to the material weaknesses, the measures we have taken may not be effective given our global operations and distribution capabilities in over 100 countries, and we may not be able to implement and maintain effective internal control over financial reporting in the future. If we have these or other material weaknesses in the future, it could affect the financial results that we report or create a perception that those financial results do not fairly state our financial condition or results of operations. Either of those events could have an adverse effect on the value of our common stock.


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Our results of operations may be adversely affected by changes in or interpretations of accounting standards.
 
We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States. These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting standards. Our accounting policies that recently have been or may be affected by changes in the accounting rules are as follows:
 
  •  software revenue recognition
 
  •  accounting for income taxes
 
  •  accounting for business combinations and related goodwill
 
  •  accounting for stock issued to employees
 
  •  assessing fair value of financial and non-financial assets
 
  •  application, if any, of international financial reporting standards (IFRS)
 
We continuously review our compliance with all new and existing revenue recognition accounting pronouncements. Depending upon the outcome of these ongoing reviews and the potential issuance of further accounting pronouncements, implementation guidelines and interpretations, we may be required to modify our reported results, revenue recognition policies or business practices which could harm our results of operations.
 
Our results of operations could be harmed by changes in tax rates or negative tax rulings.
 
We are subject to taxes in the United States and a variety of foreign jurisdictions. All of these jurisdictions have in the past and may in the future make changes to their corporate income tax rates and other income tax laws which could increase our future income tax provision.
 
Our future income tax obligations could be affected by earnings that are lower than anticipated in jurisdictions where we have lower statutory rates and by earnings that are higher than anticipated in jurisdictions where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, changes in the amount of unrecognized tax benefits under FASB ASC Topic No. 740, Income Taxes, or by changes in tax laws, regulations, accounting principles or interpretations thereof.
 
Our determination of our tax liability is subject to review by applicable United States and foreign tax authorities. Any adverse outcome of such a review could harm our operating results and financial condition. The determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment and, in the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain. Moreover, as a multinational business, we have subsidiaries that engage in many intercompany transactions in a variety of tax jurisdictions where the ultimate tax determination is uncertain.
 
As a result of these and other factors, the ultimate amount of tax obligations owed may differ from the amounts recorded in our financial statements and any such difference may harm our financial results in future periods in which we change our estimates of our tax obligations or in which the ultimate tax outcome is determined.
 
Risks Related to this Offering
 
An active trading market for our common stock may not develop.
 
Prior to this offering, there has been no public market for our common stock. Although we anticipate that our common stock will be approved for listing on the Nasdaq Global Market, an active trading market for our shares may never develop or be sustained following this offering. The initial public offering price for our common stock will be determined by negotiation between the representatives of the underwriters and us. This initial public offering price may vary from the market price of our common stock after the offering. Investors may not be able to sell their common stock at or above the initial public offering price. In addition, an inactive market may impair our ability to raise capital by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration, which, in turn, could harm our business.


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If securities or industry analysts do not publish research or reports or publish unfavorable research or reports about our business, our stock price and trading volume could decline.
 
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us, our business, our market or our competitors. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our stock could be negatively impacted. In the event we obtain securities or industry analyst coverage, if one or more of the analysts who covers us downgrades our stock, our stock price would likely decline. If one or more of these analysts ceases to cover us or fails to regularly publish reports on us, interest in our stock could decrease which could cause our stock price or trading volume to decline.
 
The price of our common stock may be volatile and fluctuate substantially which could result in substantial losses for investors purchasing shares in this offering.
 
The initial public offering price for the shares of our common stock sold in this offering will be determined by negotiation between the representatives of the underwriters and us. This price may not reflect the market price of our common stock following this offering. In addition, the market price of our common stock is likely to be highly volatile and may fluctuate substantially due to the following factors (in addition to the other risk factors described in this section):
 
  •  quarterly variations in our results of operations or those of our competitors
 
  •  announcements by us or our competitors of acquisitions, new products, significant contracts or commercial relationships
 
  •  our ability to respond to changing industry standards, technological developments or customer requirements on a timely basis
 
  •  commencement of, or our involvement in, litigation
 
  •  any major change in our board of directors or management
 
  •  recommendations by securities analysts or changes in earnings estimates
 
  •  announcements about our earnings that are not in line with analyst expectations
 
  •  announcements by our competitors of their earnings that are not in line with analyst expectations
 
  •  the volume of shares of our common stock available for public sale
 
  •  sales of stock by us or by our stockholders
 
  •  short sales, hedging and other derivative transactions involving shares of our common stock
 
  •  adoption of new accounting standards affecting the software industry
 
  •  general economic conditions in the United States and abroad and slow or negative growth of related markets
 
  •  general political conditions in the United States and abroad, including terrorist attacks, war or threat of terrorist attacks or war
 
In addition, the stock market in general, and the Nasdaq Global Market and the market for technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. These broad market and industry factors may materially harm the market price irrespective of our operating performance. As a result of these factors, you might be unable to resell your shares at or above the initial public offering price after this offering. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against the affected company. This type of litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.


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We currently do not intend to pay dividends on our common stock, and consequently, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates and you sell your shares at a price above your cost.
 
We currently do not intend to declare or pay dividends on shares of our common stock in the foreseeable future. See “Dividend Policy” for more information. Consequently, your only opportunity to achieve a return on your investment in our company will be if the market price of our common stock appreciates and you sell your shares at a price above your cost. There is no guarantee that the price of our common stock will ever exceed the price that you pay.
 
A substantial number of shares of our common stock could be sold into the public market shortly after this offering, which could depress our stock price.
 
The market price of our common stock could decline as a result of sales by our existing stockholders of shares of common stock in the market after this offering or the perception that these sales could occur. Once a trading market develops for our common stock, many of our stockholders will have an opportunity to sell their stock for the first time. Approximately 89% of our total outstanding shares and options immediately prior to the closing of this offering will be subject to a lock-up agreement with the underwriters for a period of 180 days following the date of this prospectus and substantially all of our total outstanding shares and options immediately prior to the closing of this offering will be subject to a lock-up agreement with the company for a period of 180 days following the date of this prospectus. These factors could also make it difficult for us to raise additional capital by selling stock. Please see the section entitled “Shares Eligible for Future Sale” for more information regarding these factors.
 
As a new investor, you will incur immediate and substantial dilution as a result of this offering.
 
The initial public offering price of our common stock will be substantially higher than the pro forma as adjusted net tangible book value per share of our outstanding common stock. Accordingly, if you purchase shares of our common stock at the assumed initial public offering price (the midpoint of the range set forth on the cover page of this prospectus), you will incur immediate and substantial dilution of $7.65 per share. If the holders of outstanding options or warrants exercise those options or warrants, you will suffer further dilution. See “Dilution” for more information.
 
Our management will have broad discretion over the use of the proceeds we receive in this offering and might not apply the proceeds in ways that increase the value of your investment.
 
Our management will have broad discretion to use the net proceeds from this offering and you will be relying on the judgment of our management regarding the application of these proceeds. They might not apply the net proceeds of this offering in ways that increase the value of your investment. We expect to use the net proceeds from this offering for repayment of outstanding debt and general corporate purposes, including working capital, capital expenditures, acquisitions and further development of our services and solutions. We have not allocated these net proceeds for any specific purposes. Our management might not be able to yield any return on the investment and use of these net proceeds. You will not have the opportunity to influence our decisions on how to use the proceeds.
 
Existing stockholders significantly influence us and could delay or prevent an acquisition by a third party.
 
Upon completion of this offering, executive officers and directors and their affiliates will beneficially own, in the aggregate, approximately 50.7% of our outstanding common stock. As a result, these stockholders will be able to exercise significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions which could have the effect of delaying or preventing a third party from acquiring control over us. For information regarding the ownership of our outstanding stock by our executive officers and directors and their affiliates, please see “Principal Stockholders.”
 
Anti-takeover provisions in our certificate of incorporation and bylaws and in Delaware law could prevent or delay a change in control of our company.
 
We are a Delaware corporation, and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder even if a change of control would be beneficial to our existing stockholders. For more information, see “Description of


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Capital Stock — Anti-Takeover Effects of Our Certificate of Incorporation, Bylaws and Delaware Law.” In addition, our restated certificate of incorporation and amended and restated bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Our restated certificate of incorporation and amended and restated bylaws which will be in effect as of the closing of this offering:
 
  •  authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt
 
  •  do not provide for cumulative voting in the election of directors which would allow holders of less than a majority of the stock to elect some directors
 
  •  establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election
 
  •  require that directors only be removed from office for cause
 
  •  provide that vacancies on the board of directors, including newly-created directorships, may be filled only by a majority vote of directors then in office
 
  •  limit who may call special meetings of stockholders
 
  •  prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders
 
  •  establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings
 
For information regarding these and other provisions, please see “Description of Capital Stock.”
 
Our ability to utilize our net operating losses may be limited if cumulative changes in ownership of our capital stock exceed 50% during certain periods.
 
If over a rolling three-year period, the cumulative change in our ownership exceeds 50%, our ability to utilize our net operating losses to offset future taxable income may be limited. We have exceeded this 50% cumulative change threshold during 2000 and 2004. We have not yet determined the amount of the cumulative change in our ownership resulting from this offering. The effect of this offering on our cumulative change in ownership may limit or otherwise negatively affect the benefits of engaging in financing and other transactions in the future. Furthermore, it is possible that transactions in our stock that may not be within our control may cause us to exceed the 50% cumulative change threshold and may impose a limitation on the utilization of our net operating losses in the future. In the event the usage of these net operating losses is subject to limitation and we are profitable, our future cash flows could be adversely impacted due to our increased tax liability.


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
 
This prospectus contains forward-looking statements. All statements other than statements of historical fact contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
 
In some cases, we identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section and elsewhere in this prospectus. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not occur and actual results could differ materially from those projected in our forward-looking statements. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
This prospectus also contains statistical data that we obtained from industry publications and reports. These industry publications generally indicate that they have obtained their information from sources believed to be reliable, but do not guarantee the accuracy and completeness of their information. Although we have not independently verified the data contained in these industry publications and reports, based on our industry experience we believe that the publications are reliable and the conclusions contained in the publications and reports are reasonable.
 
The Gartner report described herein represents data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”) and are not representations of fact. The Gartner report speaks as of its original publication date (and not as of the date of this prospectus) and the opinions expressed in the Gartner report are subject to change without notice.
 
The following notes set forth the source for the Gartner report and certain IDC reports and a description of the term “generic” business intelligence project as used in a 2009 IDC report referenced in the sections of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business”:
 
  (1)  Gartner, Inc. Business Intelligence Purchase Drivers and Adoption Rates, 2009 Survey Results, Bill Hostmann, September 4, 2009.
 
  (2)  A “generic” business intelligence project uses IDC’s standard proportions for the elements of software, services and hardware. This calculation combines these proportions with the savings QlikView customers made on each element. IDC White Paper sponsored by Qlik Technologies Inc., “The TCO of BI: The QlikView Customer Experience,” Doc# IDCWPI6R, October 2009.
 
  (3)  IDC White Paper sponsored by Qlik Technologies Inc., “Time to Value and ROI from BI: The QlikView Customer Experience,” Doc #IDCWP16R3, October 2009.
 
  (4)  IDC White Paper sponsored by Qlik Technologies Inc., “The TCO of BI: The QlikView Customer Experience,” Doc #IDCWP16R, October 2009.


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USE OF PROCEEDS
 
We estimate that we will receive net proceeds from the sale of the common stock that we are offering of approximately $89.7 million, or approximately $103.8 million if the underwriters exercise their right to purchase additional shares of common stock to cover over-allotments in full, based upon an assumed initial public offering price of $9.00 per share, which is the midpoint of the range listed on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses that we must pay. A $1.00 increase (decrease) in the assumed initial public offering price of $9.00 per share would increase (decrease) the net proceeds to us from this offering by approximately $10.4 million (assuming the number of shares offered by us as set forth on the cover page of the prospectus remains the same). We may also increase or decrease the number of shares we are offering. Each increase (decrease) of 1,000,000 in the number of shares offered by us would increase (decrease) the net proceeds to us from this offering by approximately $8.4 million, assuming that the assumed initial public offering price remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We do not expect that a change in the offering price or the number of shares by these amounts would have a material effect on our uses of the net proceeds from this offering, although it may impact the amount of time prior to which we may need to seek additional capital.
 
We intend to use approximately $6.1 million of the net proceeds of this offering to repay in full the principal and accrued interest and to pay any applicable prepayment fee on our outstanding loan from Stiftelsen Industrifonden, based on amounts accrued as of March 31, 2010. The loan has an interest rate of 10% per annum and has a maturity date of March 2012. The loan is subject to a prepayment fee of an amount equal to interest on the amount prepaid from the date of prepayment through March 31, 2012 at a rate equal to one-half the Swedish Reference Rate (0.25% as of March 31, 2010) applicable on the date of prepayment. We used the net proceeds of this loan for working capital and general corporate purposes.
 
We intend to use the remaining net proceeds of this offering for general corporate purposes, including working capital needs. While we have not allocated the remaining net proceeds of this offering to specified general corporate purposes, we may utilize such proceeds by allocating them amongst the following categories: expansion of our domestic and international sales and marketing activities; technology infrastructure to help increase transaction volume and further enhance our software products and develop new software solutions; increase awareness of our solutions and expand our customer base; and development of marketing, sales and other promotional programs to sell products to our existing and future customers. We believe opportunities may exist to expand our current business through strategic acquisitions and investments in technology, and we may use a portion of the proceeds for these purposes. We are not currently a party to any contracts or letters of intent, nor do we have any arrangements or understandings, with respect to any strategic acquisitions or investments. The amount of net proceeds to be utilized for strategic acquisitions has not been determined.
 
The expected use of net proceeds of this offering represents our current intentions based upon our present plans and business conditions. The amounts we actually expend in these areas may vary significantly from our current intentions and will depend upon a number of factors, including future sales growth, success of our engineering efforts, cash generated from future operations, if any, and actual expenses to operate our business. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to be received upon the closing of this offering. Accordingly, our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of our management regarding the application of the net proceeds of this offering.
 
Pending the uses described above, we intend to invest the net proceeds in a variety of capital preservation instruments, including short-term, interest-bearing, investment grade instruments, certificates of deposit or direct or guaranteed obligations of the United States government.


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DIVIDEND POLICY
 
We have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends on our common stock for the foreseeable future. We expect to retain future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends on our common stock will be at the discretion of our board of directors and will depend upon, among other factors, our financial condition; operating results; current and anticipated cash needs; plans for expansion; applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits; and other factors that our board of directors may deem relevant.


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CAPITALIZATION
 
The following table sets forth our cash, cash equivalents and capitalization as of March 31, 2010:
 
  •  on an actual basis;
 
  •  on a pro forma basis to give effect to (i) the renaming of our Series A common stock as common stock; (ii) the conversion of all outstanding shares of our Series A preferred stock and Series AA preferred stock into shares of our common stock and all outstanding warrants to purchase preferred stock into warrants to purchase common stock and (iii) the reclassification of our outstanding preferred stock warrants from long-term liabilities to additional paid-in capital; and
 
  •  on a pro forma as adjusted basis to reflect: (i) the renaming of our Series A common stock as common stock; (ii) the conversion of all outstanding shares of our Series A preferred stock and Series AA preferred stock into shares of our common stock and all outstanding warrants to purchase preferred stock into warrants to purchase common stock; (iii) the reclassification of our outstanding preferred stock warrants from long-term liabilities to additional paid-in capital; (iv) the sale by us of the 11,200,000 shares of common stock offered by this prospectus at an initial public offering price of $9.00 per share, the mid-point of the range reflected on the cover of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us; (v) the filing of our restated certificate of incorporation, which will occur immediately upon closing of this offering and (vi) the use of approximately $6.1 million of the net proceeds of this offering to repay in full the principal and accrued interest and to pay any applicable prepayment fee on our outstanding debt facility from Stiftelsen Industrifonden.
 
