10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-35433

BAZAARVOICE, INC.

(Exact name of registrant as specified in its charter)

State of Delaware	20-2908277
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3900 N. Capital of Texas Highway, Suite 300 Austin, Texas	78746-3211
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (512) 551-6000

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of the registrant’s common stock outstanding as of August 29, 2014 was 78,083,156.

Bazaarvoice, Inc.

Table of Contents

		Page
Part I.	Financial Information
Item 1.	Condensed Consolidated Financial Statements:
	Unaudited Condensed Consolidated Balance Sheets as of July 31, 2014 and April 30, 2014		1
	Unaudited Condensed Consolidated Statements of Operations for the three months ended July 31, 2014 and 2013		2
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended July  31, 2014 and 2013		3
	Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three months ended July 31, 2014		4
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended July 31, 2014 and 2013		5
	Notes to Unaudited Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		29
Item 4.	Controls and Procedures		29
Part II.	Other Information		31
Item 1.	Legal Proceedings		31
Item 1A.	Risk Factors		32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		50
Item 5.	Other Information		51
Item 6.	Exhibits		52
Signature			53

Bazaarvoice, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except shares and per share data)

(unaudited)

	July 31, 2014			April 30, 2014
Assets
Current assets:
Cash and cash equivalents	$	24,704		$	31,934
Restricted cash		500			604
Short-term investments		67,898			40,700
Accounts receivable, net of allowance for doubtful accounts of $2,432 and $2,324 as of July 31, 2014 and April 30, 2014, respectively		38,062			39,099
Prepaid expenses and other current assets		12,861			8,212
Assets held for sale		—			33,745
Total current assets		144,025			154,294
Property, equipment and capitalized internal-use software development costs, net		17,840			17,005
Goodwill		139,155			139,155
Acquired intangible assets, net		12,915			13,388
Other non-current assets		3,761			3,428
Total assets	$	317,696		$	327,270
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,777		$	3,346
Accrued expenses and other current liabilities		26,417			27,071
Revolving line of credit		27,000			27,000
Deferred revenue		57,074			54,951
Liabilities held for sale		—			3,621
Total current liabilities		114,268			115,989
Deferred revenue less current portion		1,947			1,722
Deferred tax liability, long-term		1,670			1,730
Other liabilities, long-term		1,048			1,367
Total liabilities		118,933			120,808
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock – $0.0001 par value; 150,000,000 shares authorized, 78,271,861 shares issued and 78,021,861 shares outstanding as of July 31, 2014; 150,000,000 shares authorized, 77,887,663 shares issued and 77,637,663 shares outstanding at April 30, 2014		8			8
Treasury stock, at cost – 250,000 shares at July 31, 2014 and April 30, 2014		—			—
Additional paid-in capital		402,022			398,201
Accumulated other comprehensive income		373			328
Accumulated deficit		(203,640	)		(192,075	)
Total stockholders’ equity		198,763			206,462
Total liabilities and stockholders’ equity	$	317,696		$	327,270

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

Bazaarvoice, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except net loss per share data)

(unaudited)

	Three Months Ended July 31,
	2014			2013
Revenue	$	45,977		$	40,319
Cost of revenue		16,356			12,117
Gross profit		29,621			28,202
Operating expenses:
Sales and marketing		20,995			20,996
Research and development		9,730			8,924
General and administrative		7,893			8,536
Acquisition-related and other		492			7,504
Amortization of acquired intangible assets		309			282
Total operating expenses		39,419			46,242
Operating loss		(9,798	)		(18,040	)
Other income (expense), net:
Interest income		6			66
Other expense		(504	)		(63	)
Total other income (expense), net		(498	)		3
Loss from continuing operations before income taxes		(10,296	)		(18,037	)
Income tax expense (benefit)		12			(391	)
Net loss from continuing operations	$	(10,308	)	$	(17,646	)
Income (loss) from discontinued operations, net of tax		(1,257	)		278
Net loss applicable to common stockholders	$	(11,565	)	$	(17,368	)
Net loss per share applicable to common stockholders:
Continuing operations	$	(0.13	)	$	(0.23	)
Discontinued operations		(0.02	)		—
Basic and diluted loss per share:	$	(0.15	)	$	(0.23	)
Basic and diluted weighted average number of shares outstanding		77,766			73,983

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

Bazaarvoice, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three Months Ended July 31,
	2014			2013
Net loss from continuing operations	$	(10,308	)	$	(17,646	)
Other comprehensive gain (loss), net of tax:
Foreign currency translation adjustment		(2	)		(61	)
Unrealized gain (loss) on investments		47			(48	)
Total other comprehensive gain (loss), net of tax		45			(109	)
Comprehensive loss	$	(10,263	)	$	(17,755	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

Bazaarvoice, Inc.

Condensed Consolidated Statement of Changes in Stockholders’ Equity

(in thousands)

(unaudited)

	Common Stock				Treasury Stock					Additional		Accumulated Other						Total
	Number of Shares		Amount		Number of Shares			Amount		Paid-in Capital		Comprehensive Income (Loss)			Accumulated Deficit			Stockholders’ Equity (Deficit)
Balance at April 30, 2014		77,888	$	8		(250	)	$	—	$	398,201	$	328		$	(192,075	)	$	206,462
Excess tax benefit related to stock-based expense		—		—		—			—		1		—			—			1
Stock-based expense		—		—		—			—		3,246		—			—			3,246
Exercise of stock options and vested restricted stock units		384		—		—			—		574		—			—			574
Change in foreign currency translation adjustment		—		—		—			—		—		(2	)		—			(2	)
Change in unrealized gain on investments		—		—		—			—		—		47			—			47
Net loss applicable to common stockholders		—		—		—			—		—		—			(11,565	)		(11,565	)
Balance at July 31, 2014		78,272		8		(250	)		—		402,022		373			(203,640	)		198,763

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Bazaarvoice, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months Ended July 31,
	2014			2013
Operating activities:
Net loss	$	(11,565	)	$	(17,368	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense		2,810			3,476
Loss on disposal of discontinued operations, net of tax		1,537			—
Stock-based expense		3,246			4,008
Bad debt expense		601			566
Excess tax benefit related to stock-based expense		(1	)		(90	)
Other non-cash expense		169			82
Changes in operating assets and liabilities:
Accounts receivable		435			2,507
Prepaid expenses and other current assets		(145	)		(356	)
Other non-current assets		(319	)		(523	)
Accounts payable		208			(474	)
Accrued expenses and other current liabilities		(2,388	)		1,729
Deferred revenue		2,349			(2,432	)
Other liabilities, long-term		(349	)		(239	)
Net cash used in operating activities		(3,412	)		(9,114	)
Investing activities:
Acquisitions, net of cash acquired, and purchase of intangible asset		—			(205	)
Proceeds from sale of discontinued operations		25,500			—
Purchases of property, equipment and capitalized internal-use software development costs		(3,280	)		(3,963	)
Purchases of short-term investments		(38,858	)		(25,161	)
Proceeds from maturities of short-term investments		11,655			21,250
Proceeds from sale of short-term investments		—			16,018
Net cash provided by (used in) investing activities		(4,983	)		7,939
Financing activities:
Proceeds from employee stock compensation plans		1,156			2,837
Excess tax benefit related to stock-based expense		1			90
Net cash provided by financing activities		1,157			2,927
Effect of exchange rate fluctuations on cash and cash equivalents		8			(57	)
Net change in cash and cash equivalents		(7,230	)		1,695
Cash and cash equivalents at beginning of period		31,934			25,045
Cash and cash equivalents at end of period	$	24,704		$	26,740
Supplemental disclosure of other cash flow information:
Cash paid for income taxes	$	461		$	357
Cash paid for interest		222			—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

These Condensed Consolidated Statement of Cash Flows include combined cash flows from continuing operations along with discontinued operations.

5

Bazaarvoice, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Nature of Operations

Bazaarvoice, Inc. (“Bazaarvoice” or the “Company”) powers a network that connects brands and retailers to the authentic voices of people where they shop. Bazaarvoice, which literally means “voice of the marketplace,” was founded on the premise that online word of mouth is critical to consumers and businesses because of its influence on purchasing decisions, both online and offline. The Company’s technology platform collects and displays ratings and reviews, questions and answers and stories from customers along with visual commerce capabilities that collectively amplify the voices of the consumers into the shopping experience – before, during and after a purchase. The Company helps clients leverage social data derived from online word of mouth content to increase sales, acquire new customers, improve marketing effectiveness, enhance consumer engagement across channels, increase success of new product launches, improve existing products and services, effectively scale customer support, decrease product returns and enable retailers to launch and manage on-site advertising solutions and site monetization strategies.

2. Summary of Significant Accounting Policies

Fiscal Year

The Company’s fiscal year end is April 30. References to fiscal year 2015, for example, refer to the fiscal year ending April 30, 2015.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The Company’s significant accounting policies and recent accounting pronouncements are described in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2014, filed on June 26, 2014. Therefore, these unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2014.

The condensed consolidated balance sheet data as of April 30, 2014 was derived from the audited consolidated financial statements which are included in the Company’s Annual Report on form 10-K for the fiscal year ended April 30, 2014, filed on June 26, 2014.

On July 2, 2014, the Company completed the sale of its PowerReviews business. The operating results of this business have been presented as discontinued operations for the three month periods ended July 31, 2013 and July 31, 2014. Certain prior year amounts have been reclassified to conform to the current year presentation as a result of discontinued operations (See Note 3). The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations for all periods presented. All other disclosures and amounts in the notes to the condensed consolidated financial statements relate to the Company’s continuing operations, unless otherwise indicated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, allowance for doubtful accounts, income taxes, stock-based expense, accrued liabilities, useful lives of property and equipment and capitalized software development costs, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from the estimates made by management with respect to these items.

6

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements and notes have been prepared in accordance with GAAP, as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification for interim financial information and Article 10 of Regulation S-X issued by the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by GAAP for annual fiscal reporting periods. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and cash flows. The results of operations for the three months ended July 31, 2014 are not necessarily indicative of results that may be expected for the fiscal year ending April 30, 2015 or any other period.

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, and trade receivables. The Company’s cash and cash equivalents are placed with high-credit-quality financial institutions and issuers, and at times may exceed federally insured limits. The Company has not experienced any loss relating to cash and cash equivalents in these accounts. The Company maintains an allowance for doubtful accounts receivable balances, performs periodic credit evaluations of its clients and generally does not require collateral of its clients.

No single client accounted for 10% or more of accounts receivable as of July 31, 2014 or April 30, 2014. No single client accounted for 10% or more of total revenue for the three months ended July 31, 2014 or 2013.

Revenue Recognition

In general, the Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the client, (iii) the fee is fixed or determinable and (iv) collectability is reasonably assured.

The Company generates revenue primarily from sales of the following services:

Software as a Service (“SaaS”)

The Company generates SaaS revenue principally from the sale of subscriptions to its hosted social commerce platform and sells its application services pursuant to service agreements that are generally one year in length. The client does not have the right to take possession of the software supporting the application service at any time, nor do the arrangements contain general rights of return. The Company accounts for these arrangements by recognizing the arrangement consideration for the application service ratably over the term of the related agreement, commencing upon the later of the agreement start date or when all revenue recognition criteria have been met.

Media

Media revenue consists primarily of fees charged to advertisers when their advertisements are displayed on websites owned by various third-parties (“Publishers”). The Company has revenue sharing agreements with these Publishers. The Company receives a fee from the advertisers and pays the Publishers based on their contractual revenue-share. Media revenues earned from the advertisers are recognized on a net basis as the Company has determined that it is acting as an agent in these transactions.

The Company’s agreements do not currently combine SaaS and Media services.

Deferred Revenue

Deferred revenue consists of billings or payments in advance of revenue recognition and is recognized as revenue recognition criteria are met. The Company invoices clients in a variety of installments and, consequently, the deferred revenue balance does not represent the total contract value of its non-cancelable subscription agreements. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue and the remaining portion is recorded as non-current deferred revenue.

7

Cash and Cash Equivalents

The Company considers all highly liquid investments acquired with an original maturity of three months or less at the date of purchase and readily convertible to known amounts of cash to be cash equivalents. Cash and cash equivalents are deposited with banks in demand deposit accounts. Cash equivalents are stated at cost, which approximates market value, because of the short maturity of these instruments.

Short-term Investments

Short-term investments consist of U.S. Treasury securities and agency securities that are a guaranteed obligation of the U.S. Government and are classified as available-for-sale securities. The Company may or may not hold securities with stated maturities greater than one year until maturity. After consideration of its risks versus reward objectives, as well as its liquidity requirements, the Company may sell these securities prior to their stated maturities. As the Company views these securities as available to support current operations, it has classified all available-for-sale securities as short-term. Available-for-sale securities are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. For the periods presented, realized and unrealized gains and losses on short-term investments were not material. An impairment charge is recorded in the consolidated statements of operations for declines in fair value below the cost of an individual investment that are deemed to be other-than-temporary. The Company assesses whether a decline in value is temporary based on the length of time that the fair market value has been below cost, the severity of the decline, as well as the intent and ability to hold, or plans to sell, the investment. There have been no impairment charges recognized related to short-term investments for the three months ended July 31, 2014 or 2013.

Restricted Cash

The Company’s restricted cash consists of a standby letter of credit under its Pledge and Security Agreement for corporate credit card services, secured by its money market account (See Note 9).

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate their respective fair values, due to the short-term nature of the instruments.

The Company applies the authoritative guidance on fair value measurements for financial assets and liabilities. The guidance defines fair value, thereby eliminating inconsistencies in guidance found in various prior accounting pronouncements, and increases disclosures surrounding fair value calculations. The guidance establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company.

Level 2: Inputs that are observable in the marketplace other than those inputs classified as Level 1.

Level 3: Inputs that are unobservable in the marketplace which require the Company to develop its own assumptions.

Derivative Financial Instruments

As a result of the Company’s international operations, it is exposed to various market risks that may affect its consolidated results of operations, cash flows and financial position. These market risks include, but are not limited to, fluctuations in currency exchange rates. The Company’s primary foreign currency exposures are in Euros and British Pound Sterling. The Company faces exposure to adverse movements in currency exchange rates as the financial results of certain of its operations are translated from local currency into U.S. dollars upon consolidation. Additionally, foreign exchange rate fluctuations on transactions denominated in currencies other than the functional currency result in gains and losses that are reflected in income.

The Company may enter into derivative instruments to hedge certain net exposures of non-U.S. dollar-denominated assets and liabilities, even though it does not elect to apply hedge accounting or hedge accounting does not apply. Gains and losses resulting from a change in fair value of these derivatives are reflected in income in the period in which the change occurs and are recognized on the consolidated statement of operations in other income (expense). Cash flows from these contracts are classified within net cash used in operating activities on the consolidated statements of cash flows.

The Company does not use financial instruments for trading or speculative purposes. The Company recognizes all derivative instruments on the balance sheet at fair value, and its derivative instruments are generally short-term in duration.

8

Derivative contracts were not material as of July 31, 2014 and April 30, 2014. The Company is exposed to the risk that counterparties to derivative contracts may fail to meet their contractual obligations.

Property, Equipment and Capitalized Internal-Use Software Development Costs

Property and equipment is carried at cost less accumulated depreciation and amortization.

Depreciation and amortization is computed utilizing the straight-line method over the estimated useful lives of the related assets as follows:

Computer equipment	3 years
Furniture and fixtures	5 years
Office equipment	5 years
Software	3 years
Leasehold improvements	Shorter of estimated useful life or the lease term

When depreciable assets are sold or retired, the related cost and accumulated depreciation are removed from the accounts. Any gain or loss is included in other income (expense), net in the Company’s statement of operations. Major additions and betterments are capitalized. Maintenance and repairs which do not materially improve or extend the lives of the respective assets are charged to operating expenses as incurred.

The Company capitalizes certain development costs incurred in connection with its internal-use software. These capitalized costs are primarily related to its proprietary social commerce platform that is hosted by the Company and accessed by its clients on a subscription basis. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, direct internal and external costs are capitalized until the software is substantially complete and ready for its intended use. Maintenance and training costs are expensed as incurred. Internal-use software development costs are amortized on a straight-line basis over its estimated useful life, generally three years, into cost of revenue.

Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments

The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during the fourth quarter or more often if and when circumstances indicate that goodwill may not be recoverable (See Note 6).

Intangible assets are amortized over their useful lives. Each period the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. The carrying amounts of these assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets then the Company will recognize an impairment charge.

The Company evaluates the recoverability of its long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value (See Note 7).

Stock-Based Expense

The Company records stock-based expense based upon the fair value for all stock options, restricted stock units and restricted stock awards issued to all persons to the extent that such options vest. The fair value of restricted stock units and restricted stock awards is based on the number of shares granted and the closing price of our common stock on the date of grant. The fair value of stock options is calculated by the Black-Scholes option pricing model.

The Company recognizes stock-based expense on a straight-line basis over the respective vesting period, net of estimated forfeitures. The Company recognizes stock-based expense for shares issued pursuant to its Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the offering period of six months. The Company includes an estimated effect of forfeitures in its compensation cost and updates the estimated forfeiture rate through the final vesting date of the awards.

The Company currently recognizes an insignificant tax benefit resulting from compensation costs expensed in the financial statements, however the Company provides a valuation allowance against the majority of deferred tax asset resulting from this type of temporary difference since it expects that it will not have sufficient future taxable income to realize such benefit.

9

Income Taxes

The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities will be recognized in the period that includes the enactment date. A valuation allowance is established against the deferred tax assets to reduce their carrying value to an amount that is more likely than not to be realized.

Foreign Currency Translation

The U.S. dollar is the reporting currency for all periods presented. The functional currency of the Company’s foreign subsidiaries is generally the local currency. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are translated at the average rate during the period. Equity transactions are translated using historical exchange rates. Adjustments resulting from translating foreign currency financial statements into U.S. dollars are included in accumulated other comprehensive loss. Foreign currency transaction gains and losses are included in net loss for the period.

There have been no significant changes or updates to the Company’s significant accounting policies disclosed in its Annual report on Form 10-K the fiscal year ended April 30, 2014, filed on June 26, 2014.

Recent Accounting Pronouncements

Stock-based expense

In June 2014, the FASB issued Accounting Standards Update 2014-12, “Accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period,” (“ASU 2014-12”) which requires performance-based awards with a performance target that affects vesting and that could be achieved after an employee completes the requisite service period to be accounted for as a performance condition. If performance targets are clearly defined and it is probable that the performance condition will be achieved, stock-based expense should be recognized over the remaining requisite service period. This guidance will be effective for fiscal year ending April 30, 2017 with early adoption permitted. The Company is currently evaluating the impact of this standards update on the Company’s condensed consolidated financial statements.

Revenue

In May 2014, the FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”) which provides updated, comprehensive revenue recognition guidance for contracts with customers, including a new principles-based five step framework that eliminates much of the industry-specific guidance in current accounting literature. Under ASU 2014-09, revenue recognition is based on a core principle that companies recognize revenue in an amount consistent with the consideration it expects to be entitled to in exchange for the transfer of goods or services. The standards update also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of recognized revenue. This guidance will be effective for fiscal year ending April 30, 2018 and may be applied on either a full or modified retrospective basis, with early adoption not permitted. The Company is currently evaluating the impact of this standards update on the Company’s condensed consolidated financial statements.

Discontinued Operations

In April 2014, the FASB issued Accounting Standards Update 2014-08, “Reporting of Discontinued Operations and Disclosures of Disposals of Components of an entity,” (“ASU 2014-08”) which changes the criteria for determining which disposals can be presented as discontinued operations and requires new disclosures for individually significant dispositions that do not quality as discontinued operations. ASU 2014-08 is effective prospectively for fiscal years and interim reporting periods within those years beginning after December 15, 2014, with early adoption permitted for transactions that have not been reported in financial statements previously issued or available for issuance. The standard will be effective for the fiscal year ending April 30, 2016. The standard is not expected to have a material impact on the Company’s condensed consolidated financial statements.

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3. Discontinued Operations

On June 12, 2012, the Company acquired PowerReviews, a provider of social commerce solutions based in San Francisco, California. The total consideration paid for this transaction was $150.8 million, including the issuance of 6.4 million shares of the Company’s common stock and assumption of vested and unvested options to purchase the common stock of PowerReviews equivalent to options to purchase 1.7 million shares of the Company’s common stock, but excluding the potential cash proceeds that may arise from the exercise of these assumed options. On January 10, 2013, the DOJ filed a complaint against the Company with the U.S. District Court for the Northern District of California, San Francisco Division (the “Court”), alleging that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18 and seeking the Company’s divestiture of assets sufficient to create a competing business that can replace the competitive significance of PowerReviews in the marketplace. On January 8, 2014, the Court ruled that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18. On June 4, 2014, the Company entered into a definitive agreement to divest PowerReviews, LLC (“PowerReviews”), the successor to PowerReviews, to Wavetable Labs, LLC (“Wavetable”) for $30.0 million in cash, $4.5 million of which is to be held in escrow as partial security for the Company’s indemnification obligations under the definitive agreement. Any reduction in proceeds of the escrow would be recorded as an additional loss. The terms of this transaction were approved by the DOJ on June 26, 2014, and the transaction was completed on July 2, 2014. Wavetable subsequently changed its name to PowerReviews. As a result of the foregoing, PowerReviews revenues, related expenses and loss on disposal, net of tax, are components of “loss from discontinued operations” in the Condensed Consolidated Statements of Operations. As of April 30, 2014, on the Condensed Consolidated Balance Sheets, the assets and liabilities of the discontinued operations of PowerReviews were presented as ‘Assets held for sale’ and ‘Liabilities held for sale,’ respectively. The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations for all periods presented.

The Company incurred a total loss on the disposal of the PowerReviews business of $10.7 million; of which, $9.2 million was recognized as an estimated loss on disposal of discontinued operations during the three months ended April 30, 2014. The additional $1.5 million loss was primarily caused by a decrease of $0.5 million in estimated cash proceeds and incremental transaction costs of $0.4 million. The Company recognized the additional loss of $1.5 million in the current quarter.

Summarized results from discontinued operations were as follows (in thousands):

	Three Months Ended July 31,
	2014			2013
Revenues from discontinued operations	$	2,535		$	4,252
Income from discontinued operations before income taxes	$	303		$	446
Income tax expense		23			168
Net income from discontinued operations		280			278
Loss on disposal of discontinued operations, net of tax		(1,537	)		—
Net income (loss) from discontinued operations, net of tax	$	(1,257	)	$	278

The carrying amounts of the major classes of assets and liabilities of discontinued operations were as follows (in thousands):

	July 2, 2014		April 30, 2014
ASSETS:
Restricted cash	$	104	$	—
Accounts receivable, net		1,097		1,036
Prepaid expenses and other current assets		48		49
Total current assets		1,249		1,085
Property and equipment, net		37		37
Goodwill		9,002		9,002
Acquired intangible assets, net		32,813		32,813
Total assets	$	43,101	$	42,937
LIABILITIES:
Accounts payable	$	76	$	221
Accrued expenses and other current liabilities		823		895
Deferred revenue		2,230		2,505
Total Liabilities	$	3,129	$	3,621

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The Company recorded a loss on the disposal of discontinued operations of $1.5 million, net of tax, in the current quarter which was calculated as follows (in thousands):

Cash consideration	$	30,000
Less:
Basis in net assets as of July 2, 2014		39,972
Costs incurred directly attributable to the transaction		1,039
Loss before income taxes		(11,011	)
Income tax benefit		(282	)
Loss on disposal of discontinued operations, net of taxes		(10,729	)
Loss on disposal of discontinued operations, net of taxes, previously recognized		9,192
Loss on disposal of discontinued operations, net of tax, recognized in current period	$	(1,537	)

The carrying amount of assets held for sale in the condensed consolidated balance sheet was calculated as follows (in thousands):

	April 30, 2014
Total assets of discontinued operations	$	42,937
Estimated loss on disposal of discontinued operations, net of tax		(9,192	)
Assets held for sale	$	33,745

The sale of the PowerReviews business was completed on July 2, 2014; as such, there were no assets held for sale as of July 31, 2014. The $4.5 million held in escrow is recorded as a receivable in “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheet as of July 31, 2014.

4. Fair Value of Financial Assets and Liabilities

The following table summarizes the Company’s cash and cash equivalents as of July 31, 2014 and April 30, 2014 (in thousands):

	July 31, 2014		April 30, 2014
Demand deposit accounts	$	21,674	$	24,721
Money market funds		1,442		6,971
Certificates of deposit		—		242
Municipal bonds		887		—
U.S. Treasury bills		701		—
Total cash and cash equivalents	$	24,704	$	31,934

The following table summarizes the Company’s short-term investments as of July 31, 2014 (in thousands):

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Certificates of deposit	$	7,230	$	1	$	(7	)	$	7,224
Municipal bonds		3,377		31		(1	)		3,407
Commercial paper		5,997		—		(1	)		5,996
U.S. Treasury notes		51,258		14		(1	)		51,271
Total short-term investments	$	67,862	$	46	$	(10	)	$	67,898

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The following table summarizes the Company’s short-term investments as of April 30, 2014 (in thousands):

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Certificates of deposit	$	7,466	$	17	$	(9	)	$	7,474
U.S. Treasury notes		33,226		2		(2	)		33,226
Total short-term investments	$	40,692	$	19	$	(11	)	$	40,700

All short-term investments had original maturity dates of less than 12 months at July 31, 2014 and April 30, 2014. Realized gains and losses from the sale of short-term investments were not material for the three months ended July 31, 2014 and 2013.

The following table summarizes the fair value of the Company’s financial assets and liabilities that were measured on a recurring basis as of July 31, 2014 and April 30, 2014 (in thousands):

	Fair Value Measurements at July 31, 2014								Fair Value Measurements at April 30, 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	1,442	$	—	$	—	$	1,442	$	6,971	$	—	$	—	$	6,971
Certificates of deposit		—		—		—		—		242		—		—		242
Municipal bonds		—		887		—		887		—		—		—		—
U.S. Treasury bills		701		—		—		701		—		—		—		—
Total cash equivalents		2,143		887		—		3,030		7,213		—		—		7,213
Restricted cash		500		—		—		500		604		—		—		604
Short-term investments:
Certificates of deposit		—		7,224		—		7,224		—		7,474		—		7,474
Municipal bonds		—		3,407		—		3,407		—		—		—		—
Commercial paper		—		5,996		—		5,996		—		—		—		—
U.S. Treasury notes		51,271		—		—		51,271		33,226		—		—		33,226
Total short-term investments		51,271		16,627		—		67,898		33,226		7,474		—		40,700
Total assets	$	53,914	$	17,514	$	—	$	71,428	$	41,043	$	7,474	$	—	$	48,517

The Company measures certain assets, including property and equipment, goodwill and intangible assets, at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. The Company evaluates transfers between levels at the end of the fiscal year and assumes that any identified transfers are deemed to have occurred at the end of the reporting year. There were no transfers between levels in any of the periods presented.

5. Business Combinations

On April 15, 2014, during the fourth quarter of fiscal year 2014, the Company acquired FeedMagnet Inc. (“FeedMagnet”) for $9.3 million in cash. FeedMagnet was a privately-owned social media curation company that enables brands to collect, curate and display consumer-generated images, video and social content on their websites and other marketing properties. The Company accounted for the FeedMagnet acquisition using the acquisition method of accounting. As of July 31, 2014, the Company did not record any adjustments to the preliminary purchase price allocation.

6. Goodwill

As of July 31, 2014 and April 30, 2014, the Company had goodwill in the amount of $139.2 million. The Company assesses goodwill for impairment annually in the fourth fiscal quarter, or more frequently if other indicators of potential impairment arise. There were no potential indicators of impairment as of July 31, 2014.

7. Acquired Intangible Assets, net

Acquired intangible assets, net, as of July 31, 2014 and April 30, 2014 for continuing operations are as follows (in thousands):

	July 31, 2014							April 30, 2014
	Gross Fair		Accumulated			Net Book		Gross Fair		Accumulated			Net Book
	Value		Amortization			Value		Value		Amortization			Value
Customer relationships	$	11,835	$	(1,993	)	$	9,842	$	11,835	$	(1,684	)	$	10,151
Developed technology		3,265		(192	)		3,073		3,265		(28	)		3,237
Total	$	15,100	$	(2,185	)	$	12,915	$	15,100	$	(1,712	)	$	13,388

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Acquired intangible assets, net, as of April 30, 2014 for discontinued operations are as follows (in thousands):

	April 30, 2014
	Gross Fair		Accumulated						Net Book
	Value		Amortization			Impairment			Value
Customer relationships	$	39,966	$	(7,463	)	$	(2,354	)	$	30,149
Developed technology		5,400		(3,390	)		(146	)		1,864
Domain name (indefinite useful life)		800		—			—			800
Total	$	46,166	$	(10,853	)	$	(2,500	)	$	32,813

The sale of the PowerReviews business was completed on July 2, 2014; as such, there were no acquired intangible assets, net, for discontinued operations as of July 31, 2014.

The amortization of customer relationships is recorded as amortization expense and the amortization for developed technology is amortized to cost of revenue.

The following table presents our estimate of future amortization expense for definite-lived intangible assets (in thousands):

Fiscal period:	Amount
Remaining nine months of Fiscal year 2015		1,418
Fiscal year 2016		1,890
Fiscal year 2017		1,890
Fiscal year 2018		1,890
Fiscal year 2019		1,856
Thereafter		3,971

8. Income Taxes

The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities will be recognized in the period that includes the enactment date. A valuation allowance is established against the deferred tax assets to reduce their carrying value to an amount that is more likely than not to be realized.

The Company computes its interim provision for income taxes by applying the estimated annual effective tax rate to income from operations and adjusts the provision for discrete tax items occurring in the period. For continuing operations, the Company’s effective tax rate for the three months ended July 31, 2014 was (0.1) percent compared to 2.2 percent for the three months ended July 31, 2013. During the three months ended July 31, 2014, the foreign and state income tax expense was primarily offset by the income tax benefit from the Texas state research and development credit. During the three months ended July 31, 2013, an additional benefit of $0.4 million was recorded as a discrete item related to the 2013 Texas state research and development credit which was enacted in the quarter.

9. Debt

On July 18, 2007, the Company entered into a loan and security agreement (“Loan Agreement”) with a financial institution, which was most recently amended in June 2013. As amended, the Loan Agreement provides for a revolving line of credit with a borrowing capacity of up to the lesser of (a) $30.0 million or (b) 100% of eligible monthly service fees as defined in the Loan Agreement, inclusive of any amounts outstanding under the $2.7 million sublimit for corporate credit card and letter of credit services. The revolving line of credit expires on January 31, 2015 with all advances immediately due and payable. The revolving line of credit bears interest at the prime based rate as defined in the Loan Agreement except during any period of time during which, in accordance with the Loan Agreement, the line bears interest at the daily adjusting LIBOR rate plus 2.5%. Borrowings under the revolving line of credit are collateralized by substantially all assets of the Company and of its U.S. subsidiaries. The Loan Agreement contains certain financial covenants. As of July 31, 2014 and April 30, 2014, the Company had drawn down $1.6 million in the form of letter of credits as security deposits for its leased corporate headquarters. On February 21, 2014, the Company drew down $27.0 million of its unused balance of the revolving line of credit. The outstanding loan balance is subject to all terms and conditions described above in the Loan Agreement and its subsequent amendments. The unused balance of the revolving line of credit was $1.4 million as of July 31, 2014 and April 30, 2014. The Company was in compliance with all financial covenants as of July 31, 2014 and April 30, 2014.

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On November 4, 2008, the Company entered into a pledge and security agreement with a financial institution for a standby letter of credit for credit card services from a separate financial institution. As amended, the agreement provides for a standby letter of credit for credit card services in an amount not to exceed $0.5 million. The Company pledged a security interest in its money market account, in which the balance must equal at least the credit extended. This letter of credit expires annually, and the pledged security interest is recorded as short-term restricted cash in the Company’s condensed consolidated financial statements.