You should read the information in this table together with our financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this prospectus.
 
                         
    As of March 31, 2010  
                Pro Forma As
 
    Actual     Pro Forma     Adjusted(1)  
    (unaudited)  
    (in thousands, except share and
 
    per share data)  
 
Cash and cash equivalents
  $ 37,366     $ 37,366     $ 121,470  
                         
Long-term obligations, including current portion
  $ 11,006     $ 8,240     $ 2,266  
Convertible preferred stock, par value $0.0001 per share; 47,195,706 shares authorized, 46,721,424 shares issued and outstanding, actual; 47,195,706 shares authorized, no shares issued and outstanding, pro forma; none authorized, issued or outstanding, pro forma as adjusted
    23,901              
Stockholders’ equity (deficit):
                       
Preferred stock, par value $0.0001 per share; none authorized, issued or outstanding, actual and pro forma; 10,000,000 shares authorized, none issued or outstanding, pro forma as adjusted
                 
Common stock, par value $0.0001 per share; 78,068,237 shares authorized, 17,036,170 shares issued and outstanding, actual; 78,068,237 shares authorized, 63,757,594 shares issued and outstanding, pro forma; 300,000,000 shares authorized, 74,957,594 shares issued and outstanding, pro forma as adjusted
    2       7       8  
Additional paid-in capital
    7,433       32,175       123,838  
Accumulated deficit
    (13,502 )     (13,502 )     (13,656 )
Accumulated other comprehensive loss
    (1,051 )     (1,051 )     (1,051 )
                         
Total stockholders’ equity (deficit)
    (7,118 )     17,629       109,139  
                         
Total capitalization
  $ 27,789     $ 25,869     $ 111,405  
                         


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(1) Each $1.00 increase or decrease in the assumed initial public offering price of $9.00 per share would increase or decrease, respectively, the amount of pro forma as adjusted additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by approximately $10.4 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions. If the underwriters’ option to purchase additional shares of our common stock in this offering is exercised in full, the amount of pro forma as adjusted additional paid-in capital, total stockholders’ equity (deficit) and total capitalization would increase by approximately $14.1 million, and we would have 76,637,594 shares of our common stock issued and outstanding.
 
In the table above, the number of shares outstanding as of March 31, 2010 does not include:
 
  •  12,441,041 shares of common stock issuable upon exercise of stock options outstanding at a weighted average exercise price of approximately $1.68 per share;
 
  •  1,161,905 shares of common stock available for future issuance under our stock-based compensation plans; and
 
  •  568,263 shares of common stock issuable upon the exercise of outstanding warrants at a weighted average exercise price of approximately $1.43 per share.
 
See “Management — Equity Benefit Plans” and Note 13 of the notes to our audited consolidated financial statements for a description of our equity plans.


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DILUTION
 
Our pro forma net tangible book value as of March 31, 2010 was approximately $9.4 million, or approximately $0.15 per share. Pro forma net tangible book value per share represents the amount of total tangible assets minus our total liabilities, divided by 63,757,594 shares of common stock outstanding after giving effect to (i) the renaming of our Series A common stock as common stock; (ii) the conversion of all outstanding shares of our Series A preferred stock and Series AA preferred stock into shares of our common stock and all outstanding warrants to purchase preferred stock into warrants to purchase common stock; and (iii) the use of approximately $6.1 million of the net proceeds of this offering to repay in full the principal and accrued interest and to pay any applicable prepayment fee on our outstanding debt facility from Stiftelsen Industrifonden.
 
Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the net tangible book value per share of common stock immediately after completion of this offering. After giving effect to our sale of 11,200,000 shares of common stock in this offering at an assumed initial public offering price of $9.00 per share, and after deducting the underwriting discounts and commissions and estimated offering expenses, the pro forma net tangible book value as of March 31, 2010 would have been approximately $100.9 million or approximately $1.35 per share. This represents an immediate increase in net tangible book value of $1.20 per share to existing stockholders and an immediate dilution in net tangible book value of $7.65 per share to purchasers of common stock in the offering, as illustrated in the following table:
 
                 
Assumed initial public offering price per share
          $ 9.00  
Pro forma net tangible book value per share before this offering
  $ 0.15          
Increase in pro forma net tangible book value per share attributable to new investors
    1.20          
                 
Pro forma net tangible book value per share after this offering
            1.35  
                 
Dilution per share to new investors
          $ 7.65  
                 
 
Each $1.00 increase (decrease) in the assumed initial public offering price of $9.00 per share would increase (decrease) our pro forma as adjusted net tangible book value by $10.4 million, or $0.14 per share, and the pro forma dilution per share to investors in this offering by $0.86 per share, 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 underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase of 1,000,000 in the number of shares offered by us would increase our pro forma as adjusted net tangible book value by approximately $8.4 million, or $0.09 per share, and the pro forma dilution per share to investors in this offering would be $7.56 per share, assuming that the assumed initial public offering price remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, a decrease of 1,000,000 in the number of shares offered by us would decrease our pro forma as adjusted net tangible book value by approximately $8.4 million, or $0.10 per share, and the pro forma dilution per share to investors in this offering would be $7.75 per share, assuming that the assumed initial public offering price remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing.
 
If the underwriters exercise their option to purchase additional shares of our common stock in full in this offering, the pro forma net tangible book value per share after the offering would be approximately $1.50 per share, the increase in pro forma net tangible book value per share to existing stockholders would be approximately $1.35 per share and the dilution to new investors purchasing shares in this offering would be approximately $7.50 per share.
 


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The table below presents on a pro forma basis as of March 31, 2010, after giving effect to the renaming of our Series A common stock as common stock and the conversion of all outstanding shares of our Series A preferred stock and Series AA preferred stock into shares of our common stock and assuming there are no exercises of stock options or warrants outstanding on March 31, 2010 (as further described below), the differences between the existing stockholders and the purchasers of shares in the offering with respect to the number of shares purchased from us, the total consideration paid and the average price paid per share:
 
                                         
                Total
    Average
 
    Shares Purchased     Consideration     Price
 
    Number     Percent     Amount     Percent     per Share  
 
Existing stockholders
    63,757,594       85.1 %   $ 38,164,230       27.5 %   $ 0.60  
Investors in the offering
    11,200,000       14.9       100,800,000       72.5     $ 9.00  
                                         
Total
    74,957,594       100.0 %   $ 138,964,230       100.0 %        
                                         
 
As of March 31, 2010, there were options outstanding to purchase a total of 12,441,041 shares of common stock at a weighted average exercise price of approximately $1.68 per share. In addition, as of March 31, 2010, there were warrants outstanding to purchase 93,981 shares of common stock at a weighted average exercise price of $1.65 per share and 474,282 shares of Series A preferred stock at a weighted average exercise price of approximately $1.39 per share, which in the aggregate will be exercisable for 568,263 shares of common stock upon the completion of the offering. Effective immediately upon the signing of the underwriting agreement for this offering, an aggregate of 3,300,000 shares of our common stock will be reserved for issuance under our 2010 Equity Incentive Plan (which includes 1,161,905 shares of common stock reserved as of March 31, 2010 for future issuance under our 2007 Omnibus Stock Option and Award Plan that will be allocated to our 2010 Equity Incentive Plan), and this share reserve will also be subject to automatic annual increases in accordance with the terms of the plan. Furthermore, we may choose to raise additional capital through the sale of equity or convertible debt securities due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that any of these options or warrants are exercised, new options are issued under our equity incentive plans or we issue additional shares of common stock or other equity securities in the future, there will be further dilution to investors participating in this offering. For a description of our equity plans, please see “Management — Equity Benefit Plans” and Note 13 of the notes to our audited consolidated financial statements.


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SELECTED CONSOLIDATED FINANCIAL DATA
 
The following selected consolidated financial data should be read together with our financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this prospectus. The selected financial data in this section is not intended to replace our financial statements and the related notes. Our historical results are not necessarily indicative of our future results.
 
We derived the consolidated statements of operations data for the years ended December 31, 2007, 2008 and 2009 and the consolidated balance sheet data as of December 31, 2008 and 2009 from our audited consolidated financial statements appearing elsewhere in this prospectus. The consolidated statements of operations data for the years ended December 31, 2005 and 2006, and the consolidated balance sheet data as of December 31, 2005, 2006 and 2007 are derived from our audited consolidated financial statements which are not included in this prospectus. The consolidated statements of operations data for the three months ended March 31, 2009 and 2010 and the consolidated balance sheet data as of March 31, 2010 are derived from our unaudited consolidated financial statements appearing elsewhere in this prospectus.
 
                                                         
          Three Months
 
          Ended
 
    Year Ended December 31,     March 31,  
Consolidated Statement of Operations Data:   2005     2006     2007     2008     2009     2009     2010  
                                  (unaudited)  
    (in thousands, except share and per share data)  
 
Revenue:
                                                       
License revenue
  $ 15,654     $ 28,915     $ 51,482     $ 74,446     $ 99,864     $ 14,759     $ 26,222  
Maintenance revenue
    5,725       9,797       17,747       29,401       41,390       7,969       13,069  
Professional services revenue
    3,113       5,558       11,357       14,417       16,105       3,676       4,474  
                                                         
Total revenue
    24,492       44,270       80,586       118,264       157,359       26,404       43,765  
Cost of revenue:
                                                       
License revenue
    580       1,140       2,949       3,071       3,663       587       679  
Maintenance revenue
    289       352       580       1,365       1,635       376       695  
Professional services revenue
    1,520       4,582       8,177       9,562       11,802       2,817       2,912  
                                                         
Total cost of revenue(1)
    2,389       6,074       11,706       13,998       17,100       3,780       4,286  
Gross profit
    22,103       38,196       68,880       104,266       140,259       22,624       39,479  
Operating expenses:
                                                       
Sales and marketing(1)
    18,602       26,999       48,249       74,267       93,349       19,562       25,413  
Research and development(1)
    2,969       3,275       5,419       8,258       8,735       2,223       2,664  
General and administrative(1)
    7,244       9,699       15,154       20,190       25,009       7,219       9,393  
                                                         
Total operating expenses
    28,815       39,973       68,822       102,715       127,093       29,004       37,470  
                                                         
Income (loss) from operations
    (6,712 )     (1,777 )     58       1,551       13,166       (6,380 )     2,009  
Other income (expense)
    173       (748 )     (463 )     3,304       (4,529 )     670       (2,174 )
                                                         
Income (loss) before benefit for income taxes
    (6,539 )     (2,525 )     (405 )     4,855       8,637       (5,710 )     (165 )
Benefit (provision) for income taxes
                40       (1,860 )     (1,776 )     1,409       46  
                                                         
Net income (loss)
  $ (6,539 )   $ (2,525 )   $ (365 )   $ 2,995     $ 6,861     $ (4,301 )   $ (119 )
                                                         
Net income (loss) per common share(2):
                                                       
Basic
  $ (0.53 )   $ (0.20 )   $ (0.03 )     0.01     $ 0.07     $ (0.27 )   $ (0.01 )
                                                         
Diluted
  $ (0.53 )   $ (0.20 )   $ (0.03 )   $ 0.01     $ 0.06     $ (0.27 )   $ (0.01 )
                                                         


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          Three Months
 
          Ended
 
    Year Ended December 31,     March 31,  
Consolidated Statement of Operations Data:   2005     2006     2007     2008     2009     2009     2010  
                                  (unaudited)  
    (in thousands, except share and per share data)  
 
Weighted average number of common shares outstanding
                                                       
Basic
    12,394,631       12,515,571       13,526,926       14,552,999       16,267,186       15,992,623       16,846,798  
Diluted
    12,394,631       12,515,571       13,526,926       16,523,443       20,778,448       15,992,623       16,846,798  
Pro forma net income per common share (unaudited)(3)
                                                       
Basic
                                  $ 0.13             $ 0.01  
Diluted
                                  $ 0.12             $ 0.01  
Weighted average number of shares used in pro forma computation (unaudited)(3)
                                                       
Basic
                                    62,988,610               63,568,222  
Diluted
                                    67,606,341               70,834,602  
Pro forma as adjusted net income per common share (unaudited)(4)
                                                       
Basic
                                  $ 0.12             $ 0.01  
Diluted
                                  $ 0.11             $ 0.01  
Weighted average number of shares used in pro forma as adjusted computation (unaudited)(4)
                                                       
Basic
                                    74,188,610               74,768,222  
Diluted
                                    78,806,341               82,034,602  
                                                         
                                                       
(1) Includes stock-based compensation expense as follows:
Cost of revenue
  $     $ 2     $ 12     $ 39     $ 82     $ 19     $ 26  
Sales and marketing
          12       103       285       733       157       260  
Research and development
          1       6       19       79       8       21  
General and administrative
          11       69       388       585       155       193  
                                                         
    $     $ 26     $ 190     $ 731     $ 1,479     $ 339     $ 500  
                                                         
 
(2) We applied the two-class method to compute net income (loss) per common share which requires that earnings attributable to common stockholders for the period be allocated between common and participating securities based upon their respective rights to receive distributed and undistributed earnings. See Note 2 of the notes to each of our consolidated financial statements.
 
(3) The pro forma basic and diluted net income per share have been calculated assuming (i) the renaming of our Series A common stock as common stock prior to the closing of this offering, (ii) the conversion of all outstanding shares of Series A and Series AA preferred stock into an aggregate of 46,721,424 shares of our common stock prior to the close of this offering and (iii) the reclassification of outstanding preferred stock warrants from long term liabilities to additional paid-in capital as of the beginning of the period. The numerator of the pro forma net income per share calculation is derived by adding the approximately $1.372 million and $0.554 million charge related to the preferred stock warrant liability for the year ended December 1, 2009 and the three months ended March 31, 2010 to net income (loss) as reported of approximately $6.861 million and ($0.119 million) to arrive at net income attributable to common shares of approximately $8.233 million and $0.435 million for the year ended December 31, 2009 and the three months ended March 31, 2010.
 
(4) The pro forma as adjusted basic and diluted net income per share have been calculated assuming (i) the renaming of our Series A common stock as common stock prior to the closing of this offering, (ii) the conversion of all outstanding shares of Series A and Series AA preferred stock into an aggregate of 46,721,424 shares of our

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common stock prior to the close of this offering, (iii) the reclassification of outstanding preferred stock warrants from long-term liabilities to additional paid-in capital, (iv) the sale by us of the 11,200,000 shares of common stock offered by the prospectus, (v) the filing of our restated certificate of incorporation, which will occur immediately upon closing of this offering and (vi) the use of approximately $6.1 million of the net proceeds of this offering to repay in full the principal and accrued interest and to pay any applicable prepayment fee on our outstanding debt facility from Stiftelsen Industrifonden as of the beginning of the period. The numerator of the pro forma as adjusted net income per share calculation is derived by adding the approximately $1.372 million and $0.554 million charge related to the preferred stock warrant liability for the year ended December 1, 2009 and the three months ended March 31, 2010 and the interest recorded related to the Stiftelsen Industrifonden debt facility of approximately $0.8 million and $0.2 million for the year ended December 31, 2009 and the three months ended March 31, 2010 to net income (loss) as reported of approximately $6.861 million and ($0.119 million) for the year ended December 31, 2009 and the three months ended March 31, 2010, to arrive at net income attributable to common shares of approximately $9.033 million and $0.635 million for the year ended December 31, 2009 and the three months ended March 31, 2010.
 