10. Net Loss Per Share Applicable to Common Stockholders

The following table sets forth the computations of net loss per share applicable to common stockholders for the three months ended July 31, 2014 and 2013, respectively (in thousands, except net loss per share data):

	Three Months Ended July 31,
	2014			2013
Net loss from continuing operations	$	(10,308	)	$	(17,646	)
Net income (loss) from discontinued operations, net of tax		(1,257	)		278
Net loss applicable to common stockholders	$	(11,565	)	$	(17,368	)
Basic and diluted loss per share
Continuing operations	$	(0.13	)	$	(0.23	)
Discontinued operations		(0.02	)		—
Basic and diluted loss per share:	$	(0.15	)	$	(0.23	)
Basic and diluted weighted average number of shares outstanding		77,766			73,983
Potentially dilutive securities (1):
Outstanding stock options		922			2,987
Restricted shares		170			188

⁽¹⁾  The impact of potentially dilutive securities on earnings per share is anti-dilutive in a period of net loss.

11. Commitments and Contingencies

In the ordinary course of business, the Company may be subject to various legal proceedings and claims including alleged infringement of third-party patents and other intellectual property rights. The Company reviews the status of each matter and records a provision for a liability when it is considered both probable that a liability has been incurred and that the amount of the loss can be reasonably estimated. These provisions are reviewed quarterly and adjusted as additional information becomes available. If either or both of the criteria are not met, the Company assesses whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, the Company discloses the estimate of the amount of loss or range of losses, discloses that the amount would not have a material effect on the Company’s condensed consolidated financial statements (if applicable) or discloses that an estimate of the possible loss or range of loss cannot be made. Legal fees are recognized as incurred when the legal services are provided, and therefore are not recognized as a part of a loss contingency accrual.

On June 12, 2012, the Company acquired PowerReviews, Inc. (“PowerReviews”), a provider of social commerce solutions based in San Francisco, California. The total consideration paid for this transaction was $150.8 million, including the issuance of 6.4 million shares of the Company’s common stock and assumption of vested and unvested options to purchase the common stock of PowerReviews equivalent to options to purchase 1.7 million shares of the Company’s common stock, but excluding the potential cash proceeds that may arise from the exercise of these assumed options. On January 10, 2013, the U.S. Department of Justice (the “DOJ”) filed a complaint against the Company with the U.S. District Court for the Northern District of California, San Francisco Division (the “Court”), alleging that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18 and seeking the Company’s divestiture of assets sufficient to create a competing business that can replace the competitive significance of PowerReviews in the marketplace. On January 8, 2014, the Court ruled that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18. On April 24, 2014, the Company entered into a Joint Stipulation with the DOJ to resolve the DOJ’s claims in the antitrust action challenging the acquisition of PowerReviews and, together with the DOJ, the Company submitted a proposed order to the Court (the “Order”). Under the terms of the Joint Stipulation and the Order, the Company was required to divest all of the assets of the PowerReviews business. On June 4, 2014, the Company entered into a definitive

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agreement to divest PowerReviews, LLC, the successor to PowerReviews, to Wavetable Labs, LLC (“Wavetable”) for $30.0 million in cash, $4.5 million of which is to be held in escrow as partial security for the Company’s indemnification obligations under the definitive agreement. The terms of this transaction were approved by the DOJ on June 26, 2014, and the transaction was completed on July 2, 2014. Wavetable subsequently changed its name to PowerReviews. As a result of the foregoing, PowerReviews revenues, related expenses and loss on disposal, net of tax, are components of “loss from discontinued operations” in the Condensed Consolidated Statement of Operations. On the Condensed Consolidated Balance Sheets, the assets and liabilities of the discontinued operations of PowerReviews have been presented as ‘Assets held for sale’ and ‘Liabilities held for sale,’ respectively. The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations.

The Company realized a total loss on the disposal of PowerReviews of $10.7 million; of which, $9.2 million was recognized as an estimated loss on disposal of discontinued operations during the fiscal year ended April 30, 2014. The Company recognized the incremental loss of $1.5 million in the current fiscal quarter (See Note 3).

On March 12, 2013, a purported shareholder derivative action was filed in the Texas State District Court for Travis County, Texas against certain of the Company’s officers and directors, former officers and directors, and against the Company as nominal defendant. The original petition in this matter alleged claims purportedly on behalf of the Company against the individual defendants for corporate waste, breaches of fiduciary duties and breaches of the Company’s corporate policies in connection with the acquisition of PowerReviews and certain of the Company’s officers’ and directors’ sales of shares of the Company’s stock. The original petition requested declaratory judgment, a disgorgement of $91.4 million in proceeds received from such sales of the Company’s stock, unspecified damages on behalf of the Company, reasonable attorneys’, accountants’ and experts’ fees, and equitable relief. On October 23, 2013, the court granted a motion filed by the Company and individual defendants and ruled that the plaintiff’s original petition failed to allege particularized facts sufficient to excuse plaintiff from making pre-suit demand on the Company’s Board of Directors. The court ordered the plaintiff to file an amended complaint within 30 days setting forth particularized facts sufficient to excuse demand. On November 22, 2013, the plaintiff filed its amended petition, which again asserted claims for corporate waste, breaches of fiduciary duties and breaches of the Company’s corporate policies in connection with the acquisition of PowerReviews and certain of the Company’s officers’ and directors’ sales of shares of the Company’s stock. The court stayed the lawsuit and its ruling on the motion for summary judgment to allow the parties to participate in mediation. On July 9, 2014, the parties attended mediation and agreed to preliminary settlement terms, subject to board approval, court approval, and notice to the Company’s shareholder. The Company does not expect the settlement to have a material impact on the Company’s condensed consolidated financial statements.

As of July 31, 2014, the Company was in the process of assessing the sales tax status of the Bazaarvoice enterprise service offering with sales tax agencies in certain states in which it operates. Based on the limited information received from certain of these states, the Company cannot determine with certainty the historical time period for which these services were taxable, and, for certain states, which of its service offerings and features these states may determine to be subject to state sales tax. The Company currently estimates that its liability, net of amounts to be recovered from clients, will be between $2.8 million and $3.3 million. The Company has accrued a liability of $3.1 million, representing the best estimate of the amount within this range that will probably be incurred to settle these obligations. The estimated range includes continuing to execute its action plan for recovering these amounts due from the Company’s clients. If it is determined that the time period in which the products are taxable or the portion of the Company’s product offering subject to state sales tax is greater than that used to determine the accrual as of July 31, 2014, or if there are changes in our underlying assumptions, then the actual liability incurred will likely approach the higher end of the current estimated range.

12. Subsequent Events

On August 20, 2014, the Company was informed that the DOJ is investigating whether the Company retained any PowerReviews technology in violation of the Joint Stipulation and Order. Due to the early stage of this investigation, it is not possible to reliably predict the outcome. The Company cannot currently estimate what, if any, possible loss or range of loss could result from the investigation.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2014, filed on June 26, 2014, which discuss our business in greater detail.

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This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements may be identified by the use of forward-looking words such as “anticipate,” “believe,” “may,” “will,” “continue,” “seek,” “estimate,” “intend,” “hope,” “predict,” “could,” “should,” “would,” “project,” “plan,” “expect” or the negative or plural of these words or similar expressions, although not all forward-looking statements contain these words. These forward-looking statements include, but are not limited to, statements concerning the following:

• our ability to timely and effectively scale and adapt our existing technology and network infrastructure;

• our ability to retain clients or renew them at similar prices and upsell to existing clients;

• our ability to attract new clients and launch without delays;

• our ability to increase adoption of our platforms by our clients’ internal and external users;

• our ability to protect our users’ information and adequately address security and privacy concerns;

• our ability to maintain an adequate rate of growth;

• our ability to effectively execute and adapt our business model in a dynamic market;

• our future expenses;

• our ability to expand our network;

• our ability to integrate clients, employees and operations of acquired companies into our business;

• our ability to earn revenue based on ads that are served on our network;

• our plan to continue investing in long-term growth and research and development, enhancing our platforms, and pursuing strategic acquisitions of complementary businesses and technologies to drive future growth;

• our ability to increase engagement of our solutions by our clients, partners and professional organizations and launch those solutions without delay;

• our anticipated trends of our operating metrics and financial and operating results;

• the effects of increased competition in our market;

• our ability to effectively manage our growth;

• our ability to successfully enter new markets and manage our international expansion;

• our ability to maintain, protect and enhance our brand and intellectual property;

• the attraction and retention of qualified employees and key personnel;

• our expectations regarding the outcome of litigation proceedings; and

• other risk factors included under “Risk Factors” in this Quarterly Report on Form 10-Q.

The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from our forward-looking statements, including those factors discussed in Part II, Item 1A: “Risk Factors” of this Quarterly Report on Form 10-Q and other risks and uncertainties detailed in this and our other reports and filings with the SEC. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Overview

We power a network that connects brands and retailers to the authentic voices of people where they shop. Bazaarvoice, which literally means “voice of the marketplace,” was founded on the premise that online word of mouth is critical to consumers and businesses because of its influence on purchasing decisions, both online and offline. Our technology platform collects and displays ratings and reviews, questions and answers and stories from consumers along with visual commerce capabilities that collectively amplify the voices of the consumers into the shopping experience – before, during and after a purchase. We help clients leverage social data derived from online word of mouth content to increase sales, acquire new customers, improve marketing effectiveness, enhance consumer engagement across channels, increase success of new product launches, improve existing products and services, effectively scale customer support, decrease product returns and enable retailers to launch and manage on-site advertising solutions and site monetization strategies.

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Since our inception in May 2005, we have experienced revenue growth primarily driven by our active clients. In order to take advantage of our growth opportunity and to provide high levels of client service, we have expanded our number of full-time employees since the fiscal year following our IPO. We believe our growth is further illustrated by SaaS impressions served, which we define as single instances of online word of mouth delivered to an end user’s web browser, as this metric measures the reach of our network to a consumer audience.

The following table summarizes measures of our growth from continuing operations for the first quarter of fiscal year 2015 compared to the first quarter of fiscal year 2014:

	Three Months Ended July 31,
	2014		2013
Revenue (in thousands)	$	45,977	$	40,319
Number of active clients (period end) (1)		1,197		922
Full-time employees (period end) (2)		787		776
SaaS impressions served (in millions) (3)		61,260		45,973

⁽¹⁾  Beginning as of our fourth quarter of fiscal year 2014, we define an active client as an organization from which we are currently recognizing recurring revenue. We count organizations that are closely related as one client, even if they have signed separate contractual agreements. We believe that our ability to increase our active client base is a leading indicator of our ability to grow revenue. Further, due to the presentation of the PowerReviews business as discontinued operations, we have separated our active clients into two categories: 1) active clients from continuing operations and 2) active clients from discontinued operations. As a result of this analysis, each category could include a common client who may have organizations for which we recognized recurring revenue that have separate signed contractual agreements. All periods prior to the fourth quarter of fiscal 2014 have been revised to conform to this definition of an active client from continuing operations.

⁽²⁾  Included in full-time employees for three months ended July 31, 2013 are 28 full-time employees attributable to discontinued operations of PowerReviews.

⁽³⁾  The number of SAAS impressions for the three months ended July 31, 2014 and 2013 are exclusive of impressions served on either the PowerReviews enterprise platform or the Express platform.

For the three months ended July 31, 2014, through the continued enhancement and expansion of our social commerce platform, we achieved continued growth as compared to the three months ended July 31, 2013 in the number of active clients. Our revenue from continuing operations was $46.0 million for the three months ended July 31, 2014, which represented a 14.0% increase from the three months ended July 31, 2013.

For the remainder of fiscal year 2015, we plan to continue to invest for long-term growth. We expect to continue the enhancement of our platforms by developing new solutions, adding new features and functionality and expanding the potential applications of our existing solutions. We also plan to continue our investments in research and development and to pursue strategic acquisitions of complementary businesses and technologies that will enable us to continue to drive growth in the future.

Business Model

Our business model focuses on adding new clients and maximizing the lifetime value of such client relationships. We make significant investments in acquiring new clients and believe that we will be able to achieve a favorable return on these investments by growing our relationships over time and ensuring that we have a high level of client retention.

In connection with the acquisition of new clients, we incur and recognize significant upfront costs. These costs include sales and marketing costs associated with generating client agreements, such as sales commission expenses that are recognized fully in the period in which we execute a client contract. In addition, we incur implementation costs which are generally recognized in periods prior to recognizing revenue. However, we recognize revenue ratably over the entire term of those contracts, which commences when the client is able to begin using our solution. Although we expect each client to be profitable for us over the duration of our relationship, the costs we incur with respect to any client relationship may exceed revenue in earlier periods because we recognize those costs in advance of the recognition of revenue. As a result, an increase in the mix of new clients as a percentage of total clients will initially have a negative impact on our operating results. On the other hand, we expect that a decrease in the mix of new clients as a percentage of total clients will initially have a positive impact on our operating results. Additionally, some clients pay in advance of the recognition of revenue and, as a result, our cash flow from these clients may exceed the amount of revenue recognized for those clients in earlier periods of our relationship. As we depend on third-party Internet-hosting providers to operate our business, increased computing and storage consumption by some of our customers can increase our hosting costs and impact our gross margins.

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Key Business Metrics

In addition to macroeconomic trends affecting the demand for our solutions, management regularly reviews a number of key financial and operating metrics to evaluate our business, determine the allocation of our resources, make decisions regarding corporate strategies and evaluate forward-looking projections and trends affecting our business. The following table summarizes our key business metrics for continuing operations:

	Three Months Ended July 31,
	2014			2013
	(in thousands, except number of clients and client retention rate)
Revenue:
SaaS	$	44,324		$	38,863
Media		1,653			1,456
Total revenue	$	45,977		$	40,319
Cash flow used in operations	$	(3,412	)	$	(9,114	)
Number of active clients (period end)		1,197			922
SaaS revenue per active client (1)	$	38.0		$	43.0
Active client retention rate (2)		94.8	%		97.5	%
Total revenue per employee (3)	$	58.9		$	53.7

⁽¹⁾  Calculated based on the average number of active clients for the period on a quarterly basis from continuing operations.

⁽²⁾  Calculated based on active client retention over a three month period from continuing operations.

⁽³⁾  Calculated based on the average number of full-time employees for the period on a quarterly basis. For the purpose of this calculation, we have excluded full-time employees attributable to discontinued operations of PowerReviews for the three months ended July 31, 2013. Full-time employees as of July 31, 2014 does not include PowerReviews employees.

Revenue

SaaS revenue consists primarily of fees from the sale of subscriptions to our hosted social commerce solutions, and we generally recognize revenue ratably over the related subscription period, which is typically one year. We regularly review our revenue and revenue growth rate to measure our success. We believe that trends in revenue are important to understanding the overall health of our marketplace, and we use these trends in order to formulate financial projections and make strategic business decisions.

Media revenue consists primarily of fees charged to advertisers when their advertisements are displayed on our publishers’ websites and is net of amounts due to such publishers.

Cash Flow Used in Operations

Cash flow used in operations is the cash that we use through the normal course of business and is measured prior to the impact of investing or financing activities. Due to the fact that we incur a significant amount of upfront costs associated with the acquisition of new clients with revenue recognized over an extended period, we consider cash flows from operations to be a key measure of our operating performance.

Number of Active Clients

Beginning with our fourth quarter of fiscal year 2014, we define an active client as an organization from which we are recognizing recurring revenue, and we count organizations that are closely related as one client, even if they have signed separate contractual agreements. We believe that our ability to increase our active client base is a leading indicator of our ability to grow revenue.

All prior periods have been revised to conform to the current period definition of an active client.

SaaS Revenue per Active Client

SaaS revenue per active client is calculated as SaaS revenue recognized during the period divided by the average number of active clients for the period. Since some of our new clients are added at initial pricing that is lower than our average pricing, our SaaS revenue per client could decline in the future.

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Active Client Retention Rate

Active client retention rate is calculated based on the number of active clients at period end that were also active clients at the start of the period divided by the number of active clients at the start of the period. We believe that our ability to retain our active clients and expand their use of our solutions over time is a leading indicator of the stability of our revenue base and the long-term value of our client relationships.

Total Revenue per Employee

Revenue per employee is calculated as revenue recognized during the period divided by the average number of full-time employees for the period, excluding content moderators and employees attributable to the discontinued operations of PowerReviews. We believe revenue per employee is a leading indicator of our productivity and operating leverage. The growth of our business is dependent on our ability to hire the talented people we require to effectively capitalize on our market opportunity and scale with growth while maintaining a high level of client service.

Key Components of Our Condensed Consolidated Statements of Operations

Revenue

We generate revenue principally from fixed commitment subscription contracts under which we provide clients with various services, including access to our hosted software platforms. We sell these services under contractual agreements for service terms that are generally one year in length. Clients typically commit to fixed rate fees for the service term. Revenue from these agreements is recognized ratably over the period of service and any revenue that does not meet recognition criteria is recorded as deferred revenue on our balance sheet. We invoice clients on varying billing cycles, including annually, quarterly and monthly; therefore, our deferred revenue balance does not represent the total contract value of our non-cancelable subscription agreements. Fees payable under these agreements are due in full within 30 to 90 days of invoicing and non-refundable regardless of the actual use of the service and contain no general rights of return. No single client accounted for more than 10.0% of our revenue for the three months ended July 31, 2014 and 2013.

Cost of Revenue

Cost of revenue consists primarily of personnel costs and related expenses associated with employees and contractors who provide our subscription services, our implementation team, our content moderation teams and other support services provided as part of the fixed commitment subscription contracts. Cost of revenue also includes professional fees, including third-party implementation support, travel-related expenses and an allocation of general overhead costs. We allocate general overhead expenses to all departments based on the number of employees in each department, which we consider to be a fair and representative means of allocation. Personnel costs include salaries, benefits, bonuses and stock-based expense. We generally increase our capacity, particularly in the areas of implementation and support, ahead of the growth in revenue we expect those investments to drive, which can result in lower margins in the given investment period.

Cost of revenue also includes hosting costs, the amortization of capitalized internal-use software development costs incurred in connection with our hosted software platforms, personnel costs and third-party service costs to support and retain our clients.

We intend to continue to invest additional resources in our client services teams and in the capacity of our hosting service infrastructure and, as we continue to invest in technology innovation through our research and development organization, we may also see an increase in the amortization expense associated with capitalized internal-use software development costs incurred in connection with enhancing our software architecture and adding new features and functionality to our platforms. The level and timing of investment in these areas could affect our cost of revenue, both in terms of absolute dollars and as a percentage of revenue in the future.

Operating Expenses

We classify our operating expenses into five categories: sales and marketing; research and development; general and administrative; acquisition-related and other; and amortization of acquired intangible assets. In each category, our operating expenses consist primarily of personnel costs, program expenses, professional fees and travel-related expenses, as applicable. In addition, we allocate general overhead expenses to all departments based on the number of employees in each department, which we consider to be a fair and representative means of allocation and, as such, general overhead expenses, including depreciation and facilities costs, are reflected in each of our operating expense categories.

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Sales and marketing. Sales and marketing expenses consist primarily of personnel costs for our sales, marketing and business development employees and executives, including salaries, benefits, stock-based expense, bonuses and commissions earned by our sales personnel. Sales and marketing also includes contingent consideration resulting from the acquisition of Longboard Media. Also included are non-personnel costs such as professional fees, an allocation of our general overhead expenses and the costs of our marketing and brand awareness programs. Our marketing programs include our Social Summits, regional user groups, corporate communications, public relations and other brand building and product marketing expenses. We expense sales commissions when a client contract is executed because we believe our obligation to pay a sales commission arises at that time. We plan to continue investing in sales and marketing by increasing the number of direct sales personnel, expanding our domestic and international sales and marketing activities, and focusing our marketing efforts on direct sales support and pipeline generation, which we believe will enable us to add new clients and increase penetration within our existing client base. We expect that in the foreseeable future, sales and marketing expenses may decrease as a percentage of revenue but will continue to be our largest operating cost.

Research and development. Research and development expenses consist primarily of personnel costs for our product development employees and executives, including salaries, benefits, stock-based expense and bonuses. Also included are non-personnel costs such as professional fees payable to third-party development resources and an allocation of our general overhead expenses. A substantial portion of our research and development efforts are focused on enhancing our software architecture and adding new features and functionality to our platforms to address social and business trends as they evolve, and we anticipate increasing this focus on innovation through technology. We are also incurring an increasing amount of expenses in connection with our efforts to leverage data that we and our clients collect and manage through the use of our solutions. We therefore expect that, in the future, research and development expenses will increase, as will the amount of development expenses capitalized in connection with our internal-use hosted software platforms.

General and administrative. General and administrative expenses consist primarily of personnel costs, including salaries, benefits, stock-based expense and bonuses for our administrative, legal, human resources, finance, accounting and information technology employees and executives. General and administrative expenses also include contingent consideration (included as compensation) and revaluation of contingent consideration related to the acquisition of Longboard Media. Also included are non-personnel costs, such as travel-related expenses, professional fees and other corporate expenses, along with an allocation of our general overhead expenses. We expect to incur incremental costs associated with supporting the growth of our business, both in terms of size and geographical diversity, and to meet the increased compliance requirements associated with being a public company. Those costs include increases in our accounting and legal personnel, additional consulting, legal, audit and tax fees, insurance costs, board of directors’ compensation and the costs of achieving and maintaining compliance with Section 404 of the Sarbanes-Oxley Act. As a result, we expect our general and administrative expenses to increase in absolute dollars in future periods but to decrease as a percentage of revenue over time.

Acquisition-related and other. Acquisition-related and other expenses consist of costs incurred related to the acquisition of FeedMagnet and Longboard Media and include legal, banking, accounting and other advisory fees of third parties. Included in acquisition costs are legal and advisory fees for the U.S. Department of Justice suit related to our acquisition of PowerReviews. All other legal and advisory expenses related to our acquisition and completed divestiture of PowerReviews are now included as a component of “loss from discontinued operations, net of tax.” We expect to incur ongoing costs to comply with our obligations resulting from the divestiture of PowerReviews.

Amortization of acquired intangible assets. The amortization of acquired intangible assets represents amortization of acquired customer relationship intangible assets from FeedMagnet and Longboard Media. Due to the presentation of PowerReviews as discontinued operations, all intangible assets related to the acquisition of PowerReviews have been included in “assets held for sale” and the related amortization expenses of these intangible assets for prior reporting periods are now included as a component of “loss from discontinued operations, net of tax.”

Other Income (Expense), Net

Other income (expense) consists primarily of interest income, interest expense related to our revolving line of credit, foreign exchange gains and losses and the resulting gain or loss from foreign exchange contracts. Interest income represents interest received on our cash and investments of proceeds received from our initial public offering and follow-on offering. Foreign exchange gains and losses arise from revaluations of foreign currency denominated monetary assets and liabilities and are partially offset by the change in market value of our foreign exchange contracts.

Income Tax Expense (Benefit)

As a result of our current net operating loss position in the United States, income tax expense consists primarily of corporate income taxes resulting from profits generated in foreign jurisdictions by wholly-owned subsidiaries, along with state income taxes payable in the United States. We expect our income tax expense to increase in the future if we become profitable both in the United States and in foreign jurisdictions.

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Results of Operations

The following tables set forth our results of operations for the specified periods. The period-to-period comparisons of results of operations are not necessarily indicative of results for future periods.

Consolidated Statements of Operations Data:

	Three Months Ended July 31,
	2014			2013
	(in thousands)
Revenue	$	45,977		$	40,319
Cost of revenue (1)		16,356			12,117
Gross profit		29,621			28,202
Operating expenses:
Sales and marketing (1)		20,995			20,996
Research and development (1)		9,730			8,924
General and administrative (1)		7,893			8,536
Acquisition-related and other		492			7,504
Amortization of acquired intangible assets		309			282
Total operating expenses		39,419			46,242
Operating loss		(9,798	)		(18,040	)
Total other income (expense), net		(498	)		3
Loss from continuing operations before income taxes		(10,296	)		(18,037	)
Income tax expense (benefit)		12			(391	)
Net loss from continuing operations	$	(10,308	)	$	(17,646	)
Other Financial Data:
Adjusted EBITDA from continuing operations (2)	$	(5,280	)	$	(5,306	)
(1)      Includes stock-based expense as follows:
Cost of revenue	$	314		$	318
Sales and marketing		944			1,227
Research and development		647			805
General and administrative		1,217			1,457

⁽²⁾  We define Adjusted EBITDA from continuing operations (“Adjusted EBITDA”) as generally accepted accounting principles (“GAAP”) net loss from continuing operations adjusted for stock-based expense, contingent considerations related to acquisition, adjusted depreciation and amortization (which excludes amortization of capitalized internal-use software development costs), integration and other costs related to acquisitions, other non-business costs and benefits, income tax expense and other (income) expense, net. Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP.

Adjusted EBITDA should not be considered as an alternative to net loss, operating loss or any other measure of financial performance calculated and presented in accordance with GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of other organizations because other organizations may not calculate Adjusted EBITDA in the same manner. We prepare Adjusted EBITDA to eliminate the impact of items that we do not consider indicative of our core operating performance. You are encouraged to evaluate these adjustments and the reason we consider them appropriate.

We believe Adjusted EBITDA is useful to investors in evaluating our operating performance for the following reasons:

• Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items, such as stock-based expense, adjusted depreciation and amortization, acquisition costs, income tax expense and other income, net, that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;

• Our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of operating performance and the effectiveness of our business strategies and in communications with our board of directors concerning our financial performance;

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• Adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP operating results; and

• We anticipate that our investor and analyst presentations will include Adjusted EBITDA as a supplemental measure to evaluate our overall operating performance.

We understand that although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results of operations as reported under GAAP. These limitations include:

• Adjusted depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future; Adjusted EBITDA does not reflect any cash requirements for these replacements;

• Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs or contractual commitments;

• Adjusted EBITDA does not reflect cash requirements for income taxes and the cash impact of other income; and

• Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

The following table presents a reconciliation of net loss from continuing operations, the most comparable GAAP measure, to Adjusted EBITDA for each of the periods indicated.

	Three Months Ended July 31,
	2014			2013
	(in thousands)
GAAP net loss from continuing operations	$	(10,308	)	$	(17,646	)
Stock-based expense		3,122			3,807
Contingent consideration related to acquisition (1)		—			370
Adjusted depreciation and amortization		1,334			1,053
Acquisition-related and other expense		492			7,504
Other stock-related expense (2)		(430	)		—
Income tax expense (benefit)		12			(391	)
Total other expense (income), net		498			(3	)
Adjusted EBITDA from continuing operations	$	(5,280	)	$	(5,306	)
(1)       Contingent consideration related to acquisition includes the following:
Contingent consideration included in compensation expense
General and administrative		—			185
Sales and marketing		—			185
Contingent consideration related to acquisition	$	—		$	370

Revaluation of contingent consideration is the decrease in fair value of the liability-classified contingent consideration related to the acquisition of Longboard Media, Inc. Contingent consideration included in compensation expense relates to certain Longboard Media employees whose right to receive such compensation is forfeited if they terminate their employment. The contingent consideration was payable to Longboard Media’s achievement of certain performance goals for the period from January 1, 2013 to December 31, 2013. On October 31, 2013, the Company determined that the probability of the attainment of the underlying performance goals was remote and the resultant payout was estimated to be zero. As a result, the fair value of the liability-classified contingent consideration and the liability accrued for contingent consideration included in compensation expense were reduced to zero. On January 31, 2014, the Company concluded that the underlying performance goals were not met and the payout was zero. We exclude these items from our non-GAAP financial measures in order to facilitate the comparison of post-acquisition operating results.

⁽²⁾  Other stock-related expense represents an estimated liability for taxes and related items in connection with our treatment of certain stock option grants. Since the estimated liability directly relates to stock option grants and as stock-based expenses are consistently excluded from our non-GAAP financial measures, we have excluded this estimated liability. During the three months ended July 31, 2014, the Company recorded a benefit of $0.4 million due to a reduction of this estimated liability.

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The following table sets forth our results of operations for the specified periods as a percentage of revenue. The period-to-period comparisons of results are not necessarily indicative of results for future periods.

Consolidated Statements of Operations Data:

	Three Months Ended July 31,
	2014			2013
Revenue		100.0	%		100.0	%
Cost of revenue (1)		35.6			30.1
Gross profit		64.4			69.9
Operating expenses:
Sales and marketing (1)		45.6			52.0
Research and development (1)		21.1			22.1
General and administrative (1)		17.2			21.2
Acquisition-related and other		1.1			18.6
Amortization of acquired intangible assets		0.7			0.7
Total operating expenses		85.7			114.6
Operating loss		(21.3	)		(44.7	)
Total other income (expense), net		(1.1	)		—
Loss from continuing operations before income taxes		(22.4	)		(44.7	)
Income tax expense (benefit)		—			(0.9	)
Net loss from continuing operations		(22.4	)%		(43.8	)%
Other Financial Data:
Adjusted EBITDA from continuing operations(2)		(11.5	)%		(13.2	)%
(1)      Includes stock-based expense as follows:
Cost of revenue		0.7	%		0.8	%
Sales and marketing		2.1			3.0
Research and development		1.4			2.0
General and administrative		2.6			3.6

⁽²⁾ We define Adjusted EBITDA from continuing operations as GAAP net loss from continuing operations adjusted for stock- based expense, contingent consideration related to acquisition, adjusted depreciation and amortization (which excludes amortization of capitalized internal-use software development costs), integration and other costs related to acquisitions, other non-business costs and benefits, income tax expense and other (income) expense, net. See Note ⁽²⁾ to the Consolidated Statement of Operations Data of this Quarterly Report on Form 10-Q for a reconciliation of net loss to Adjusted EBITDA from continuing operations.

Comparison of the Three Months Ended July 31, 2014 and 2013

Revenue

	Three Months Ended July 31,
	2014		2013		% Change
	(dollars in thousands)
Revenue	$	45,977	$	40,319		14.0	%

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Our revenue increased by $5.7 million, or 14.0%, for the three months ended July 31, 2014 compared to the three months ended July 31, 2013. Included in this increase was an increase in SaaS revenue of $5.5 million and an increase in Media revenue of $0.2 million. Of the $5.5 million increase in SaaS revenue, $4.1 million was generated from new clients utilizing our platform and solutions during the period. The remaining $1.4 million increase was generated from existing clients due to increased subscriptions of our products and offerings and a one time termination fee from an existing client. For the three months ended July 31, 2014, our active client retention rate was 94.8%, and SaaS revenue per active client (in thousands) was $38.0, compared to an active client retention rate of 97.5% and SaaS revenue per active client (in thousands) of $43.0 for the three months ended July 31, 2013. For the three months ended July 31, 2014, our client retention rate was lower as we reduced our client count by 23 clients which represents an adjustment for previous fiscal quarters due to Connections only clients who converted to a “Freemium’ model and clients from the Shopzilla asset purchase which were a part of the PowerReviews divestiture. Further, the reduction in the client count also included certain clients from our FeedMagnet acquisition whose contracts expired. The annual subscription fees for these clients were not significant. Our client retention rates can be impacted due to a variety of reasons including, but not limited to, non-renewals, renewals at less favorable terms, and the cyclical and discretionary nature of marketing and advertising spending.

Cost of Revenue and Gross Profit Percentage

	Three Months Ended July 31,
	2014			2013			% Change
	(dollars in thousands)
Cost of revenue	$	16,356		$	12,117			35.0	%
Gross profit		29,621			28,202			5.0
Gross profit percentage		64.4	%		69.9	%

Cost of revenue increased $4.2 million, or 35.0%, for the three months ended July 31, 2014 compared to the three months ended July 31, 2013. This increase was primarily due to increases of $1.6 million in costs associated with hosting services due to an increase in the volume of impressions and $0.4 million in amortization of capitalized internal-use software development costs. Additional increases include $1.3 million in personnel-related expenses, $0.2 million in professional fees and $0.5 million in travel and allocated overhead expenses. Our cost of revenue for the three months ended July 31, 2014 includes $0.2 million of amortization of developed technology acquired from FeedMagnet.

Operating Expenses

	Three Months Ended July 31,
	2014					2013
	Amount		% of Revenue			Amount		% of Revenue			% Change
	(dollars in thousands)
Sales and marketing	$	20,995		45.6	%	$	20,996		52.0	%		—	%
Research and development		9,730		21.1			8,924		22.1			9.0
General and administrative		7,893		17.2			8,536		21.2			(7.5	)
Acquisition-related and other		492		1.1			7,504		18.6			(93.4	)
Amortization of acquired intangible assets		309		0.7			282		0.7			9.6
Total operating expenses	$	39,419		85.7	%	$	46,242		114.6	%		(14.8	)%

Sales and marketing. Sales and marketing expenses stayed constant at $21.0 million for the three months ended July 31, 2014 compared to the three months ended July 31, 2013. For the three months ended July 31, 2014, personnel-related expenses decreased by $0.7 million due to a decrease in head count and professional services also decreased by $0.6 million. These decreases were offset by a $1.1 million increase in marketing expenses as we hosted our annual marketing event “Bazaarvoice Summit” for current and prospective clients during the three months ended July 31, 2014 and a $0.2 million increase in travel and other expenses associated with the event. The Company hosted the last “Bazaarvoice Summit” in March 2013.

Research and development. Research and development expenses increased $0.8 million, or 9.0%, for the three months ended July 31, 2014 compared to the three months ended July 31, 2013. This increase was primarily due to an increase in professional fees of $0.6 million resulting from an increased use of third party contractor resources to supplement our research and development efforts and training programs and a $0.2 million increase in allocated overhead expenses.

General and administrative. General and administrative expenses decreased $0.6 million, or 7.5%, for the three months ended July 31, 2014 compared to the three months ended July 31, 2013. Personnel-related expenses increased by $0.7 million due to an increase in head count. This increase was offset by a decrease of $0.8 million in professional services. A decrease of $0.2 million in facility-related expenses was partially offset by an increase of $0.1 million in bad debt expense. During the three months ended July 31, 2014, we recorded a benefit of $0.4 million due to a reduction in our estimated liability recorded in fiscal year 2013 in connection with our treatment of certain stock option grants.

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Acquisition-related and other. Acquisition-related and other expenses decreased $7.0 million, or 93.4%, for the three months ended July 31, 2014 compared to the three months ended July 31, 2013. This decrease was primarily due to the completion of the divestiture of PowerReviews. We incurred $0.5 million in legal fees for the three months ended July 31, 2014 primarily for the shareholder derivative action filed in connection with the acquisition of PowerReviews. For the three months ended July 31, 2013, we incurred $7.5 million in legal and advising fees primarily due to the U.S. Department of Justice suit related to our acquisition of PowerReviews.

Amortization of acquired intangibles. The amortization of acquired intangible assets represents amortization of acquired customer relationship and developed technology intangible assets from FeedMagnet and Longboard Media. Due to the presentation of PowerReviews as discontinued operations, all intangible assets related to the acquisition of PowerReviews were included in “assets held for sale” as of April 30, 2014 and were not amortized during the three months ended July 31, 2014. The related amortization expenses of these intangible assets for the three months ended July 31, 2013 is now included as a component of “loss from discontinued operations, net of tax.” Amortization from continuing operations is presented separately in the statement of operations and was $0.3 million for the three months ended July 31, 2014 and 2013.

Other Income (Expense), Net

	Three Months Ended July 31,
	2014						2013
	Amount			% of Revenue			Amount			% of Revenue			% Change
	(dollars in thousands)
Interest income	$	6			—	%	$	66			0.2	%		(90.9	)%
Other expense		(504	)		(1.1	)		(63	)		(0.2	)		700.0
Total other income (expense), net	$	(498	)		(1.1	)%	$	3			—	%		(16,700.0	)%

Total other expense, net, increased by $0.5 million in the three months ended July 31, 2014 compared to the three months ended July 31, 2013 primarily due to inclusion of $0.2 million of interest expense on the $27.0 million revolving line of credit for the three months ended July 31, 2014 and an increase of $0.3 million in realized and unrealized gains on transactions in foreign currencies.

Income Tax Expense (Benefit)

	Three Months Ended July 31,
	2014					2013
	Amount		% of Revenue			Amount			% of Revenue			% Change
	(dollars in thousands)
Income tax expense (benefit)	$	12		—	%	$	(391	)		(0.9	)%		(103.1	)%

Income tax expense increased by $0.4 million in the three months ended July 31, 2014 compared to the three months ended July 31, 2013, primarily due to the additional benefit of $0.4 million from the 2013 Texas state research and development tax credit, which was enacted during the three months ended July 31, 2013.

Liquidity and Capital Resources

Our principal source of liquidity at July 31, 2014 consisted of $92.6 million of cash, cash equivalents and short term investments. Cash and cash equivalents consist of cash, money market funds, municipal bonds and U.S. Treasury securities. Our short-term investments consist of certificates of deposit, municipal bonds, commercial paper and U.S. Treasury securities. As of July 31, 2014, the amount of cash and cash equivalents held by foreign subsidiaries was $4.9 million. If these funds are needed for our domestic operations, we would be required to accrue and pay U.S. taxes to repatriate these funds. However, our intent is to permanently reinvest these funds outside the U.S. and our current plans do not demonstrate a need to repatriate them to fund our domestic operations. We do not provide for federal income taxes on the undistributed earnings of our foreign subsidiaries.

On February 21, 2014, we drew down $27.0 million of the unused balance of the revolving line of credit. The funds have largely been used for general corporate purposes and for the acquisition of FeedMagnet in fiscal year 2014. On July 2, 2014, we completed the sale of PowerReviews for total consideration of $30.0 million and received $25.5 million in cash. Our principal needs for liquidity include funding our operating losses, working capital requirements, capital expenditures, repaying our outstanding revolving line of credit and acquisitions. We believe that our available resources are sufficient to fund our liquidity requirements for at least the next 12 months.

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Further, we anticipate making significant investments in growth and initiatives designed to improve our operating efficiency for the foreseeable future, which may impact our ability to generate positive cash flow from operating activities in the near-term. Our future capital requirements will depend on many factors, including our rate of client and revenue growth, the expansion of our sales and marketing activities, our needs to expand our existing infrastructure and facilities, the timing and extent of spending to support product development efforts, the timing of introductions of new features and enhancements to our social commerce platforms and future acquisitions of, or investments in, complementary businesses and technologies. The timing, frequency, and pattern of our billing mix can also impact our operating cash flows. To the extent that existing cash, cash equivalents and short-term investments along with future cash flow from operations are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

The following table summarizes our cash flows for the periods indicated (including cash flows from discontinued operations):

	Three Months Ended July 31,
	2014			2013
	(in thousands)
Net cash used in operating activities	$	(3,412	)	$	(9,114	)
Net cash provided by (used in) investing activities		(4,983	)		7,939
Net cash provided by financing activities		1,157			2,927

Net Cash Used in Operating Activities

Net cash used in operating activities is primarily influenced by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business, the increase in the number of clients using our platforms and the amount and timing of client payments.

For the three months ended July 31, 2014, operating activities used $3.4 million of cash after changes in our operating assets and liabilities offset a net loss of $11.6 million, which included non-cash depreciation and amortization of $2.8 million, non-cash loss on disposal of discontinued operations, net of tax, of $1.5 million, non-cash stock-based expense of $3.2 million and non-cash bad debt and other non-cash expense of $0.9 million. The $0.4 million decrease in accounts receivable was offset by a $0.5 million increase in prepaid expenses and other current assets and other non-current assets. The decrease in accrued expenses and other current liabilities and other long-term liabilities of $2.7 million was partially offset by the $2.6 million increase in accounts payable and deferred revenue; resulting in a net decrease of $0.2 million due to changes in operations assets and liabilities. Included in changes for accrued liabilities and accounts payable was $0.8 million which we spent on legal and advisory fees for the divestiture of PowerReviews.

For the three months ended July 31, 2013, operating activities used $9.1 million of cash after changes in our operating assets and liabilities offset a net loss of $17.4 million, which included non-cash depreciation and amortization of $3.5 million, non-cash stock-based expense of $4.0 million, non-cash bad debt expense of $0.6 million and other non-cash expense of $0.1 million. Changes in operating assets and liabilities were a net increase of $0.2 million, including a $2.5 million decrease in accounts receivable largely offset by a $2.4 million decrease in deferred revenue. Included in changes for accrued liabilities and accounts payable was $6.0 million which we spent on legal and advisory fees for the DOJ suit related to our acquisition of PowerReviews.

Net Cash Provided by (Used in) Investing Activities

Our primary investing activities have consisted of acquisitions, purchases of short-term investments and property and equipment, including technology hardware and software to support our growth as well as costs capitalized in connection with the development of our internal-use hosted software platform. Purchases of property and equipment may vary from period to period due to the timing of the expansion of our operations and the development cycles of our internal-use hosted software platform. We expect to continue to invest in short-term investments, property and equipment and developing our software platform for the foreseeable future.

For the three months ended July 31, 2014, investing activities used $5.0 million which included $27.2 million of purchases of short term investments, net, and $3.3 million purchases of property, equipment and capitalized internal-use offset by proceeds of $25.5 million from the sale of the PowerReviews business.

For the three months ended July 31, 2013, investing activities provided $7.9 million, including $12.1 million of proceeds from the maturities and sales of short term investments, net of purchases of short term investments, offset by $4.2 million in purchases of property, equipment and capitalized internal-use software development costs and purchase of intangible assets.

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Net Cash Provided by Financing Activities

Our financing activities have consisted primarily of net proceeds from the issuance of common stock, proceeds from the exercises of options to purchase common stock.

For the three months ended July 31, 2014, financing activities provided $1.2 million due to proceeds of $0.6 million from the exercise of options to purchase our common stock and contributions of $0.6 million to our Employee Stock Purchase Plan.

For the three months ended July 31, 2013, financing activities provided $2.9 million, primarily due to proceeds from the exercise of options to purchase our common stock and contributions to our Employee Stock Purchase Plan.

Contractual Obligations and Commitments

We have non-cancelable operating lease obligations related to our office space, the largest of which is for our headquarters in Austin, Texas. We do not have any material capital lease obligations and all of our property, equipment and software has been purchased with cash. We have no material purchase obligations outstanding with any vendors or third-parties.

Obligations arising from unrecognized tax benefits are not included in the contractual obligations because it is expected that the unrecognized benefits would result in an insignificant amount of cash payments as we have generated net operating losses.

On July 18, 2007, we entered into a loan and security agreement, or the Loan Agreement, with a financial institution, which was most recently amended in June 2013. As amended, the Loan Agreement provides for a revolving line of credit with a borrowing capacity of up to the lesser of (a) $30.0 million or (b) 100% of eligible monthly service fees as defined in the Loan Agreement, inclusive of any amounts outstanding under the $2.7 million sublimit for corporate credit card and letter of credit services.

As of July 31, 2014 and April 30, 2014, we had drawn down $1.6 million in the form of letter of credits as security deposits for its leased corporate headquarters. On February 21, 2014, we drew down $27.0 million of its unused balance of the revolving line of credit. The outstanding loan balance is subject to all terms and conditions described above in the Loan Agreement and its subsequent amendments. The unused balance of the revolving line of credit was $1.4 million as of July 31, 2014 and April 30, 2014. Borrowings under the revolving line of credit are collateralized by substantially all of our assets and bear interest at a floating interest rate equal to the prime rate (defined as the financial institution’s daily adjusting LIBOR rate plus 2.5%), which is payable monthly. The revolving line of credit expires and all interest and principal thereunder is payable in full on January 31, 2015.

The Loan Agreement contains certain restrictive covenants that limit our and our subsidiaries’ ability to, among other things, incur additional indebtedness or guarantee indebtedness of others; make payments on additional indebtedness or make changes to certain agreements related to additional indebtedness; enter into hedging arrangements; create liens on our assets; make loans and investments; make capital expenditures; dispose of assets; store inventory and equipment with others; pay dividends or make distributions on, or purchase or redeem, our capital stock; enter into mergers or consolidations with or into other entities; undergo a change of control; engage in different lines of business; or enter into transactions with affiliates. The Loan Agreement also contains numerous affirmative covenants, including covenants regarding, among other things, compliance with applicable laws and regulations, reporting, payment of taxes and other obligations, maintenance of insurance coverage, maintenance of bank and investment accounts with the financial institution and its affiliates, registration of intellectual property rights, and obtaining certain third-party consents and waivers. We were in compliance with all financial covenants as of July 31, 2014 and April 30, 2014. The loan is repayable on or before January 31, 2015.

On November 4, 2008, we entered into a pledge and security agreement with a financial institution for a standby letter of credit for credit card services from a separate financial institution for an amount not to exceed $0.1 million. We pledged a security interest in our money market account, in which the balance must equal at least the credit extended. On March 17, 2010, the standby letter of credit for credit card services was increased to $0.3 million. On May 18, 2011, the standby letter of credit for credit card services was increased to $0.5 million. This letter of credit expires annually and the pledged security interest is recorded as short-term restricted cash in our condensed consolidated financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Critical Accounting Policies and the Use of Estimates

Preparation of our condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We believe the most complex and sensitive judgments, because of their significance to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis and Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended April 30, 2014, filed on June 26, 2014 describe the significant accounting estimates and policies used in the preparation of our condensed consolidated financial statements. Actual results in these areas could differ from management’s estimates. During the three months ended July 31, 2014, there were no significant changes in our critical accounting policies or estimates from those reported in our Annual Report on Form 10-K for the fiscal year ended April 30, 2014, filed on June 26, 2014.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have operations both within the United States and internationally and we are exposed to market risks in the ordinary course of our business, including the effect of interest rate changes and foreign currency fluctuations. Information relating to quantitative and qualitative disclosures about these market risks is set forth below.

Interest Rate Sensitivity

We hold cash, cash equivalents and short-term investments for working capital purposes. We do not have material exposure to market risk with respect to these investments. 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 will reduce future interest income.

Foreign Currency Risk

Our results of operations and cash flows are subject to fluctuations because of changes in foreign currency exchange rates, particularly changes in exchange rates between the U.S. dollar and the Euro and British Pound, the currencies of countries where we currently have our most significant international operations. On a historical basis, invoicing has largely been denominated in U.S. dollars; however; we expect an increasing proportion of our future business to be conducted in currencies other than U.S. dollars. Our expenses are generally denominated in the currencies of the countries in which our operations are located, with our most significant operations at present located in the United States, the United Kingdom, Germany, France, Australia and Sweden.

We assess the market risk of changes in foreign currency exchange rates utilizing a sensitivity analysis that measures the potential impact on earnings, fair values and cash flows of a hypothetical 10% change in the value of the U.S. dollar on foreign currency denominated monetary assets and liabilities. The effect of an immediate 10% adverse change in exchange rates on foreign currency denominated monetary assets and liabilities, principally accounts receivable and intercompany balances, as of July 31, 2014, would be immaterial.

We have entered into forward exchange contracts to partially hedge our exposure to these foreign currencies. We do not enter into any derivative financial instruments for trading or speculative purposes. We may enter into additional forward exchange contracts to further contain our exposure to foreign currencies fluctuations. To date, we have hedged against some of the fluctuations in currency exchange rates, however fluctuations in exchange rates could still cause harm to our business in the future.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of January 31, 2014. The term “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and

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reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of July 31, 2014, management concluded that our disclosure controls and procedures were effective as of July 31, 2014.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended July 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to legal proceedings and litigation arising in the ordinary course of business which from time to time might include intellectual property and privacy litigation matters, including class action lawsuits. Although occasional adverse decisions or settlements may occur, we do not believe that the final disposition of any of these matters will have a material effect on our business. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages, and could include claims for injunctive relief. We record a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. Periodically, we evaluate developments in our legal matters that could affect the amount of liability that has been previously accrued, if any, and make adjustments as appropriate. Significant judgment is required to determine both likelihood of there being, and the estimated amount of, a loss related to such matters, and our judgment may be incorrect. The outcome of any proceeding is not determinable in advance. Until the final resolution of any such matters that we may be required to accrue for, there may be an exposure to loss in excess of the amount accrued and such amounts could be material.

There have been and continue to be regulatory developments that affect our industry. For example, the Federal Trade Commission has directed attention to compensated blogging, endorsements and reviews and state, U.S. federal and international government agencies have become increasingly focused on privacy in social networks and social commerce, including with respect to collection and use of personally identifiable information and the deployment and use of cookies. In addition, with respect to our clients that are in regulated industries, such as banking and finance or healthcare, our activities may be subject to the regulations governing such businesses.

On June 12, 2012, we acquired PowerReviews, Inc. (“PowerReviews”), a provider of social commerce solutions based in San Francisco, California. The total consideration paid for this transaction was $150.8 million, including the issuance of 6.4 million shares of our common stock and assumption of vested and unvested options to purchase the common stock of PowerReviews equivalent to options to purchase 1.7 million shares of our common stock, but excluding the potential cash proceeds that may arise from the exercise of these assumed options. On January 10, 2013, the U.S. Department of Justice (the “DOJ”) filed a complaint against us with the U.S. District Court for the Northern District of California, San Francisco Division (the “Court”), alleging that our acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18 and seeking the divestiture of assets sufficient to create a competing business that can replace the competitive significance of PowerReviews in the marketplace. On January 8, 2014, the Court ruled that our acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18. On April 24, 2014, we entered into a Joint Stipulation with the DOJ to resolve the DOJ’s claims in the antitrust action challenging the acquisition of PowerReviews and, together with the DOJ, we submitted a proposed order to the Court (the “Order”). Under the terms of the Joint Stipulation and the Order, we were required to divest all of the assets of the PowerReviews business. On June 4, 2014, we entered into a definitive agreement to divest PowerReviews, LLC, the successor to PowerReviews, to Wavetable Labs, LLC (“Wavetable”) for $30.0 million in cash, $4.5 million of which is to be held in escrow as partial security for the our indemnification obligations under the definitive agreement. The terms of this transaction were approved by the DOJ on June 26, 2014, and the transaction was completed on July 2, 2014. Wavetable subsequently changed its name to PowerReviews. We have recorded a total loss on disposal of $10.7 million.

On March 12, 2013, a purported shareholder derivative action was filed in the Texas State District Court for Travis County, Texas against certain of our officers and directors, former officers and directors, and against us as nominal defendant—in Edmans v. Hurt et al., Case No. D-1-GN-13-000874. The original petition in this matter alleged claims purportedly on behalf of us against the individual defendants for corporate waste, breaches of fiduciary duties and breaches of our corporate policies in connection with the acquisition of PowerReviews and certain of our officers’ and directors’ sales of shares of our stock. The original petition requested declaratory judgment, a disgorgement of $91.4 million in proceeds received from such sales of our stock, unspecified damages on behalf of us, reasonable attorneys’, accountants’ and experts’ fees, and equitable relief. On October 23, 2013, the court granted a motion filed by us and individual defendants and ruled that the plaintiff’s original petition failed to allege particularized facts sufficient to excuse plaintiff from making pre-suit demand on our Board of Directors. The court ordered the plaintiff to file an amended complaint within 30 days setting forth particularized facts sufficient to excuse demand. On November 22, 2013, the plaintiff filed its amended petition, which again asserted claims for corporate waste, breaches of fiduciary duties and breaches of our corporate policies in connection with the acquisition of PowerReviews and certain of our officers’ and directors’ sales of shares of our stock. We filed a motion for summary judgment asserting that the amended petition failed to cure the defects in the original petition. The court stayed the lawsuit and its ruling on the motion for summary judgment to allow the parties to participate in mediation. On July 9, 2014, the partied attended mediation and agreed to preliminary settlement terms, subject to board approval, court approval, and notice to our shareholders. We do not expect the settlement to have a material impact on our condensed consolidated financial statements.

On August 20, 2014, we were informed that the DOJ is investigating whether we retained any PowerReviews technology in violation of the Joint Stipulation and Order. Due to the early stage of this investigation, it is not possible to reliably predict the outcome. We cannot currently estimate what, if any, possible loss or range of loss could result from the investigation.

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Item 1A. Risk Factors

We have a limited operating history, which makes it difficult to evaluate our current business and future prospects and may increase the risk of your investment.

We began our operations in May 2005. Our limited operating history may make it difficult to evaluate our current business and our future prospects. We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in rapidly developing and changing industries, including challenges in forecasting accuracy, determining appropriate investments of our limited resources, market acceptance of our existing and future solutions, managing client implementations and developing new solutions. Our current operating model may require changes in order for us to achieve profitability and scale our operations efficiently. For example, we may need to continue to enhance our software architecture to allow us to efficiently and cost effectively develop and implement new solutions, make our solutions easy to implement, ensure our marketing engine is designed to drive highly qualified leads cost effectively and implement changes in our sales model to improve the predictability of our sales and reduce our sales cycle. If we fail to implement these changes on a timely basis or are unable to implement them due to factors beyond our control, our business may suffer. You should consider our business and prospects in light of the risks and difficulties we face as an early-stage company.

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

We have incurred significant losses in each fiscal period since our inception in 2005. We experienced net losses of $52.8 million and $47.5 million from continuing operations during fiscal years 2014 and 2013, respectively. As of July 31, 2014, we had an accumulated deficit of $203.6 million which also includes losses from discontinued operations. The losses and accumulated deficit were due to the substantial investments we made to grow our business and acquire clients. Expenses associated with the integration of the clients, employees and operations of acquired companies into our business could further delay our profitability. We anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to invest to grow our business and acquire clients, develop our platforms and develop new products and solutions. These efforts may prove more expensive and more difficult than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. Many of our efforts to generate revenue from our business are new and unproven, and any failure to increase our revenue or generate revenue from new products and solutions could prevent us from attaining or increasing profitability. Furthermore, to the extent we are successful in increasing our client base; we could also incur increased losses because costs associated with entering into client agreements are generally incurred up front, while revenue is generally recognized ratably over the term of the agreement. Additionally, we currently sell our products on a fixed price basis. However, many of the third-party costs associated with providing our products are subject to variable pricing. We cannot be certain that we will be able to attain or increase profitability on a client-by-client basis or on a quarterly or annual basis. If we are unable to effectively manage these risks and difficulties as we encounter them, our business, financial condition and results of operations may suffer.

We operate in a new and unproven market for social commerce solutions. Our success depends upon the continued development of this market, and if the market does not develop as we expect, our business could be harmed.

We are focused on the market for social commerce solutions, which is new and unproven with little market research or data. It is uncertain whether the market in which we operate will continue to develop or if our solutions will achieve and sustain a level of demand and market acceptance sufficient for us to continue to generate revenue and achieve profitability. Due to our evolving business model, the uncertain size of our market and the unpredictability of future general economic and financial market conditions, we may not be able to forecast our growth rate accurately.

In particular, we believe our success will depend to a large extent on the willingness of brands to use online word of mouth in their marketing and advertising materials. Many of our potential clients remain hesitant to embrace our solutions, such as Ratings & Reviews, since they are uncomfortable displaying negative reviews about products or services offered on their websites. In addition, many brands may continue to devote significant portions of their marketing and advertising budgets to traditional, offline media or other types of online marketing or advertising initiatives that do not use online word of mouth. Some brands may be open to the idea of making online word of mouth available to consumers and yet may be unwilling or unable to implement third-party SaaS solutions similar to ours or may seek to develop such solutions internally. We believe that the continued growth and acceptance of our solutions will depend on the perceived authenticity of online word of mouth and effectiveness of using online word of mouth to influence purchase decisions, both online and offline, and better understand consumer preferences regarding products and services. The existence of fraudulent reviews may call into question the authenticity of online word of mouth. We also depend on the continued growth of the social web and adoption of mobile devices, among other factors. If any of these factors are not realized, then the market for social commerce solutions may not develop as we expect, or it may develop more slowly than we expect, either of which could significantly harm our business and operating results.

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We derive a substantial portion of our revenue from a limited number of our solutions. If we are unable to maintain demand for these solutions or diversify our revenue sources by successfully developing and introducing new or enhanced solutions, we could lose existing clients or fail to attract new clients and our business could be harmed.

Ratings & Reviews was our first social commerce solution and still remains the core element of our technology platform today. Other social commerce solutions we have developed or acquired include Connections Solutions, Analytics Solutions, BV Local and Curations. If we are unable to continue developing enhanced features for these solutions to maintain demand or to diversify our revenue base by increasing demand for our other solutions and successfully developing and introducing new solutions either by internal development or acquisition, our operating results could be negatively impacted. We are currently modifying our software architecture to be able to develop and implement new solutions more efficiently and cost effectively. We are also currently investing significant amounts in research and development in connection with our efforts to leverage data that we and our clients collect and manage through the use of our solutions. Improving our architecture and developing and delivering new or upgraded solutions may require us to make substantial investments, and we have no assurance that such new or upgraded architecture solutions will generate sufficient revenue to offset their costs. If we are unable to efficiently develop, license or acquire such new or upgraded solutions on a timely and cost-effective basis, or if such solutions are not effectively brought to market, are not appropriately timed with market opportunity or do not achieve market acceptance, we could lose existing clients or fail to attract new clients, and our business and operating results could be materially adversely affected.

In addition, we must continuously modify and enhance our solutions to keep pace with rapid changes in the social web and Internet-related hardware, software communication, browser, database and social commerce technologies. If we are unable to respond in a timely and cost-effective manner to rapid technological developments, our solutions could become less marketable and less competitive or become obsolete, and our operating results could be negatively affected.

The market in which we participate is fragmented, rapidly evolving and highly competitive, and we may be unable to compete successfully with our current or future competitors.

The market for social commerce solutions is highly competitive. The competitive dynamics of our market are unpredictable because it is at an early stage of development, rapidly evolving, fragmented and subject to potential disruption by new technological innovations.

Our main competition is from traditional marketing and advertising programs used by businesses that remain hesitant to embrace social commerce solutions such as Ratings & Reviews. Additionally, some businesses have developed, or may develop in the future, social commerce solutions internally. These businesses may consider their internal solutions adequate, even if our solutions are superior.

We have several direct and indirect competitors that provide third-party social commerce solutions, including but not limited to companies such as PowerReviews (formerly named Wavetable), Pluck, Reevoo, eKomi, Yotpo, Rating System and Gigya. As a result of our divestiture of the PowerReviews business, our competition with PowerReviews (formerly Wavetable) may likely become more intense. Additionally, we face potential competition from participants in adjacent markets that may enter our markets by leveraging related technologies and partnering with other companies.

We may also face competition from companies entering our market, including large Internet companies like Amazon, Google and Facebook, which could expand their platforms or acquire one or more of our competitors. While these companies do not currently focus on our market, they have significantly greater financial resources and, in the case of Amazon and Google, a longer operating history. They may be able to devote greater resources to the development and improvement of their services than we can and, as a result, they may be able to respond more quickly to technological changes and clients’ changing needs. Because our market is changing rapidly, it is possible that new entrants, especially those with substantial resources, more efficient operating models, more rapid product development cycles or lower marketing costs, could introduce new solutions that disrupt the manner in which businesses use online word of mouth and engage with consumers online to address the needs of our clients and potential clients. Our business and operating results could be harmed if any such disruption occurs.

We believe we compete primarily on the basis of product breadth and functionality, scope, quality and breadth of client base, amount and quality of content, service, price, reputation and the efficiency of our operating model. Our competitors or potential competitors may adopt certain aspects of our business model, which could reduce our ability to differentiate our solutions. As market dynamics change, or as new and existing competitors introduce more competitive pricing models or new or disruptive technologies, or as clients develop internal solutions for their social commerce needs, we may be unable to renew our agreements with existing clients or attract new clients at the same price or based on the same pricing model as previously used. As a result, we may be required to change our pricing model, offer price incentives or reduce our prices in response to competitive pressures, which could harm our revenue, profitability and operating results. Moreover, many software vendors could bundle competitive products or services or offer

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them at a low price as part of a larger product sale. In addition, some competitors may offer software that addresses one or a limited number of strategic social commerce functions at lower prices or with greater depth than our solutions. As a result, our competitors might be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or client requirements. For all of these reasons, we may not be able to compete successfully against our current and future competitors.

Our quarterly financial results are subject to fluctuations; as a result, we could fail to meet or exceed expectations of analysts or investors, which could cause our stock price to decline.

Our revenue, expenses, operating results and cash flows have fluctuated from quarter to quarter in the past and are likely to continue to do so in the future. These fluctuations are due to, or may in the future result from, many factors, some of which are outside of our control, including:

• the timing differences between when we incur sales commissions, implementation costs and other client acquisition costs associated with new solutions sales and when we generate revenue from these sales, particularly related to larger sales to new or existing clients;

• our ability to sell additional solutions, including our media solutions, to existing clients and to add new clients, in multiple regions around the world, particularly in the United States and Europe, which has fluctuated and is likely to continue to fluctuate, due to the effectiveness of our sales execution, economic conditions, the timing of larger sales opportunities and other factors affecting our sales in each of these regions;

• our ability, and the ability of our clients, to timely and effectively implement our solutions;

• the amount, timing and effectiveness of our product development investments and related expenses and delays in generating revenue from these new solutions;

• increases in our hosting costs, which could result in advance payments to our hosting vendors, due to variations in demand for storage capacity and computing consumption without a corresponding increase in pricing from our existing clients;

• the timing, frequency and pattern of our billing mix;

• our ability to adjust our cost structure, particularly our personnel costs, in response to reductions in revenue;

• the cyclical and discretionary nature of marketing and advertising spending, especially spending on social commerce solutions and target social commerce campaigns;

• seasonal variations and unpredictability in our clients’ advertising budgets;

• the amount and timing of operating expenses and capital expenditures related to the expansion of our operations and infrastructure and client acquisition;

• our failure to achieve the growth rate that was anticipated by us in setting our operating and capital expense budgets;

• changes in our active client retention rates;

• the timing and success of new solutions, product and service offerings and pricing policies by us or our competitors or any other changes in the competitive dynamics of our industry;

• the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill or intangible assets from acquired companies;

• unforeseen litigation costs and related settlement costs, particularly those related to intellectual property infringement and our obligation to fulfill related client indemnification obligations and regulatory investigations or restructuring activities, including settlement costs and regulatory penalties assessed related to government enforcement actions;

• our ability to accurately estimate state and local sales tax obligations and to collect such actual amounts from our clients;

• our ability to accurately estimate payroll and related taxes for wages and equity transactions;

• our ability to accurately estimate bonus and other incentive payments to key employees based on performance and market conditions;

• changes in currency exchange rates and associated costs of hedging to manage foreign currency fluctuations; and

• the adoption of new laws or regulations, or interpretations of existing laws or regulations, that restrict, or increase the costs of, providing social commerce solutions or using the Internet as a medium for communications and commerce.

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We offer our social commerce solutions primarily through subscription agreements and generally recognize revenue ratably over the related subscription period, while revenue from our media services is generally recognized in the month services are provided. As a result of both types of arrangements, revenue attributable to a contract signed in a particular quarter will not be fully and immediately recognized in the quarter in which the contract is signed. Because we incur most costs associated with generating client contracts at the time of sale, we may not recognize revenue in the same period in which we incur the related costs of sale. Timing differences of this nature could cause our margins and our operating income or losses to fluctuate significantly from quarter to quarter, and such fluctuations may be more pronounced in quarters in which we experience a change in the mix of new clients as a percentage of total clients.