                                                 
    As of December 31,   As of March 31,
    2005   2006   2007   2008   2009   2010
                        (unaudited)
    (in thousands)
Consolidated balance sheet data:
                                               
Cash and cash equivalents
  $ 3,407     $ 4,401     $ 9,214     $ 14,800     $ 24,852     $ 37,366  
Working capital
    3,375       2,958       2,411       12,155       14,829       14,909  
Deferred revenue
    5,374       9,760       17,297       22,143       35,575       36,480  
Total assets
    15,463       25,827       50,684       67,018       102,967       100,223  
Long-term obligations, including current portion
          1,965       1,855       10,762       11,436       11,006  
Convertible preferred stock
    23,901       23,901       23,901       23,901       23,901       23,901  
Total stockholders’ equity (deficit)
    (19,770 )     (21,190 )     (20,877 )     (17,368 )     (9,103 )     (7,118 )


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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected Consolidated Financial Data” and our consolidated financial statements and related notes appearing elsewhere in this prospectus. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this prospectus, including those set forth under “Risk Factors” and “Special Note Regarding Forward-Looking Statements and Industry Data.”
 
Overview
 
We have pioneered a powerful, easy-to-use business intelligence solution that enables our customers to make better and faster business decisions. Our software platform, QlikView, combines enterprise-class analytics and search functionality with the simplicity and ease-of-use found in office productivity software tools for a broad set of business users. QlikView is powered by our in-memory associative search technology, which has utilized rapid advances in computing power to yield significant improvement in flexibility and performance at a lower cost than traditional business intelligence solutions. We have grown our customer base from over 2,000 customers in 2005 to approximately 14,000 as of March 31, 2010 and increased our revenue at a 59% compound annual growth rate during the same period. We added an average of 404 new customers per month during fiscal year 2009. Our solution addresses the needs of a diverse range of customers from middle market customers to large enterprises such as BP, Campbell Soup Company, Colonial Life, The Dannon Company, Inc., Heidelberger Druckmaschinen AG, Kraft Foods, ING, Lifetime Brands, National Health Service (NHS), Qualcomm, Symantec and Volvo Car UK Limited. We have customers in over 100 countries, and approximately 75% of our revenue for the three months ended March 31, 2010 was derived internationally.
 
We have a differentiated business model designed to accelerate the adoption of our product by reducing the time and cost to purchase and implement our software. Our low risk approach to product sales, which offers free product downloads to individuals and a 30-day money back guarantee upon purchase, provides a needed alternative to costly, all-or-nothing, traditional business intelligence models. We initially focus on specific business users or departments within a prospective customer’s organization and seek to solve a targeted business need. After demonstrating QlikView’s benefits to initial adopters within an organization, we work to expand sales of our product to other business units, geographies and use cases with the long-term goal of broad organizational deployment. According to a 2009 IDC survey, 44% of our customers deploy QlikView in less than one month and 77% of our customers deploy QlikView in less than three months.3
 
We license QlikView under perpetual licenses which include one year of maintenance as part of the initial purchase price of the product. Our customers can renew, and generally have renewed, their maintenance agreements for a fee that is based upon a percentage of the initial license fee paid. For the fiscal year ended December 31, 2009, our total revenue was comprised of 64% license revenue, 26% maintenance revenue and 10% professional services revenue. For the three months ended March 31, 2010, our revenue was comprised of 60% license revenue, 30% maintenance revenue and 10% professional services revenue. We have a diversified distribution model that consists of a direct sales force and a partner network of resellers, OEM relationships and systems integrators which accounted for 50% of our total license revenue and first years’ maintenance billings during fiscal year 2009 and the three months ended March 31, 2010. Additionally, our online QlikCommunity provides us with a loyal and growing network of users who promote our software, provide support for other users and contribute valuable insights and feedback for our product development efforts.
 
To complement QlikView, we have developed a differentiated business model that has the following attributes:
 
  •  Broad User Focus — marketing and selling QlikView directly to the business user by providing an easy-to-use platform that can be used with minimal training
 
  •  Low Risk Rapid Product Adoption — providing a low risk alternative to costly, all-or-nothing, enterprise-wide deployment requirements


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  •  “Land and Expand” Customer Penetration — initially targeting business users in an organization to create a loyal user base that promotes broad adoption of our software platform across an organization
 
  •  Globally Diversified Distribution Model — employing a multi-pronged international sales approach that leverages a direct sales force and partner network
 
  •  Community-Based Marketing and Support — augmenting our development, marketing and support efforts through our online QlikCommunity
 
In evaluating our operating results we focus on the productivity of our sales force, the effectiveness of our local and corporate level marketing, our ability to close opportunities generated by our marketing leads and the competitiveness of our technology. In each of these areas, we have taken steps designed to improve our operating results, including undertaking additional sales training for our sales representatives, hiring more experienced regional sales management, investing further in our corporate website to improve its use as an effective lead generative tool, developing a partner enablement program to focus on the results of our sales partners around the world and expanding our research and development staff with a focus on testing and quality assurance.
 
From a risk perspective we have had to deal with the impact of the recessionary global environment during the past two years, although we anticipate that the negative impact of these conditions will continue to moderate. We have faced pricing pressure from some of our larger competitors to which we have attempted to respond by focusing on the value delivered by QlikView in comparison to more traditional business intelligence products, and we believe that this has helped to minimize the loss of potential new business from this pressure. Also, the rapid growth in our business has required the continued hiring of experienced staff across all of our geographic territories. To aid this effort we have focused on improving our local recruiting initiatives, as well as developing further internal training programs to prepare executives for greater responsibilities.
 
We were founded in Sweden in 1993. From 1993 until 1999, our activities were focused on software research and development that resulted in QlikView’s core technology, and from 1999 until 2004 we focused on the commercialization of our technology primarily in the Nordic market and limited regions of Europe. In late 2004, we reincorporated in Delaware and began to broaden our marketing and sales activities in the United States and continued our expansion globally.
 
Financial Operations Overview
 
Revenues
 
Our revenue is comprised of license, maintenance and professional services revenue. We license our software under perpetual licenses which include one year of maintenance as part of the initial purchase price of the product. License revenue reflects the revenue recognized from sales of licenses to new customers and additional licenses to existing customers. Historically, the majority of our license revenues have come from new customers. However, going forward we seek to increase the contribution from existing customers based upon our “land and expand” sales strategy. Customers can renew, and generally have renewed, their maintenance agreements for a fee that is based upon a percentage of the initial license fee paid. Current customers with maintenance agreements are entitled to receive unspecified upgrades and enhancements when and if they become available. We have experienced growth in maintenance revenue primarily due to increased license sales and growth in our customer base and high retention of those customers. In 2009, our annual maintenance renewal rate was greater than 85%. Professional services revenue is comprised of training, installation and other consulting revenues. Given the ease of implementation of our product, professional service revenues have averaged 12% of total revenues during the last three fiscal years. For the three months ended March 31, 2009 and 2010, professional services revenue was approximately 14% and 10% of total revenue. We do not expect that proportion to change significantly during the near term. Of our total revenues, we have historically generated the majority of sales through our direct sales channel rather than through our partner network. However, the contribution from our partner network continues to grow, and we anticipate that over time revenues from partners will be more than 50% of total revenues. Given the size of the United States market and our limited penetration there, we expect that the United States will represent our largest market during the near term and will likely be an important contributor to future revenue growth. Due to the global diversity of our customer base, our results are impacted by movements in the currencies of the major territories in which we operate. The primary


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currencies impacting results are the United States dollar (our functional currency), the Swedish kronor, the euro and the British pound. Inflation and changing prices had no material effect on our sales, revenue or operating income from continuing operations during 2007, 2008 and 2009 and the three months ended March 31, 2009 and 2010.
 
Cost of Revenue
 
Cost of revenue primarily consists of personnel costs, fees paid to subcontractors providing technical support services, referral fees paid to third parties in connection with software license sales and other discrete professional services. Personnel costs include salaries, employee benefit and social costs, bonuses, stock-based compensation and direct overhead.
 
Operating Expenses
 
We classify our operating expenses into three categories: sales and marketing, research and development and general and administrative. Our operating expenses primarily consist of personnel costs, sales commissions, marketing program costs, legal, accounting, consulting and other professional service costs and depreciation and amortization. Personnel costs include salaries, employee benefit and social costs, bonuses, stock-based compensation and direct overhead. Historically, we have focused on the continued growth of our license revenues, and as a result, sales and marketing has represented the largest amount of total expenses both in absolute dollar terms and as a percentage of total revenues. Going forward, we expect to drive greater efficiencies from this cost base and consequently expect that sales and marketing as a percentage of revenues will decline in the long term. Conversely, we project that research and development expenses will remain constant or grow as a percentage of total revenues as we continue to invest in future product enhancements and new products.
 
Sales and Marketing.  Sales and marketing expenses primarily consist of personnel costs for our sales, marketing and business development employees and executives; commissions earned by our sales personnel; facilities costs attributable to our sales and marketing personnel; the cost of marketing programs; and the cost of business development programs. We expect to continue to hire additional sales personnel in the United States and in our international locations in 2010.
 
Research and Development.  Research and development expenses primarily consist of personnel and facility costs for our research and development and product marketing employees. We have devoted our development efforts primarily to enhancing the functionality and expanding the capabilities of our software platform, including, for example, the development of our QlikView mobile client (released in 2009). We expect that our research and development expenses will continue to increase in absolute dollars and as a percentage of revenue in the long term as we increase our research and development and product marketing headcount to further strengthen and enhance our software platform. The vast majority of our research and development staff is based in Lund, Sweden.
 
General and Administrative.  General and administrative expenses primarily consist of personnel costs for our executive, finance, legal, human resources and administrative personnel, as well as the cost of facilities attributable to general and administrative operations, depreciation and amortization, legal, accounting and other professional service fees and other corporate expenses. We incurred additional costs in 2009 and the three months ended March 31, 2010, and expect to continue to incur higher costs, associated with being a public company, including higher legal, corporate insurance and accounting expenses and the additional costs of achieving and maintaining compliance with Section 404 of the Sarbanes-Oxley Act and related regulations. We also expect that general and administrative expenses will continue to increase in absolute dollars because of our efforts to expand our international operations, but we believe over time general and administrative costs will decline as a percentage of revenues as we expect to derive greater efficiencies from our corporate infrastructure.
 
Other Income (Expense)
 
Other income (expense) primarily consists of net interest, change in the fair value of warrants, foreign exchange gains (losses) and other income. Net interest represents interest income received on our cash and cash equivalents and interest expense associated with our outstanding debt. We expect interest expense to decrease in periods subsequent to the completion of this offering as we anticipate paying down all of our outstanding long-term debt balance with proceeds from this offering. Change in the fair value of warrants consists of charges recorded to


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mark our company’s outstanding preferred and common stock warrants to fair value at each reporting date. Upon completion of this offering our preferred stock warrants will be reclassified to additional paid-in capital, and they will no longer be required to be adjusted based on their fair market carrying value each period. Foreign exchange gains (losses) relate to the remeasurement of certain transactions, primarily our outstanding note payable with a Swedish financial institution, denominated in currencies other than our functional currency, the United States dollar. As a result of our business activities in foreign countries, we expect that foreign exchange gains (losses) will continue to occur due to fluctuations in exchange rates in the countries where we do business.
 
Income Tax Expense
 
Income tax expense primarily consists of corporate income taxes related to profits resulting from the sale of our software platform by our United States and international subsidiaries.
 
Impact of Foreign Currency Translation
 
Approximately 73% and 71% of our operating revenues for the year ended December 31, 2009 and the three months ended March 31, 2010 were earned in foreign denominated currencies, including the Swedish kronor, euro and British pound. We expect that our exposure to foreign currency exchange risk will increase to the extent we are able to continue to expand our business internationally. For purposes of our consolidated financial statements, local currency assets and liabilities are translated at the rate of exchange to the United States dollar on the balance sheet date and local currency revenues and expenses are translated at average rates of exchange to the United States dollar during the reporting period. Foreign currency transaction gains (losses) have been reflected as a component of our results from operations and foreign currency translation gains (losses) have been included as a component of accumulated other comprehensive income (loss).
 
Our operating results for the three months ended March 31, 2009 and 2010 were negatively impacted by the general strengthening of the United States dollar relative to the Swedish kronor, euro and British pound. Our 2009 operating results were favorably impacted by the general weakening of the United States dollar relative to the Swedish kronor offset in part by the general strengthening of the United States dollar relative to the euro and British pound, and our 2008 results were negatively impacted by the general strengthening of the United States dollar relative to the Swedish kronor.
 
Critical Accounting Policies and Estimates
 
We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
 
Revenue Recognition
 
We derive substantially all of our revenue from the licensing of our software products, from the sale of maintenance agreements and from the sale of training and other consulting services. We require one year of maintenance as part of the initial purchase price of each software offering and then sell annual renewals of this maintenance agreement. We recognize revenue for software, maintenance and other services when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured.
 
As substantially all of our software licenses are sold in multiple-element arrangements that include either maintenance or both maintenance and professional services, we use the residual method to determine the amount of license revenue to be recognized. Under the residual method, consideration is allocated to undelivered elements based upon vendor-specific objective evidence (or VSOE) of the fair value of those elements, with the residual of


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the arrangement fee allocated to and recognized as license revenue. We have established VSOE of the fair value of maintenance through independent maintenance renewals which demonstrate a consistent relationship of maintenance pricing as a percentage of the contractual license fee. Maintenance revenues are deferred and recognized ratably over the contractual period of the maintenance arrangement which is generally 12 months. Arrangements that include other professional services are evaluated to determine whether those services are essential to the functionality of other elements of the arrangement. We have determined that these services are not considered essential and the amounts allocated to the services are recognized as revenue when the services are performed. The VSOE of fair value of our professional services is based on the price for these same services when they are sold separately. Revenue for services that are sold either on a stand-alone basis or included in multiple-element arrangements is recognized as the services are performed.
 
For sales through resellers, we recognize revenue upon the shipment of the product only if those resellers provide us, at the time of placing their order, with the identity of the end-user customer to whom the product has been sold. Our resellers do not carry inventory of our software. Sales through resellers are evidenced by a reseller agreement, together with purchase orders on a transaction-by-transaction basis. We do not currently offer any rights to return products sold to resellers.
 
We also sell software licenses to OEMs who integrate our product for distribution with their applications. The OEM’s end-user customer is licensed to use our products solely in conjunction with the OEM’s application. In OEM arrangements, key delivery is required as the basis for revenue recognition. However, depending upon the OEM partner’s business model we recognize revenue either up-front or over time in subscription or royalty based models.
 
We do not offer specified upgrades or incrementally significant discounts. We record advance payments as deferred revenues until the product is shipped, services are delivered or obligations are met and the revenue can be recognized. Deferred revenues represent the excess of amounts invoiced or paid over amounts recognized as revenues. Any contingencies, such as rights of return, conditions of acceptance, and warranties are accounted for as a separate element. The effect of accounting for these contingencies included in revenue arrangements has not been material.
 
Stock-Based Compensation
 
Our stock-based compensation is as follows:
 
                                         
    Year Ended December 31,     Three Months Ended March 31,  
    2007     2008     2009     2009     2010  
                      (unaudited)  
    (in thousands)  
 
Cost of revenue
  $ 12     $ 39     $ 82     $ 19     $ 26  
Sales and marketing
    103       285       733       157       260  
Research and development
    6       19       79       8       21  
General and administrative
    69       388       585       155       193  
                                         
Total stock-based compensation
  $ 190     $ 731     $ 1,479     $ 339     $ 500  
                                         
 
Prior to January 1, 2006, we applied the intrinsic-value method of accounting prescribed in previous FASB accounting guidance, which was later superseded, for our stock options issued to employees and directors. Under this method, compensation expense was recognized on the date of grant only if the current fair value of the underlying stock exceeded the exercise price. On January 1, 2006, we adopted the revised accounting guidance for stock-based compensation which was adopted prospectively to new awards and to awards modified, repurchased or cancelled after December 31, 2005. This current guidance requires companies to measure and recognize compensation expense for all employee stock-based payments at fair value, net of estimated forfeitures, over the vesting period of the underlying stock-based awards. In addition, we account for stock-based compensation to non-employees in accordance with the FASB accounting guidance for equity instruments that are issued to other


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than employees. Stock-based compensation issued to non-employees has not been material for any period presented.
 
For the years ended December 31, 2007, 2008 and 2009 and the three months ended March 31, 2009 and 2010, we calculated the fair value of options granted using the Black-Scholes pricing model with the following assumptions:
 
                                         
          Three Months
 
    Year Ended December 31,     Ended March 31,  
    2007     2008     2009     2009     2010  
 
Volatility
    18.5%-21.8 %     48.0%-88.8 %     44.7%-85.7 %     44.7%-62.4 %     48.7%-50.2 %
Expected term, in years (Swedish grants)
    4.00       4.00       4.00       4.00       4.00  
Expected term, in years (all other grants)
    6.25       6.25       6.25       6.25       6.25  
Dividend yield
    0 %     0 %     0 %     0 %     0 %
Risk-free interest rate
    3.7%-4.8 %     1.2%-3.1 %     1.5%-2.4 %     1.5%-2.3 %     1.9%-2.7 %
 
We use the Black-Scholes option-pricing model to value our stock option awards. The Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected life of the stock-based payment awards and stock price volatility. In addition, as a private company, one of the most subjective inputs into the Black-Scholes option pricing model is the estimated fair value of common stock which is discussed below. Since we have been operating as a private company, we do not have sufficient historical volatility for the expected term of the options. Prior to 2008, we established the expected volatility assumption by determining an appropriate industry sector that was representative of the nature of our operations as well as our market capitalization size (mid-cap software industry). As of January 1, 2008 and forward, we use comparable public companies as a basis for our expected volatility to calculate the fair value of option grants. We intend to continue to consistently apply this process using comparable companies until a sufficient amount of historical information regarding the volatility of our own share price becomes available. The expected term for option grants to employees based in Sweden is four years based on the contractual expiration date required under local rules. The expected term for all other grants is based on the simplified method provided by SEC guidance. The risk-free interest rate is based on United States Treasury yield curve with a remaining term equal to the expected life assumed at grant. The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimate and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, share-based compensation expense could be materially different in the future.
 
For all employee stock options, we recognize expense over the requisite service period using the straight-line method. In addition to the assumptions used to calculate the fair value of the options, we are required to estimate the expected forfeiture rate of all stock-based awards and only recognize expense for those awards expected to vest. The estimation of the number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period in which estimates are revised. We consider many factors when estimating expected forfeitures, including types of awards, employee class and an analysis of our historical and known forfeitures on existing awards. During the period in which the options vest, we will record additional expense if the actual forfeiture rate is lower than estimated and a recovery of expense if the actual forfeiture rate is higher than estimated.
 
As of March 31, 2010, there was approximately $5.0 million of unrecognized stock-based compensation expense related to non-vested stock option awards, net of estimated forfeitures that we expect to recognize over a weighted-average period of 1.82 years.
 
Based upon an assumed initial public offering price of $9.00 per share, which is the mid-point of the range listed on the cover page of this prospectus, the aggregate intrinsic value of options outstanding as of March 31, 2010 was $92.4 million, of which $54.1 million related to vested options and $38.3 million related to unvested options.


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Common Stock Valuations
 
For all option grants during 2007, 2008 and 2009 and the three months ended March 31, 2010, the fair value of the common stock underlying the option grants was determined by our board of directors, with the assistance of management, which intended all options granted to be exercisable at a price per share not less than the per share fair value of our common stock underlying those options on the date of grant. We utilized the guidance set forth by the American Institute of Certified Public Accountants, or the AICPA, in the AICPA Technical Practice Aid, “Valuation of Privately-Held-Company Equity Securities Issued as Compensation,” referred to herein as the AICPA Practice Aid, when establishing the fair value of common stock at each grant date.
 
2007 and 2008 Valuations
 
In 2007 and 2008, our board of directors, with the assistance of management, used the market approach and the income approach in order to estimate the fair value of common stock underlying our option grants during those periods. We believe both of these approaches are appropriate methodologies given our stage of development during 2007 and 2008. For the market approach, we utilized the guideline company method by analyzing a population of comparable companies and selected those technology companies that we considered to be the most comparable to us in terms of product offerings, revenues, margins and growth. Under the market approach, we then used these guideline companies to develop relevant market multiples and ratios, which are then applied to our corresponding financial metrics to estimate our equity value. For the income approach, we performed discounted cash flow analyses which utilize projected cash flows as well as a residual value which are then discounted to the present in order to arrive at our current equity value. In determining our equity value, we applied a greater weighting to the income approach than to the market approach during 2007 and 2008, as we concluded that the discounted cash flow method utilized under the income approach was a more reliable indicator of our equity value during that time. In allocating the total equity value between preferred and common stock, we considered the liquidation preferences of the preferred stockholders. Additionally, each valuation during this period utilizes the option-pricing method for allocating the total equity value between preferred and common stock.
 
The significant input assumptions used in our valuation models during 2007 and 2008 are based on subjective future expectations combined with management’s judgment, including:
 
Income approach assumptions are:
 
  •  our expected revenue, operating performance and cash flows for the current and future years, determined as of the valuation date based on our estimates;
 
  •  a discount rate, which is applied to discretely forecasted future cash flows in order to calculate the present value of those cash flows; and
 
  •  a terminal value multiple, which is applied to our last year of discretely forecasted cash flows to calculate the residual value of our future cash flows.
 
Assumptions utilized in the market approach are:
 
  •  our expected revenue, operating performance and cash flows for the current and future years, determined as of the valuation date based on our estimates;
 
  •  multiples of market value to trailing revenues, determined as of the valuation date, based on a group of comparable public companies we identified; and
 
  •  multiples of market value to expected future revenues, determined as of the valuation date, based on the same group of comparable public companies.


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2009 Valuations
 
In 2009, we granted options to purchase shares of common stock with exercise prices as follows:
 
                                 
    Options
  Exercise Price
  Fair Value
  Intrinsic
Grant Date
  Granted   per Share   per Share   Value
 
1st Quarter
    939,000     $ 1.65     $ 1.65     $  
2nd Quarter
    666,202       1.65       1.65        
3rd Quarter
                       
4th Quarter
    1,104,552       3.81       3.81        
 
In order to determine the fair value of our common stock underlying all option grants issued in the first and second quarters of 2009, the board of directors, with the assistance of management, used the market approach and the income approach consistent with the 2008 methodology described above. During this time period, our board of directors considered our operational metrics relative to the challenging global economic conditions and recession and determined that our estimated equity value remained consistent with 2008. During the first half of 2009, revenue growth slowed due in part to the global economic crisis and was well below our expectations for that period resulting in operating losses for the period. We also considered the decline in valuations of publicly held technology companies which we considered to be comparable to us in terms of lines of business, revenues, margins, or growth, during this period. In the third quarter of 2009, we began to see a strengthening in our sales pipeline for both the second half of 2009 and 2010, and we also began to forecast positive operating income for the second half of 2009. In addition, in the third quarter of 2009, we began initial discussions with investment banks regarding a possible public offering of our common stock. In October of 2009, our board of directors approved the composition of an investment banking syndicate to lead a potential initial public offering of our common stock.
 
As a result of having greater visibility into a potential liquidity event as well as due to improving operating results in the second half of 2009, the board of directors with the assistance of management performed a contemporaneous valuation as of September 30, 2009, and adopted the probability-weighted expected return method (known as PWERM) in connection with this valuation, as prescribed by the AICPA Practice Aid. The PWERM requires the consideration of various liquidity scenarios, including an initial public offering, a sale of our company at a range of valuations, or continuing to operate as a standalone private company without a liquidity event, and takes into account potential timing and the relative probability of each possible outcome. This change in valuation model was precipitated by changes in our business that allowed us to forecast the timing and nature of a liquidity event with a greater degree of certainty. This valuation model took into consideration the following scenarios and associated probabilities:
 
  •  two different scenarios for the completion of an initial public offering, one occurring in June 2010 and another occurring in December 2010, with a combined probability of 35% of occurrence
 
  •  three different scenarios for the sale of our company to a strategic acquirer: a high, low and distressed sale scenario with a combined probability of 50%
 
  •  remaining a standalone private company without a liquidity event, assigned a probability of 15%
 
For the initial public offering scenarios, we determined our equity value by using a multiple of expected 2010 revenue based upon an analysis of the revenue multiples of companies that we considered to be comparable to us in terms of industry and business model. For the scenarios which considered a sale of our company, we considered a range of revenue multiples that were based on merger and acquisition events for companies we consider to be comparable to us in terms of industry and business model, applied to expected 2011 revenues. For the scenario which considered remaining a standalone private company without a liquidity event, we determined the enterprise value by weighing both a market based approach which utilizes a multiple of expected 2010 revenue based on an analysis of the revenue multiples of companies that we considered to be comparative to us in terms of industry and business model, and an income based approach based on estimated future discounted cash flows. For all scenarios, we applied discounts ranging from 19% to 25% for lack of marketability, and we utilized an estimated cost of capital of 25% based on our stage of development.


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As a result of the above analysis, we estimated the fair value of our common stock to be $3.81 as of September 30, 2009. Accordingly, the common stock options granted in the fourth quarter of 2009 were granted with an exercise price of $3.81. We believe that the increase from the previous valuation of $1.65 to $3.81 is primarily attributed to the following factors:
 
  •  significant progress in discussions with investment banks during the third quarter of 2009 regarding a potential initial public offering of our common stock
 
  •  greater clarity regarding the timing of a potential liquidity event
 
  •  improvement in global economic conditions in the third quarter of 2009, specifically in the technology sector
 
  •  improved expectations for our financial performance in the fourth quarter of 2009 and in 2010
 
The board of directors with the assistance of management performed a contemporaneous valuation as of December 31, 2009 using PWERM. We estimated the fair value of our common stock as of December 31, 2009 at $5.18 per share. The increase of 36% over the previous valuation of $3.81 was primarily due to an increase in the probability of our initial public offering. This valuation reflected marketability discounts of 11% to 25% for the various scenarios. The probability of an initial public offering was weighted at 50%, the probability of a sale to a strategic acquirer was 35% and the probability of remaining a private company was 15%.
 
2010 Valuations
 
In 2010, we granted options to purchase shares of common stock with exercise prices as follows:
 
                                 
    Options
  Exercise Price
  Fair Value
  Intrinsic
Grant Date
  Granted   per Share   per Share   Value
 
1st Quarter
    525,500     $ 5.18     $ 5.18     $  
2nd Quarter
    900,000       6.91       6.91        
 
The board of directors with the assistance of management estimated the fair market value of our common stock to be $5.18 per share as of the date of the option grants made in the first quarter of 2010. The estimate was based on the valuation conducted by the board of directors as of December 31, 2009 as the board of directors concluded that there had been no material changes to our business or prospects between such valuation and the grant date.
 
The board of directors with the assistance of management performed a valuation of our common stock as of March 31, 2010 using PWERM. We estimated the fair value of our common stock as of March 31, 2010 at $6.91 per share. The increase of 33% over the previous valuation of $5.18 was primarily due to an increase in the probability of our initial public offering. This valuation reflected marketability discounts of 9% to 15% for the various scenarios. The probability of an initial public offering was weighted at 75%, the probability of a sale to a strategic acquirer was 20% and the probability of remaining a private company was 5%.
 
The board of directors with the assistance of management estimated the fair market value of our common stock to be $6.91 per share as of the date of the option grants made in the second quarter of 2010. The estimate was based on the valuation conducted by the board of directors as of March 31, 2010 as the board of directors concluded that there had been no material changes to our business or prospects between such valuation and the grant date.
 
The midpoint of the price range reflected on the cover page of this prospectus, $9.00, is an increase of $2.09, or approximately 30%, as compared to the estimated fair market value of our common stock as of the date of the option grants made in the second quarter of 2010 of $6.91; the $8.50 low end of the price range reflected on the cover page of this prospectus is an increase of $1.59, or approximately 23%. The increase was primarily the result of the following factors:
 
  •  the increased likelihood of consummating this offering, rather than the blended weighting of various liquidation scenarios used in PWERM
 
  •  the removal of the prior discounts for lack of marketability and the immediate liquidity available to investors in this offering
 
The assumptions around fair value that we have made represent our management’s best estimate, but they are highly subjective and inherently uncertain. If management had made different assumptions, our calculation of the


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options’ fair value and the resulting stock-based compensation expense could differ, perhaps materially, from the amounts recognized in our financial statements.
 
Research and Development Expense for Software Products
 
Software development costs are expensed as incurred until technological feasibility has been established, at which time such costs are capitalized to the extent that the capitalizable costs do not exceed the realizable value of such costs, until the product is available for general release to customers. Based on our product development process, technological feasibility is established upon the completion of a working model of the software product that has been tested to be consistent with the product design specifications and that is free of any uncertainties related to high-risk development issues. Costs incurred by us between completion of the working model and the point at which the product is ready for general release have been insignificant. Accordingly, we have charged all such costs to research and development expense.
 
Income Taxes
 
We use the liability method of accounting for income taxes as set forth in the authoritative guidance for income taxes. Under this method, we recognize deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the respective carrying amounts and tax bases of our assets and liabilities. For the year ended December 31, 2009, our tax provision consists principally of foreign tax expense partially offset by United States federal and state benefit. For year ended December 31, 2008, our tax provision consists principally of foreign and United States federal income tax expense.
 
We continue to assess the realizability of our deferred tax assets, which primarily consist of net operating loss, or NOL, carry-forwards. In assessing the realizability of these deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. We establish valuation allowances when necessary to reduce deferred tax assets to the amounts expected to be realized. The factors used to assess the likelihood of realization include our latest forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. As of December 31, 2009 and 2008, our deferred tax assets had a valuation allowance of $1.7 million and $3.0 million. The decrease in 2009 was due to reversal of valuation allowances in certain jurisdictions in 2009 due to improved current and projected taxable income.
 
If our recent trend of profitability continues, we may determine that there is sufficient positive evidence to support a reversal of, or decrease in, the valuation allowance. If we were to reverse all or some part of our valuation allowance our financial statements in the period of reversal would likely reflect an increase in assets on our balance sheet and a corresponding tax benefit to our statement of operations in the amount of the reversal.
 
Because of certain prior period ownership changes, the utilization of a portion of our United States federal and state NOL carry forward may be limited. We have not finalized our analysis to determine the annual 382 limitation, but we estimate that approximately $2.0 million of our United States federal and state net operating losses may be limited which has been reflected in our valuation allowance at December 31, 2009. If we were to determine that certain amounts of the $2.0 million were not limited, a portion of our valuation allowance could be reversed.
 
Effective January 1, 2007, we adopted the guidance on accounting for uncertainty in income taxes as set forth under Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes (codified in ASC 740 Income Taxes). This guidance clarified the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return. There was no impact upon adoption as our liability recognized under previous accounting guidance was consistent with that required under the new guidance. At December 31, 2009 and March 31, 2010, our reserve for uncertain tax positions was $3.3 million and $3.2 million.
 
The adoption of this guidance required us to identify, evaluate and measure all uncertain tax positions taken or to be taken on tax returns and to record liabilities for the amount of these positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities. Although we believe that our estimates and judgments were reasonable, actual results may differ from these estimates. Some or all of these judgments are subject to review by the taxing authorities.
 