Typically, a significant percentage of our bookings occur in the last few weeks of a quarter. Accordingly, a market disruption or other event outside of our control that occurred toward the end of a quarter could have a disproportionate impact on us and could cause us to substantially miss our forecasted results for that quarter.

Fluctuations in our quarterly operating results may lead analysts to change their long-term model for valuing our common stock, cause us to face short-term liquidity issues, impact our ability to retain or attract key personnel or cause other unanticipated issues, all of which could cause our stock price to decline. As a result of the potential variations in our quarterly revenue and operating results, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful, and the results of any one quarter should not be relied upon as an indication of future performance.

Our business depends substantially on renewing agreements with existing clients and selling additional solutions to them. If our clients, especially our larger clients, do not renew their agreements, renew on less favorable terms or fail to purchase additional solutions, our revenue may decline and our operating results would likely be harmed.

In order for us to improve our operating results, it is important that our clients renew their agreements with us when the initial term expires and also purchase additional solutions from us. We offer most of our social commerce solutions primarily through subscription agreements and generally recognize revenue ratably over the related subscription period. Our clients have no renewal obligation after their initial term expires, and we cannot assure you that we will be able to renew agreements with our clients at the same or higher contract value or at all. Moreover, under specific circumstances, our clients may have the right to cancel their agreements with us before they expire, for example, in the event of an uncured breach by us, or our clients may seek to renegotiate the terms of their contract prior to its expiration. Additionally, in pursuant to the terms contained in the Joint Stipulation with the DOJ, we have agreed that during the period beginning on the date we completed the sale of PowerReviews (July 2, 2014) and ending on the later to occur of one year and the termination date of a client’ contract, we will allow existing Bazaarvoice clients as of July 2, 2014 to terminate their contract with us should they choose to use the ratings and reviews solution offered by PowerReviews. Similarly, our contracts with our media clients and covering certain of our social commerce solutions generally do not include long-term obligations requiring them to purchase our services and are often cancelable upon short or no notice and without penalty. Any decline in our client renewals or expansions would likely harm our future operating results, especially if we are unable to recognize sufficient revenue to offset related client acquisition costs prior to such termination or cancellation of our client agreements. If our clients, especially our larger clients, cancel their agreements, negotiate price concessions in their current agreements, do not renew their agreements, renew on less favorable terms for us or fail to purchase additional solutions, our revenue may decline, and our operating results would likely be harmed.

Our active client retention rates may decline in the future due to a variety of factors, including:

• the availability, price, performance and functionality of our solutions and competing products and services;

• our ability to demonstrate to new clients the value of our solutions within the initial contract term, particularly if we are unable to introduce planned solutions innovation;

• poor performance or discontinuation of our clients’ brands;

• changes in our clients’ marketing or advertising strategies which can be cyclical, reflecting overall economic conditions as well as budgeting and discretionary buying patterns;

• the timing and quality of ratings and reviews posted to our clients’ websites and the existence of negative reviews;

• changes in key personnel at our clients;

• reductions in our clients’ spending levels;

• consolidation in our client base;

• the development by our clients of internal solutions for their social commerce needs; and

• the effects of economic downturns and global economic conditions.

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We incur most of our client acquisition costs at the time of sale. Depending upon the scope of the client’s needs, these costs can be significant. In certain cases, clients may have the right to terminate or cancel agreements with us if we fail to maintain service level requirements or we are otherwise in breach under the client agreements. If a client does not renew or cancels its agreement with us or we are otherwise required to provide price concessions to retain the client, we may not recognize sufficient revenue from that client prior to the termination or cancellation to offset the acquisition costs associated with that client. If the cost to acquire clients is greater than the revenue we generate over time from those clients, our business and operating results may be harmed.

In addition, our costs associated with maintaining and increasing revenue from existing clients may be lower than costs associated with generating revenue from new clients. Therefore, the loss of recurring revenue or a reduction in the rate of revenue increase from our existing clients, even if offset by an increase in revenue from new clients, could have a material adverse effect on our operating results.

We face risks associated with our acquired companies that may adversely impact our operating results.

In November 2012, we acquired Longboard Media, a full service media network for retailers, shopping publishers and advertisers based in San Francisco, California. In April 2014, we acquired FeedMagnet, a privately-owned social media curation company that enables brands to collect, curate and display consumer-generated images, video and social content on their websites and other marketing priorities. We may not successfully evaluate, utilize or integrate the acquired products, technologies or personnel, or accurately forecast the financial impact of the acquisitions, including accounting charges or the impact on our existing business. The acquisitions of Longboard Media and FeedMagnet have provided us with new lines of business and/or products that may result in unforeseen operating difficulties and expenditures. External factors, such as competition from companies with greater resources and experience and our clients’ willingness to purchase new and different services from us, may also limit our ability to make further investment in this business in order to take full advantage of the business opportunities available to us. Accordingly, we may not realize the potential benefits of the acquisition.

Our divestiture of the PowerReviews business could have an adverse effect on our business.

After the completion of our acquisition of PowerReviews, the DOJ filed a complaint against us with the Court alleging that our acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18, and seeking the divestiture of assets sufficient to create a competing business that can replace the competitive significance of PowerReviews in the marketplace. On January 8, 2014, the court ruled that our acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18. On April 24, 2014, we entered into a Joint Stipulation with the DOJ to resolve the DOJ’s claims in the antitrust action challenging the acquisition of PowerReviews and, together with the DOJ, we submitted the Order to the Court. Under the terms of the Joint Stipulation and the Order, we were required to divest all of the assets of the PowerReviews business. On June 4, 2014, we entered into a definitive agreement to divest PowerReviews, LLC, the successor to PowerReviews, to Wavetable Labs, LLC (“Wavetable”) for $30.0 million in cash, $4.5 million of which is to be held in escrow as partial security for the Company’s indemnification obligations under the definitive agreement. The terms of this transaction were approved by the DOJ on June 26, 2014, and the transaction was completed on July 2, 2014. Wavetable subsequently changed its name to PowerReviews. As a result of this divestiture, we expect to experience in the short term a decrease in our SaaS revenues and a negative impact on our adjusted EBITDA and our progress towards profitability and positive operating cash flows. In addition, competition in the social commerce solutions market will become more intense as a result of this divestiture. We will also have ongoing obligation arising as a result of the terms of the Joint Stipulation with the DOJ, the Order and the divestiture agreement with PowerReviews. If we fail to comply with these obligations, our business could be adversely affected. For example, on August 20, 2014, we were informed that the DOJ is investigating whether we retained any PowerReviews technology in violation of the Joint Stipulation and Order. The DOJ’s investigation could be lengthy, and we may be required to produce documents and data and offer to the DOJ other written and oral testimony, which could result in material legal fees and associated costs and require considerable time and attention of our management. Further, if the DOJ determines that we have violated the Joint Stipulation and Order, we could be subject to litigation and be required to incur legal expenses and potentially fines. As a result, this investigation could have a material adverse effect on our operating results and could materially impact our business strategy going forward.

Our actual results may differ significantly from any guidance that we may issue in the future and the consensus expectations of research analysts.

From time to time, we may release earnings guidance or other forward-looking statements in our earnings releases, earnings conference calls or otherwise regarding our future performance that represent our management’s estimates as of the date of release. If given, this guidance will be based on forecasts prepared by our management. The principal reason that we may release guidance is to provide a basis for our management to discuss our business outlook with analysts and investors. Guidance is necessarily speculative in nature. The speculative nature of any guidance is further exacerbated by the rapidly evolving nature and uncertain size of the market for social commerce solutions, as well as the unpredictability of future general economic and financial conditions. In addition, at this

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time we cannot accurately predict the impact the divestiture of PowerReviews and the ongoing obligations related thereto may have on our future performance. As a result, some or all of the assumptions of any future guidance that we furnish may not materialize or may vary significantly from actual future results. Any failure to meet guidance or analysts’ expectations could have a material adverse effect on the trading price or volume of our stock.

If we cannot efficiently implement our solutions for clients, we may be delayed in generating revenue.

In general, implementation of our solutions may require lengthy and significant work. We generally incur sales and marketing expenses related to the commissions owed to our sales representatives and make upfront investments in technology and personnel to support the engagements before we begin recognizing revenue from client contracts. We do not control our clients’ implementation schedules. As a result, as we have experienced in the past, if our clients do not allocate internal resources necessary to meet their implementation responsibilities or if we face unanticipated implementation difficulties, the implementation may be delayed and/or cancelled. Further, in the past, our implementation capacity has at times constrained our ability to successfully and timely implement our solutions for our clients, particularly during periods of high demand. If the client implementation process is not executed successfully or if execution is delayed, whether due to our clients’ or our capacity constraints, we could incur significant costs prior to generating revenue and our clients may delay their payment to us, and our relationships with some of our clients may be adversely affected. In addition, competitors with more efficient operating models with lower implementation costs could penetrate our client relationships.

Our management team may not be able to execute our business plan. Changes to our management team may cause uncertainty regarding the future of our business and may adversely impact employee hiring and retention, our stock price, and our revenue, operating results, and financial condition.

Our management team has worked together at the Company for only a limited period of time and has a limited track record of executing our business plan as a team. In addition, we have recently filled a number of positions in our senior management. Accordingly, certain key personnel have only recently assumed the duties and responsibilities they are now performing, and it is difficult to predict whether our management team, individually and collectively, will be effective in operating our business. In addition, our Chief Executive Officer assumed his current position on January 31, 2014, becoming our third Chief Executive Officer in an 18 month period. These changes may cause speculation and uncertainty regarding our future business strategy and direction and may cause or result in:

• disruption of our business or distraction of our employees and management;

• difficulty in recruiting, hiring, motivating and retaining talented and skilled personnel;

• stock price volatility; and

• difficulty in negotiating, maintaining or consummating business or strategic relationships or transactions.

If we are unable to mitigate these or other potential risks, our revenue, operating results and financial condition may be adversely impacted.

Our business depends on retaining and attracting qualified management and operating personnel.

Our success depends in large part on our ability to retain and attract high-quality management and operating personnel. We do not maintain key person life insurance policies on any of our employees. We may not be able to offset the impact on our business of the loss of the services of one or more of our executive officers or key employees. Our business also requires skilled technical and sales personnel, who are in high demand and are often subject to competing offers. As we expand into new vertical and geographic markets, we will require personnel with expertise in these new areas. Competition for qualified employees is intense in our industry and particularly in Austin, Texas, where most of our employees are based. We continue to experience increased employee turnover since our initial public offering and have incurred additional expenses as a result. An inability to retain, attract, relocate and motivate additional highly skilled employees required for the operation and planned expansion of our business, could harm our operating results and impair our ability to grow. To retain and attract key personnel, we use various measures, including an equity incentive program and incentive bonuses for executive officers and other key employees. These measures may not be sufficient to retain and attract the personnel we require to operate our business effectively. A significant portion of the stock options held by our employees have exercise prices that are higher than the current market price for our common stock. As a result, such stock options may no longer provide additional incentive for our employees to remain employed by us and we may be required to issue additional equity grants to retain key employees. In addition, in making employment decisions, particularly in the software industry, job candidates often consider the value of the stock options they are to receive in connection with their employment. Significant volatility in the price of our stock may, therefore, adversely affect our ability to retain and attract key employees.

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Our growth could strain our personnel, technology and infrastructure resources, and if we are unable to effectively manage our growth, our operating results may suffer.

Since our inception, we have experienced growth, which has increased the complexity of our operations. As our operations have expanded, we have grown from 640 full-time employees at April 30, 2012 to 787 full-time employees at July 31, 2014. We have increased the size of our client base from 782 active clients at April 30, 2012 to 1,197 active clients at July 31, 2014. The rapid growth and increasing complexity have demanded, and will continue to demand, substantial resources and attention from our management, most of whom have limited experience in managing a business of our size and complexity. We expect to continue to hire more employees in the future as we grow our business. To manage the expected growth of our operations and personnel and to support financial reporting requirements as a public company, we will need to continue to improve our operational, financial, technology and management controls and our reporting systems and procedures. Further, to accommodate our expected growth we must continually improve and maintain our technology, systems and network infrastructure. Our current and planned personnel, systems, procedures and controls may not be adequate to support our future operations. Our inability to expand our personnel and operations in an efficient manner could result in difficulty in acquiring new clients or retaining existing clients, declines in quality or client satisfaction, increases in expenses relative to our revenue and challenges in developing and introducing new solutions, any of which could adversely affect our operating results.

Because we recognize revenue for our solutions ratably over the term of our client agreements, decreases in the revenue recognizable under contracts for new active clients will not be fully and immediately reflected in our operating results.

We offer our social commerce solutions primarily through subscription agreements and generally recognize revenue ratably over the related subscription period, which is typically one year. As a result, some portion of the revenue we report in each quarter is revenue from contracts entered into during prior quarters. Consequently, a decline in the revenue recognizable under contracts for new active clients signed in any quarter or a decline in the growth rate of revenue recognizable under contracts signed in any quarter will not be fully and immediately reflected in the revenue of that quarter and would negatively affect our revenue in future quarters. In addition, we may be unable to adjust our cost structure rapidly, or at all, to take account of this reduced revenue.

Our sales cycle can be long and unpredictable and require considerable time and expense, which may cause our operating results to fluctuate. Additionally, if we do not continue to identify and qualify new clients, our ability to grow our revenue may be adversely effected.

The sales cycle for our solutions, from initial contact with a potential client to contract execution and implementation, varies widely by client and solution. Some of our clients undertake a significant evaluation process that has in the past resulted in a lengthy sales cycle, typically three to 12 months. We have no assurance that the substantial time and money spent on our sales efforts will produce any sales. If sales expected from a specific client for a particular quarter are not realized in that quarter or at all, our results could fall short of public expectations and our business, operating results and financial condition could be adversely affected.

We continue to focus our sales efforts on generating business from new clients. Our future success, particularly our ability to grow revenue, will depend largely upon the success of this effort. Our sales force and marketing team need to continue to generate new sales leads. When we “qualify” a lead, that lead becomes part of our sales “pipeline.” If we do not continue to add potential new clients to our pipeline there could eventually be a negative impact in our ability to grow our revenue in the future.

The average sales price of our solutions may decrease, which may adversely affect our ability to achieve and maintain profitability.

The average sales price of our solutions may decline for a variety of reasons, including competitive pricing pressures, and the introduction of new solutions or pricing models. In addition, because the market for our social commerce solutions is new and unproven and because our business model is evolving, we may not be able to achieve and sustain a level of demand and market acceptance sufficient for us to continue to maintain the current average sales price for our solutions. Furthermore, the composition of our clients may change in a manner that makes it more difficult to maintain such prices. Any failure to maintain our prices could have an adverse effect on our business, results of operations and financial condition.

If we are unable to maintain or expand our direct sales and marketing capabilities, we may not be able to generate anticipated revenue.

We rely primarily on our direct sales force to sell our solutions. Our solutions require a sophisticated sales force. We have worked to upgrade and expand our sales team in order to increase revenue from new and existing clients and to further penetrate our existing markets and expand into new markets. We are constantly evaluating our sales organization as part of our efforts to optimize our sales operations to grow our revenue. If we have not structured our sales organization properly or if we fail to make changes in a timely fashion, our ability to grow our revenue could be adversely effected.

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Our sales force upgrade and expansion may not have the desired effect of expanding our business and generating anticipated revenue. Competition for qualified sales personnel is intense, and there can be no assurance that we will be able to retain our existing sales personnel or attract, integrate or retain sufficient highly qualified sales personnel, which could adversely affect our revenue growth. Many of the companies with which we compete for experienced personnel have greater resources than we have. If any of our sales representatives were to leave us and join one of our competitors, we may be unable to prevent such sales representatives from helping competitors to solicit business from our existing clients, which could adversely affect our revenue.

In addition, new sales hires require training and typically take several months to achieve productivity, if at all. For internal planning purposes, we assume that it will take significant time before a newly hired sales representative is fully trained and productive in selling our solutions. This amount of time may be longer for sales personnel focused on new geographies or new verticals. As a result, the cost of hiring and carrying new representatives cannot be offset by the revenue they produce for a significant period of time. Furthermore, because of the length of our sales training period, we often cannot determine if a sales representative will succeed until after he or she has been employed for several months or longer. If we experience high turnover in our sales force, or if we cannot reliably develop and grow a successful sales team, our revenue growth may be adversely affected.

If we are not able to successfully leverage data we and our clients collect and manage through our solutions and services, we may not be able to increase our revenue through our media services, analytics and other data solutions. Additionally, if the costs to obtain the rights to utilize the data are high, our results of operations could be adversely effected.

Our ability to optimize the placement and scheduling of advertisements for our media clients and to grow our revenue through analytics and other data solutions depends on our ability to successfully leverage data that we and our clients collect and manage through the use of our solutions and services. Our ability to successfully leverage such data, in turn, depends on our ability to collect and obtain rights to utilize such data in our solutions and services and to maintain and grow our network of clients. We currently employ cookies, which are small files of non-personalized information placed on an Internet user’s computer, on a limited basis with respect to our social commerce solutions and more broadly with respect to our media services. Additionally, if we introduce new pricing methodologies we may be required to implement changes to our billing and collection systems and processes which could involve the expenditure of significant time and resources. The cookies are used to collect information related to the user, such as the user’s Internet Protocol, or IP, address, demographic information and history of the user’s interactions with our clients and any advertisements we deliver. If we are unable to effectively utilize or introduce cookies more broadly, our ability to collect such data could be impaired.

Additionally, our ability to both collect and utilize data may be affected by a number of factors outside of our control, including increased government regulation of the collection of information concerning consumer behavior on the Internet and the increased use of technologies that allow website visitors to modify their settings to prevent or delete cookies and to sweep all cookies from their computers. Further, we currently do not own the data collected through the use of our solutions and services but currently license the data from our clients for limited aggregation purposes. If our clients decide not to allow us to collect the data or if we are not able to obtain sufficient rights to the data, we may not be able to utilize it in our solutions and services. Additionally, the costs to us related to obtaining sufficient rights to utilize this data could be high and such costs could affect our future operating results.

Finally, in order to obtain the critical mass of data necessary for our analytics and other data solutions to have value for our clients, we will need to maintain and grow our client base. Currently, a substantial amount of the data to which we have access is collected by a small number of our clients. Consequently, the loss of a single client could have a disproportionate impact on the data that is available to us. Any of these limitations on our ability to successfully leverage data could have a material adverse effect on our ability to increase our revenue through media services, analytics and other data solutions and could harm our future operating results.

Our client relationships and overall business will suffer if we encounter significant problems migrating clients to our next-generation technology platform, or if the new platform does not meet expectations.

In fiscal year 2013, we began implementation of Conversations, our next-generation social commerce technology platform, and we intend to migrate all of our clients to this new technology platform over time. We have limited experience migrating clients from one platform to another. Given the complexity and significance of this transition, including the amount of client data within our systems that will need to be accessed and migrated, our client relationships, our reputation, and our overall business could be severely damaged if these migrations go poorly. To the extent we encounter difficulties in implementation and migration of Conversations, we may be required to incur additional costs, including research and development costs, to address issues identified during the process. In addition, we have incurred additional expenses as a result of the dual technology platforms we maintain (Conversations and PRR), and if we experience any delays or technical problems as a result of the migration to Conversations, we may incur such expenses for a much longer period of time than anticipated. Also, one of the anticipated benefits of Conversations is that client implementation times should be shortened, which should result in reduced costs and earlier revenue recognition. Delays in the launch of and migration to Conversations would result in corresponding delays in our ability to achieve these anticipated benefits and could result in client

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dissatisfaction. Similarly, even if the migrations go smoothly, our business operations and client relationships will be at high risk if the new platform does not meet our performance expectations, or those of our clients. All of this could harm our business in numerous ways including, without limitation, a loss of revenue, lost client contracts, and damage to our reputation.

Our long-term success depends, in part, on our ability to maintain and expand our operations outside of the United States and, as a result, our business is susceptible to risks associated with international operations.

As our operations have expanded, we have established and currently maintain offices in the United States, the United Kingdom, France, Germany, the Netherlands, Sweden, Singapore and Australia. We have limited experience in operating in foreign jurisdictions outside the United States and are making significant investments to build our international operations. Managing a global organization is difficult, time-consuming and expensive, and any international expansion efforts that we may undertake may not be successful. In addition, conducting international operations subjects us to risks, including the following:

• the cost and resources required to localize our solutions;

• competition with companies that understand the local market better than we do or who have pre-existing relationships with potential clients in those markets;

• legal uncertainty regarding the application of unique local laws to social commerce solutions or a lack of clear precedent of applicable law;

• lack of familiarity with and the burden of complying with a wide variety of other foreign laws, legal standards and foreign regulatory requirements, which are subject to unexpected changes;

• difficulties in managing and staffing key leadership positions in international operations;

• fluctuations in currency exchange rates;

• potentially adverse tax consequences, including the complexities of foreign value added tax systems and restrictions on the repatriation of earnings;

• Developing and maintaining the appropriate tax structure;

• increased financial accounting and reporting burdens and complexities and difficulties in implementing and maintaining adequate internal controls;

• political, social and economic instability abroad, terrorist attacks and security concerns in general;

• reduced or varied protection for intellectual property rights in some countries; and

• higher telecommunications and Internet service provider costs.

Operating in international markets also requires significant management attention and financial resources. The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability.

Unfavorable conditions in the market for social commerce solutions or the global economy or reductions in marketing spending could limit our ability to grow our business and negatively affect our operating results.

Our operating results may vary based on the impact on us or our clients of changes in the market for social commerce solutions or the global economy. In addition, the revenue growth and potential profitability of our business depends on marketing spending by companies in the markets we serve. To the extent that weak economic conditions cause our clients and potential clients to freeze or reduce their marketing budgets demand for our solutions may be negatively affected. Historically, economic downturns have resulted in overall reductions in marketing spending. If economic conditions deteriorate or do not materially improve, our clients and potential clients may elect to decrease their marketing budgets by deferring or reconsidering product purchases, which would limit our ability to grow our business and negatively affect our operating results.

If we are unable to increase our penetration in our principal existing markets and expand into additional vertical markets, we will be unable to grow our business and increase revenue.

We currently market our solutions to a variety of industries, including the retail, consumer products, travel and leisure, technology, telecommunications, financial services, healthcare and automotive industries. We believe our future growth depends not only on increasing our penetration into the principal markets in which our solutions are currently used but also on identifying and expanding the number of industries, communities and markets that use or could use our solutions. Efforts to offer our solutions beyond our current markets may divert management resources from existing operations and require us to commit significant financial

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resources, either of which could significantly impair our operating results. In addition, some markets, such as financial services and healthcare, have unique and complex regulatory requirements that may make it more difficult or costly for us to develop, market, sell implement or continue to develop our solutions in those markets. Moreover, our solutions may not achieve market acceptance in new markets, and our efforts to expand beyond our existing markets may not generate additional revenue or be profitable. Our inability to further penetrate our existing markets or our inability to identify additional markets and achieve acceptance of our solutions in these additional markets could adversely affect our business, results of operations and financial condition.

Our growth depends in part on the success of our relationships with third parties for the delivery and development of, and implementation support for, our solutions and services.

We currently depend on, and intend to pursue additional relationships with, various third parties related to product development, including technology and service providers and social media platforms, and our media services. Identifying, negotiating and documenting these relationships requires significant time and resources, as does integrating our solutions with third-party technologies. In some cases, we do not have formal written agreements with our development partners. Even when we have written agreements, they are typically non-exclusive and do not prohibit our development partners from working with our competitors or from offering competing services. Our competitors may be effective in providing incentives to third parties to favor their products or services.

Specifically, we outsource some of our product development, quality assurance and technology operations to two third-party contractors located in the Ukraine and India. We also rely on a third-party relationship to assist with client implementation support. We believe that supplementing our product development and implementation support activities with our outsourced third-party contractors enhances the efficiency and cost-effectiveness of these activities. If we experience problems with our third-party contractors, including if such contractors’ business operations are interrupted for any reason, or the costs charged by our contractors increases, we may not be able to develop new solutions or enhance existing solutions or meet our clients’ implementation support needs in an alternate manner that is equally or more efficient and cost-effective.

We integrate certain of our solutions directly with Facebook’s social media platform. We currently rely on Facebook’s cooperation in order to integrate our solutions with Facebook’s platform, and we do not have a formal, written agreement with Facebook. There is no assurance that Facebook will continue to cooperate with us. Changes in Facebook’s technology or terms of use may inhibit or restrict us from continuing to integrate our solutions with Facebook’s platform. If Facebook does not continue to cooperate with us or if Facebook changes their technology or terms of use in ways that inhibit, restrict or increase the costs of the integration of our solutions with Facebook, our business could be harmed.

Our Curations product collects and curates consumer-generated images, video and social content from social media platforms such as Facebook, Instagram, Pinterest and Twitter. If these social medical companies change their technology or terms of use in ways that restrict or inhibit the way we can collect or use content, the success of this solution could be significantly impacted.

We use DoubleClick’s ad-serving platform to deliver and monitor ads for our media management services. There can be no assurance that DoubleClick, which is owned by Google, will continue providing these services, that our agreement with DoubleClick will be extended or renewed upon expiration, that we will be able to extend or renew our agreement with DoubleClick on terms and conditions favorable to us or that we could identify another alternative vendor to take its place. Our agreement with DoubleClick also allows DoubleClick to terminate our relationship before the expiration of the agreement on the occurrence of certain events, including material breach of the agreement by us, and to suspend provision of the services if DoubleClick determines that our use of its service violates certain terms of the agreement.

We anticipate that we will continue to depend on these and other third-party relationships in order to grow our business. If we are unsuccessful in maintaining existing and establishing new relationships with third parties, our ability to efficiently develop and implement new solutions could be impaired, our ability to effectively renew agreements with existing customers could be impaired, and our competitive position or our operating results could suffer. Even if we are successful, these relationships may not result in increased revenue.

We currently rely on a small number of third-party service providers to host and deliver a significant portion of our solutions, and any interruptions or delays in services from these third parties could impair the delivery of our solutions and harm our business.

We host our solutions and serve our clients primarily from third-party data center facilities located in Texas, Virginia and Oregon. We also utilize third-party services that deploy data centers worldwide. We do not control the operation of any of the third-party data center facilities we use. These facilities may be subject to break-ins, computer viruses, denial-of-service attacks, sabotage, acts of vandalism and other misconduct. They are also vulnerable to damage or interruption from power loss, telecommunications failures, fires, floods, earthquakes, hurricanes, tornadoes and similar events. As a result, we may in the future experience website

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disruptions, outages and other performance problems. Despite our efforts, the occurrence of any of these events, a decision by our third-party service providers to close their data center facilities without adequate notice or other unanticipated problems could result in loss of data as well as a significant interruption in the offering of our solutions and harm to our reputation and brand.

Additionally, our third-party data center facility agreements are of limited durations, and our third-party data center facilities have no obligation to renew their agreements with us on commercially reasonable terms, or at all. If we are unable to renew our agreements with these facilities on commercially reasonable terms, we may experience delays in the provisioning of our solutions until an agreement with another data center facility can be arranged. This shift to alternate data centers could take more than 24 hours depending on the nature of the event, which could cause significant interruptions in service and adversely affect our business and reputation.

We also depend on third-party Internet-hosting providers and continuous and uninterrupted access to the Internet through third-party bandwidth providers to operate our business. If we lose the services of one or more of our Internet-hosting or bandwidth providers for any reason or if their services are disrupted, for example due to viruses or “denial-of-service” or other attacks on their systems, or due to power loss, telecommunications failures, fires, floods, earthquakes, hurricanes, tornadoes or similar events, we could experience disruption in our ability to offer our solutions or we could be required to retain the services of replacement providers, which could increase our operating costs and harm our business and reputation.

Any errors, defects, disruptions or other performance problems with our solutions could harm our reputation and may damage our clients’ businesses. Interruptions in our ability to offer our solutions would likely reduce our revenue, could cause our clients to cease using our solutions and could adversely affect our retention rates. In addition, some of our client agreements require us to issue credits for downtime in excess of certain targets, and in some instances give our clients the ability to terminate the agreements. Our business and results of operations would be harmed if our current and potential clients believe our solutions are unreliable.

Unfavorable changes in evolving government regulation and taxation of the Internet and online communications and social commerce solutions could harm our business and results of operations.

The future success of our business depends upon the continued use of the Internet as a primary medium for communications and commerce. As the use of the Internet continues to evolve, increasing regulation by federal, state or foreign governments becomes more likely. Federal, state or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting data privacy, the solicitation, collection, processing or use of personal or consumer information, truth-in-advertising, consumer protection and the use of the Internet as a commercial medium and the market for social commerce solutions. There is also uncertainty as to how some existing laws governing issues such as sales taxes, libel and personal privacy, apply to the Internet. In addition, government agencies or private organizations may begin to impose taxes, fees or other charges for accessing the Internet. Any new regulations or legislation or new interpretations of existing regulations or legislation restricting Internet commerce or communications or imposing greater fees for Internet use could result in a decline in the use of the Internet as a medium for commerce and communications, diminish the viability of Internet solutions generally, and reduce the demand for our solutions. Additionally, if we are required to comply with new regulations or legislation or new interpretations of existing regulations or legislation, this compliance could cause us to incur additional expenses, make it more difficult to conduct our business or require us to alter our business model. Any of these outcomes could have a material adverse effect on our business, financial condition or results of operations.

Increased regulation and industry standards around data and Internet privacy issues may require us to incur significant expenses and other liabilities or deter or prevent us from providing our products and solutions to clients, thereby harming our business.

As part of our business, we collect and store personal information. We expect our collection and storage of personal information to increase, primarily in connection with our efforts to expand our media services, analytics, and other data solutions. The regulatory framework for privacy issues worldwide is currently in flux and is likely to remain so for the foreseeable future. Practices regarding the collection, use, storage, transmission and security of personal information by companies operating over the Internet have recently come under increased public scrutiny and as a result there are an increasing number of regulations and industry standards that affect our business.

Regulators, including the Federal Trade Commission (“FTC”), continue to more broadly define personal information to include IP addresses, machine identification, location data, and other information. As a result of such broadened definition of personal information, our ability to use such information is increasingly restricted and may limit or inhibit our ability to operate or expand our business. For example, the U.S. government, including the White House, Congress, and the FTC are reviewing the need for greater regulation for the use, collection and disclosure of information concerning consumer behavior on the Internet, including regulation aimed at restricting certain targeted advertising practices. Proposed legislation could, if enacted, impose additional requirements and/or prohibit the use, collection, storage and disclosure of information concerning consumer behavior on the Internet and restrict or

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otherwise prohibit the use of certain technologies that track individuals’ activities on web pages or across the Internet. Such laws and regulations could restrict our ability to collect and use web browsing data and personal information, which may result in financial penalties, litigation, regulatory investigations, negative publicity, reduced growth opportunities, and other significant liabilities. We will also face additional privacy issues as we continue to expand in international markets, as many nations and economic regions have privacy protections more stringent or that are otherwise at odds with those in the United States. For example, the European Union is in the process of proposing reforms to its existing data protection legal framework, which will result in a greater compliance burden for companies with users in Europe. Further, German companies often require even more stringent privacy controls than other markets within the EU, which may limit our ability to expand in that market. Complying with new EU privacy requirements, whether imposed by Regulation or contract, will require additional expenditures and may require other significant liabilities. The Australian Privacy Principles (APP) that came into effect this year likewise increase the complexities of operating in that economy. The complex web of privacy and data security requirements across the various countries or economic regions that we operate within may be inconsistently applied and conflict with other applicable requirements, our business practices, or our contractual commitments to customers.