Our annual provision for income taxes and the determination of the resulting deferred tax assets and liabilities involve a significant amount of management judgment. Management’s judgments, assumptions and estimates


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relative to the current provision for income tax take into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. We operate within federal, state and international taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues which may require an extended period of time to resolve.
 
We accrue interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of the adoption date of this guidance and as of December 31, 2008, December 31, 2009 and March 31, 2010, there was no accrued interest or penalties.
 
We intend either to invest our non-United States earnings permanently in foreign operations or to remit these earnings to our United States entities in a tax-free manner. For this reason, we do not record federal income taxes on the undistributed earnings of our foreign subsidiaries.
 
Results of Operations
 
The following tables set forth a summary of our consolidated statement of operations and the related changes for the periods indicated:
 
                                         
          Three Months Ended
 
    Year Ended December 31,     March 31,  
Consolidated Statement of Operations Data:   2007     2008     2009     2009     2010  
                      (unaudited)  
    (in thousands)  
 
Revenue:
                                       
License revenue
  $ 51,482     $ 74,446     $ 99,864     $ 14,759     $ 26,222  
Maintenance revenue
    17,747       29,401       41,390       7,969       13,069  
Professional services revenue
    11,357       14,417       16,105       3,676       4,474  
                                         
Total revenues
    80,586       118,264       157,359       26,404       43,765  
Cost of revenue:
                                       
License revenue
    2,949       3,071       3,663       587       679  
Maintenance revenue
    580       1,365       1,635       376       695  
Professional services revenue
    8,177       9,562       11,802       2,817       2,912  
                                         
Total cost of revenue(1)
    11,706       13,998       17,100       3,780       4,286  
                                         
Gross profit
    68,880       104,266       140,259       22,624       39,479  
Operating expenses:
                                       
Sales and marketing(1)
    48,249       74,267       93,349       19,562       25,413  
Research and development(1)
    5,419       8,258       8,735       2,223       2,664  
General and administrative(1)
    15,154       20,190       25,009       7,219       9,393  
                                         
Total operating expenses
    68,822       102,715       127,093       29,004       37,470  
                                         
Income from operations
    58       1,551       13,166       (6,380 )     2,009  
Other income (expense)
    (463 )     3,304       (4,529 )     670       (2,174 )
                                         
Income (loss) before benefit for income taxes
    (405 )     4,855       8,637       (5,710 )     (165 )
Benefit (provision) for income taxes
    40       (1,860 )     (1,776 )     1,409       46  
                                         
Net income (loss)
  $ (365 )   $ 2,995     $ 6,861     $ (4,301 )   $ (119 )
                                         
                                         
                                       
(1) Included stock-based compensation expense as follows:
                                       
Cost of revenue
  $ 12     $ 39     $ 82     $ 19     $ 26  
Sales and marketing
    103       285       733       157       260  
Research and development
    6       19       79       8       21  
General and administrative
    69       388       585       155       193  
                                         
    $ 190     $ 731     $ 1,479     $ 339     $ 500  
                                         


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Comparison of the Three Months Ended March 31, 2009 and 2010
 
Revenue
 
                                                 
    Three Months Ended March 31,              
    2009     2010              
          Percentage of
          Percentage of
    Period to Period
 
    Amount     Revenue     Amount     Revenue     Change  
          (unaudited)
                   
          (dollars in thousands)                    
 
Revenue:
                                               
License revenue
  $ 14,759       55.9 %   $ 26,222       59.9 %   $ 11,463       77.7 %
Maintenance revenue
    7,969       30.2 %     13,069       29.9 %     5,100       64.0 %
Professional services revenue
    3,676       13.9 %     4,474       10.2 %     798       21.7 %
                                                 
Total revenue
  $ 26,404       100.0 %   $ 43,765       100.0 %   $ 17,361       65.8 %
                                                 
 
Revenue was $43.8 million for the three months ended March 31, 2010 compared to $26.4 million for the three months ended March 31, 2009, an increase of $17.4 million, or 65.8%. License revenue grew by approximately $11.5 million, or 77.7%. All territories reported strong revenue growth, particularly the North America and Nordic regions, which grew by 61% and 71% and contributed an incremental $8.4 million in total revenue. Revenue also increased due to our acquisition during the three months ended March 31, 2010 of a reseller in Japan, which provided $1.3 million in incremental revenue during the quarter. Although we introduced a new version of QlikView in 2009, there was no material increase in the pricing for our product during the three month periods. Revenue growth was achieved primarily due to volume growth as more customers acquired our product for the first time, along with additional license purchases by our existing customers. In addition, we experienced increased revenue from existing customers, approximately 63% of license revenues, which resulted from our “land and expand” sales strategy and greater productivity from our sales representatives with revenue per representative growing 52%. We believe that an improving global economic outlook during the three months ended March 31, 2010 also contributed to higher revenues as customer demand and their willingness to invest in information technology continued to grow compared to the same period last year. Maintenance revenues grew by approximately 64% driven by annual maintenance renewal rates of greater than 85%. Professional service revenue grew by 22% in the three months ended March 31, 2010 compared to the three months ended March 31, 2009 due to growth in consulting and training revenue, resulting from an increase in our customer base. Although we expect revenue growth to continue in 2010 we do not expect it to continue at the 65.8% growth rate experienced in the three months ended March 31, 2010 as compared to the three months ended March 31, 2009.


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Cost of Revenue and Gross Profit
                                                 
    Three Months Ended March 31,              
    2009     2010              
          Percentage
          Percentage
       
          of Related
          of Related
    Period to Period
 
    Amount     Revenue     Amount     Revenue     Change  
          (unaudited)                    
          (dollars in thousands)                    
 
Cost of Revenue:
                                               
Cost of license revenue
  $ 587       4.0 %   $ 679       2.6 %   $ 92       15.7 %
Cost of maintenance revenue
    376       4.7 %     695       5.3 %     319       84.8 %
Cost of professional services revenue
    2,817       76.6 %     2,912       65.1 %     95       3.4 %
                                                 
Total cost of revenue
  $ 3,780       14.3 %   $ 4,286       9.8 %   $ 506       13.4 %
                                                 
Gross Profit:
                                               
License revenue
  $ 14,172       96.0 %   $ 25,543       97.4 %   $ 11,371       80.2 %
Maintenance revenue
    7,593       95.3 %     12,374       94.7 %     4,781       63.0 %
Professional services revenue
    859       23.4 %     1,562       34.9 %     703       81.8 %
                                                 
Gross Profit
  $ 22,624       85.7 %   $ 39,479       90.2 %   $ 16,855       74.5 %
                                                 
                                                 
 
Cost of revenue was $4.3 million for the three months ended March 31, 2010 compared to $3.8 million for the three months ended March 31, 2009, an increase of $0.5 million, or 13.4%. Overall cost of revenue declined as a percentage of revenue from 14.3% for the three months ended March 31, 2009 to 9.8% for the three months ended March 31, 2010. In anticipation of continued growth in our installed customer base, we increased headcount in our support organization which increased costs by $0.3 million for the three months ended March 31, 2010 as compared to the same period in 2009. Fees paid to referral partners for license revenues increased by $0.1 million for the three months ended March 31, 2010 compared to the three months ended March 31, 2009. Cost of professional services revenue increased by $0.1 million but decreased as a percentage of professional services revenue from 76.6% for the three months ended March 31, 2009 to 65.1% for the three months ended March 31, 2010 due to higher utilization rates in our professional services organization. Although we expect gross profit growth to continue in 2010 we do not expect it to continue at the 74.5% growth rate experienced in the three months ended March 31, 2010 as compared to the three months ended March 31, 2009.
 
Operating Expenses
                                                 
    Three Months Ended March 31,              
    2009     2010              
          Percentage
          Percentage
    Period to Period
 
    Amount     of Revenue     Amount     of Revenue     Change  
          (unaudited)                    
          (dollars in thousands)                    
 
Operating Expenses:
                                               
Sales and marketing
  $ 19,562       74.1 %   $ 25,413       58.0 %   $ 5,851       29.9 %
Research and development
    2,223       8.4 %     2,664       6.1 %     441       19.8 %
General and administrative
    7,219       27.3 %     9,393       21.5 %     2,174       30.1 %
                                                 
Total operating expenses
  $ 29,004       109.8 %   $ 37,470       85.6 %   $ 8,466       29.2 %
                                                 
 
Sales and Marketing.  Sales and marketing expenses increased $5.9 million, or 29.9%, but declined as a percentage of revenues, reflecting an increase in revenue achieved per sales representative and an increased percentage of sales from existing customers and through partners. The increase in sales and marketing expenses was


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primarily attributable to an increase in personnel and commission costs of $5.0 million (including a $0.1 million increase in stock-based compensation), an increase in costs related to marketing programs of $0.3 million and an increase in travel expenses of $0.5 million.
 
Research and Development.  Research and development expenses grew by approximately $0.5 million or 19.8% during the three months ended March 31, 2010 as compared to the three months ended March 31, 2009. The increase was attributable to higher personnel costs of $0.3 million as a result of the increase in our headcount in research and development in both of these three month periods. The remaining increase of $0.2 million was due to changes in the value of the Swedish kronor as the vast majority of our research and development staff is based in Lund, Sweden.
 
General and Administrative.  General and administrative expenses were $9.4 million for the three months ended March 31, 2010 compared to $7.2 million for the three months ended March 31, 2009, an increase of $2.2 million, or 30.1%. This increase was due primarily to a $0.6 million increase in personnel costs to build out our corporate level functions to support anticipated global growth and prepare for being a publicly traded company. This increase was also due to a $0.8 million increase in travel expenses primarily related to our annual employee summit, a $0.2 million increase in facility and infrastructure costs to support international expansion and an increase in depreciation and amortization of $0.1 million related in part to additional investment in property and equipment due to our increased headcount.
 
Other Income (Expense).  Other income (expense) was an expense of $2.2 million for the three months ended March 31, 2010 compared to income of $0.7 million for the three months ended March 31, 2009. The change consisted of increased interest expense, charges for our common and preferred stock warrants and a foreign exchange loss in 2010. Interest expense increased due to amortization of a loan fee related to our line of credit. The change in the fair value of the stock warrants increased by $0.4 million for the three months ended March 31, 2010 as compared to the three months ended March 31, 2009 in a manner consistent with the increased estimated fair value in our common stock. We had a $1.4 million foreign exchange loss for the three months ended March 31, 2010 compared to a gain of $1.0 million for the three months ended March 31, 2009. The change is principally due to the foreign currency impact of our intercompany balances as a result of the euro and British pound generally weakening relative to the Swedish kronor during the three months ended March 31, 2010 compared to generally strengthening during the three months ended March 31, 2009.
 
Income Tax Benefit.  We have applied a projected 27.8% effective tax rate to our results of operations for the three months ended March 31, 2010 which results in a benefit for income taxes of approximately $0.1 million during the period. The estimated effective tax rate increased from the 2009 annual effective tax rate of 20.6% due to certain discrete items recognized during 2009, including the release of a valuation allowance and tax on repatriated earnings which netted to (5.5%). Additionally, the effective tax rate for 2009 included benefits associated with foreign tax credits and state income tax benefits in excess of certain foreign tax withholding amounts. The estimated effective tax rate for the three months ended March 31, 2009 of 24.6% differs from the actual annual effective tax rate for 2009 due to the timing of the recognition of certain discrete items mentioned above. We operate in an international environment with significant operations in various locations outside of the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting our earnings (losses) and the applicable tax rates in the various locations where we operate.


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Comparison of the Years Ended December 31, 2008 and 2009
 
Revenue
 
                                                 
    Year Ended December 31,              
    2008     2009              
          Percentage of
          Percentage of
    Period to Period
 
    Amount     Revenue     Amount     Revenue     Change  
    (dollars in thousands)              
 
Revenue:
                                               
License revenue
  $ 74,446       62.9 %   $ 99,864       63.5 %   $ 25,418       34.1 %
Maintenance revenue
    29,401       24.9 %     41,390       26.3 %     11,989       40.8 %
Professional services revenue
    14,417       12.2 %     16,105       10.2 %     1,688       11.7 %
                                                 
Total revenue
  $ 118,264       100.0 %   $ 157,359       100.0 %   $ 39,095       33.1 %
                                                 
 
Revenue was $157.4 million in 2009 compared to $118.3 million in 2008, an increase of $39.1 million, or 33.1%. License revenue grew by approximately $25.4 million, or 34%. All territories showed strong revenue growth, particularly Spain and France, which in their second full year of operations as a direct sales office grew 72% and 96%, contributing an incremental $7.3 million in total revenue. We also grew revenue by $9.0 million, or 27%, in our largest market, North America, and saw growing contributions from relatively new markets in Eastern Europe and a brand new market, Japan, which provided $1.7 million in incremental license revenue. Although we introduced a new version of QlikView in 2009, there was no material increase in the pricing for our product. Revenue growth was achieved primarily due to volume growth as more customers acquired our product for the first time, along with additional license purchases by our existing customers. From a performance perspective, we experienced an increasing contribution from existing customers, approximately 58% of license revenues, which resulted from our “land and expand” sales strategy and greater productivity from our sales representatives with revenue per representative growing 38%. We believe that a better global economic outlook also contributed to higher revenues as customer demand and their willingness to invest in information technology grew over the course of the year, with the majority of our growth for 2009 coming in the third and fourth quarters of the fiscal year. Maintenance revenues grew by approximately 41% driven by annual maintenance renewal rates of greater than 85%. As a percentage of total revenues, maintenance grew to 26% in 2009 from 25% in 2008, reflecting the impact of the growing installed customer base and renewal rates. Professional service revenue grew by 12% and was approximately 10% of our total revenues.


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Cost of Revenue and Gross Profit
 
                                                 
    Year Ended December 31,              
    2008     2009              
          Percentage of
          Percentage of
       
          Related
          Related
    Period to Period
 
    Amount     Revenue     Amount     Revenue     Change  
    (dollars in thousands)              
 
Cost of Revenue:
                                               
Cost of license revenue
  $ 3,071       4.1 %   $ 3,663       3.7 %   $ 592       19.3 %
Cost of maintenance revenue
    1,365       4.6 %     1,635       4.0 %     270       19.8 %
Cost of professional services revenue
    9,562       66.3 %     11,802       73.3 %     2,240       23.4 %
                                                 
Total cost of revenue
  $ 13,998       11.8 %   $ 17,100       10.9 %   $ 3,102       22.2 %
                                                 
Gross Profit:
                                               
License revenue
  $ 71,375       95.9 %   $ 96,201       96.3 %   $ 24,826       34.8 %
Maintenance revenue
    28,036       95.4 %     39,755       96.0 %     11,719       41.8 %
Professional services revenue
    4,855       33.7 %     4,303       26.7 %     (552 )     (11.4 %)
                                                 
Gross Profit
  $ 104,266       88.2 %   $ 140,259       89.1 %   $ 35,993       34.5 %
                                                 
 
Cost of revenue was $17.1 million in 2009 compared to $14.0 million in 2008, an increase of $3.1 million, or 22.2%. Overall cost of revenue declined as a percent of revenue from 11.8% in 2008 to 10.9% in 2009, despite a decrease in our margin related to professional services. In anticipation of continued growth in our installed customer base, we increased headcount in our professional services organization which increased costs by $1.5 million in 2009, but we did not achieve a corresponding increase in related revenues, reducing our gross margin in the category to 26.7% from 33.7%. In addition, fees paid to subcontractors increased by $0.9 million. Fees paid to referral partners for license revenues increased by $0.6 million in 2009 due to a significant transaction.
 