We have incurred, and will continue to incur, expenses to comply with privacy and security standards and protocols imposed by law, regulation, industry standards or contractual obligations. Increased domestic or international regulation of data utilization and distribution practices, including self-regulation, could require us to modify our operations and incur significant expense, which could have an adverse effect on our business, financial condition and results of operations. Our business, including our ability to operate and expand internationally, could be adversely affected if legislation or regulations are adopted, interpreted, or implemented in a manner that is inconsistent with our current or planned business practices and that require changes to these practices, the design of our solutions or our privacy policy.

If our security measures are breached or unauthorized access to consumer data is otherwise obtained, our solutions may be perceived as not being secure, clients may curtail or stop using our solutions, and we may incur significant liabilities.

Our operations involve the storage and transmission of confidential information, and security breaches could expose us to a risk of loss of this information, litigation, indemnity obligations to our clients and other liability. If our security measures are breached as a result of third-party action, employee error, malfeasance or otherwise, and, as a result, someone obtains unauthorized access to client and consumer data, including personally identifiable information regarding consumers, our reputation will be damaged, our business may suffer and we could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Even in cases where commercially reasonable security measures are in place, employee errors or intentional acts may be able to circumvent protections meant to secure consumer data from external threats. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose potential sales and existing clients.

We may be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could require us to pay significant damages and limit our ability to operate.

Companies in the Internet and technology industries, and other patent, copyright and trademark holders, own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on claims of infringement or other violations of intellectual property rights. We have received in the past, and expect to receive in the future, notices that claim we or our clients using our solutions have misappropriated or misused other parties’ intellectual property rights. There may be intellectual property rights held by others, including issued or pending patents, copyrights and trademarks, that cover significant aspects of our technologies, content, branding or business methods. Any intellectual property claim against us or against our clients requiring us to indemnify our clients, regardless of merit, could be time-consuming and expensive to settle or litigate and could divert our management’s attention and other resources. These claims also could subject us to significant liability for damages and could result in our having to stop using technology, content, branding or business methods found to be in violation of another party’s rights. In addition, some of our commercial agreements require us to indemnify the other party for third-party intellectual property infringement claims, which could increase the cost to us of an adverse ruling in such an action. We might be required or may opt to seek a license for rights to intellectual property held by others, which may not be available on commercially reasonable terms, or at all. Even if a license is available, we could be required to pay significant royalties, which would increase our operating expenses. We may also be required to develop alternative non-infringing technology, content, branding or business methods, which could require significant effort and expense and make us less competitive. If we cannot license or develop technology, content, branding or business methods for any allegedly infringing aspect of our business, we may be unable to compete effectively. Any of these results could harm our operating results.

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If we do not adequately protect our intellectual property, our ability to compete could be impaired.

If we are unable to protect our intellectual property, our competitors could use our intellectual property to market products and services similar to ours and our ability to compete effectively would be impaired. To protect our intellectual property we rely on a combination of copyright, trademark, patent and trade secret laws, contractual provisions and technical measures. These protections may not be adequate to prevent our competitors from copying or reverse-engineering our technology and services to create similar offerings. The scope of patent protection, if any, we may obtain from our patent applications is difficult to predict and, if issued, our patents may be found invalid, unenforceable or of insufficient scope to prevent competitors from offering similar services. Our competitors may independently develop technologies that are substantially equivalent or superior to our technology. To protect our trade secrets and other proprietary information, we require employees, consultants, advisors, subcontractors and collaborators to enter into confidentiality agreements, and we maintain policies and procedures to limit access to our trade secrets and proprietary information. These agreements and the other actions we take may not provide meaningful protection for our trade secrets, know-how or other proprietary information from unauthorized use, misappropriation or disclosure. Existing copyright and patent laws may not provide adequate or meaningful protection in the event competitors independently develop technology, products or services similar to our solutions. Even if such laws provide protection, we may have insufficient resources to take the legal actions necessary to protect our interests.

Upon discovery of potential infringement of our intellectual property, we promptly take action we deem appropriate to protect our rights. Even if we do detect violations and decide to enforce our intellectual property rights, litigation may be necessary to enforce our rights, and any enforcement efforts we undertake could be time-consuming and expensive, could divert our management’s attention and may result in a court determining that our intellectual property rights are unenforceable. A failure to protect our intellectual property in a cost-effective and meaningful manner could have a material adverse effect on our ability to compete.

As of July 31, 2014, we had five issued U.S. patents and 24 pending U.S. non-provisional patent applications. We cannot be certain that any additional patents will be issued with respect to our current or potential patent applications. Any current or future patents issued to us may be challenged, invalidated or circumvented, may not provide sufficiently broad protection or may not prove to be enforceable inactions against alleged infringers. Furthermore, effective patent, trademark, copyright and trade secret protection may not be available in every country in which our products are available over the Internet. In addition, the legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain and still evolving.

We face potential liability and expenses for legal claims based on online word of mouth and other third-party content that is enabled and delivered by our solutions and services. If we are required to pay damages or expenses in connection with these legal claims, our operating results and business may be harmed.

Our solutions enable our clients to collect and display user-generated content, in the form of online word of mouth, on their websites and other third-party websites. We are also involved in the syndication and moderation of such content and the delivery of other forms of third-party content in connection with our media services. Consequently, in connection with the operation of our business, we face potential liability based on a variety of theories, including fraud, defamation, negligence, copyright or trademark infringement or other legal theories based on the nature and syndication or moderation of this information, and under various laws, including the Lanham Act and the Copyright Act. In addition, it is also possible that consumers could make claims against us for losses incurred in reliance upon information enabled by our solutions, syndicated, moderated or delivered by us or displayed on our clients’ websites or social networks. These claims, whether brought in the United States, or abroad, could divert management time and attention away from our business and result in significant costs to investigate and defend, regardless of the merit of these claims. If we become subject to these or similar types of claims and are not successful in our defense, we may be forced to pay substantial damages. There is no guarantee that we will avoid future liability and potential expenses for legal claims based on the content of the materials that our solutions and services enable. Should the content enabled by our solutions and services violate the intellectual property rights of others or otherwise give rise to claims against us, we could be subject to substantial liability, which could have a negative impact on our business, revenue and financial condition.

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

We use open source software in our solutions. Although we monitor our use of open source software closely, the terms of many open source licenses have not been interpreted by courts in or outside of the United States, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our solutions. We also incorporate certain third-party technologies into our solutions and may desire to incorporate additional third-party technologies in the future. Licenses to new third-party technology may not be available to us on commercially reasonable terms, or at all. We could be required to seek licenses from third parties in order to continue offering our solutions, to re-engineer our technology or to discontinue offering our solutions in the event re-engineering cannot be accomplished on a timely basis, any of which could adversely affect our business, operating results and financial condition.

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Undetected errors or defects in our solutions could result in the loss of revenue, delayed market acceptance of our products or services or claims against us.

Our solutions are complex and frequently upgraded and may contain undetected errors, defects, failures or viruses, especially when first introduced or when new versions or enhancements are released. Our solutions and services may also be vulnerable to fraudulent acts by third-parties, including the posting of inauthentic reviews and click-through fraud, which occurs when an individual clicks on an ad displayed on a website or an automated system is used to create such clicks with the intent of generating the revenue share payment to the publisher rather than to view the underlying content. Despite testing, our solutions, or third-party products that we incorporate into our solutions each may contain undetected errors, defects, viruses or vulnerabilities that could, among other things:

• require us to make extensive changes to our solutions, which would increase our expenses;

• expose us to claims for damages;

• require us to incur additional technical support costs;

• cause negative client or consumer reactions that could reduce future sales;

• generate negative publicity regarding us and our solutions; or

• result in clients electing not to renew their subscriptions for our solutions.

Any of these occurrences could have a material adverse effect upon our business, financial condition and results of operations.

We might require additional capital to support business growth, and this capital might not be available.

We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new solutions or enhance our existing solutions and platforms, enhance our operating infrastructure and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock, including shares of common stock sold in our initial public offering which was completed in February 2012, or our follow-on public offering, which was completed in July 2012. Any debt financing secured by us in the future would likely be senior to our common stock and could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited.

Our loan agreement contains operating and financial covenants that may restrict our business and financing activities and expose us to risks that could adversely affect our liquidity and financial condition.

On July 18, 2007, we entered into a loan and security agreement with a financial institution. As amended to date, the loan agreement provides for borrowings up to $30.0 million, subject to a borrowing formula, under a revolving line of credit, with a sublimit of $2.7 million for the issuance of corporate credit cards and letters of credit on our behalf. As of July 31, 2014, we had $27.0 million in borrowings and a $1.6 million standby letter of credit issued under our loan agreement. The outstanding loan balance is subject to all terms and conditions per the Loan Agreement and its subsequent amendments. The loan is repayable on or before January 31, 2015. If we cannot obtain the funds to repay this loan or otherwise refinance it on terms favorable to us, or at all, our liquidity and general financial condition could be adversely effected. Any borrowings, letters of credit and credit card services pursuant to our loan agreement are secured by substantially all of our assets, including our intellectual property. Our loan agreement limits, among other things, our ability to:

• incur additional indebtedness or guarantee the obligations of other persons;

• make payments on additional indebtedness or make changes to certain agreements related to additional indebtedness;

• enter into hedging arrangements;

• create, incur or assume liens and other encumbrances;

• make loans and investments, including acquisitions;

• make capital expenditures;

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• sell, lease, license or otherwise dispose of assets;

• store inventory and equipment with other persons;

• pay dividends or make distributions on, or purchase or redeem, our capital stock;

• consolidate or merge with or into other entities;

• undergo a change in control;

• engage in new or different lines of business; or

• enter into transactions with affiliates.

Our loan agreement also contains numerous affirmative covenants, including covenants regarding compliance with applicable laws and regulations, reporting, payment of taxes and other obligations, maintenance of insurance coverage, maintenance of bank and investment accounts with the financial institution and its affiliates, registration of intellectual property rights, and certain third-party consents and waivers. The operating and other restrictions and covenants in our loan agreement, and in any future financing arrangements that we may enter into, may restrict our ability to finance our operations, engage in certain business activities, or expand or fully pursue our business strategies, or otherwise limit our discretion to manage our business. Our ability to comply with these restrictions and covenants may be affected by events beyond our control, and we may not be able to meet those restrictions and covenants.

Our loan agreement contains events of default, which include, among others, non-payment defaults, covenant defaults, material adverse change defaults, bankruptcy and insolvency defaults, material judgment and settlement defaults, cross-defaults to certain other material agreements and defaults related to inaccuracy of representations and warranties made by us. An event of default under our loan agreement or any future financing arrangements could result in the termination of commitments to extend further credit, cause any outstanding indebtedness under our loan agreement or under any future financing arrangements to become immediately due and payable and permit our lender to exercise remedies with respect to all of the collateral securing the loans. Accordingly, an event of default could have an adverse effect on our access to capital, liquidity and general financial condition.

If Internet search engines’ methodologies are modified, our search engine optimization (“SEO”) capability could be harmed.

In connection with SEO, capabilities that we provide our clients, including our SEO solution, we depend in part on various Internet search engines, such as Google and Bing, to direct a significant amount of traffic to our clients’ websites. Our ability to influence the number of visitors directed to our clients’ websites through search engines is not entirely within our control. For example, search engines frequently revise their algorithms in an attempt to optimize their search result listings. In 2011, Google announced an algorithm change that affected nearly 12% of their U.S. query results. There cannot be any assurance as to whether these or any future changes that may be made by Google or any other search engines might impact our SEO capability in the long term. Changes in the methodologies used by search engines to display results could cause our clients’ websites to receive less favorable placements, which could reduce the number of users who click to visit our clients’ websites from these search engines. Some of our clients’ websites have experienced fluctuations in search result rankings and we anticipate similar fluctuations in the future. Internet search engines could decide that content on our clients’ websites enabled by our solutions, including online word of mouth, is unacceptable or violates their corporate policies. Any reduction in the number of users directed to our clients’ websites could negatively affect our ability to earn revenue through our SEO solution.

If we are unable to maintain our corporate culture as we grow, we could lose the passion, performance, innovation, openness, teamwork, respect and generosity that we believe contribute to our success and our business may be harmed.

We believe that a critical contributor to our success has been our corporate culture. As we grow and change, we may find it difficult to maintain the values that are fundamental to our corporate culture. Any failure to preserve our culture could negatively affect our ability to recruit and retain personnel and otherwise adversely affect our future success. We may face pressure to change our culture as we grow, particularly if we experience difficulties in attracting competent personnel who are willing to embrace our culture.

Our revenue may be adversely affected if we are required to charge sales taxes in additional jurisdictions or other taxes for our solutions.

We collect or have imposed upon us sales or other taxes related to the solutions we sell in certain states and other jurisdictions. Additional states, countries or other jurisdictions may seek to impose sales or other tax collection obligations on us in the future, or states or jurisdictions in which we already pay tax may increase the amount of taxes we are required to pay. A successful assertion by any state, country or other jurisdiction in which we do business that we should be collecting sales or other taxes on the sale of our products and services could, among other things, create significant administrative burdens for us, result in substantial tax liabilities for past sales, discourage clients from purchasing solutions from us or otherwise substantially harm our business and results of operations.

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If we undertake business combinations and acquisitions, they may be difficult to integrate, disrupt our business, dilute stockholder value or divert management’s attention.

In addition to our acquisition Longboard Media in November 2012 and our acquisition of FeedMagnet in April 2014, we may support our growth through acquisitions of, or investments in, additional complementary businesses, services or technologies in the future. Future acquisitions involve risks, such as:

• misjudgment with respect to the value, return on investment or strategic fit of any acquired operations or assets;

• challenges associated with integrating acquired technologies, operations and cultures of acquired companies;

• exposure to unforeseen liabilities;

• diversion of management and other resources from day-to-day operations;

• possible loss of key employees, clients, suppliers and partners;

• higher than expected transaction costs;

• potential loss of commercial relationships and clients based on their concerns regarding the acquired business or technologies; and

• additional dilution to our existing stockholders if we use our common stock as consideration for such acquisitions.

As a result of these risks, we may not be able to achieve the expected benefits of any acquisition. If we are unsuccessful in completing or integrating acquisitions, we may be required to reevaluate our growth strategy and we may incur substantial expenses and devoted significant management time and resources in seeking to complete and integrate the acquisitions.

Future business combinations could involve the acquisition of significant intangible assets. We may need to record write-downs from future impairments of identified intangible assets and goodwill. These accounting charges would reduce any future reported earnings or increase a reported loss. In addition, we could use substantial portions of our available cash, including some or substantially all of the proceeds from our initial public offering, to pay the purchase price for acquisitions. Subject to the provisions of our existing indebtedness, it is possible that we could incur additional debt or issue additional equity securities as consideration for these acquisitions, which could cause our stockholders to suffer significant dilution.

We may not be able to utilize a significant portion of our net operating loss or research tax credit carry-forwards, which could adversely affect our operating results.

As of July 31, 2014, we had federal net operating loss carry-forwards of $196.5 million due to prior period losses, which expire beginning in 2027. We also have federal research tax credit carry-forwards of approximately $4.8 million that will begin to expire in 2027. As of July 31, 2014, we had state net operating loss carry-forwards of $89.1 million, which will begin expiring in 2016 if not utilized, and research and development credits of $1.7 million, of which a portion will begin expiring in 2034 and a portion will not expire. Realization of these net operating loss and research tax credit carry-forwards depends on many factors, including our future income. There is a risk that due to regulatory changes or unforeseen reasons our existing carry-forwards could expire or otherwise be unavailable to offset future income tax liabilities, which would adversely affect our operating results. In addition, under Section 382/383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carry-forwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income may be limited. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carry-forwards or other pre-change tax attributes to offset U.S. federal and state taxable income may be subject to limitations.

We are exposed to fluctuations in currency exchange rates.

We face exposure to adverse movements in currency exchange rates, which may cause our revenue and operating results to differ materially from expectations. A decline in the U.S. dollar relative to foreign currencies would increase our non-U.S. revenue, when translated into U.S. dollars. Conversely, if the U.S. dollar strengthens relative to foreign currencies, our revenue would be adversely affected. Our operating results could be negatively impacted depending on the amount of expense denominated in foreign currencies. As exchange rates vary, revenue, cost of revenue, operating expenses and other operating results, when translated, may differ materially from expectations. In addition, our revenue and operating results are subject to fluctuation if our mix of U.S. and foreign currency denominated transactions and expenses changes in the future. We currently enter into forward exchange contracts and as we continue to implement hedging strategies to mitigate foreign currency risk, these strategies might not eliminate our exposure to foreign exchange rate fluctuations and would involve costs and risks of their own, such as ongoing management time and expertise, external costs to implement the strategies and potential accounting implications.

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The requirements of being a public company may strain our resources and divert management’s attention

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NASDAQ and other applicable securities and rules and regulations. As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010, as well as rules subsequently implemented by the SEC and The NASDAQ Stock Market LLC, impose various requirements on public companies, including establishing effective internal controls and certain corporate governance practices. Our management and other personnel have begun to devote a substantial amount of time to these compliance initiatives, and additional laws and regulations may divert further management resources.

As a public company, we are also required, under Section 404 of the Sarbanes-Oxley Act (“Section 404”), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a deficiency or 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 and interim financial statements will not be prevented or detected on a timely basis. We will be required to disclose changes made in our internal control and procedures on a quarterly basis. However, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the date we are no longer an “emerging growth company” as defined in the recently enacted Jumpstart Our Business Startups Act of 2012, or the JOBS Act, if we take advantage of the exemptions contained in the JOBS Act. We may remain an “emerging growth company” through April 30, 2017, which would be the last day of the fiscal year following the fifth anniversary of our initial public offering, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any October 31 before February 23, 2017, we would cease to be an “emerging growth company” at the end of that fiscal year.

We have, and will continue to consume, management resources and incur significant expenses for section 404 compliance on an ongoing basis. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal controls are effective. If we are unable to conclude that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our common stock to decline.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. Greater expenditures may be necessary in the future with the advent of new laws, regulations and stock exchange listing requirements pertaining to public companies, particularly after we are no longer an emerging growth company. Moreover, if we are not able to comply with the requirements of new compliance initiatives in a timely manner, the market price of our stock could decline, and we could be subject to investigations and other actions by the SEC and The NASDAQ Stock Market LLC, or other regulatory authorities, which would require additional financial and management resources. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

Our stock price has been volatile and may be subject to volatility in the future.

The market price of our common stock has been volatile historically and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. For example, fluctuations in the valuation of companies perceived by investors to be comparable to us or in valuation metrics, such as our price to earnings ratio, could impact our stock price. Additionally, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations and general economic, political and market conditions, such as recessions, changes in U.S. credit ratings, interest rate changes or international currency fluctuations, may negatively affect the market price of our common stock. In the past, many companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us, regardless of the merits or outcome, could result in substantial costs and divert our management’s attention from other business concerns, which could materially harm our business.

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If securities analysts do not continue to publish research or publish negative research about our business, our stock price and trading volume could decline.

The trading market for our common stock depends in part on the research and reports that securities analysts publish about us or our business. If one or more of the analysts who cover us downgrade our stock or publish negative research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our stock or fail to publish reports on us regularly, we could lose visibility in the market for our stock and demand for our stock could decrease, which could cause our stock price or trading volume to decline.

The concentration of our capital stock ownership with insiders will likely limit your ability to influence corporate matters.

Our executive officers, directors, beneficial owners of 5.0% or more of our outstanding shares of common stock and affiliated entities together owned approximately 53.4% of our common stock outstanding as of July 31, 2014. As a result, these stockholders, acting together, may be able to control our management and affairs and matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as mergers, consolidations or the sale of substantially all of our assets. Consequently, this concentration of ownership could limit your ability to influence corporate matters and may have the effect of delaying or preventing a change of control, including a merger, consolidation or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if such a change of control would benefit our other stockholders. This significant concentration of share ownership may adversely affect the trading price for our common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders.

Our stock price could decline due to the large number of outstanding shares of our common stock eligible for future sale.

The price of our common stock could decline if there are substantial sales of our common stock in the public stock market. We had an aggregate of 78,083,156 outstanding shares of common stock as of August 29, 2014. Shares beneficially owned by our affiliates and certain employees are subject to volume and other restrictions under Rules 144 or 701 of the Securities Act, as well as our insider trading policy and any applicable 10b5-1 trading plan. Certain of our employees, including many of our executive officers, have entered into 10b5-1 trading plans providing for sales of shares of our common stock from time to time.

The holders of certain shares of our common stock have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

We have also registered the issuance of all shares of common stock that we have issued and may issue under our option plans. These shares can be freely sold in the public market upon issuance, subject to the satisfaction of applicable vesting provisions, Rule 144 volume limitations and manner of sale, notice and public information requirements applicable to our affiliates.

Also, in the future, we may issue securities in connection with investments and acquisitions. The amount of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding stock. Due to these factors, sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.

We do not anticipate paying any dividends on our common stock.

We do not anticipate paying any cash dividends on, or making repurchases of, our common stock in the foreseeable future. If we do not pay cash dividends, you could receive a return on your investment in our common stock only if the market price of our common stock has increased when you sell your shares. In addition, the terms of our loan and security agreement currently restrict our ability to pay dividends or purchase our stock.

We are an “emerging growth company,” and the reduced disclosure requirements applicable to “emerging growth companies” could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more; (ii) April 30, 2017; (iii) the

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date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. We will be deemed a large accelerated filer on the last day of the fiscal year for which the market value of our common equity held by non-affiliates exceeds $700 million, measured on October 31. As of October 31, 2013, we did not meet this threshold. We cannot predict if investors will find our common stock less attractive to the extent we rely on the exemptions available to emerging growth companies. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

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

The unfavorable outcome of any pending or future litigation or administrative action and expenses incurred in connection with litigation could result in additional litigation, financial losses or harm to our business.

We are, and in the future may be, subject to legal actions in the ordinary course of our operations, both domestically and internationally. For example, on January 10, 2013, the U.S. Department of Justice filed a complaint against us with the U.S. District Court for the Northern District of California, San Francisco Division, with respect to our acquisition of PowerReviews. See Item 1: “Legal Proceedings” for further discussion of this claim. In addition, on March 12, 2013, a purported shareholder derivative action was filed in the Texas State District Court for Travis County, Texas against certain of our officers and directors, former officers and directors, and against us as nominal defendant in Edmans v. Hurt et al., Case No. D-1-GN-13-000874. The complaint in this matter alleges corporate waste, breaches of fiduciary duties and breaches of the Company’s corporate policies in connection with the acquisition of PowerReviews and certain of the Company’s officers’ and directors’ sales of shares of the Company’s stock. The complaint requests declaratory judgment, a disgorgement of $91.4 million in proceeds received from such sales of the Company’s stock, unspecified damages on behalf of the Company, reasonable attorneys’, accountants’ and experts’ fees, and equitable relief. On July 9, 2014, the parties attended mediation and agreed to preliminary settlement terms, subject to board approval, court approval, and notice to our shareholders. See Item 1: “Legal Proceedings” for further description of each of this claim. There can be no assurances as to the favorable outcome of any litigation. An unfavorable outcome in any litigation matter against us could result in additional litigation. In addition it can be costly to defend litigation and these costs could negatively impact our financial results.

Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.

Our current certificate of incorporation and bylaws contain provisions that could delay or prevent a change in control of our company. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include:

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

• not providing for cumulative voting in the election of directors;

• authorizing our board of directors to issue, without stockholder approval, preferred stock with rights senior to those of our common stock;

• prohibiting stockholder action by written consent; and

• requiring advance notification of stockholder nominations and proposals.

These and other provisions in our current certificate of incorporation and bylaws, and under Delaware law could discourage potential takeover attempts, reduce the price that investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Use of Proceeds from Public Offering of Common Stock

On February 29, 2012, we completed our initial public offering of 10,906,941 shares of our common stock, of which 10,422,645 shares were offered by us and 484,296 shares were offered by selling stockholders at a price to the public of $12.00 per share. The aggregate offering price for shares sold in the offering was approximately $130.9 million. This offering was effected on

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February 23, 2012 pursuant to a registration statement on Form S-1 (File No. 333-176506), which the SEC declared effective on such date. Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC acted as representatives of the underwriters in the offering. The gross proceeds that we raised from the sale of our common stock in the offering was approximately $125.1 million, resulting in net proceeds from the sale of our common stock of approximately $112.8 million, after deducting underwriting discounts and commissions of approximately $8.8 million and other offering expenses of approximately $3.5 million. No payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries, or as a result of sales of shares of common stock by selling stockholders in the offering.

Some of the proceeds from our initial public offering have been used for working capital and general corporate purposes. We initially invested our net proceeds from our initial public offering in U.S. government-guaranteed short-term investment. In connection with our acquisition of PowerReviews, we used approximately $31.1 million in cash in our first fiscal quarter of 2013. On November 5, 2012, we used approximately $26.9 million in cash in our purchase of Longboard Media. We have broad discretion over the uses of the net proceeds. Pending other uses, we plan to invest the remaining net proceeds from our initial public offering and follow-on offering in short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government. There have been no material differences between the actual use of proceeds and intended use of proceeds as originally described in our initial public offering or follow-on offering.

Item 5. Other Information

On May 29, 2014, the Compensation Committee of our Board of Directors (the “Compensation Committee”) approved target bonuses for our fiscal year ending April 30, 2015 (“Fiscal Year 2015”) for the Company’s named executive officers, including the Company’s principal executive officer and principal financial officer. Although the Committee deferred the approval of the Fiscal Year 2015 executive bonus plan (the “2015 Bonus Plan”) and the performance measures and payout formulas to be used for the 2015 Bonus Plan, the following target bonuses were approved:

Executive Officer	Title	Target Bonus		% of Base Salary
Gene Austin	Chief Executive Officer		450,000		100	%
James Offerdahl	Chief Financial Officer		192,000		60	%
Bryan C. Barksdale	Chief Legal Officer, General Counsel and Secretary		116,000		40	%
Ryan D. Robinson	Chief People Officer		106,000		40	%
Kelly Connery	Chief Revenue Officer		250,000		88	%

On June 10, 2014, the Compensation Committee approved the performance measures and payout formulas to be used for the 2015 Bonus Plan. For each named executive officer participating in the 2015 Bonus Plan except the Company’s Chief Revenue Officer, the total bonus opportunity will be based on the achievement of two corporate performance measures: net bookings, and adjusted EBITDA. The net bookings measure represents 65% of the target bonus award and the adjusted EBITDA measure represents 35% of the target bonus award.

For the Company’s Chief Revenue Officer, the total bonus opportunity will be based on the achievement of three corporate performance measures: gross bookings, net bookings, and new clients booked. The gross bookings measure represents 60% of the target bonus award, net bookings measure represents 20% of the target bonus award and the new clients booked measure represents 20% of the target bonus award.

Additionally, the payments for achievement of each corporate performance measure are subject to certain thresholds. The Company must meet minimum thresholds for each corporate performance measure in order for the named executive officers to receive the portion of the target bonus attributable to such corporate performance measure. The named executive officers, other than the Chief Revenue Officer, will be entitled to 50% of the target bonus portion attributable to the net bookings target upon achievement of 83.333% of the net bookings goal and 50% of the target bonus portion attributable to the EBITDA target upon achievement of 88.888% of the EBITDA goal. The Chief Revenue Officer will be entitled to 50% of the target bonus portion attributable to the gross bookings target upon achievement of 90% of the gross bookings goal, 50% of the target bonus portion attributable to the net bookings target upon achievement of 83.333% of the net bookings goal and 50% of the portion attributable to the new clients booked target upon achievement of 75% of the new clients booked goal.

The bonus amounts payable for each of the performance measures may exceed the target bonus amounts attributable to such measures. The multipliers for each corporate performance measure applicable to each of the named executive officers other than the Chief Revenue Officer are capped as set forth in the following table:

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Corporate Performance Measure	Maximum Payout (% of Target Payout)	Achievement Required for Maximum Payout (% of Goal)
Net Bookings	150%	Greater than 149.242%
Adjusted EBITDA	110%	107.143%

The multipliers for each corporate performance measure applicable to the Chief Revenue Officer are capped as set forth in the following table:

Corporate Performance Measure	Maximum Payout (% of Target Payout)	Achievement Required for Maximum Payout (% of Goal)
Gross Bookings	200%	Greater than 130%
Net Bookings	150%	Greater than 149.242%
New Clients	140%	Greater than 112%

Additionally, on June 10, 2014, the Compensation Committee approved the following equity awards to strengthen long-term incentive and retention:

• Gene Austin, our President and Chief Executive Officer, was granted 125,100 restricted stock units and an option to purchase 244,400 shares of our common stock;

• Kelly E. Connery, our Chief Revenue Officer, was granted 34,600 restricted stock units and an option to purchase 67,500 shares of our common stock;

• Ryan D. Robinson, our Chief People Officer, was granted 18,700 restricted stock units and an option to purchase 36,600 shares of our common stock; and

• Bryan C. Barksdale, our Chief Legal Officer, General Counsel and Secretary, was granted 31,200 restricted stock units and an option to purchase 61,000 shares of our common stock.

Item 6. Exhibits

See the Exhibit Index immediately following the signature page of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

	BAZAARVOICE, INC.
Dated: September 4, 2014	/s/ James R. Offerdahl
	James R. Offerdahl
	Chief Financial Officer
	(Principal Financial Officer)

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EXHIBIT INDEX

Exhibit Number	Exhibit Description	Incorporated by Reference
		Form	File No.	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation, as currently in effect	S-1	333-176506	3.1	August 26, 2011
3.2	Amended and Restated Bylaws, as currently in effect	S-1	333-176506	3.2	August 26, 2011
10.1*	Syndication Services Agreement by and between the Registrant and Wavetable Labs, Inc. dated July 2, 2014
10.2*	Transition Services Agreement by and between the Registrant and Wavetable Labs, Inc. dated July 2, 2014
10.3*	First Amendment to Transition Services Agreement by and between the Registrant and PowerReviews, Inc. dated August 29, 2014
31.1*	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** The financial information contained in these XBRL documents is unaudited and these are not the official publicly filed financial statements of Bazaarvoice, Inc. The purpose of submitting these XBRL documents is to test the related format and technology, and, as a result, investors should continue to rely on the official filed version of the furnished documents and not rely on this information in making investment decisions. In accordance with Rule 402 of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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EX-10.1

Exhibit 10.1

SYNDICATION SERVICES AGREEMENT

This Syndication Services Agreement (this “Agreement”) is entered into on July 2, 2014 (the “Effective Date”) by and among Bazaarvoice, Inc., a Delaware corporation (“Bazaarvoice”), and Wavetable Labs, Inc., a Delaware corporation (“Wavetable”). Bazaarvoice and Wavetable are sometimes referred to in this Agreement individually as a “Party” or together as the “Parties.”

Recitals

A. Pursuant to that certain Amended and Restated Agreement and Plan of Merger dated July 2, 2014 (as the same may hereafter be amended or modified, the “Merger Agreement”) by and among Bazaarvoice and Wavetable Labs, LLC, a Delaware limited liability company (“Wavetable LLC”), among others, Wavetable intends to acquire Bazaarvoice’s subsidiary, PowerReviews, LLC (“PowerReviews”).

B. Prior to the Closing Date, Wavetable LLC converted from a Delaware limited liability company into Wavetable, a Delaware corporation.

C. Effective as of the Effective Time (all references herein to Effective Time shall have the meaning as defined in the Merger Agreement), Bazaarvoice desires to provide to Wavetable, and Wavetable desires to receive from Bazaarvoice, certain services relating to the syndication of reviews of products of certain Wavetable clients to certain of Bazaarvoice’s clients on the terms and subject to the conditions of this Agreement.

D. Effective as of the Effective Time, Wavetable desires to provide to Bazaarvoice, and Bazaarvoice desires to receive from Wavetable, certain services relating to the syndication of reviews of products of certain Bazaarvoice clients to certain of Wavetable’s clients on the terms and subject to the conditions of this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

Article 1

Definitions

1.1 “Affiliates” means, with respect to any Person, any other Person controlling, controlled by or under common control with such Person, but a Person is an “Affiliate” only during the period that such control exists. For purposes of this definition and this Agreement, the term “control” (and correlative terms) means the power, whether by contract, equity ownership or otherwise, to direct the policies or management of a Person.