Operating Expenses
 
                                                 
    Year Ended December 31,              
    2008     2009     Period to
 
          Percentage
          Percentage
    Period
 
    Amount     of Revenue     Amount     of Revenue     Change  
    (dollars in thousands)              
 
Operating Expenses:
                                               
Sales and marketing
  $ 74,267       62.8 %   $ 93,349       59.3 %   $ 19,082       25.7 %
Research and development
    8,258       7.0 %     8,735       5.6 %     477       5.8 %
General and administrative
    20,190       17.1 %     25,009       15.9 %     4,819       23.9 %
                                                 
Total operating expenses
  $ 102,715       86.9 %   $ 127,093       80.8 %   $ 24,378       23.7 %
                                                 
 
Sales and Marketing.  Sales and marketing expenses increased $19.1 million, or 25.7%, but declined as a percentage of revenues, reflecting an increase in revenue achieved per sales representative and an increased percentage of sales from existing customers and through partners. The increase was primarily attributable to an increase in personnel and commission costs of $12.9 million (including a $0.5 million increase in stock-based compensation), an increase in costs related to marketing programs of $2.4 million, an increase in facility and other infrastructure costs of $2.6 million and an increase in travel expenses of $0.9 million. Also in 2009, we implemented an online customer relationship management tool to facilitate sales force growth. We expect sales and marketing expenses to continue to increase in absolute dollars but to decrease as a percentage of revenues over time as we continue to expand our sales force and marketing activities.


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Research and Development.  Although total research and development headcount increased during this period, total research and development expenses grew by only $0.5 million or 5.8%. With the vast majority of our related staff based in Lund, Sweden, changes in the value of the Swedish kronor reduced the impact of the staff increase by approximately $0.8 million. To accommodate the increase in our research and development staff, we made further investment in our facility in Sweden of approximately $0.2 million. We expect our research and development expenses will continue to increase in absolute dollars and as a percentage of revenue in the long term as we increase our research and development headcount to further strengthen and enhance our software platform.
 
General and Administrative.  General and administrative expenses were $25.0 million in 2009 compared to $20.2 million in 2008, an increase of $4.8 million, or 23.9%. This increase was due primarily to a $2.3 million increase in personnel costs to build out our corporate level functions to support anticipated global growth and prepare for being a publicly traded company. This increase was also due to a $1.2 million increase in travel expenses, a $0.2 million increase in stock-based compensation expense, a $0.5 million increase in facility and infrastructure costs to support international expansion, and an increase in depreciation and amortization of $0.3 million related in part to additional investment in property and equipment due to our increased headcount. We expect that general and administrative expenses will continue to increase in absolute dollars because of our efforts to expand our international operations and due to costs to be incurred in connection with this offering and ongoing public company related costs. However, we believe over time general and administrative costs will decline as a percentage of revenues as we will derive greater efficiencies from our corporate infrastructure.
 
Other Income (Expense)
 
Other income (expense) was an expense of $4.5 million in 2009 compared to income of $3.3 million in 2008. The change consisted of increased interest expense, charges for our common and preferred stock warrants and foreign exchange. Interest expense increased due to a full year of interest expense on our term loan. The change in the fair value of the stock warrants increased by $1.5 million in 2009 in a manner consistent with the increased value in our common stock. We had a $1.6 million foreign exchange loss in 2009 compared to a gain of $4.2 million in 2008. The change is principally due to the foreign currency impact of our outstanding debt as a result of the United States dollar generally weakening relative to the Swedish kronor in 2009 compared to generally strengthening in 2008.
 
Income Tax Expense
 
Our income tax expense in 2009 was consistent with income tax expense in 2008. The increase in our income before income taxes of $3.8 million from 2008 to 2009 was offset by a decrease in our effective tax rate from 38% in 2008 to 21% in 2009 as a result of current year reversal of valuation allowance in certain jurisdictions and a more significant impact of earnings from foreign operations.
 
Comparison of the Years Ended December 31, 2007 and 2008
 
Revenue
 
                                                 
    Year Ended December 31,              
    2007     2008     Period to
 
          Percentage of
          Percentage of
    Period
 
    Amount     Revenue     Amount     Revenue     Change  
    (dollars in thousands)              
 
Revenue:
                                               
License revenue
  $ 51,482       63.9 %   $ 74,446       62.9 %   $ 22,964       44.6 %
Maintenance revenue
    17,747       22.0 %     29,401       24.9 %     11,654       65.7 %
Professional services revenue
    11,357       14.1 %     14,417       12.2 %     3,060       26.9 %
                                                 
Total revenue
  $ 80,586       100.0 %   $ 118,264       100.0 %   $ 37,678       46.8 %
                                                 


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Revenue was $118.3 million in 2008 compared to $80.6 million in 2007, an increase of $37.7 million, or 46.8%, driven by an increase of $14.2 million, or 73%, in our North American operations, which includes Latin America, and an increase of $7.6 million, or 37%, in the Nordic countries, primarily in Sweden, and $8.6 million in contributions from new markets including our direct sales operations in France and Spain. Although we introduced a new version of QlikView in 2008, there was no material increase in the pricing for our product. Revenue growth was achieved primarily due to volume growth as more customers acquired our product for the first time, along with additional license purchases by our existing customers. License revenue grew 45% and maintenance revenue grew 66%. Maintenance revenue grew in both absolute dollars and as a percentage of total revenues due to the continued growth in our installed customer base and strong renewal rates. Professional service revenue also increased reflecting growth in both consulting and training services.
 
Cost of Revenue and Gross Profit
 
                                                 
    Year Ended December 31,              
    2007     2008              
          Percentage
          Percentage
    Period to
 
          of Related
          of Related
    Period
 
    Amount     Revenue     Amount     Revenue     Change  
    (dollars in thousands)              
 
Cost of Revenue:
                                               
Cost of license revenue
  $ 2,949       5.7 %   $ 3,071       4.1 %   $ 122       4.1 %
Cost of maintenance revenue
    580       3.3 %     1,365       4.6 %     785       135.3 %
Cost of professional services revenue
    8,177       72.0 %     9,562       66.3 %     1,385       16.9 %
                                                 
Total cost of revenue
  $ 11,706       14.5 %   $ 13,998       11.8 %   $ 2,292       19.6 %
                                                 
Gross Profit:
                                               
License revenue
  $ 48,533       94.3 %   $ 71,375       95.9 %   $ 22,842       47.1 %
Maintenance revenue
    17,167       96.7 %     28,036       95.4 %     10,869       63.3 %
Professional services revenue
    3,180       28.0 %     4,855       33.7 %     1,675       52.7 %
                                                 
Gross Profit
  $ 68,880       85.5 %   $ 104,266       88.2 %   $ 35,386       51.4 %
                                                 
 
Cost of revenue was $14.0 million in 2008 compared to $11.7 million in 2007, an increase of $2.3 million, or 19.6%. This increase was primarily due to the increase in revenues and an increase in personnel and facility costs of $0.8 million related to expanded headcount in our support organization in order to support the increasing number of new customers we added during 2007 and 2008. In addition, fees paid to subcontractors in connection with the sale of professional services to our customers increased $1.3 million. Our gross profit as a percentage of revenue increased slightly in 2008 as compared to 2007 due to a higher percentage of our revenue being derived from license and maintenance sales.


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Operating Expenses
 
                                                 
    Year Ended December 31,              
    2007     2008     Period to
 
          Percentage
          Percentage
    Period
 
    Amount     of Revenue     Amount     of Revenue     Change  
    (dollars in thousands)              
 
Operating Expenses:
                                               
Sales and marketing
  $ 48,249       59.9 %   $ 74,267       62.8 %   $ 26,018       53.9 %
Research and development
    5,419       6.7 %     8,258       7.0 %     2,839       52.4 %
General and administrative
    15,154       18.8 %     20,190       17.1 %     5,036       33.2 %
                                                 
Total operating expenses
  $ 68,822       85.4 %   $ 102,715       86.9 %   $ 33,893       49.2 %
                                                 
 
Sales and Marketing.  Sales and marketing expenses were $74.3 million in 2008 compared to $48.2 million in 2007, an increase of $26.0 million, or 53.9%. The increase was primarily attributable to an increase in personnel and commission costs of $17.9 million, an increase in costs related to marketing programs of $3.4 million, an increase in facility and other infrastructure costs of $2.7 million and an increase in travel expenses of $2.1 million. Our establishment of direct sales offices in France and Spain along with the further growth of our sales force in the United Stated contributed to the increase in sales and marketing expenses in 2008 as compared to 2007.
 
Research and Development.  Research and development expenses were $8.3 million in 2008 compared to $5.4 million in 2007, an increase of $2.8 million, or 52.4%. The increase was due to an increase in personnel costs of $2.3 million due to an expansion of our product marketing organization and increased travel expenses of $0.5 million in 2008. With the vast majority of our research and development staff based in Lund, Sweden, changes in the value of the Swedish kronor adversely impacted these costs.
 
General and Administrative.  General and administrative expenses were $20.2 million in 2008 compared to $15.2 million in 2007, an increase of $5.0 million, or 33.2%. This increase was due primarily to a $1.8 million increase in personnel costs, a $0.3 million increase in stock-based compensation expense, a $0.9 million increase in facility and infrastructure costs to support our growth and international expansion and an increase in travel expenses of $0.7 million. In addition, professional fees, principally from accounting, audit and tax fees, increased by $0.5 million and depreciation and amortization expense increased by $0.3 million as compared to 2007. These costs were incurred in order to provide the needed corporate infrastructure necessary to support further revenue growth.
 
Other Income (Expense)
 
Other income (expense) was income of $3.3 million in 2008 compared to expense of $0.5 million in 2007. The change was principally due to a $4.2 million foreign exchange gain in 2008. This change was primarily due to the foreign currency impact of our outstanding debt, which is denominated in Swedish kronor, as a result of the United States dollar generally strengthening relative to the Swedish kronor in 2008 compared to a general weakening in 2007. This change was offset by increased interest expense and charges for our common and preferred stock warrants. Interest expense increased due to higher average outstanding debt balances in 2008 as compared to 2007. The change in fair value of stock warrants in 2008 was consistent with the change in fair value of stock warrants in 2007.
 
Income Tax Expense
 
Our income tax expense in 2008 increased by $1.9 million from 2007. This increase resulted from an increase in our income before income taxes of $5.3 million from 2007 to 2008 and an increase in our effective tax rate from 9.9% in 2007 to 38.3% in 2008 as a result of more significant earnings in foreign operations in 2008 as compared to 2007 and the impact of nondeductible expenses in 2008.


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Quarterly Results of Operations
 
The following table sets forth our unaudited consolidated revenue and operating expenses for each of the nine quarters beginning March 31, 2008 and ending March 31, 2010. You should read this data together with our consolidated financial statements and the related notes included elsewhere in this prospectus. We have prepared the unaudited information on a basis consistent with our audited financial statements and have included all adjustments of a normal and recurring nature, which, in the opinion of management, are considered necessary to fairly present our revenue and operating expenses for the quarters presented. Our historical quarterly revenue and operating expenses are not necessarily indicative of results for any future period.
 
                                                                         
    For the Three Months Ended,  
    March 31,
    June 30,
    September 30,
    December 31,
    March 31,
    June 30,
    September 30,
    December 31,
    March 31,
 
    2008     2008     2008     2008     2009     2009     2009     2009     2010  
    (unaudited)  
    (in thousands)  
 
Consolidated Statement of Operations Data:
                                                                       
Revenue:
                                                                       
License revenue
  $ 13,116     $ 21,577     $ 15,485     $ 24,268     $ 14,759     $ 20,045     $ 21,388     $ 43,672     $ 26,222  
Maintenance revenue
    6,422       7,316       8,172       7,491       7,969       9,478       11,164       12,779       13,069  
Professional services revenue
    2,889       4,238       3,318       3,972       3,676       3,322       3,754       5,353       4,474  
                                                                         
Total revenue
    22,427       33,131       26,975       35,731       26,404       32,845       36,306       61,804       43,765  
Cost of revenue:
                                                                       
License revenue
    465       1,076       704       826       587       614       590       1,872       679  
Maintenance revenue
    290       408       376       291       376       455       402       402       695  
Professional services revenue
    2,209       2,585       2,195       2,573       2,817       2,589       2,732       3,664       2,912  
                                                                         
Total cost of revenue(1)
    2,964       4,069       3,275       3,690       3,780       3,658       3,724       5,938       4,286  
Gross profit
    19,463       29,062       23,700       32,041       22,624       29,187       32,582       55,866       39,479  
Operating Expenses:
                                                                       
Sales and marketing(1)
    16,201       20,552       18,985       18,529       19,562       23,214       23,147       27,426       25,413  
Research and development(1)
    1,726       2,250       2,024       2,258       2,223       2,152       1,962       2,398       2,664  
General and administrative(1)
    5,783       4,965       4,420       5,022       7,219       6,530       5,734       5,526       9,393  
                                                                         
Total operating expenses
    23,710       27,767       25,429       25,809       29,004       31,896       30,843       35,350       37,470  
Income (loss) from operations
  $ (4,247 )   $ 1,295     $ (1,729 )   $ 6,232     $ (6,380 )   $ (2,709 )   $ 1,739     $ 20,516     $ 2,009  
                                                                         
 
 
(1) Amounts in the table above include stock-based compensation expense, as follows:
 
                                                                         
    For the Three Months Ended,  
    March 31,
    June 30,
    September 30,
    December 31,
    March 31,
    June 30,
    September 30,
    December 31,
    March 31,
 
    2008     2008     2008     2008     2009     2009     2009     2009     2010  
    (unaudited)  
    (in thousands)  
 
Cost of revenue
  $ 6     $ 9     $ 12     $ 12     $ 19     $ 19     $ 21     $ 23     $ 26  
Sales and marketing
    55       72       80       78       157       196       183       197       260  
Research and development
    4       5       5       5       8       23       23       25       21  
General and administrative
    61       40       149       138       155       168       121       141       193  
                                                                         
    $ 126     $ 126     $ 246     $ 233     $ 339     $ 406     $ 348     $ 386     $ 500  
                                                                         


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Comparison of Unaudited Quarterly Results
 
We conduct business in our foreign operations in local currencies. Accordingly, our revenue and operating expense results presented above are affected by changes in foreign exchange rates. Income and expense accounts are translated at the average monthly exchange rates during the period. As a result, a decline in the value of the United States dollar relative to the local currencies of our foreign subsidiaries can have a favorable effect on our profitability, and an increase in the value of the United States dollar relative to the local currencies of foreign subsidiaries can have a negative effect on our profitability.
 
Revenue
 
Our total consolidated revenue has generally increased over the periods presented due to volume growth through sales to new customers as well as to existing customers purchasing additional software licenses and maintenance.
 
Cost of Revenue
 
Our total consolidated cost of revenue has fluctuated over the periods presented reflecting referral fees paid in connection with our license revenue generated, fees paid to consultants providing training and consulting services for our customers, and personnel costs related to our customer support organization.
 
Sales and Marketing
 
Sales and marketing expenses have generally increased over the periods presented due to the addition of sales and marketing personnel as well as commission expense that increases in absolute dollars as revenue increases. Quarterly fluctuations are the result of the timing of marketing expenditures and sales commission expense associated with license revenue recognized during the quarter. In addition, sales and marketing expenses in the second quarter of each year presented include the cost of our annual partner event.
 
Research and Development
 
Research and development expenses have generally increased over the periods presented due to the increased focus on new product features and functionality and the associated addition of personnel.
 
General and Administrative
 
General and administrative expenses have generally increased over the periods presented reflecting an investment in our infrastructure to support our growth, including increased cost of executive and administrative personnel, facilities cost, and depreciation expense. In addition, general and administrative expenses in the first quarter of each year presented include the cost of our annual employee summit.
 
Seasonality
 
Our quarterly results reflect seasonality in the sale of our products and services. Historically, a pattern of increased license sales in the fourth quarter has positively impacted sales activity in that period which can make it difficult to achieve sequential revenue growth in the first quarter. Similarly, our gross margins and operating income have been affected by these historical trends because the majority of our expenses are relatively fixed in the near-term. The timing of revenues in relation to our expenses, much of which does not vary directly with revenue, has an impact on the cost of revenue, sales and marketing expense, research and development expense and general and administrative expense as a percentage of revenue in each calendar quarter during the year. The majority of our expenses are personnel-related and include salaries, stock-based compensation, benefits and incentive-based compensation plan expenses. As a result, we have not experienced significant seasonal fluctuations in the timing of our expenses from period to period, other than an increase in general and administrative expenses during the first quarter of each year as a result of our annual employee summit and an increase in sales and marketing expenses in the second quarter of each year due to our annual partner event. On a quarterly basis, we have usually generated the majority of our revenues in the final month of each quarter and a significant amount in the last two weeks of a quarter. We believe this is due to customer buying patterns typical in this industry. Although these seasonal factors are common in the technology sector, historical patterns should not be considered a reliable indicator of our future sales activity or performance.


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Acquisitions
 
In January 2008, in order to achieve a direct sales presence in Spain, we acquired the operations and tangible assets of P.C. Compatible Business Intelligence, S.L., or PCB, a Spanish reseller of our product, for $1.9 million, including cash of $0.4 million and a warrant to purchase an aggregate of 93,981 shares of our common stock at an exercise price of $1.65 per share. PCB has the right to exercise such warrant until December 31, 2010 and to require us to purchase the acquired shares for an aggregate of €1.8 million (approximately $2.3 million based on an assumed exchange rate of approximately $1.35 as of March 31, 2010). In the event the holder does not exercise this right to cause us to repurchase these shares, the warrant would remain outstanding and be exercisable until its expiration on December 31, 2014.
 
In January 2010, in order to achieve a direct sales presence in Japan, we acquired all of the issued and outstanding shares of Syllogic Corporation, or Syllogic, a Japanese reseller of our product, for 120,000 shares of our common stock plus contingent cash consideration not to exceed $0.8 million. The total estimated purchase price of Syllogic was $1.1 million.
 
We account for acquisitions using the purchase method of accounting. In each case, we allocated the purchase price to the assets acquired, including intangible assets and liabilities assumed, based on estimated fair values at the date of the acquisition.
 
Liquidity and Capital Resources
 
Since our inception, we have financed our operations through the sale of preferred stock and common stock, cash flows generated by operations and borrowings under debt instruments. As of March 31, 2010, we had cash and cash equivalents totaling $37.4 million, net accounts receivable of $45.3 million and $14.9 million of working capital. As of March 31, 2010, we owed a balance of 44.2 million Swedish kronor (approximately $6.1 million based on an assumed exchange rate of approximately 0.14 as of March 31, 2010) under a promissory note held by a financial institution which is one of our stockholders. We currently intend to prepay the outstanding principal of this promissory note and any applicable prepayment fees with the proceeds of this offering. In addition, we have an asset based line of credit facility with a Swedish bank under which we may borrow up to 60 million Swedish kronor (approximately $8.4 million as of March 31, 2010 based on an assumed exchange rate of approximately 0.14) which had no outstanding balance as of March 31, 2010. The line of credit matures on June 30, 2010, and we have begun discussions with the lender regarding a possible extension of the facility beyond that date.
 
We estimate our capital expenditures for 2010 to be approximately $2.0 million, comprised primarily of additional leasehold improvements, furniture and fixtures and computer equipment. We believe that our existing cash and cash equivalents and our cash flow from operations will be sufficient to fund our operations and our capital expenditures and to pay our debt service for at least the next 12 months. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of spending to support product development efforts and expansion into new territories, the timing of introductions of new software products and enhancements to existing software products and the continuing market acceptance of our software offerings. Although we are not currently a party to any agreement or letter of intent regarding potential investments in, or acquisitions of, complementary businesses, applications or technologies, we may enter into these types of arrangements, which could require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.
 
We will also incur costs as a public company that we have not previously incurred, including, but not limited to, costs and expenses for directors fees, increased directors and officers insurance, investor relations fees, expenses for compliance with the Sarbanes-Oxley Act of 2002 and rules implemented by the SEC and Nasdaq, on which our common stock will be listed, and various other costs. The Sarbanes-Oxley Act of 2002 requires that we maintain effective disclosure controls and procedures and internal controls.


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The following table shows selected balance sheet data as well as our cash flows from operating activities, investing activities and financing activities for the stated periods:
 
                                         
    As of and for the Year Ended
  As of the Three Months
    December 31,   Ended March 31,
    2007   2008   2009   2009   2010
                (unaudited)
    (in thousands)
 
Cash and cash equivalents
  $ 9,214     $ 14,800     $ 24,852     $ 17,205     $ 37,366  
Accounts receivable, net
    33,859       41,110       63,729       30,953       45,328  
Cash provided by operating activities
    2,856       2,631       13,036       3,572       15,414  
Cash used in investing activities
    (1,022 )     (2,158 )     (2,128 )     (334 )     (158 )
Cash provided by (used in) financing activities
    2,480       6,926       (1,791 )     (314 )     (1,523 )
 
Cash and Cash Equivalents
 
Our cash and cash equivalents at March 31, 2010 were held for working capital purposes and were invested primarily in cash and money market accounts. We do not enter into investments for trading or speculative purposes.
 
Accounts Receivable, Net
 
Our accounts receivable balance fluctuates from period to period which affects our cash flow from operating activities. The fluctuations vary depending on the timing of our service delivery and billing activity, cash collections and changes to our allowance for doubtful accounts. Our allowance for doubtful accounts represents our best estimate of the amount of probable credit losses. To date, we have not incurred any write-offs of accounts receivable significantly different than accounts reserved.
 
Cash Flows
 
Cash Provided by Operating Activities
 
Net cash provided by operating activities was $3.6 million and $15.4 million, which includes a net loss of $4.3 million and $0.1 million for the three months ended March 31, 2009 and 2010. The reasons for the increase in net cash provided by operating activities for the three months ended March 31, 2010 include the decrease in net loss during the three months ended March 31, 2010. We incurred non-cash expenses totaling $1.4 million and $2.6 million for the three months ended March 31, 2009 and 2010. Non-cash expenses primarily consisted of stock-based compensation expense, provisions for bad debt, change in the fair value of warrants, unrealized foreign currency gains and losses, and depreciation and amortization expense.
 
The change in certain assets and liabilities resulted in a net source of cash of $6.5 million and $12.5 million for the three months ended March 31, 2009 and 2010. Cash provided by operating activities is driven by sales of our software offerings. Collection of accounts receivable from the sales of our software offerings is a significant component of our cash flows from operating activities, as is the change in deferred revenue related to these sales. We experienced a positive cash flow impact in the three months ended March 31, 2010 as compared to the three months ended March 31, 2009 related to collection of accounts receivable, as the accounts receivable balance was significantly higher at December 31, 2009 compared to December 31, 2008.
 
Net cash provided by operating activities was $2.9 million, $2.6 million and $13.0 million and net income (loss) was ($0.4 million), $3.0 million and $6.9 million for the years ended December 31, 2007, 2008 and 2009. The primary reason for the increase in net cash provided by operating activities in 2009 relates to the increase in net income during 2009. We (generated) incurred non-cash (income) expenses totaling $1.0 million, $1.9 million and $3.2 million for the years ended December 31, 2007, 2008 and 2009. Non-cash expenses primarily consisted of stock-based compensation expense, bad debt expense, change in deferred tax assets and liabilities, unrealized foreign currency gains and losses, and depreciation and amortization expense.
 
The change in certain assets and liabilities resulted in a net source (use) of cash of $2.2 million, ($2.2 million) and $3.0 million for the years ended December 31, 2007, 2008 and 2009. Cash provided by operating activities is driven by


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sales of our software offerings. Collection of accounts receivable from the sales of our software offerings is a significant component of our cash flows from operating activities, as is the change in deferred revenue related to these sales.
 
Cash Used in Investing Activities
 
Net cash used in investing activities was $0.3 million and $0.2 million for the three months ended March 31, 2009 and 2010. Cash used in investing activities for the three months ended March 31, 2009 was primarily for capital expenditures related to property and equipment as we continued to expand our infrastructure and workforce. During the three months ended March 31, 2010 we acquired Syllogic which resulted in a source of cash of approximately $0.2 million. This net cash acquired partially offset capital expenditures for property and equipment of $0.4 million during the three months ended March 31, 2010.
 
Net cash used in investing activities was $1.0 million, $2.2 million and $2.1 million for the years ended December 31, 2007, 2008 and 2009. Cash used in investing activities for the year ended December 31, 2007 was primarily for the purchase of property. During the year ended December 31, 2008, we acquired PCB for an aggregate of $0.4 million in cash. In addition, we made capital expenditures for property and equipment. Cash used in investing activities for the year ended December 31, 2009 was primarily for capital expenditures related to property and equipment as we continued to expand our infrastructure and workforce.
 
Cash Provided by (Used in) Financing Activities
 
Net cash used in financing activities was $0.3 million and $1.5 million for the three months ended March 31, 2009 and 2010. Net cash used in financing activities for the three months ended March 31, 2009 was primarily related to payments made under our previous long-term note payable. Net cash used in financing activities for the three months ended March 31, 2010 primarily resulted from payments under our long-term note payable arrangement and the payoff of debt assumed in the acquisition of Syllogic partially offset by proceeds from the exercise and issuance of stock options.
 
Net cash provided by financing activities was $2.5 million and $6.9 million for the years ended December 31, 2007 and 2008. Net cash used in financing activities was $1.8 million for the year ended December 31, 2009. Net cash provided by financing activities for the year ended December 31, 2007 was primarily related to borrowings under our line of credit facility as well as proceeds from the exercise of stock options partially offset by payments made under our long-term debt arrangement. Net cash provided by financing activities for the year ended December 31, 2008 resulted from borrowings under a new long-term note payable arrangement and proceeds from the exercise of stock options partially offset by payments made under our line of credit facility and the previous long-term note payable. Net cash used in financing activities for the year ended December 31, 2009 was due to payments under our long-term note payable arrangement partially offset by payments received for the exercise and purchase of stock options.
 
Contractual Obligations and Commitments
 
We generally do not enter into long-term minimum purchase commitments. Our principal commitments, in addition to those related to our long-term debt discussed below, consist of obligations under facility leases for office space.
 
The following table summarizes our outstanding contractual obligations as of December 31, 2009:
 
                                         
    Payments Due by Period  
          Less Than
                More Than
 
    Total     1 Year     1-3 Years     3 to 5 Years     5 Years  
    (in thousands)  
 
Operating lease obligations
  $ 16,662     $ 5,522     $ 7,167     $ 3,364     $ 609  
Note payable
  $ 6,921       3,076       3,845              
Interest on note payable
  $ 865       577       288              
                                         
Total
  $ 24,448     $ 9,175     $ 11,300     $ 3,364     $ 609  
                                         


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There has been no material change in the obligations since December 31, 2009 other than scheduled payments through March 31, 2010. We have obligations related to unrecognized tax benefit liabilities totaling $3.3 million, which have been excluded from the table above as we do not think it is practicable to make reliable estimates of the periods in which payments for these obligations will be made. See Note 9 of the notes to our audited consolidated financial statements.
 
Off-Balance Sheet Arrangements
 
During the years ended December 31, 2007, 2008 and 2009, and the three months ended March 31, 2010, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
 
Recently Adopted Accounting Principles
 
In January 2010, the Financial Accounting Standards Board, or FASB, issued updated guidance related to fair value measurements and disclosures, which requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and to describe the reasons for the transfers. In addition, in the reconciliation for fair value measurements using significant unobservable inputs, or Level 3, a reporting entity should disclose separately information about purchases, sales, issuances and settlements (that is, on a gross basis rather than on a net basis). The updated guidance also requires that an entity should provide fair value measurement disclosures for each class of assets and liabilities and disclosures about the valuation techniques and inputs used to measure fair value for both recurring and non-recurring fair value measurements for Level 2 and Level 3 fair value measurements. The updated guidance is effective for interim or annual financial reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. We adopted the updated guidance in the first quarter of 2010, and the impact on the consolidated financial statements was not material.
 
In June 2009, the FASB issued The FASB Accounting Standards Codification, or the Codification, authorizing the Codification as the sole source for authoritative guidance in accordance with GAAP. The Codification is effective for financial statements issued for reporting periods that end after September 15, 2009. The Codification supersedes all accounting standards in GAAP, aside from those issued by the SEC.
 
In May 2009, the FASB issued a standard that sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This standard is effective for interim and annual periods ending after June 15, 2009. We adopted this standard in the year ended December 31, 2009, and it did not impact our consolidated financial results.
 
We adopted new accounting guidance on business combinations effective January 1, 2009. While retaining the fundamental requirements of previous GAAP, this new statement makes various modifications to the accounting for contingent consideration, preacquisition contingencies, purchased in-process research and development, acquisition-related transaction costs, acquisition-related restructuring costs, and changes in tax valuation allowances and tax uncertainty accruals. The impact of adopting the guidance will depend on the nature and terms of business combinations, if any, that we consummate on or after January 1, 2009.
 
We adopted new accounting guidance on fair value measurements effective January 1, 2008, for financial assets and liabilities. In addition, effective January 1, 2009, we adopted this guidance as it relates to nonfinancial assets and liabilities that are not recognized or disclosed at fair value in the financial statements on at least an annual basis. This guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability, referred to as the exit price, in an orderly transaction between market participants at the measurement date. The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. See additional disclosures in Note 5 of the notes to each of our consolidated financial statements related to the adoption of this fair value guidance.


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In June 2008, the FASB issued new guidance related to assessing whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock for the purposes of determining whether such equity-linked financial instrument (or embedded feature) is subject to derivative accounting. We adopted the new guidance effective January 1, 2009. The adoption of this guidance did not have a material impact on our consolidated financial statements.
 
Recent Accounting Pronouncements
 
In October 2009, the FASB clarified the accounting guidance for sales of tangible products containing both software and hardware elements and issued new guidance that amends the criteria for evaluating the individual items in a multiple deliverable revenue arrangement and how to allocate the consideration received to the individual items. The guidance is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. We have evaluated the potential impact of the revised guidance on our financial position and results of operations and have concluded that they will not have a material impact on our consolidated financial statements.
 
In August 2009, the FASB issued guidance on measuring liabilities at fair value, which provides clarification that in circumstances where a quoted market price in an active market for an identical liability is not available, a reporting entity must measure fair value of the liability using one of the following techniques: the quoted price of the identical liability when traded as an asset; quoted prices for similar liabilities or similar liabilities when traded as assets; or another valuation technique, such as a present value technique or the amount that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability that is consistent with the provisions of authoritative guidance. This statement becomes effective for the first reporting period, including interim periods, beginning after issuance. We adopted this statement effective as of January 1, 2010. We have evaluated the potential impact of these consensuses on our financial position and results of operations, and we have concluded that they will not have a material impact on our consolidated financial statements.
 
Quantitative and Qualitative Disclosures about Market Risk
 
Interest Rate Sensitivity
 
We had cash and cash equivalents of $9.2 million at December 31, 2007, $14.8 million at December 31, 2008, $24.9 million at December 31, 2009 and $37.4 million at March 31, 2010. We held these amounts primarily in cash or money market funds.
 
We hold cash and cash equivalents for working capital purposes. We do not have material exposure to market risk with respect to investments, as our investments consist primarily of highly liquid investments purchased with original maturities of three months or less. We do not use derivative financial instruments for speculative or trading purposes; however, we may adopt specific hedging strategies in the future. Any declines in interest rates, however, will reduce future interest income.
 