1.2 “BV Client” means a ratings and reviews client of Bazaarvoice.

1.3 “BV Content” text-based (with, optionally, embedded photos or videos) product ratings and reviews content and related metadata from the applicable BV Client that has been authenticated and moderated by Wavetable, to the extent Wavetable deems necessary, in anticipation of syndication to a PR Client.

1.4 “BV Intranetwork Content” means text-based (with, optionally, embedded photos or videos) product ratings and reviews content and related metadata from the applicable BV Client that has been authenticated and moderated by Bazaarvoice, to the extent Bazaarvoice deems necessary, in anticipation of syndication to another BV Client.

1.5 “Person” means an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization or other entity.

1.6 “PR Client” means a ratings and reviews client of PowerReviews, Wavetable or their respective Affiliates. For avoidance of doubt, this includes such clients existing as of the Effective Time and all clients of PowerReviews, Wavetable and their Affiliates after the Effective Time for so long as such clients remain ratings and review clients of PowerReviews, Wavetable or their Affiliates.

1.7 “PR Content” means text-based (with, optionally, embedded photos or videos) product ratings and reviews content and related metadata from the applicable PR Client that has been authenticated and moderated by Bazaarvoice, to the extent Bazaarvoice deems necessary, in anticipation of syndication to a BV Client.

1.8 “PR Intranetwork Content” means text-based (with, optionally, embedded photos or videos) product ratings and reviews content and related metadata from the applicable PR Client that has been authenticated and moderated by Wavetable or its Affiliates, to the extent Wavetable deems necessary, in anticipation of syndication to another PR Client.

1.9 “Review Content” means either or both the BV Content and PR Content as the context requires.

Article 2

Syndication Services

2.1 Syndication Services.

(a) Subject to the terms and conditions set forth in this Agreement, during the Term, (a) Bazaarvoice will provide services in connection with the syndication of PR Content from PR Clients to BV Clients that have agreed to accept such PR Content as further described in Exhibit A (the “BV Services”), and (b) Wavetable will provide services in connection with the syndication of BV Content from BV Clients to PR Clients that have agreed to accept such BV Content as further described in Exhibit B (the “Wavetable Services” and collectively with the BV Services, the “Services”).

(b) The BV Services will be provided using the then-most current syndication technology capabilities as are made generally commercially available to BV Clients (e.g., not including beta-stage technology) as it relates to BV Intranetwork Content (“BV Intranetwork Services”). Content that is not within the definition of “PR Content” are not and will not be within the scope of the BV Services or within the scope of “PR Content”. The BV Services shall represent at a minimum the operational processes, access and services in place and generally commercially available to BV Clients as of the Effective Date to ensure continuity of service (and backward compatibility as set forth on Exhibit A) to PR Clients.

(c) The Wavetable Services will be provided using the then-most current syndication technology capabilities as are made generally commercially available to PR Clients (e.g., not including beta-stage technology) as it relates to PR Intranetwork Content (“PR Intranetwork Services”). Content that is not within the definition of “BV Content” are not and will not be within the scope of the Wavetable Services or within the scope of “BV Content”. The Wavetable Services shall represent at a minimum the operational processes, access and services in place and generally commercially available to PR Clients as of the Effective Date to ensure continuity of service (and backward compatibility as set forth on Exhibit B) to BV Clients.

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2.2 Contract Pricing to Clients.

(a) Each Party may sell syndication services to its respective clients on its own terms, including pricing; provided, that Bazaarvoice shall use a consistent pricing model for any individual client whether it is selling Wavetable Services or BV Intranetwork Services and Wavetable shall use a consistent pricing model for any individual client whether it is selling BV Services or Wavetable Intranetwork Services. For example, if Bazaarvoice sell a syndication package to a BV Clients that includes access to all BV Clients, such package shall include access to all PR Clients or if Bazaarvoice sells a syndication package that is based on the number of Edges, each Edge shall be priced identically. For avoidance of doubt, each party may price syndication services to individual clients as they deem fit.

(b) Bazaarvoice agrees that it will not charge a BV Client to receive PR Content if it does not charge such BV Client to receive BV Intranetwork Content. If Bazaarvoice does charge a BV Client to receive PR Content, it may not discriminate based on pricing for those clients receiving PR Content versus BV Intranetwork Content.

(c) Wavetable agrees that it will not charge a PR Client to receive BV Content if it does not charge such PR Client to receive PR Intranetwork Content. If Wavetable does charge a PR Client to receive BV Content it may not discriminate based on pricing for those clients receiving BV Content versus PR Intranetwork Content.

2.3 Subcontractors. A Party may engage one or more Subcontractors to perform all or any portion of its duties under this Agreement, provided that any such Subcontractor agrees in writing to be bound by confidentiality obligations at least as protective of the other Party as the terms of Article 5 (Confidentiality). As used in this Agreement, “Subcontractor” means any individual, partnership, corporation, firm, association, unincorporated organization, joint venture, trust or other entity engaged by a Party to perform Services under this Agreement. A Party will not have any obligation to engage any Subcontractor to provide any Service. A Party engaging a Subcontractor shall be and remain fully responsible and liable for fulfilling all of the Party’s obligations under this Agreement.

2.4 Non-Discrimination.

(a) Notwithstanding anything else herein to the contrary other than in Section 2.2, Bazaarvoice covenants that it will on non-discriminatory terms provide the BV Services to PR Clients as it provides BV Intranetwork Services to BV Clients. For the avoidance of doubt, the following is a non-exhaustive list of terms for which Bazaarvoice will not discriminate: timing and prioritization of delivery and servicing of the BV Intranetwork Services to BV Clients and BV Services to PR Clients (i.e., pre-sales support (as described in Exhibit A), set up time, matching, refresh of data, importing and exporting product catalogs and reviews, timing to authenticate, updating reviews and products, escalation processes, determining edges and matches, etc.), implementation status and go-live dates, speed of content transmission, server lag time and/or uptime, alignment of product databases, database synchronization, content presentation, pricing to Bazaarvoice’s customers based on syndication partner(s), offering of available BV Intranetwork Content versus available PR Content to BV Clients, data fields transmitted or utilized, and integration with Question and Answer products. Nothing in this section shall be interpreted to permit Wavetable’s, PowerReviews’ or their Affiliates’ customers receiving BV Services to violate any terms of service that are applicable to all of Bazaarvoice’s BV Intranetwork Services. Bazaarvoice will grant exceptions to its default moderation standards for PR Clients at Wavetable’s request in all material respects to the same extent Bazaarvoice grants exceptions to its default moderation standards for BV Clients.

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(b) Notwithstanding anything else herein to the contrary other than in Section 2.2, Wavetable covenants that it will on non-discriminatory terms provide Wavetable Services to BV Clients as it provides PR Intranetwork Services to PR Clients. For the avoidance of doubt, the following is a non-exhaustive list of terms for which Wavetable will not discriminate: timing and prioritization of delivery and servicing of the PR Intranetwork Services to PR Clients and Wavetable Services to BV Clients (i.e., pre-sales support (as described in Exhibit B), set up time, matching, refresh of data, importing and exporting product catalogs and reviews, timing to authenticate, updating reviews and products, escalation processes, determining edges and matches, etc.), implementation status and go-live dates, speed of content transmission, server lag time and/or uptime, alignment of product databases, database synchronization, content presentation, pricing to Wavetable’s customers based on syndication partner(s), offering of available PR Intranetwork Content versus available BV Content to PR Clients, data fields transmitted or utilized, and integration with Question and Answer products. Nothing in this section shall be interpreted to permit Bazaarvoice’s customers receiving Wavetable Services to violate any terms of service that are applicable to all of Wavetable customers receiving Wavetable Intranetwork Services. Wavetable will grant exceptions to its default moderation standards for BV Clients on Bazaarvoice’s request in all material respects to the same extent Wavetable grants exceptions to its default moderation standards for PR Clients.

2.5 Representations and Warranties of Bazaarvoice. Bazaarvoice represents and warrants that as of the Effective Date (i) it does not offer any products or services in connection with syndication that provide the ability to share product ratings or reviews and related content between two or more customers except for the services in connection with the syndication of BV Intranetwork Content from BV Clients or ratings and reviews clients of PowerReviews to (A) other BV Clients or (B) to ratings and reviews clients of PowerReviews that, in each case, have agreed to accept such BV Intranetwork Content and (ii) it does not syndicate any content other than text-based (with, optionally, embedded photos or videos) product ratings and reviews content and related metadata.

2.6 Non-Disparagement of Network Access. Bazaarvoice will represent Wavetable’s ability to access Bazaarvoice’s syndication network in a nondiscriminatory fashion and in a manner consistent with statement attached here to as Exhibit C. Wavetable may request that the statement in Exhibit C be amended from time to time. Any such amendment will be subject to Bazaarvoice’s approval, not to be unreasonably withheld.

Article 3

Compensation

3.1 Charges for Services. For performance of the Services, each Party will pay the other Party the applicable compensation set forth in Exhibit D (the “Fee Schedule”).

3.2 Payment Terms. Each Party will bill the other Party for all charges pursuant to this Agreement as set forth in the Fee Schedule. The invoiced Party will pay the invoicing Party for undisputed charges for Services provided under this Agreement within 30 days after receipt of an invoice therefor. Late payments will bear interest at the lesser of 12% per annum or the maximum rate allowed by law. If a Party (the “Defaulting Party”) fails to pay the full amount of any invoice within 30 days of the relevant payment due date, such failure will be considered a material breach of this Agreement (except to the extent of any amounts reasonably disputed by the Defaulting Party in good faith) and the other Party (the “Suspending Party”) may, without liability, subject to Section 4.2(b), suspend its obligations under this Agreement to provide any and all Services to the Defaulting Party until such time as undisputed

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portions of such invoices have been paid in full; provided, that (a) the Suspending Party has provided written notice (the “Payment Notice”) to the Defaulting Party describing the payment default (including the amount owing) and indicating that it intends to suspend the Services as of a date that is no less than 10 days from the date of its delivery of the Payment Notice (the “Suspension Date”) and (b) the Defaulting Party has not paid the amount owing to Suspending Party prior to the Suspension Date. Should the invoiced Party dispute any portion of any invoice, the invoiced Party will promptly notify the invoicing Party in writing of the nature and basis of the dispute and will promptly pay any previously disputed amount within 5 days of resolution of the dispute. No Party will offset any amounts payable by it under this Agreement against any amounts owed to it by the other Party or any of the other Party’s Affiliates under this Agreement or under the Merger Agreement or any other agreement contemplated by, or entered into in connection with, the Merger Agreement.

3.3 Taxes. Each Party is responsible for payment of all taxes (including sales and use taxes and other similar taxes), duties, fees and other charges imposed by any federal, state or local governmental authority on the fees paid by such Party to the other Party hereunder other than taxes based on the other Party’s income, net worth, capital, or business activity or other similar taxes (collectively, “taxes”). If the other Party is required by law to collect such taxes, the other Party shall include the amount of such taxes in an invoice issued to the responsible Party, which shall timely pay such taxes to the other Party. Otherwise, the responsible Party shall make timely remittance of the taxes directly to the applicable governmental authority. Each Party will pay any additional taxes (but not penalties or interest) to the other Party as are necessary to ensure that the net amounts received by the other Party after all such taxes are paid are equal to the amounts that the other Party would have been entitled to in accordance with this Agreement as if the taxes did not exist, regardless of whether such taxes were included on the initial applicable invoice to the invoiced Party. The Parties shall cooperate to minimize the amount of taxes imposed on services provided under this Agreement and in any audit, investigation or litigation regarding such taxes.

Article 4

Term; Termination

4.1 Term. The term of this Agreement (the “Term”) will commence at the Effective Time and continue until the fourth anniversary of the date of the Effective Time unless earlier terminated as set forth in this Agreement.

4.2 Termination of the Agreement.

(a) Either Party may terminate this Agreement if the other Party materially breaches a provision of this Agreement and does not cure such breach (or does not take reasonable steps required under the circumstances to cure such breach) within 90 days after being given written notice of the breach, provided that the terminating Party has complied with the provisions of Section 8.4 (Dispute Resolution); provided further that Bazaarvoice has no right to terminate this Agreement as a result of Wavetable’s failure to make payment if Wavetable is disputing in good faith its obligation to pay with respect to a default in payment provided that all undisputed amounts due have been paid; provided, further, that Bazaarvoice may only terminate this Agreement with respect to Wavetable’s provision of the Wavetable Services and such Bazaarvoice termination shall not terminate its obligations to continue to provide the BV Services in accordance with the terms set forth herein unless such termination is due to (a) Wavetable’s failure to make an undisputed payment hereunder or (b) material breach of Section 5.3 (Confidentiality Obligations) or Article 7 (Indemnification). If any proceeding is commenced by or against either Party for the purpose of subjecting its assets to any law relating to bankruptcy or insolvency or for the appointment of a receiver for the business, property, affairs or revenues of such Party, or if such Party makes a general assignment of its assets for the benefit of creditors, then the other Party may, at its

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option without further notice to or demand of, in addition to all other rights and remedies provided at law or in equity, terminate this Agreement, effective immediately upon written notice to the other Party hereto, and all rights, privileges and licenses granted or created under this Agreement.

(b) Notwithstanding anything else herein to the contrary, Bazaarvoice shall not suspend or terminate this Agreement prior to the fourth anniversary of the date of the Effective Time without first notifying the Trustee and Wavetable in writing in accordance with Section 8.4 and receiving the written approval of the Court (as defined in Section 8.4) that it may suspend or terminate this Agreement.

4.3 Termination of Wavetable Services. Wavetable may terminate the provision of Wavetable Services to Bazaarvoice at any time during the Term on no less than 90 days’ notice to Bazaarvoice. Such termination date is the “Wavetable Services Termination Date”.

4.4 Wind-Down Period. For a period of up to one year period following the end of a Party’s obligation to provide Services to the other Party (i.e., following the end of the Term or, with respect to the Wavetable Services, following the Wavetable Services Termination Date), as determined by the Party receiving the applicable Services (the “Wind-Down Period”), the Parties will cooperate to terminate syndication of the applicable Review Content and related activities. Except as otherwise agreed by the Parties, the Party providing Services that have been terminated may remove the Review Content of the other Party’s clients from its systems and cease providing such Review Content to the clients of the Party receiving Services at any time during the Wind-Down Period.

4.5 Survival. Section 4.2 (Termination), 4.4 (Wind-Down Period), Article 5 (Confidentiality), Section 6.2 (Disclaimer of Warranty and Limitation of Liability), Article 7 (Indemnification) (with respect to claims arising during the Term) and Article 8 (Miscellaneous) will survive termination or expiration of this Agreement, as will Article 3 (Compensation) with respect to fees and charges payable for Services rendered through the end of the Term and during the Wind-Down Period.

Article 5

Confidentiality

5.1 Definition. “Confidential Information” means any secret, confidential or proprietary information provided by one Party (the “Disclosing Party”) to the other (the “Receiving Party”) in connection with this Agreement, whether provided in written, oral, graphic, video, computer or other form, or which is otherwise deemed to be “Confidential Information” by the terms of this Agreement and all other information that has not been made available by the Disclosing Party to the general public, including information that relates to or is (a) the existing or proposed research, development efforts, business, plans, products, services, finances, technology or affairs of the Disclosing Party or (b) third party confidential information entrusted to the Disclosing Party.

5.2 Exclusions. “Confidential Information” excludes information that (a) the Receiving Party can demonstrate is: (i) now or hereafter, through no unauthorized act or failure to act on Receiving Party’s part, in the public domain, (ii) known to the Receiving Party from a source other than the Disclosing Party (including former employees of the Disclosing Party) (and with respect to Bazaarvoice’s non-disclosure obligation, this clause (ii) exception shall not include information regarding PowerReviews that was confidential as of the date hereof) without an obligation of confidentiality at the time Receiving Party receives the same from the Disclosing Party, as evidenced by written records, (iii) hereafter furnished to the Receiving Party by a third party as a matter of right and without restriction on disclosure, (iv) furnished to others by the Disclosing Party without restriction on disclosure or (v) independently

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developed by the Receiving Party without use of the Disclosing Party’s Confidential Information, and (b) Bazaarvoice or Wavetable (and its officers, directors, employees, affiliates and agents) is permitted to use without a confidentiality restriction pursuant to the Merger Agreement or other Transaction Documents.

5.3 Confidentiality Obligations. The Receiving Party shall treat as confidential all of the Disclosing Party’s Confidential Information and shall not use such Confidential Information except as expressly permitted under this Agreement. Without limiting the foregoing, the Receiving Party shall use the same degree of care and means that it utilizes to protect its own information of a similar nature, but in any event not less than reasonable care and means, to prevent the unauthorized use or the disclosure of such Confidential Information to third parties. Confidential Information may be disclosed only to employees, contractors or permitted assignees of the Receiving Party with a reasonable “need to know” who are instructed and under a duty not to disclose the Confidential Information and not to use the Confidential Information for any purpose, except as set forth in this Agreement. Nothing in this Agreement shall prevent the Receiving Party from disclosing Confidential Information to the extent the Receiving Party is legally compelled to do so by any governmental investigative or judicial agency pursuant to proceedings over which such agency has jurisdiction, or in connection with the requirements of an initial public offering or securities filing; provided, however, that prior to any such disclosure, the Receiving Party shall (a) assert the confidential nature of the Confidential Information to the agency, (b) if legally permitted, immediately notify the Disclosing Party in writing of the agency’s order or request to disclose, and (c) cooperate fully with the Disclosing Party in protecting against any such disclosure and/or obtaining a protective order narrowing the scope of the compelled disclosure and protecting its confidentiality. Notwithstanding the foregoing or anything herein to the contrary, Wavetable and its officers, directors, employees, affiliates and agents shall not be subject to the provisions of this Section 5.3 or any restrictions on the use or Confidential Information to the extent exempt pursuant to (i) the Merger Agreement or any other agreement between Bazaarvoice and Wavetable contemplated by, or entered into in connection with, the Merger Agreement or (ii) the DOJ Order (as defined below).

5.4 Survival of Confidentiality Obligations. The obligations of the Parties with respect to Confidential Information, as are set forth in this ARTICLE 5, shall remain in force and effect at all times during the Term and: (i) with respect to Confidential Information that constitutes a trade secret under applicable law, for so long as such trade secret status is maintained; and (ii) with respect to Confidential Information that does not constitute a trade secret, for five (5) years after termination or expiration of the Term of this Agreement.

Article 6

Warranties and Covenants

6.1 Warranties.

(a) By Bazaarvoice. Bazaarvoice warrants to Wavetable that:

(i) the BV Services shall be performed in a timely, workpersonlike, and professional manner by appropriately qualified, certified, skilled, and experienced personnel, in accordance with all applicable laws, regulations and industry standards, and shall meet the service levels applicable to the BV Services set forth herein; and

(ii) any software or firmware provided in the course of the BV Services do not and will not contain, and Bazaarvoice will not insert, any computer code (1) designed to disrupt, disable, harm, or otherwise impede the operation of such software or firmware or any computer or network (referred to as “viruses” or “worms”); (2) that would disable the software or firmware or any

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computer or network or impair in any way their operation based on the elapsing of a period of time, the exceeding of an authorized number of copies, or the advancement to a particular date or other numeral (referred to as “time bombs”, “time locks”, or “drop dead” devices); (3) that would permit Bazaarvoice or any third party to access the software or firmware or any computer or network system in a manner not contemplated by this Agreement (referred to as “traps”, “access codes” or “trap door” devices); and

(iii) it shall promptly assist Wavetable in reducing and mitigating the effects of any virus discovered in any of the BV Services, and all other data, software, documentation, systems, and other materials utilized by Bazaarvoice or provided or made available to Wavetable hereunder.

(b) By Wavetable. Wavetable warrants to Bazaarvoice that:

(i) the Wavetable Services shall be performed in a timely, workpersonlike, and professional manner by appropriately qualified, certified, skilled, and experienced personnel, in accordance with all applicable laws, regulations and industry standards, and shall meet all service levels applicable to the Wavetable Services set forth herein; and

(ii) any software or firmware provided in the course of the Wavetable Services do not and will not contain, and Wavetable will not insert, any computer code (1) designed to disrupt, disable, harm, or otherwise impede the operation of such software or firmware or any computer or network (referred to as “viruses” or “worms”); (2) that would disable the software or firmware or any computer or network or impair in any way their operation based on the elapsing of a period of time, the exceeding of an authorized number of copies, or the advancement to a particular date or other numeral (referred to as “time bombs”, “time locks”, or “drop dead” devices); (3) that would permit Bazaarvoice or any third party to access the software or firmware or any computer or network system (referred to as “traps”, “access codes” or “trap door” devices); and

(iii) it shall promptly assist Bazaarvoice in reducing and mitigating the effects of any virus discovered in any of the Wavetable Services, and all other data, software, documentation, systems, and other materials utilized by Wavetable or provided or made available to Bazaarvoice hereunder.

(c) Mutual. Each Party warrants, represents and covenants that: (1) it is a corporation duly formed and in good standing under the laws of the State identified in the preamble of this Agreement; (2) it is qualified and registered to transact business in all locations where the performance of its obligations hereunder would require such qualification; (3) the execution, delivery, and performance of this Agreement by it have been duly authorized by all necessary corporate action; (4) the execution and performance of this Agreement by it shall not violate any applicable laws or regulations; and (5) it has, and shall maintain throughout the Term, all corporate authority, corporate rights, and corporate powers necessary or required to (A) fulfill its obligations under this Agreement, to provide the Services to the other Party as set forth in this Agreement, and (B) grant any rights that it purports to grant in this Agreement;

6.2 Disclaimer of Warranty and Limitation of Liability.

(a) EXCEPT AS SET FORTH IN SECTION 6.1 (WARRANTIES), THE SERVICES AND ANY RELATED DELIVERABLES PROVIDED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS AND NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, NON-INFRINGEMENT, FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER MATTER WITH RESPECT TO ANY SERVICE OR DELIVERABLE PROVIDED UNDER THIS AGREEMENT.

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(b) EXCEPT FOR LIABILITY ARISING OUT OF BREACHES OF Article 5 (CONFIDENTIALITY) OR ARISING PURSUANT TO Article 7 (INDEMNIFICATION): (I) NEITHER PARTY OR ITS SUBSIDIARIES OR OTHER AFFILIATES WILL BE LIABLE TO THE OTHER PARTY OR ITS SUBSIDIARIES OR OTHER AFFILIATES FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND (II) THE TOTAL COLLECTIVE LIABILITY OF EACH PARTY UNDER THIS AGREEMENT WILL NOT EXCEED THE AGGREGATE FEES PAID BY THE OTHER PARTY UNDER THIS AGREEMENT DURING THE 6 MONTH PERIOD PRIOR TO THE DATE IN WHICH THE CLAIM AROSE, REGARDLESS OF WHETHER BASED UPON AN ACTION OR CLAIM IN CONTRACT, WARRANTY, EQUITY, NEGLIGENCE, INTENDED CONDUCT OR OTHERWISE. THE LIMITATIONS OF LIABILITY SET FORTH IN THIS AGREEMENT WILL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED IN THIS AGREEMENT.

6.3 Non-Circumvention. Bazaarvoice shall not change its technology, standards, specifications, requirements or other similar items (i) to frustrate the intent of this Agreement or (ii) with the intent to make it more difficult for PR Clients to use the syndication services to be provided under this Agreement than BV Clients.

Article 7

Indemnification

7.1 Defense. Each Party (“Indemnifying Party”) will, at its option and expense, defend the other Party and their respective officers, directors and employees (“Indemnified Party”) from or settle any claim, proceeding, or suit (“Claim”) brought by a third party against the Indemnified Party that arises out of or relates to any material breach by the Indemnifying Party of its warranties or representations under this Agreement; provided, that: (a) Indemnified Party gives Indemnifying Party prompt written notice of the Claim (except that failure to promptly notify shall not relieve indemnification obligations of an Indemnifying Party except to the extent it is prejudiced thereby); (b) Indemnified Party grants Indemnifying Party full and complete control over the defense and settlement of the Claim; and (c) Indemnified Party provides assistance in connection with the defense and settlement of the Claim as Indemnifying Party may reasonably request. Indemnified Party will not defend or settle any Claim without Indemnifying Party’s prior written consent. Indemnified Party will have the right to participate in the defense of the Claim at its own expense and with counsel of its own choosing, but Indemnifying Party will have sole control over the defense and settlement of the Claim.

7.2 Indemnity. Indemnifying Party will indemnify Indemnified Party from and pay (a) all damages, costs, and attorneys’ fees finally awarded against Indemnified Party in any Claim under Section 7.1; (b) all out-of-pocket costs (including reasonable attorneys’ fees) reasonably incurred by Indemnified Party in connection with the defense of a Claim under Section 7.1 (other than attorneys’ fees and costs incurred without Indemnifying Party’s consent after Indemnifying Party has accepted defense of the Claim); and, (c) if any Claim arising under Section 7.1 is settled, all amounts to be paid to any third party in settlement of any the Claim (as agreed to by Indemnifying Party).

7.3 Exception. Notwithstanding the preceding sections, the Indemnified Party will be entitled to employ counsel separate from counsel for the Indemnifying Party and from any other party in such action, proceeding or investigation and to participate in the action, proceeding or investigation, and the Indemnifying Party shall bear the reasonable fees and expenses of such separate counsel (and shall pay such fees and expenses as and when incurred), only if either (a) the Indemnifying Party shall not have

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employed counsel to represent the Indemnified Party within a reasonable time after the Indemnifying Party shall have received written notice of the institution of any such action, proceeding or investigation, or (b) the Indemnifying Party shall authorize, in writing, the Indemnified Party to employ separate counsel at the expense of the Indemnifying Party. In no event shall the Indemnifying Party be obligated to hire more than one separate counsel for all Indemnified Parties.

Article 8

Miscellaneous

8.1 Entire Agreement. This Agreement (including all Exhibits referenced or attached to this Agreement) and the Merger Agreement (including all Exhibits referenced or attached to the Merger Agreement) and the other documents and instruments executed in connection herewith and therewith constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof and supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof.

8.2 Relationship Between the Parties. The Parties are “independent contractors,” and nothing in this Agreement is intended and nothing will be construed to allow either Party to exercise control or direction over the manner or method by which the other Party performs its obligations under this Agreement; provided that the Services to be provided under this Agreement will be furnished in a manner consistent with the standards governing such Services and pursuant to the provisions of this Agreement. Each Party understands and agrees that (a) neither Party will withhold on behalf of the other Party any sums for income tax, unemployment insurance, social security or any other withholding pursuant to any law or requirement of any governmental body or make available any of the benefits afforded to its employees, (b) all of such payments, withholdings and benefits, if any, are the sole responsibility of the Party incurring the liability, and (c) each Party will indemnify and hold the other harmless from any and all loss or liability arising with respect to such payments, withholdings and benefits, if any.

8.3 Governing Law. This Agreement will be construed in accordance with and all disputes under this Agreement will be governed by the laws of the State of Delaware, excluding its conflict of law rules that would result in the application of the laws of another jurisdiction and the United Nations Convention on Contracts for the International Sale of Goods. Except as otherwise set forth in Section 8.4 (Dispute Resolution), all claims brought by a Party under this Agreement are required to be brought and maintained in the state or federal courts in Wilmington, Delaware. Any and all counterclaims in any action must be brought in the same court in which the related proceeding was initiated in accordance with the foregoing provisions. The Parties agree that such courts will have exclusive jurisdiction and venue over all disputes between the Parties that are permitted to be brought in a court of law excluding those pursuant to Section 8.4 (Dispute Resolution) which will be brought in the jurisdiction chosen by the Trustee.

8.4 Dispute Resolution. All disputes arising in connection with this Agreement will be referred for resolution to the Trustee appointed pursuant to the Final Judgment entered pursuant to Case No. 13-cv-00133 WHO in the U.S. District Court for the Northern District of California, San Francisco Division (the “Court”), between United States of America and Bazaarvoice (“DOJ Order”).

8.5 Force Majeure. If a Party is prevented from or delayed in complying, either totally or in part, with any of the terms or provisions of this Agreement by reason of a Force Majeure (such an excused failure or delay in performance is referred to in this Agreement as an “Impracticability”), then upon written notice to the other Party, the affected provisions or other requirements of this Agreement will be suspended during the period of Impracticability and the Party will have no liability to the other Party or any other party in connection therewith. “Force Majeure” means any act of God or the public enemy, any strike or labor disturbance, accident, explosion, fire, storm, earthquake, flood, epidemic or any other circumstance or event beyond the reasonable control of the Party relying upon such circumstance or event.

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8.6 Notices. Any notice, demand, offer, request or other communication required or permitted to be given by either Party pursuant to the terms of this Agreement will be in writing and will be deemed effectively given (a) if delivered personally, on the date of such delivery, (b) one business day after being delivered by facsimile (with receipt of appropriate confirmation), (c) one business day after being deposited with a nationally recognized overnight courier service, charges prepaid, or (d) four days after being deposited in the U.S. mail, First Class, with postage prepaid, in each case addressed to the attention of the applicable Party as follows:

If to Bazaarvoice:

Bazaarvoice, Inc.

3900 North Capital of Texas Highway, Suite 300

Austin, TX 78746

Attention: Chief Legal Officer

E-mail: bryan.barksdale@bazaarvoice.com

Facsimile: (512) 551-6001

with a copy (which will not constitute notice) to:

Paul R. Tobias

Wilson Sonsini Goodrich & Rosati, Professional Corporation

900 South Capital of Texas Highway

Las Cimas IV, Fifth Floor

Austin, TX 78746-5546

E-mail: ptobias@wsgr.com

Facsimile: (512) 338-5499

If to Wavetable:

Wavetable Labs, Inc.

440 North Wells

Suite 720

Chicago, IL 60654

Attn: Matt Moog

e-mail: matt@viewpoints.com

Fax: (866) 278-2117

with a copy (which will not constitute notice) to:

Michael B. Gray

Neal Gerber & Eisenberg LLP

Two North LaSalle Street, Suite 1700

Chicago, IL 60602

E-mail: mgray@ngelaw.com

Fax: (312) 750-6551

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A Party may substitute a different address, e-mail or facsimile number, from time to time, if such substitute is provided to the intended notice recipient of the other Party in writing by notice given in the manner provided in this Section.

8.7 Counterparts. This Agreement, any Exhibits hereto and the other documents referred to in this Agreement, may be executed in counterparts via facsimile or otherwise, each of which will be deemed to be an original but all of which will constitute one and the same agreement.

8.8 Binding Effect; Assignability. This Agreement will inure to the benefit of and be binding upon the Parties hereto and their respective legal representatives and successors, and nothing in this Agreement, express or implied, is intended to confer upon any other person or entity any rights or remedies of any nature whatsoever under or by reason of this Agreement. Except as specifically provided to the contrary in this Agreement, neither Party may assign or otherwise transfer this Agreement or any rights or obligations under this Agreement (by operation of law or otherwise), without the prior written consent of the other Party, and any such assignment or transfer will be void; provided that Wavetable may assign this Agreement, upon prior written notice to Bazaarvoice, to a wholly owned Affiliate provided that Wavetable shall remain obligated to fulfill its obligations under this Agreement. A Party may assign this Agreement in its entirety to a third party successor to all or substantially all of the business of such Party to which this Agreement relates, whether by sale of stock or other equity interests, assets, merger, reorganization, or otherwise.

8.9 Severability. The Parties have negotiated and prepared the terms of this Agreement in good faith with the intent that each and every one of the terms, covenants and conditions in this Agreement be binding upon and inure to the benefit of the respective Parties. Accordingly, if any one or more of the terms, provisions, promises, covenants or conditions of this Agreement or the application thereof to any person or circumstance will be adjudged to any extent invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, such provision will be as narrowly construed as possible or, if necessary, deleted from this Agreement, and each and all of the remaining terms, provisions, promises, covenants and conditions of this Agreement or their application to other persons or circumstances will not be affected thereby and will be valid and enforceable to the fullest extent permitted by law. To the extent this Agreement is in violation of applicable law, then the Parties agree to negotiate in good faith to amend this Agreement, to the extent possible consistent with its purposes, to conform to law.

8.10 Waiver of Breach. The waiver by either Party hereto of a breach or violation of any provision of this Agreement will not operate as, or be construed to constitute, a waiver of any subsequent breach of the same or another provision of this Agreement.

8.11 Amendment and Execution. This Agreement may be amended only if such amendment or waiver is set forth in a writing executed by the Parties to this Agreement. Any provision of this Agreement may be waived only if such waiver is set forth in a writing executed by the Party against whom enforcement is sought. No course of dealing between or among the persons or entities having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights of obligations of any person or entity under or by reason of this Agreement. This Agreement and amendments hereto will be in writing and executed in multiple copies via facsimile or otherwise on behalf of the Parties by their respective duly authorized officers and representatives. Each multiple copy will be deemed an original, but all multiple copies together will constitute one and the same instrument.

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8.12 Authority. Each of the Parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

8.13 Descriptive Headings. The headings contained in this Agreement or in any Exhibit hereto are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit but not otherwise defined in such Exhibit will have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, or Exhibit, such reference will be to an Article or Section of, or an Exhibit to, this Agreement unless otherwise indicated.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, each of the Parties has caused this Syndication Services Agreement to be executed in duplicate originals by its duly authorized representatives.

BAZAARVOICE, INC.
By:	/s/ James Offerdahl
Name:	James Offerdahl
Title:	CFO
WAVETABLE LABS, INC.
By:	/s/ Matthew Moog
Name:	Matthew Moog
Title:	Chief Executive Officer

Exhibits

• Exhibit A: BV Services Description

• Exhibit B: Wavetable Services Description

• Exhibit C: Statement Regarding Network Access

• Exhibit D: Pricing

• Exhibit E: BV Syndication Setup Request Form

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EX-10.2

Exhibit 10.2

TRANSITION SERVICES AGREEMENT

This Transition Services Agreement (this “Agreement”) is entered into on July 2, 2014 (the “Effective Date”) by and between Bazaarvoice, Inc., a Delaware corporation (“Bazaarvoice”), and Wavetable Labs, Inc., a Delaware corporation (“Wavetable”). Bazaarvoice and Wavetable are sometimes referred to in this Agreement individually as a “Party” or together as the “Parties.” Capitalized terms not otherwise defined in this Agreement have the meaning set forth in the Merger Agreement (as defined below).

Recitals

A. Pursuant to that certain Amended and Restated Agreement and Plan of Merger dated June 25, 2014 (as the same may hereafter be amended or modified, the “Merger Agreement”) by and among Bazaarvoice and Wavetable Labs, LLC, a Delaware limited liability company (“Wavetable LLC”), among others, Wavetable LLC intends to acquire Bazaarvoice’s subsidiary, PowerReviews, LLC (“PowerReviews”).

B. Prior to the Closing Date, Wavetable LLC converted from a Delaware limited liability company into Wavetable, a Delaware corporation.

C. Effective as of the Closing Date, Bazaarvoice desires to provide to Wavetable, and Wavetable desires to receive from Bazaarvoice, certain services on the terms and subject to the conditions of this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

Article 1

Transition Services

1.1 Services. Subject to the terms and conditions set forth in this Agreement, Bazaarvoice will perform for Wavetable the professional, technical, or other services (the “Services”) described in this Agreement, including in each Statement of Work attached hereto (each, an “SOW”) in connection with the Business. “Business” means the business of PowerReviews as such business was conducted by Bazaarvoice and its Affiliates prior and up to the Closing Date.

1.2 Additional Resources. Except as otherwise provided in this Agreement, in providing the Services, Bazaarvoice is not obligated to: (a) maintain the employment of any specific employee; (b) purchase, lease or license any additional equipment or software; (c) amend agreements or other arrangements with third parties to make available functionality or features that such third parties are not providing to Bazaarvoice in connection with the Business as of the Closing Date or during the 3-month period prior to the Closing Date; or (d) pay any costs related to the transfer or conversion of the Business to Wavetable. Subject to Section 2.3 (Payment Terms), Article 4 (Term; Termination) and Section 7.5 (Force Majeure), (i) in connection with the Services, Bazaarvoice will use commercially reasonable efforts to maintain the provision of third party technical services provided to Wavetable hereunder and, (ii) if Bazaarvoice is unable to so do, Bazaarvoice shall continue to make such technical services available to Wavetable at Bazaarvoice’s cost (either directly or through an alternate provider of services substantially similar to the unavailable services).

1.3 Subcontractors. Subject to providing Wavetable prior written notification, Bazaarvoice may engage one or more Subcontractors to perform all or any portion of Bazaarvoice’s duties under this Agreement, provided that any such Subcontractor agrees in writing to be bound by confidentiality obligations at least as protective of Wavetable as the terms of Article 5 (Confidentiality). As used in this Agreement, “Subcontractor” means any individual, partnership, corporation, firm, association, unincorporated organization, joint venture, trust or other entity engaged by Bazaarvoice to perform Services under this Agreement. Bazaarvoice will not have any obligation to engage any Subcontractor to provide any Service. To the extent Wavetable reasonably determines that a Subcontractor is reasonably likely to cause Bazaarvoice to breach its obligations under this Agreement and, as a result, Wavetable requests that Bazaarvoice replace such Subcontractor, Bazaarvoice shall hold executive level meetings with Wavetable and the Subcontractor to attempt to promptly mitigate such breach and, if such breach cannot be mitigated, Bazaarvoice shall use reasonable efforts to secure a new Subcontractor that is reasonably acceptable to Wavetable. Notwithstanding Bazaarvoice’s use of Subcontractors, Bazaarvoice shall be and remain fully responsible and liable for fulfilling all of Bazaarvoice’s obligations under this Agreement and for all acts and omissions of its employees and agents.

Article 2

Compensation

2.1 Charges for Services. For performance of the Services, Wavetable will pay Bazaarvoice the compensation set forth in the applicable SOW (the “Fee Schedule”). The Parties will use good faith efforts to discuss and adjust pricing in any situation in which the actual cost for a Service is reasonably expected to vary materially from the estimated charge, if any, set forth on the applicable Fee Schedule for a particular Service.

2.2 Reimbursement of Expenses. During the Term, Wavetable will reimburse Bazaarvoice for reasonable out-of-pocket expenses incurred by Bazaarvoice during the course and within the scope of providing the Services as well as pay for or reimburse reasonable travel related expenses (including, without limitation, airfare, accommodation, transportation and meal expenses); provided, that, any such out-of-pocket or travel related expenses must be pre-approved in writing by Wavetable and conform to Bazaarvoice’s Expense Reimbursement Policy.

2.3 Payment Terms. Bazaarvoice will bill Wavetable for all charges pursuant to this Agreement on or about the 15th day of each month for Services provided and expenses incurred during the prior calendar month. Wavetable will pay Bazaarvoice for undisputed charges for Services provided under this Agreement within 30 days after receipt of an invoice therefor (and any amount disputed in good faith may be withheld by Wavetable), except to the extent such charges have been offset pursuant to Exhibit D. Late payments will bear interest at the lesser of 12% per annum or the maximum rate allowed by law. If Wavetable fails to pay the full amount of any invoice within 30 days of the relevant payment due date, such failure will be considered a material breach of this Agreement (except to the extent of any amounts reasonably disputed by Wavetable in good faith) and, subject to Section 4.2(c)(ii), Bazaarvoice may, without liability, suspend its obligations under this Agreement to provide any and all Services to Wavetable until such time as undisputed portions of such invoices have been paid in full; provided, that (a) Bazaarvoice has provided written notice (the “Payment Notice”) to Wavetable describing the payment default (including the amount owing) and indicating that Bazaarvoice intends to suspend the Services as of a date that is no less than 10 days from the date of Bazaarvoice’s delivery of the Payment Notice (the “Suspension Date”) and (b) Wavetable has not paid the amount owing to Bazaarvoice prior to the Suspension Date. Should Wavetable dispute any portion of any invoice, Wavetable will promptly notify Bazaarvoice in writing of the nature and basis of the dispute, will make good faith efforts to resolve the dispute and will promptly pay any previously disputed amount within 5 days of resolution of the dispute. Wavetable will not offset any amounts payable by it under this Agreement against any amounts owed to it by Bazaarvoice or any of Bazaarvoice’s Affiliates under this Agreement or under the Merger Agreement or any other agreement contemplated by, or entered into in connection with, the Merger Agreement.

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2.4 Taxes. Wavetable is responsible for all taxes (including sales and use taxes), duties, fees and other charges imposed on the Services provided to Wavetable hereunder other than taxes based on Bazaarvoice’s net income, employment taxes in respect of Bazaarvoice’s employees, and for taxes on any property Bazaarvoice owns or leases. Wavetable will pay any additional amounts as are necessary to ensure that the net amounts received by Bazaarvoice after all such taxes, duties, fees and other charges (collectively, “taxes”) are paid are equal to the amounts that Bazaarvoice would have been entitled to in accordance with this Agreement as if the taxes did not exist, regardless of whether such taxes were included on the initial applicable invoice to Wavetable. The Parties shall use commercially reasonable efforts to minimize the amount of taxes imposed on Services provided under this Agreement and to cooperate in any audit, investigation or litigation regarding such taxes.

Article 3

General Obligations; Standard Of Care; Proprietary Rights

3.1 Performance.

(a) Bazaarvoice will maintain sufficient resources and personnel to perform its obligations under this Agreement.

(b) Bazaarvoice will use commercially reasonable efforts to provide the Services in accordance with all service levels set forth herein, and with Bazaarvoice’s applicable policies, procedures and practices in effect immediately before the Closing Date relating to or in connection with the Business, and will exercise not less than the same degree of care and skill as it generally exercises in performing similar services for itself.

3.2 Transitional Nature of Services; Changes. The Parties acknowledge the transitional nature of the Services and that they may mutually agree to changes from time to time in the manner by which Bazaarvoice performs the Services.

3.3 Good Faith Cooperation; Consents. The Parties will cooperate in order to facilitate the orderly transition of services and support relating to PowerReviews from Bazaarvoice to Wavetable and each Party will take reasonable efforts to enable such transition, including without limitation those activities set forth in the cut-over plan developed by the Parties. The Parties will use good faith efforts to cooperate with each other in all reasonable respects in all matters relating to the provision and receipt of Services. Such cooperation includes exchanging information and, where reasonably necessary to perform a Service, obtaining all third party consents, licenses, sublicenses or approvals necessary to permit each Party to perform its obligations under this Agreement (including, by way of example, not by way of limitation, rights to use third party software needed for the performance of Services). The reasonable and documented costs of obtaining such third party consents, licenses, sublicenses or approvals will be borne by Wavetable. The Parties will maintain in accordance with their respective standard document retention procedures, documentation supporting the information relevant to fee and cost calculations contained in this Agreement and cooperate in all reasonable respects with each other in making such information available as needed in the event of a tax audit, whether in the United States or any other country.

3.4 Alternatives. If Bazaarvoice is unable to provide any Service because of a failure by Wavetable to obtain necessary consents, licenses, sublicenses or approvals pursuant to Section 3.3 (Good Faith Cooperation; Consents), the Parties will negotiate in good faith in an effort to agree upon a reasonable alternative approach. Until such alternative approach is found or the problem otherwise resolved to the satisfaction of the Parties, Bazaarvoice may suspend its obligation to perform that item of Services without liability or penalty. To the extent a mutually agreed upon alternative approach requires payment above and beyond that which is included in Bazaarvoice’s charge for the Service in question, Wavetable will be responsible for any such payment unless the Parties otherwise agree in writing.

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3.5 Assistance from Wavetable. Wavetable will provide Bazaarvoice with access to its personnel, books and records to the extent Bazaarvoice reasonably determines is necessary for Bazaarvoice to perform the Services, subject to the terms of this Agreement. In particular, during the Term, Wavetable will furnish Bazaarvoice with information in its possession and control and such other reasonable assistance as Bazaarvoice reasonably determines is necessary to enable Bazaarvoice to perform the Services. If Wavetable’s failure to furnish such information and assistance renders Bazaarvoice unable to perform any item of Service without unreasonable difficulty, Bazaarvoice may suspend its obligation to perform that item of Service without liability or penalty to Bazaarvoice until Wavetable furnishes such information or assistance.

3.6 Proprietary Rights. In the event deliverables, materials, program materials, software, flowcharts, notes, outlines and the like, used, created, developed or provided to Wavetable by Bazaarvoice in connection with the Services (collectively the “Work Product”), as between Bazaarvoice and Wavetable, all intellectual property rights in the Work Product will be the sole property of Bazaarvoice, subject to the clauses below. Bazaarvoice and Wavetable acknowledge that any commercially available third party software tools and utilities or other technology or works of authorship (“Third Party Products”) that Bazaarvoice uses in connection with the Services shall not be deemed to be Work Product; provided, however, that any materials created or developed in connection with any Third Party Products by or on behalf of Bazaarvoice including without limitation all program materials, software, flowcharts, methodologies, formulas, processes or algorithms shall be deemed to be Work Product. Subject to Wavetable’s compliance with this Agreement, including all payment obligations, Bazaarvoice hereby grants to Wavetable a non-exclusive, worldwide license under Bazaarvoice’s rights in the Work Product to use the Work Product solely in connection with Wavetable’s use of the product of the Services. No other grants of licenses or rights to Wavetable will be implied from the provisions stated in this Agreement. Wavetable will not reverse engineer, decompile, or otherwise attempt to derive source code from any portions of the Work Product delivered in object code form.

Article 4

Term; Termination

4.1 Term. The term of this Agreement (the “Term”) will commence on the Closing Date and continue until the first anniversary of the Closing Date (the “Expiration Date”), unless earlier terminated as set forth in this Agreement.

4.2 Termination.

(a) Termination of an SOW for Convenience. Wavetable may terminate any SOW, or any specific Services under any SOW, for any reason or no reason at any time upon 30 calendar days’ prior written notice to Bazaarvoice (or, if mutually agreed by Wavetable and Bazaarvoice, for the number days less than 30 when Bazaarvoice is able to eliminate its costs for such Services); provided, however, that each SOW shall remain in effect until the earlier of (i) the date on which such SOW is terminated or (ii) the date on which all Services under such SOW have been terminated.

(b) Termination of the Agreement for Convenience. Wavetable may terminate this Agreement for any reason or for no reason at any time upon 30 calendar days’ prior written notice to Bazaarvoice.

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(c) Termination for Breach.

(i) Either Party may terminate this Agreement in its entirety or with respect to a specific Service if the other Party materially breaches a provision of this Agreement or with regard to that particular Service, respectively and does not cure such breach (or does not take reasonable steps required under the circumstances to cure such breach) within 60 days after being given written notice of the breach, provided that the terminating Party has complied with the provisions of Section 7.4 (Dispute Resolution) and provided that Bazaarvoice has no right to terminate this Agreement as a result of Wavetable’s failure to make payment if Wavetable is disputing in good faith its obligation to pay with respect to a default in payment provided that all undisputed amounts due have been paid. If any proceeding is commenced by or against either Party for the purpose of subjecting its assets to any law relating to bankruptcy or insolvency or for the appointment of a receiver for the business, property, affairs or revenues of such Party, or if such Party makes a general assignment of its assets for the benefit of creditors, then the other Party may, at its option without further notice to or demand of, in addition to all other rights and remedies provided at law or in equity, terminate this Agreement, effective immediately upon written notice to the other Party hereto, and all rights, privileges and licenses granted or created under this Agreement.

(ii) Notwithstanding anything else herein to the contrary, Bazaarvoice shall not suspend or terminate this Agreement prior to the Expiration Date without first notifying the Trustee and Wavetable in writing in accordance with Section 7.4 and receiving the written approval of the Court (as defined in Section 7.4) that it may suspend or terminate this Agreement.

4.3 Survival. In the event of any termination with respect to one or more, but less than all Services, this Agreement will continue in full force and effect with respect to any Services not subject to such termination in accordance with the terms of this Agreement. Section 4.2 (Termination), Article 5 (Confidentiality), Section 6.2 (Disclaimer), Section 6.3 (Limitation of Liability), Section 6.4 (Indemnity) (to the extent claims arise during the Term) and Article 7 (Miscellaneous) will survive termination or expiration of this Agreement, as will Article 2 (Compensation) with respect to fees and charges payable by Wavetable for Services rendered and expenses incurred through the date of such termination or expiration.

Article 5

Confidentiality

5.1 Definition. “Confidential Information” means any secret, confidential or proprietary information provided by one Party (the “Disclosing Party”) to the other (the “Receiving Party”) in connection with this Agreement, whether provided in written, oral, graphic, video, computer or other form, or which is otherwise deemed to be “Confidential Information” by the terms of this Agreement and all other information that has not been made available by the Disclosing Party to the general public, including information that relates to or is (a) the existing or proposed research, development efforts, business, plans, products, services, finances, technology or affairs of the Disclosing Party or (b) third party confidential information entrusted to the Disclosing Party.

5.2 Exclusions. “Confidential Information” excludes information that (a) the Receiving Party can demonstrate is: (i) now or hereafter, through no unauthorized act or failure to act on Receiving Party’s part, in the public domain, (ii) known to the Receiving Party from a source other than the Disclosing Party (including former employees of the Disclosing Party) (and with respect to Bazaarvoice’s non-disclosure obligation, this clause (ii) exception shall not include information regarding PowerReviews that was confidential as of the date hereof) without an obligation of confidentiality at the time Receiving Party receives the same from the Disclosing Party, as evidenced by written records, (iii) hereafter

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furnished to the Receiving Party by a Third Party as a matter of right and without restriction on disclosure, (iv) furnished to others by the Disclosing Party without restriction on disclosure or (v) independently developed by the Receiving Party without use of the Disclosing Party’s Confidential Information, and (b) Bazaarvoice or Wavetable is permitted to use without a confidentiality restriction pursuant to the Merger Agreement.

5.3 Confidentiality Obligations. The Receiving Party shall treat as confidential all of the Disclosing Party’s Confidential Information and shall not use such Confidential Information except as necessary to perform its obligations or exercise its rights under this Agreement. Without limiting the foregoing, the Receiving Party shall use the same degree of care and means that it utilizes to protect its own information of a similar nature, but in any event not less than reasonable care and means, to prevent the unauthorized use or the disclosure of such Confidential Information to third parties. Confidential Information may be disclosed only to employees, contractors or permitted assignees of the Receiving Party with a reasonable “need to know” who are instructed and under a duty not to disclose the Confidential Information and not to use the Confidential Information for any purpose, except as set forth in this Agreement. Nothing in this Agreement shall prevent the Receiving Party from disclosing Confidential Information to the extent the Receiving Party is legally compelled to do so by any governmental investigative or judicial agency pursuant to proceedings over which such agency has jurisdiction, or in connection with the requirements of an initial public offering or securities filing; provided, however, that prior to any such disclosure, the Receiving Party shall (a) assert the confidential nature of the Confidential Information to the agency, (b) if legally permitted, immediately notify the Disclosing Party in writing of the agency’s order or request to disclose, and (c) cooperate fully with the Disclosing Party in protecting against any such disclosure and/or obtaining a protective order narrowing the scope of the compelled disclosure and protecting its confidentiality. Notwithstanding the foregoing or anything herein to the contrary, Wavetable shall not be subject to the provisions of this Section 5.3 or any restrictions on the use or Confidential Information to the extent exempt pursuant to (i) the Merger Agreement or any other agreement contemplated by, or entered into in connection with, the Merger Agreement or (ii) the DOJ Order (as defined below).

5.4 Survival of Confidentiality Obligations. The obligations of the Parties with respect to Confidential Information, as are set forth in this Article 5, shall remain in force and effect at all times during the Term and: (a) with respect to Confidential Information that constitutes a trade secret under applicable law, for so long as such trade secret status is maintained; and (b) with respect to Confidential Information that does not constitute a trade secret, for 5 years after termination or expiration of the Term of this Agreement.

Article 6

Warranties; Disclaimer; Limitation of Liability; Indemnity

6.1 Representations and Warranties. Bazaarvoice warrants, represents, and covenants that the Services shall be performed in a timely, workpersonlike, and professional manner by appropriately qualified, certified, skilled, and experienced personnel, in accordance with all applicable laws, regulations and industry standards, and shall meet all service levels set forth herein, including in the applicable SOW. In the event of a breach of the foregoing warranty, Wavetable will allow Bazaarvoice to reperform the Services promptly in a manner that conforms to the warranty.

6.2 Disclaimer. THE WARRANTY SET FORTH IN SECTION 6.1 CONSTITUTES AND EXPRESSES THE ENTIRE STATEMENT OF THE PARTIES WITH RESPECT TO WARRANTIES. BAZAARVOICE AND WAVETABLE DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THIS AGREEMENT, INCLUDING ANY WARRANTIES AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER MATTER WITH RESPECT TO ANY SERVICE OR DELIVERABLE PROVIDED UNDER THIS AGREEMENT.

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6.3 Limitation of Liability. EXCEPT FOR LIABILITY ARISING OUT OF BREACHES OF Article 5 (CONFIDENTIALITY), (i) NEITHER PARTY OR ITS SUBSIDIARIES OR OTHER AFFILIATES WILL BE LIABLE TO THE OTHER PARTY OR ITS SUBSIDIARIES OR OTHER AFFILIATES FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND (ii) THE TOTAL COLLECTIVE LIABILITY OF EACH PARTY UNDER THIS AGREEMENT (OTHER THAN WAVETABLE’S PAYMENT OBLIGATIONS) WILL NOT EXCEED (A) $10 MILLION FOR DAMAGES ARISING OUT OF A PARTY’S WILLFUL MISCONDUCT, OR (B) $1 MILLION FOR DAMAGES ARISING OUT OF A CLAIM OTHER THAN A CLAIM ARISING OUT OF A PARTY’S WILLFUL MISCONDUCT, IN EACH CASE, (A) AND (B) REGARDLESS OF WHETHER BASED UPON AN ACTION OR CLAIM IN CONTRACT, WARRANTY, EQUITY, NEGLIGENCE, INTENDED CONDUCT OR OTHERWISE. THE LIMITATIONS OF LIABILITY SET FORTH IN THIS AGREEMENT WILL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED IN THIS AGREEMENT.

6.4 Indemnification.

(a) Defense. Bazaarvoice will, at its option and expense, defend Wavetable and its officers, directors and employees (“Indemnified Party”) from or settle any claim, proceeding, or suit (“Claim”) brought by a third party against the Indemnified Party with respect to any Claims of infringement or other violations of any other intellectual property rights of a third party relating to the Services and Bazaarvoice having an insufficient number of licenses for the users of such Services (other than use by any Indemnified Party outside the scope of the Services); provided, that: (i) Indemnified Party gives Bazaarvoice prompt written notice of the Claim (except that failure to promptly notify shall not relieve indemnification obligations of an Bazaarvoice except to the extent it is prejudiced thereby); (ii) Indemnified Party grants Bazaarvoice full and complete control over the defense and settlement of the Claim; and (iii) Indemnified Party provides assistance in connection with the defense and settlement of the Claim as Bazaarvoice may reasonably request. Indemnified Party will not defend or settle any Claim without Bazaarvoice’s prior written consent. Indemnified Party will have the right to participate in the defense of the Claim at its own expense and with counsel of its own choosing, but Bazaarvoice will have sole control over the defense and settlement of the Claim.

(b) Indemnity. Bazaarvoice will indemnify Indemnified Party from and pay (i) all damages, costs, and attorneys’ fees finally awarded against Indemnified Party in any Claim under Section 6.4(a); (ii) all out-of-pocket costs (including reasonable attorneys’ fees) reasonably incurred by Indemnified Party in connection with the defense of a Claim under Section 6.4(a) (other than attorneys’ fees and costs incurred without Bazaarvoice’s consent after Bazaarvoice has accepted defense of the Claim); and, (iii) if any Claim arising under Section 6.4(a) is settled, all amounts to be paid to any third party in settlement of any the Claim (as agreed to by Bazaarvoice).

(c) Exception. Notwithstanding the preceding sections, the Indemnified Party will be entitled to employ counsel separate from counsel for Bazaarvoice and from any other party in such action, proceeding or investigation and to participate in the action, proceeding or investigation, and Bazaarvoice shall bear the reasonable fees and expenses of such separate counsel (and shall pay such fees and expenses as and when incurred), only if either (a) Bazaarvoice shall not have employed counsel to represent the Indemnified Party within a reasonable time after Bazaarvoice shall have received written

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notice of the institution of any such action, proceeding or investigation, or (b) Bazaarvoice shall authorize, in writing, the Indemnified Party to employ separate counsel at the expense of Bazaarvoice. In no event shall Bazaarvoice be obligated to hire more than one separate counsel for all Indemnified Parties.

Article 7

Miscellaneous

7.1 Entire Agreement. This Agreement (including all Exhibits referenced or attached to this Agreement) and the Merger Agreement (including all Exhibits referenced or attached to the Merger Agreement) and the other documents and instruments executed in connection herewith and therewith constitute the entire agreement between the Parties with respect to the subject matter of hereof and thereof and supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof.

7.2 Relationship Between the Parties. The Parties are “independent contractors,” and nothing in this Agreement is intended and nothing will be construed to allow either Party to exercise control or direction over the manner or method by which the other Party performs its obligations under this Agreement; provided that the Services to be provided under this Agreement will be furnished in a manner consistent with the standards governing such Services and pursuant to the provisions of this Agreement. Each Party understands and agrees that (a) neither Party will withhold on behalf of the other Party any sums for income tax, unemployment insurance, social security or any other withholding pursuant to any law or requirement of any governmental body or make available any of the benefits afforded to its employees, (b) all of such payments, withholdings and benefits, if any, are the sole responsibility of the Party incurring the liability, and (c) each Party will indemnify and hold the other harmless from any and all loss or liability arising with respect to such payments, withholdings and benefits, if any.

7.3 Governing Law. This Agreement will be construed in accordance with and all disputes under this Agreement will be governed by the laws of the State of Delaware, excluding its conflict of law rules that would result in the application of the laws of another jurisdiction and the United Nations Convention on Contracts for the International Sale of Goods. Except as otherwise set forth in Section 7.4 (Dispute Resolution), all claims brought by a Party under this Agreement are required to be brought and maintained in the state or federal courts in Wilmington, Delaware. Any and all counterclaims in any action must be brought in the same court in which the related proceeding was initiated in accordance with the foregoing provisions. The Parties agree that such courts will have exclusive jurisdiction and venue over all disputes between the Parties that are permitted to be brought in a court of law excluding those pursuant to Section 7.4 (Dispute Resolution) which will be brought in the jurisdiction chosen by the Trustee.

7.4 Dispute Resolution. All disputes arising in connection with this Agreement will be referred for resolution to the Trustee appointed pursuant to the Final Judgment entered pursuant to Case No. 13-cv-00133 WHO in the U.S. District Court for the Northern District of California, San Francisco Division (the “Court”), between United States of America and Bazaarvoice (the “DOJ Order”) to the extent required in the DOJ Order.

7.5 Force Majeure. If Bazaarvoice is prevented from or delayed in complying, either totally or in part, with any of the terms or provisions of this Agreement by reason of a Force Majeure (such an excused failure or delay in performance is referred to in this Agreement as an “Impracticability”), then upon written notice to the Wavetable, the affected provisions or other requirements of this Agreement will be suspended during the period of Impracticability and Bazaarvoice will have no liability to Wavetable or any other Party in connection therewith. “Force Majeure” means any act of God or the public enemy, any

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strike or labor disturbance, accident, explosion, fire, storm, earthquake, flood, epidemic or any other circumstance or event beyond the reasonable control of the Party relying upon such circumstance or event. Bazaarvoice may only implement this provision to the extent the Impracticability also affects the provision of its services similar to the Services to its clients, if applicable. Bazaarvoice will resume performance of the Services hereunder immediately upon conclusion of any condition or event causing a Force Majeure. Bazaarvoice’s sole responsibility to Wavetable in the event of Impracticability will be to use commercially reasonable efforts to perform any portion of the Services which are not Impracticable or to resume performing the Services which are or have become Impracticable as promptly as reasonably practicable in accordance with the terms and conditions of this Agreement, with the duration of such suspended Services tolling the Service time period remaining under the applicable SOW, unless otherwise agreed to by Bazaarvoice in writing.

7.6 Notices. Any notice, demand, offer, request or other communication required or permitted to be given by either Party pursuant to the terms of this Agreement will be in writing and will be deemed effectively given (a) if delivered personally, on the date of such delivery, (b) one business day after being delivered by facsimile (with receipt of appropriate confirmation), (c) one business day after being deposited with a nationally recognized overnight courier service, charges prepaid, or (d) four days after being deposited in the U.S. mail, First Class, with postage prepaid, in each case addressed to the attention of the recipient of the other Party as follows:

If to Bazaarvoice:

Bazaarvoice, Inc.

3900 North Capital of Texas Highway, Suite 300

Austin, TX 78746

Attention: Chief Legal Officer

E-mail: bryan.barksdale@bazaarvoice.com

Facsimile: (512) 551-6001

with a copy (which will not constitute notice) to:

Paul R. Tobias

Wilson Sonsini Goodrich & Rosati, Professional Corporation

900 South Capital of Texas Highway

Las Cimas IV, Fifth Floor

Austin, TX 78746-5546

E-mail: ptobias@wsgr.com

Facsimile: (512) 338-5499

If to Wavetable:

PowerReviews, Inc.

440 North Wells

Suite 720

Chicago, IL 60654

Attn: Matt Moog

e-mail: matt@viewpoints.com

Fax: (            ) [            ]-[            ]

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with a copy (which will not constitute notice) to:

Michael B. Gray

Neal Gerber & Eisenberg LLP

Two North LaSalle Street, Suite 1700

Chicago, IL 60602

E-mail: mgray@ngelaw.com

Fax: (312) 269-8086

Bazaarvoice and Wavetable may substitute a different address, e-mail or facsimile number, from time to time, if such substitute is provided to the intended notice Wavetable in writing by notice given in the manner provided in this Section.

7.7 Counterparts. This Agreement, any Exhibits hereto and the other documents referred to in this Agreement, may be executed in counterparts via facsimile or otherwise, each of which will be deemed to be an original but all of which will constitute one and the same agreement.

7.8 Binding Effect; Assignability. This Agreement will inure to the benefit of and be binding upon the Parties hereto and their respective legal representatives and successors, and nothing in this Agreement, express or implied, is intended to confer upon any other person or entity any rights or remedies of any nature whatsoever under or by reason of this Agreement. Except as specifically provided to the contrary in this Agreement, neither Party may assign or otherwise transfer this Agreement or any rights or obligations under this Agreement (by operation of law or otherwise), without the prior written consent of the other Party, and any such assignment or transfer will be void. Notwithstanding the foregoing, a Party may assign this Agreement in its entirety (including all rights and obligations) to a third party successor to all or substantially all of the business of such Party to which this Agreement relates, whether by sale of stock or other equity interests, assets, merger, reorganization, or otherwise provided that the assigning Party remains obligated for performance of its obligations hereunder.