We had total outstanding debt of $5.1 million at December 31, 2007, $8.1 million at December 31, 2008, $7.0 million at December 31, 2009 and $6.0 million at March 31, 2010. The interest rate on our outstanding debt at March 31, 2010 is fixed at 10%.
 
Foreign Currency Risk
 
We market our products in North America, Europe, the Asia-Pacific Regions, South America and Africa and develop our products in Europe. As a result of our business activities in foreign countries, our financial results could be affected by factors such as changes in foreign currency exchange rates or economic conditions in foreign markets, and there is no assurance that exchange rate fluctuations will not harm our business in the future. We sell our products in certain countries in the local currency for the respective country. In addition, our product development activities are principally based at our facility in Lund, Sweden. This provides some natural hedging because most of our subsidiaries’ operating expenses are denominated in their local currencies. Regardless of this natural hedging, our results of operations may be adversely impacted by the exchange rate fluctuation. Although we will continue to monitor our exposure to currency fluctuations and, where appropriate, may use financial hedging techniques in the future to minimize the effect of these fluctuations, we are not currently engaged in any financial hedging transactions.


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Foreign currency risk exposures arise from transactions denominated in a currency other than our functional currency and from foreign denominated revenue and profit translated into United States dollars. Approximately 73% and 71% of our operating revenues were denominated in currencies other than the United States dollar for the year ended December 31, 2009 and the three months ended March 31, 2010. The principal foreign currencies in which we conduct business are the Swedish kronor, the British pound and the euro. The translation of currencies in which we operate into the United States dollar may affect consolidated revenues and gross profit margins as expressed in United States dollars. A weakening of the United States dollar versus other currencies in which we operate may increase our consolidated revenues and gross profit margins while the strengthening of the United States dollars versus these currencies may have an opposite effect on our consolidated results expressed in United States dollars.
 
At December 31, 2008 and 2009 and March 31, 2010, we have a note payable that is denominated in Swedish kronor that is remeasured at each reporting date with foreign currency gains (losses) recognized in other income (expense). We recognized a gain in 2008 as a result of the general strengthening of the United States dollar relative to the Swedish kronor and a loss in 2009 due to the general weakening of the United States dollar relative to the Swedish kronor. A hypothetical 10% change in the foreign exchange rate at December 31, 2009 and March 31, 2010 would have resulted in a $0.7 million and $0.6 million impact on net income.


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BUSINESS
 
Overview
 
We have pioneered a powerful, easy-to-use business intelligence solution that enables our customers to make better and faster business decisions. Our software platform, QlikView, combines enterprise-class analytics and search functionality with the simplicity and ease-of-use found in office productivity software tools for a broad set of business users. QlikView is powered by our in-memory associative search technology, which has utilized rapid advances in computing power to yield significant improvement in flexibility and performance at a lower cost than traditional business intelligence solutions. We have grown our customer base from over 2,000 customers in 2005 to approximately 14,000 as of March 31, 2010 and increased our revenue at a 59% compound annual growth rate during the same period. We added an average of 404 new customers per month during fiscal year 2009. Our solution addresses a diverse range of customer needs from middle market customers to large enterprises such as BP, Campbell Soup Company, Colonial Life, The Dannon Company, Inc., Heidelberger Druckmaschiner AG, ING, Kraft Foods, Lifetime Brands, National Health Services (NHS), Qualcomm, Symantec and Volvo Car UK Limited. We have customers in over 100 countries, and approximately 75% of our revenue for the three months ended March 31, 2010 was derived internationally.
 
QlikView empowers business users to navigate data in a manner consistent with the fluid, associative nature of human thought. Our technology platform enables users to consolidate large, disparate data sets and discover relationships within data in real time when requested by the user. QlikView visualizes data in a simple, intuitive user interface that enables users to interactively explore and analyze information. The ease-of-use and flexibility of QlikView enables a broad set of business users, such as sales, marketing, human resources and finance professionals; executive management and other managers; operations, support and IT staff; data analysts and statisticians. Examples of QlikView users include:
 
  •  Operations Planner — uses QlikView to prepare inventory forecasts for a global food manufacturer resulting in significant improvement in forecast accuracy and reduced transportation and workforce costs
 
  •  Pharmaceutical Sales Representative — uses QlikView to access current industry sales trends and doctor prescription history while on a sales call with a busy physician
 
  •  Chief Information Officer — uses QlikView to analyze IT spending and budget information to identify opportunities for cost savings and service level improvement
 
  •  Police Sergeant — uses QlikView to maintain a consolidated view of crime levels and optimize staffing allocations to dispatch police into high crime areas
 
We have a differentiated business model designed to accelerate the adoption of our product by reducing the time and cost to purchase and implement our software. Our low risk approach to product sales, which offers free product downloads to individuals and a 30-day money back guarantee upon purchase, provides a needed alternative to costly, all-or-nothing, traditional business intelligence sales model. We initially focus on specific business users or departments within a prospective customer’s organization and seek to solve a targeted business need. After demonstrating QlikView’s benefits to initial adopters within an organization, we work to expand sales of our product to other business units, geographies and use cases with the long-term goal of broad organizational deployment. According to a 2009 IDC survey, 44% of our customers deploy QlikView in less than one month and 77% of our customers deploy QlikView in less than three months.3 In comparison, our customers have indicated to us that their prior implementations of traditional business intelligence tools often take up to 18 months. We have a diversified distribution model that consists of a direct sales force and a partner network that includes resellers, OEMs and systems integrators. Additionally, our online QlikCommunity provides us with a loyal and growing network of users who promote our software, provide support for other users and contribute valuable insights and feedback for our product development efforts.
 
For the years ended December 31, 2009, 2008 and 2007, our revenue was $157.4 million, $118.3 million and $80.6 million, representing year-over-year growth of 33% in 2009 and 47% in 2008. For the three months ended March 31, 2010, our revenue was $43.8 million, representing 66% growth over the same period the prior year. In addition, we generated operating income of $13.2 million, $1.6 million and $0.1 million for the years ended


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December 31, 2009, 2008 and 2007. For the three months ended March 31, 2010, we generated operating income of $2.0 million, compared to an operating loss of $6.4 million for the three months ended March 31, 2009. For the year ended December 31, 2009 and the three months ended March 31, 2010, software license and maintenance revenue comprised 90% and professional services and training comprised 10% of our total revenue.
 
Our Industry
 
  Use of Business Intelligence and Data Analytics Tools
 
We believe that to succeed in today’s increasingly competitive markets, businesses must accelerate the rate at which they identify and respond to changing business conditions. An organization’s market agility and ultimate success in the global marketplace are dependent upon its ability to harness the power of increasing volumes of information to make effective business decisions. In seeking to gain an information advantage, many organizations have implemented a range of solutions, including business intelligence and data analytics tools. According to a 2009 IDC report, the business intelligence market is projected to grow to $8.6 billion in 2010; however, we believe most traditional business intelligence tools were developed for data analysts and other quantitative professionals, not business users. We believe that these traditional business intelligence tools often fail to provide timely and critical insights to business professionals due to inflexible data architecture, lack of broad usability and substantial implementation time. As a result of the limitations of traditional business intelligence tools, many business users have turned to spreadsheets to help them perform data analysis. Business users have adopted spreadsheets for many applications due to their wide availability; however, these general productivity tools were not specifically designed to facilitate interactivity, aggregation or analysis of data for decision making.
 
  Trends Driving Adoption of Business Intelligence and Data Analytics Solutions
 
The use and importance of business intelligence and data analytics software within organizations of all sizes has increased significantly for several reasons, including:
 
Exponential Growth in Data Available for Analysis.  Over the last two decades, organizations have made significant investments in automating business processes with software applications that generate substantial amounts of data which must be manipulated, analyzed and made accessible to be useful to decision makers. However, this data is often stored in different formats making it challenging to efficiently analyze the data and gain insight from it without using powerful data analytics solutions. A 2009 report by IDC indicated that enterprise data volume has grown at a 52% compounded annual growth rate since 2005.
 
Disparate Data Sources.  In today’s highly competitive marketplace, companies are expanding operations through geographic diversification, acquisitions and partnerships. The frequency of these strategic activities can result in a complex web of infrastructure and software systems within an organization. In addition, companies are more closely integrating their systems with those of their customers, partners and suppliers and adopting new software applications to improve business efficiency. As a result, large amounts of data are stored in various repositories across an extended network creating significant data aggregation challenges. Organizations often deploy a number of tools, including sophisticated data integration software, purpose-built data warehouses and business intelligence systems, to efficiently and reliably aggregate, synchronize and analyze this disparate business data.
 
Decentralized Decision-Making.  We believe that many organizations are shifting towards decentralized decision-making in order to more efficiently respond to changing industry trends and competitive threats. This shift has created the need for data analysis tools that support employees at all levels of the organization as they assume more responsibility for making critical business decisions. Additionally, we believe that increases in the power and performance of mobile networks and devices will drive demand for mobile access to business data. The widespread use of simple yet robust personal software applications has driven demand from business users for intuitive analytical tools to make faster and better decisions.


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Traditional Software Tools are Inadequate
 
Although there has been increasing adoption of business intelligence and data analytics tools, we believe that most of these traditional tools are inadequate to meet the needs of users and face the following limitations:
 
Analysis Tools Not Designed for Business Users.  Most traditional business intelligence tools were developed specifically for data analysts and other quantitative professionals. These systems require sophisticated programming skills to construct or modify predefined, inflexible data sets, known as “data cubes.” These tools are used to produce static reports which the business user cannot easily modify or explore in an interactive manner. A typical business user does not possess the skills or authority needed to modify the underlying data cube and therefore must engage their IT departments to reconfigure the analysis to produce the requested information between each decision cycle. As a result, business users often do not have access to critical data in a timely manner and may miss important insights and opportunities.
 
Highly Inflexible Solutions are Difficult to Implement and Maintain.  Traditional business intelligence solutions require the integration of large volumes of data stored across an organization and its partners and the development of a pre-defined summarization of the data (or data warehouse) to support static query and reporting tools. These tasks can be time-consuming and complex and often require significant professional services support to complete. In addition, traditional business intelligence solutions can be difficult to update and require substantial investments to refresh the underlying data.
 
Substantial Total-Cost-of-Ownership.  Organizations incur significant hardware, software and professional services costs to deploy and maintain traditional business intelligence solutions. We believe the average business intelligence platform implementation takes approximately 18 months from the time of initial purchase. According to a 2009 report, Gartner estimates that the cost of development for business intelligence and data warehouse applications is about three to five times the cost of the software.1 These initial and ongoing costs result in a substantial total-cost-of-ownership for many traditional business intelligence applications. Most providers of traditional business intelligence tools rely upon professional services revenue for a large portion of their total revenue, and thus have little incentive to migrate to a more customer friendly license-based model or to solutions that are simple to install and easy-to-use.
 
Spreadsheets Not Suited for Data Analysis and Lack Reliability.  Spreadsheets have been widely adopted by business users for data analysis because they are readily available. However, spreadsheets are general purpose business productivity tools designed for data input and calculation. The performance of spreadsheets declines when analyzing large data sets or performing real-time, dynamic calculations. Spreadsheets are often shared and edited by numerous parties, resulting in multiple versions of similar material. This lack of version control causes inconsistencies in analysis, an inability to audit workflows and significant data reliability challenges. Furthermore, spreadsheets lack sophisticated data security features and can cause a number of data security challenges given they can be easily shared via email or detachable storage drives.
 
The Opportunity for the QlikView Solution
 
QlikView addresses a broader market opportunity than solely traditional users of business intelligence. According to a 2009 IDC report, the business intelligence market is projected to grow to $8.6 billion in 2010. We believe that published market size estimates exclude the vast majority of business users, as most of these professionals do not use traditional business intelligence solutions due to their cost and complexity. According to a 2009 Gartner report, 28% of total potential users within organizations use business intelligence software.1 We believe that these potential users instead have adopted common office productivity software tools for data analysis tasks and that these users could benefit from a business intelligence tool with QlikView’s capabilities and accessibility.
 
The market for our software platform extends beyond large enterprises which have historically been the most frequent adopters of traditional business intelligence tools. The substantial cost and complexity of these traditional tools have limited adoption by small businesses and medium-sized enterprises. These potential users and customer segments represent a large, underpenetrated market opportunity that we believe will increasingly deploy powerful, enterprise-class software platforms if they are lower cost and easy to use. Based on our analysis of 2006 United


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States Census Bureau data, there are approximately 18,000 large and medium-sized enterprises (organizations with over 500 employees) and approximately 7.2 million small businesses (organizations with ten to 500 employees) in the United States. We believe that a significant number of these organizations are potential users of QlikView. In addition to the business intelligence market, we also believe QlikView can be used to satisfy business users’ needs in adjacent markets, such as search and discovery software, which according to a 2009 IDC report is projected to grow to $2.4 billion in 2010.
 
Our Solution
 
QlikView is an innovative business intelligence solution that combines enterprise-class analytics with the simplicity and ease-of-use found in office productivity software tools. We designed QlikView to enable business users in organizations of all sizes to make faster and better decisions. A 2009 IDC study found that QlikView users achieved an average of 186% return on investment, or ROI, on their QlikView projects as well as a 23% increase in cash flow, 20% decrease in operating costs and 34% increase in productivity.3 The key differentiators of our solution include:
 
Intuitive Experience Drives Broad Adoption.  QlikView empowers business users with sophisticated analytic capabilities delivered through an easy-to-use, intuitive user interface. Unlike traditional business intelligence tools, which typically require advanced programming by IT professionals to create static data reports, QlikView allows the business user to search associatively and define visual charts through simple point-and-click technology. Our user interface extends the power of data analytics to the business user and drives QlikView usage and adoption.
 
Faster Decision Cycles Increase Business Agility.  QlikView provides customers with the tools to make faster, better decisions that help improve business performance. According to a 2009 IDC survey, 44% of our customers deploy QlikView in less than one month and 77% of our customers deploy QlikView in less than three months.3 Our customers have indicated to us that their prior implementation of traditional business intelligence tools often take up to 18 months. Our deployment time significantly shortens time-to-value for our customers. In addition, after the initial installation the customer’s analysis can be rapidly updated as underlying data evolves and analytic requirements change. Furthermore, QlikView’s in-memory associative search technology makes calculations in real time enabling business users to intuitively interrogate and analyze data, which reduces decision cycles.
 
Lower Total-Cost-of-Ownership Yields Higher ROI.  QlikView has approximately 47% of the total cost of ownership of a “generic” business intelligence project, according to a 2009 IDC report.2 These savings are driven by reduced expenditures across hardware, software and services from implementation through ongoing maintenance and support. Traditional business intelligence tools are typically comprised of a number of disparate software components. QlikView is a single, cohesive product that facilitates many types of analysis, whether dashboards, analytic applications or reports, in a single user interface with a common look and feel. QlikView can be implemented in a self-service manner and runs independently with limited IT support and without extensive infrastructure. As a result, QlikView customers have reported, according to a 2009 IDC report, spending on average 39% of the professional services costs required for traditional business intelligence solutions.4
 
Highly Scalable In-Memory Architecture Leverages Hardware Advances.  QlikView’s in-memory associative technology benefits from two important computer hardware trends: 64-bit computing, which increases the amount of memory available on computers, and multi-core central processing units, or CPUs, which allow for parallel processing of complex calculations. Because of these capabilities, QlikView is able to store data in memory and perform real-time calculations on a massive volume of data from disparate sources. It is our expectation that the amount of available memory and number of CPU cores and processing speed will continue to increase in the future. These expected improvements will drive QlikView’s future performance with minimal incremental investment because we perform calculations in memory and on multiple cores in parallel. Our platform integrates with nearly all data sources and can scale from a single user to enterprise deployments without requiring significant additional infrastructure.