7.9 Severability. The Parties have negotiated and prepared the terms of this Agreement in good faith with the intent that each and every one of the terms, covenants and conditions in this Agreement be binding upon and inure to the benefit of the respective Parties. Accordingly, if any one or more of the terms, provisions, promises, covenants or conditions of this Agreement or the application thereof to any person or circumstance will be adjudged to any extent invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, such provision will be as narrowly construed as possible or, if necessary, deleted from this Agreement, and each and all of the remaining terms, provisions, promises, covenants and conditions of this Agreement or their application to other persons or circumstances will not be affected thereby and will be valid and enforceable to the fullest extent permitted by law. To the extent this Agreement is in violation of applicable law, then the Parties agree to negotiate in good faith to amend this Agreement, to the extent possible consistent with its purposes, to conform to law.

7.10 Waiver of Breach. The waiver by either Party hereto of a breach or violation of any provision of this Agreement will not operate as, or be construed to constitute, a waiver of any subsequent breach of the same or another provision of this Agreement.

7.11 Amendment and Execution. This Agreement may be amended only if such amendment is set forth in a writing executed by both Parties. Any amendment, modification or extension of this Agreement may only be entered into with the approval of the Court. Any provision of this Agreement may be waived only if such waiver is set forth in a writing executed by the Party against whom enforcement is sought. No course of dealing between or among the Persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights of obligations of any Person under or by reason of this Agreement. This Agreement and

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amendments hereto will be in writing and executed in multiple copies via facsimile or otherwise on behalf of Bazaarvoice and Wavetable by their respective duly authorized officers and representatives. Each multiple copy will be deemed an original, but all multiple copies together will constitute one and the same instrument.

7.12 Authority. Each of the Parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

7.13 Descriptive Headings. The headings contained in this Agreement or in any Exhibit hereto are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit but not otherwise defined in such Exhibit will have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, or Exhibit, such reference will be to an Article or Section of, or an Exhibit to, this Agreement unless otherwise indicated.

7.14 Additional Assurances. Except as may be specifically provided in this Agreement to the contrary, the provisions of this Agreement will be self-operative and will not require further agreement by the Parties, except that at the request of either Party, the other Party will execute such additional instruments and take such additional acts as are reasonably necessary to effectuate this Agreement. The additional acts required to be taken as provided in this Section will not include the performance of any additional services that are not expressly included in this Agreement, except to the extent certain services (including third party services) are (a) provided to the PowerReviews business as of the date hereof, and (b) unintentionally omitted from this Agreement or the SOWs by Wavetable, in which case the Parties will create or modify an SOW in good faith to make such services available to Wavetable during the remainder of the Term (or such shorter period as agreed) at their cost, subject to Section 7.11 (Amendment and Execution).

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, each of the Parties has caused this Transition Services Agreement to be executed in duplicate originals by its duly authorized representatives.

BAZAARVOICE, INC.
By:	/s/ James Offerdahl
Name:	James Offerdahl
Title:	CFO
WAVETABLE LABS, INC.
By:	/s/ Matthew Moog
Name:	Matthew Moog
Title:	Chief Executive Officer

Exhibits

• Exhibit A – SOW 1: Business Technology Services

• Exhibit B – SOW 2: R&D Technology Services

• Exhibit C – SOW 3: Content Integrity Services

• Exhibit D – SOW 4: Revenue & Accounting Services

• Exhibit E – SOW 5: EMEA Client Services

• Exhibit F – SOW 6: Technical Success Management for U.S. Clients

• Exhibit G – SOW 7: R&D and Product Management SME Services

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EX-10.3

Exhibit 10.3

FIRST AMENDMENT TO TRANSITION SERVICES AGREEMENT

This First Amendment (this “First Amendment”) is made as of August 29, 2014, to that certain Transition Services Agreement entered into on July 2, 2014 (the “Agreement”) by and between Bazaarvoice, Inc. (“Bazaarvoice”) and PowerReviews, Inc. (fka Wavetable Labs, Inc.) (“Wavetable”).

WHEREAS, Bazaarvoice and Wavetable entered into the Agreement; and

WHEREAS, in accordance with Section 7.11 of the Agreement, Bazaarvoice and Wavetable now wish to amend and restate certain provisions of the Agreement;

NOW, THEREFORE, in consideration of the mutual promises contained herein and other valuable consideration, the parties hereto agree as follows:

1. All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.

2. The Agreement is hereby amended, effective as of July 2, 2014, by replacing Exhibit G to the Agreement with the revised version of Exhibit G attached to this First Amendment.

3. Except as otherwise expressly provided in this First Amendment, all provisions of the Agreement shall remain unchanged and in full force and effect. All governing law and dispute resolution provisions in the Agreement are also applicable to this First Amendment. This First Amendment may not be amended, supplemented or modified in any way other than by a written agreement signed by each of the parties hereto.

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed by their respective representatives.

BAZAARVOICE, INC.		POWERREVIEWS, INC.
By:	/s/    Gene Austin	By:	/s/    Chris Lubkert
Name:	Gene Austin	Name:	Chris Lubkert
Title:	CEO	Title:	SVP Operations

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULES 13A-14(A) AND 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gene J. Austin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Bazaarvoice, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 4, 2014

/s/ Gene J. Austin

Gene J. Austin

Chief Executive Officer and President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULES 13A-14(A) AND 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James R. Offerdahl, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Bazaarvoice, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 4, 2014

/s/ James R. Offerdahl

James R. Offerdahl

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Bazaarvoice, Inc. (the “Company”) on Form 10-Q for the period ended July 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gene J. Austin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 4, 2014

/s/ Gene J. Austin

Gene J. Austin

Chief Executive Officer and President

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Bazaarvoice, Inc. (the “Company”) on Form 10-Q for the period ended July 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James R. Offerdahl Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 4, 2014

/s/ James R. Offerdahl

James R. Offerdahl

Chief Financial Officer

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Estimate of Future Amortization Expense for Definite-Lived Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
Remaining nine months of Fiscal year 2015	$ 1,418
Fiscal year 2016	1,890
Fiscal year 2017	1,890
Fiscal year 2018	1,890
Fiscal year 2019	1,856
Thereafter	$ 3,971

XML

Summary of Short-Term Investments (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Schedule of Available-for-sale Securities [Line Items]
Cost	$ 67,862	$ 40,692
Gross Unrealized Gains	46	19
Gross Unrealized Losses	(10)	(11)
Fair Value	67,898	40,700
Certificates of Deposit
Schedule of Available-for-sale Securities [Line Items]
Cost	7,230	7,466
Gross Unrealized Gains	1	17
Gross Unrealized Losses	(7)	(9)
Fair Value	7,224	7,474
Municipal Bonds
Schedule of Available-for-sale Securities [Line Items]
Cost	3,377
Gross Unrealized Gains	31
Gross Unrealized Losses	(1)
Fair Value	3,407
Commercial Paper
Schedule of Available-for-sale Securities [Line Items]
Cost	5,997
Gross Unrealized Losses	(1)
Fair Value	5,996
US Treasury securities
Schedule of Available-for-sale Securities [Line Items]
Cost	51,258	33,226
Gross Unrealized Gains	14	2
Gross Unrealized Losses	(1)	(2)
Fair Value	$ 51,271	$ 33,226

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Net Loss Per Share Applicable to Common Stockholders (Tables)

3 Months Ended

Jul. 31, 2014

Computations of Loss per Share Applicable to Common Stockholders

The following table sets forth the computations of net loss per share applicable to common stockholders for the three months ended July 31, 2014 and 2013, respectively (in thousands, except net loss per share data):

	Three Months Ended July 31,
	2014			2013
Net loss from continuing operations	$	(10,308	)	$	(17,646	)
Net income (loss) from discontinued operations, net of tax		(1,257	)		278
Net loss applicable to common stockholders	$	(11,565	)	$	(17,368	)
Basic and diluted loss per share
Continuing operations	$	(0.13	)	$	(0.23	)
Discontinued operations		(0.02	)		—
Basic and diluted loss per share:	$	(0.15	)	$	(0.23	)
Basic and diluted weighted average number of shares outstanding		77,766			73,983
Potentially dilutive securities (1):
Outstanding stock options		922			2,987
Restricted shares		170			188

⁽¹⁾  The impact of potentially dilutive securities on earnings per share is anti-dilutive in a period of net loss.

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Computations of Loss per Share Applicable to Common Stockholders (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jul. 31, 2014		Jul. 31, 2013
Schedule Of Computation Of Basic And Diluted Earnings Per Common Share [Line Items]
Net loss from continuing operations	$ (10,308)		$ (17,646)
Net income (loss) from discontinued operations, net of tax	(1,257)		278
Net loss applicable to common stockholders	$ (11,565)		$ (17,368)
Continuing operations	$ (0.13)		$ (0.23)
Discontinued operations	$ (0.02)
Basic and diluted loss per share	$ (0.15)		$ (0.23)
Basic and diluted weighted average number of shares outstanding	77,766		73,983
Outstanding stock options
Potentially dilutive securities (1):
Outstanding stock options	922	[1]	2,987	[1]
Restricted Stock
Potentially dilutive securities (1):
Outstanding stock options	170	[1]	188	[1]

[1] The impact of potentially dilutive securities on earnings per share is anti-dilutive in a period of net loss.

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Acquired Intangible Assets, Net (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Apr. 30, 2014	Jul. 31, 2014
Acquired Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Gross Fair Value	$ 15,100	$ 15,100
Accumulated Amortization	(1,712)	(2,185)
Net Book Value	13,388	12,915
Customer Relationships
Acquired Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets, gross	11,835	11,835
Accumulated Amortization	(1,684)	(1,993)
Acquired finite-lived intangible assets, net book value	10,151	9,842
Developed Technology
Acquired Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets, gross	3,265	3,265
Accumulated Amortization	(28)	(192)
Acquired finite-lived intangible assets, net book value	3,237	3,073
Discontinued Operations
Acquired Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Gross Fair Value	46,166
Accumulated Amortization	(10,853)
Impairment	(2,500)
Net Book Value	32,813	0
Discontinued Operations | Domain name
Acquired Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Acquired indefinite lived intangible assets	800
Discontinued Operations | Customer Relationships
Acquired Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets, gross	39,966
Accumulated Amortization	(7,463)
Impairment	(2,354)
Acquired finite-lived intangible assets, net book value	30,149
Discontinued Operations | Developed Technology
Acquired Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets, gross	5,400
Accumulated Amortization	(3,390)
Impairment	(146)
Acquired finite-lived intangible assets, net book value	$ 1,864

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Summary of Significant Accounting Policies

3 Months Ended

Jul. 31, 2014

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Fiscal Year

The Company’s fiscal year end is April 30. References to fiscal year 2015, for example, refer to the fiscal year ending April 30, 2015.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The Company’s significant accounting policies and recent accounting pronouncements are described in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2014, filed on June 26, 2014. Therefore, these unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2014.

The condensed consolidated balance sheet data as of April 30, 2014 was derived from the audited consolidated financial statements which are included in the Company’s Annual Report on form 10-K for the fiscal year ended April 30, 2014, filed on June 26, 2014.

On July 2, 2014, the Company completed the sale of its PowerReviews business. The operating results of this business have been presented as discontinued operations for the three month periods ended July 31, 2013 and July 31, 2014. Certain prior year amounts have been reclassified to conform to the current year presentation as a result of discontinued operations (See Note 3). The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations for all periods presented. All other disclosures and amounts in the notes to the condensed consolidated financial statements relate to the Company’s continuing operations, unless otherwise indicated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, allowance for doubtful accounts, income taxes, stock-based expense, accrued liabilities, useful lives of property and equipment and capitalized software development costs, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from the estimates made by management with respect to these items.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements and notes have been prepared in accordance with GAAP, as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification for interim financial information and Article 10 of Regulation S-X issued by the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by GAAP for annual fiscal reporting periods. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and cash flows. The results of operations for the three months ended July 31, 2014 are not necessarily indicative of results that may be expected for the fiscal year ending April 30, 2015 or any other period.

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, and trade receivables. The Company’s cash and cash equivalents are placed with high-credit-quality financial institutions and issuers, and at times may exceed federally insured limits. The Company has not experienced any loss relating to cash and cash equivalents in these accounts. The Company maintains an allowance for doubtful accounts receivable balances, performs periodic credit evaluations of its clients and generally does not require collateral of its clients.

No single client accounted for 10% or more of accounts receivable as of July 31, 2014 or April 30, 2014. No single client accounted for 10% or more of total revenue for the three months ended July 31, 2014 or 2013.

Revenue Recognition

In general, the Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the client, (iii) the fee is fixed or determinable and (iv) collectability is reasonably assured.

The Company generates revenue primarily from sales of the following services:

Software as a Service (“SaaS”)

The Company generates SaaS revenue principally from the sale of subscriptions to its hosted social commerce platform and sells its application services pursuant to service agreements that are generally one year in length. The client does not have the right to take possession of the software supporting the application service at any time, nor do the arrangements contain general rights of return. The Company accounts for these arrangements by recognizing the arrangement consideration for the application service ratably over the term of the related agreement, commencing upon the later of the agreement start date or when all revenue recognition criteria have been met.

Media

Media revenue consists primarily of fees charged to advertisers when their advertisements are displayed on websites owned by various third-parties (“Publishers”). The Company has revenue sharing agreements with these Publishers. The Company receives a fee from the advertisers and pays the Publishers based on their contractual revenue-share. Media revenues earned from the advertisers are recognized on a net basis as the Company has determined that it is acting as an agent in these transactions.

The Company’s agreements do not currently combine SaaS and Media services.

Deferred Revenue

Deferred revenue consists of billings or payments in advance of revenue recognition and is recognized as revenue recognition criteria are met. The Company invoices clients in a variety of installments and, consequently, the deferred revenue balance does not represent the total contract value of its non-cancelable subscription agreements. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue and the remaining portion is recorded as non-current deferred revenue.

Cash and Cash Equivalents

The Company considers all highly liquid investments acquired with an original maturity of three months or less at the date of purchase and readily convertible to known amounts of cash to be cash equivalents. Cash and cash equivalents are deposited with banks in demand deposit accounts. Cash equivalents are stated at cost, which approximates market value, because of the short maturity of these instruments.

Short-term Investments

Short-term investments consist of U.S. Treasury securities and agency securities that are a guaranteed obligation of the U.S. Government and are classified as available-for-sale securities. The Company may or may not hold securities with stated maturities greater than one year until maturity. After consideration of its risks versus reward objectives, as well as its liquidity requirements, the Company may sell these securities prior to their stated maturities. As the Company views these securities as available to support current operations, it has classified all available-for-sale securities as short-term. Available-for-sale securities are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. For the periods presented, realized and unrealized gains and losses on short-term investments were not material. An impairment charge is recorded in the consolidated statements of operations for declines in fair value below the cost of an individual investment that are deemed to be other-than-temporary. The Company assesses whether a decline in value is temporary based on the length of time that the fair market value has been below cost, the severity of the decline, as well as the intent and ability to hold, or plans to sell, the investment. There have been no impairment charges recognized related to short-term investments for the three months ended July 31, 2014 or 2013.

Restricted Cash

The Company’s restricted cash consists of a standby letter of credit under its Pledge and Security Agreement for corporate credit card services, secured by its money market account (See Note 9).

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate their respective fair values, due to the short-term nature of the instruments.

The Company applies the authoritative guidance on fair value measurements for financial assets and liabilities. The guidance defines fair value, thereby eliminating inconsistencies in guidance found in various prior accounting pronouncements, and increases disclosures surrounding fair value calculations. The guidance establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company.

Level 2: Inputs that are observable in the marketplace other than those inputs classified as Level 1.

Level 3: Inputs that are unobservable in the marketplace which require the Company to develop its own assumptions.

Derivative Financial Instruments

As a result of the Company’s international operations, it is exposed to various market risks that may affect its consolidated results of operations, cash flows and financial position. These market risks include, but are not limited to, fluctuations in currency exchange rates. The Company’s primary foreign currency exposures are in Euros and British Pound Sterling. The Company faces exposure to adverse movements in currency exchange rates as the financial results of certain of its operations are translated from local currency into U.S. dollars upon consolidation. Additionally, foreign exchange rate fluctuations on transactions denominated in currencies other than the functional currency result in gains and losses that are reflected in income.

The Company may enter into derivative instruments to hedge certain net exposures of non-U.S. dollar-denominated assets and liabilities, even though it does not elect to apply hedge accounting or hedge accounting does not apply. Gains and losses resulting from a change in fair value of these derivatives are reflected in income in the period in which the change occurs and are recognized on the consolidated statement of operations in other income (expense). Cash flows from these contracts are classified within net cash used in operating activities on the consolidated statements of cash flows.

The Company does not use financial instruments for trading or speculative purposes. The Company recognizes all derivative instruments on the balance sheet at fair value, and its derivative instruments are generally short-term in duration.

Derivative contracts were not material as of July 31, 2014 and April 30, 2014. The Company is exposed to the risk that counterparties to derivative contracts may fail to meet their contractual obligations.

Property, Equipment and Capitalized Internal-Use Software Development Costs

Property and equipment is carried at cost less accumulated depreciation and amortization.

Depreciation and amortization is computed utilizing the straight-line method over the estimated useful lives of the related assets as follows:

Computer equipment	3 years
Furniture and fixtures	5 years
Office equipment	5 years
Software	3 years
Leasehold improvements	Shorter of estimated useful life or the lease term

When depreciable assets are sold or retired, the related cost and accumulated depreciation are removed from the accounts. Any gain or loss is included in other income (expense), net in the Company’s statement of operations. Major additions and betterments are capitalized. Maintenance and repairs which do not materially improve or extend the lives of the respective assets are charged to operating expenses as incurred.

The Company capitalizes certain development costs incurred in connection with its internal-use software. These capitalized costs are primarily related to its proprietary social commerce platform that is hosted by the Company and accessed by its clients on a subscription basis. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, direct internal and external costs are capitalized until the software is substantially complete and ready for its intended use. Maintenance and training costs are expensed as incurred. Internal-use software development costs are amortized on a straight-line basis over its estimated useful life, generally three years, into cost of revenue.

Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments

The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during the fourth quarter or more often if and when circumstances indicate that goodwill may not be recoverable (See Note 6).

Intangible assets are amortized over their useful lives. Each period the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. The carrying amounts of these assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets then the Company will recognize an impairment charge.

The Company evaluates the recoverability of its long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value (See Note 7).

Stock-Based Expense

The Company records stock-based expense based upon the fair value for all stock options, restricted stock units and restricted stock awards issued to all persons to the extent that such options vest. The fair value of restricted stock units and restricted stock awards is based on the number of shares granted and the closing price of our common stock on the date of grant. The fair value of stock options is calculated by the Black-Scholes option pricing model.

The Company recognizes stock-based expense on a straight-line basis over the respective vesting period, net of estimated forfeitures. The Company recognizes stock-based expense for shares issued pursuant to its Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the offering period of six months. The Company includes an estimated effect of forfeitures in its compensation cost and updates the estimated forfeiture rate through the final vesting date of the awards.

The Company currently recognizes an insignificant tax benefit resulting from compensation costs expensed in the financial statements, however the Company provides a valuation allowance against the majority of deferred tax asset resulting from this type of temporary difference since it expects that it will not have sufficient future taxable income to realize such benefit.

Income Taxes

The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities will be recognized in the period that includes the enactment date. A valuation allowance is established against the deferred tax assets to reduce their carrying value to an amount that is more likely than not to be realized.

Foreign Currency Translation

The U.S. dollar is the reporting currency for all periods presented. The functional currency of the Company’s foreign subsidiaries is generally the local currency. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are translated at the average rate during the period. Equity transactions are translated using historical exchange rates. Adjustments resulting from translating foreign currency financial statements into U.S. dollars are included in accumulated other comprehensive loss. Foreign currency transaction gains and losses are included in net loss for the period.

There have been no significant changes or updates to the Company’s significant accounting policies disclosed in its Annual report on Form 10-K the fiscal year ended April 30, 2014, filed on June 26, 2014.

Recent Accounting Pronouncements

Stock-based expense

In June 2014, the FASB issued Accounting Standards Update 2014-12, “Accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period,” (“ASU 2014-12”) which requires performance-based awards with a performance target that affects vesting and that could be achieved after an employee completes the requisite service period to be accounted for as a performance condition. If performance targets are clearly defined and it is probable that the performance condition will be achieved, stock-based expense should be recognized over the remaining requisite service period. This guidance will be effective for fiscal year ending April 30, 2017 with early adoption permitted. The Company is currently evaluating the impact of this standards update on the Company’s condensed consolidated financial statements.

Revenue

In May 2014, the FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”) which provides updated, comprehensive revenue recognition guidance for contracts with customers, including a new principles-based five step framework that eliminates much of the industry-specific guidance in current accounting literature. Under ASU 2014-09, revenue recognition is based on a core principle that companies recognize revenue in an amount consistent with the consideration it expects to be entitled to in exchange for the transfer of goods or services. The standards update also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of recognized revenue. This guidance will be effective for fiscal year ending April 30, 2018 and may be applied on either a full or modified retrospective basis, with early adoption not permitted. The Company is currently evaluating the impact of this standards update on the Company’s condensed consolidated financial statements.

Discontinued Operations

In April 2014, the FASB issued Accounting Standards Update 2014-08, “Reporting of Discontinued Operations and Disclosures of Disposals of Components of an entity,” (“ASU 2014-08”) which changes the criteria for determining which disposals can be presented as discontinued operations and requires new disclosures for individually significant dispositions that do not quality as discontinued operations. ASU 2014-08 is effective prospectively for fiscal years and interim reporting periods within those years beginning after December 15, 2014, with early adoption permitted for transactions that have not been reported in financial statements previously issued or available for issuance. The standard will be effective for the fiscal year ending April 30, 2016. The standard is not expected to have a material impact on the Company’s condensed consolidated financial statements.

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Commitments and Contingencies - Additional Information (Detail) (USD $) Share data in Millions, unless otherwise specified	0 Months Ended		3 Months Ended	12 Months Ended		0 Months Ended
	Jun. 04, 2014	Mar. 12, 2013	Jul. 31, 2014	Apr. 30, 2014	Jun. 04, 2014	Jun. 12, 2012 PowerReviews	Jun. 12, 2012 PowerReviews	Jul. 31, 2014 Minimum [Member]	Jul. 31, 2014 Maximum [Member]
Commitments and Contingencies Disclosure [Line Items]
Shares of common Stock issued in business acquisition						6.4
Business acquisition total consideration						$ 150,800,000
Number of vested and unvested options equivalent to the acquired company's option							1.7
Definitive agreement to divest PowerReviews, expected cash proceed	30,000,000		30,000,000
Amount that will be placed into escrow as partial security for the Company's indemnification obligations					4,500,000
Loss on disposal of discontinued operations, net of taxes			(10,729,000)
Loss on disposal of discontinued operations, net of taxes, previously recognized				(9,192,000)
Loss on disposal of discontinued operations, net of tax, recognized in current period			(1,537,000)
Damages sought in shareholder derivative action		91,400,000
Sales tax liability estimate								2,800,000	3,300,000
Sales tax liability accrual			$ 3,100,000

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Carrying Amounts of Major Classes of Assets and Liabilities of Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 02, 2014	Apr. 30, 2014
ASSETS:
Restricted cash	$ 104
Accounts receivable, net	1,097	1,036
Prepaid expenses and other current assets	48	49
Total current assets	1,249	1,085
Property and equipment, net	37	37
Goodwill	9,002	9,002
Acquired intangible assets, net	32,813	32,813
Total assets	43,101	42,937
LIABILITIES:
Accounts payable	76	221
Accrued expenses and other current liabilities	823	895
Deferred revenue	2,230	2,505
Total Liabilities	$ 3,129	$ 3,621

XML

Summarized Results from Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues from discontinued operations	$ 2,535	$ 4,252
Income from discontinued operations before income taxes	303	446
Income tax expense	23	168
Net income from discontinued operations	280	278
Loss on disposal of discontinued operations, net of tax	(1,537)
Net income (loss) from discontinued operations, net of tax	$ (1,257)	$ 278

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Calculation of Loss on Disposal of Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	0 Months Ended	3 Months Ended	12 Months Ended
	Jun. 04, 2014	Jul. 31, 2014	Apr. 30, 2014	Jul. 02, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash consideration	$ 30,000	$ 30,000
Basis in net assets as of July 2, 2014				39,972
Costs incurred directly attributable to the transaction		1,039
Loss before income taxes		(11,011)
Income tax benefit		(282)
Loss on disposal of discontinued operations, net of taxes		(10,729)
Loss on disposal of discontinued operations, net of taxes, previously recognized			(9,192)
Loss on disposal of discontinued operations, net of tax, recognized in current period		$ (1,537)

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Carrying Amount of Assets Held for Sale in Condensed Consolidated Balance Sheet (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Apr. 30, 2014	Jul. 02, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Total assets of discontinued operations	$ 42,937	$ 43,101
Estimated loss on disposal of discontinued operations, net of tax	(9,192)
Assets held for sale	$ 33,745

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Organization and Nature of Operations

3 Months Ended

Jul. 31, 2014

Organization and Nature of Operations

1. Organization and Nature of Operations

Bazaarvoice, Inc. (“Bazaarvoice” or the “Company”) powers a network that connects brands and retailers to the authentic voices of people where they shop. Bazaarvoice, which literally means “voice of the marketplace,” was founded on the premise that online word of mouth is critical to consumers and businesses because of its influence on purchasing decisions, both online and offline. The Company’s technology platform collects and displays ratings and reviews, questions and answers and stories from customers along with visual commerce capabilities that collectively amplify the voices of the consumers into the shopping experience – before, during and after a purchase. The Company helps clients leverage social data derived from online word of mouth content to increase sales, acquire new customers, improve marketing effectiveness, enhance consumer engagement across channels, increase success of new product launches, improve existing products and services, effectively scale customer support, decrease product returns and enable retailers to launch and manage on-site advertising solutions and site monetization strategies.

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Summary of Cash and Cash Equivalents (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents	$ 24,704	$ 31,934
Demand deposits accounts
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents	21,674	24,721
Money Market Funds
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents	1,442	6,971
Certificates of Deposit
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents		242
Municipal Bonds
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents	887
US Treasury securities
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents	$ 701

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Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Schedule Of Income Taxes [Line Items]
Company's effective tax rate for continuing operations	(0.10%)	2.20%
Additional income tax benefit related to research and development credit		$ 0.4

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Current assets:
Cash and cash equivalents	$ 24,704	$ 31,934
Restricted cash	500	604
Short-term investments	67,898	40,700
Accounts receivable, net of allowance for doubtful accounts of $2,432 and $2,324 as of July 31, 2014 and April 30, 2014, respectively	38,062	39,099
Prepaid expenses and other current assets	12,861	8,212
Assets held for sale		33,745
Total current assets	144,025	154,294
Property, equipment and capitalized internal-use software development costs, net	17,840	17,005
Goodwill	139,155	139,155
Acquired intangible assets, net	12,915	13,388
Other non-current assets	3,761	3,428
Total assets	317,696	327,270
Current liabilities:
Accounts payable	3,777	3,346
Accrued expenses and other current liabilities	26,417	27,071
Revolving line of credit	27,000	27,000
Deferred revenue	57,074	54,951
Liabilities held for sale		3,621
Total current liabilities	114,268	115,989
Deferred revenue less current portion	1,947	1,722
Deferred tax liability, long-term	1,670	1,730
Other liabilities, long-term	1,048	1,367
Total liabilities	118,933	120,808
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock - $0.0001 par value; 150,000,000 shares authorized, 78,271,861 shares issued and 78,021,861 shares outstanding as of July 31, 2014; 150,000,000 shares authorized, 77,887,663 shares issued and 77,637,663 shares outstanding at April 30, 2014	8	8
Treasury stock, at cost - 250,000 shares at July 31, 2014 and April 30, 2014
Additional paid-in capital	402,022	398,201
Accumulated other comprehensive income	373	328
Accumulated deficit	(203,640)	(192,075)
Total stockholders' equity	198,763	206,462
Total liabilities and stockholders' equity	$ 317,696	$ 327,270

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Condensed Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands	Total USD ($)	Common Stock USD ($)	Treasury Stock	Additional Paid-in Capital USD ($)	Accumulated Other Comprehensive Income (Loss) USD ($)	Accumulated Deficit USD ($)
Beginning balance at Apr. 30, 2014	$ 206,462	$ 8		$ 398,201	$ 328	$ (192,075)
Beginning balance, Shares at Apr. 30, 2014		77,888	(250)
Excess tax benefit related to stock-based expense	1			1
Stock-based expense	3,246			3,246
Exercise of stock options and vested restricted stock units, Shares		384
Exercise of stock options and vested restricted stock units	574			574
Change in foreign currency translation adjustment	(2)				(2)
Change in unrealized gain on investments	47				47
Net loss applicable to common stockholders	(11,565)					(11,565)
Ending balance at Jul. 31, 2014	$ 198,763	$ 8		$ 402,022	$ 373	$ (203,640)
Ending balance, Shares at Jul. 31, 2014		78,272	(250)

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Business Combinations - Additional Information (Detail) (FeedMagnet, USD $) In Millions, unless otherwise specified	0 Months Ended
	Apr. 15, 2014
FeedMagnet
Business Acquisition [Line Items]
Cash paid in business acquisition	$ 9.3

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Discontinued Operations (Tables)

3 Months Ended

Jul. 31, 2014

Summary of Discontinued Operations

Summarized results from discontinued operations were as follows (in thousands):

	Three Months Ended July 31,
	2014			2013
Revenues from discontinued operations	$	2,535		$	4,252
Income from discontinued operations before income taxes	$	303		$	446
Income tax expense		23			168
Net income from discontinued operations		280			278
Loss on disposal of discontinued operations, net of tax		(1,537	)		—
Net income (loss) from discontinued operations, net of tax	$	(1,257	)	$	278

The carrying amounts of the major classes of assets and liabilities of discontinued operations were as follows (in thousands):

	July 2, 2014		April 30, 2014
ASSETS:
Restricted cash	$	104	$	—
Accounts receivable, net		1,097		1,036
Prepaid expenses and other current assets		48		49
Total current assets		1,249		1,085
Property and equipment, net		37		37
Goodwill		9,002		9,002
Acquired intangible assets, net		32,813		32,813
Total assets	$	43,101	$	42,937
LIABILITIES:
Accounts payable	$	76	$	221
Accrued expenses and other current liabilities		823		895
Deferred revenue		2,230		2,505
Total Liabilities	$	3,129	$	3,621

Calculation of Loss on Disposal of Discontinued Operations

The Company recorded a loss on the disposal of discontinued operations of $1.5 million, net of tax, in the current quarter which was calculated as follows (in thousands):

Cash consideration	$	30,000
Less:
Basis in net assets as of July 2, 2014		39,972
Costs incurred directly attributable to the transaction		1,039
Loss before income taxes		(11,011	)
Income tax benefit		(282	)
Loss on disposal of discontinued operations, net of taxes		(10,729	)
Loss on disposal of discontinued operations, net of taxes, previously recognized		9,192
Loss on disposal of discontinued operations, net of tax, recognized in current period	$	(1,537	)

Carrying Amount of Assets Held for Sale in the Condensed Consolidated Balance Sheet

The carrying amount of assets held for sale in the condensed consolidated balance sheet was calculated as follows (in thousands):

	April 30, 2014
Total assets of discontinued operations	$	42,937
Estimated loss on disposal of discontinued operations, net of tax		(9,192	)
Assets held for sale	$	33,745

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Goodwill - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Goodwill [Line Items]
Goodwill	$ 139,155	$ 139,155

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Acquired Intangible Assets, net (Tables)

3 Months Ended

Jul. 31, 2014

Acquired Intangible Assets, Net

Acquired intangible assets, net, as of July 31, 2014 and April 30, 2014 for continuing operations are as follows (in thousands):

	July 31, 2014							April 30, 2014
	Gross Fair		Accumulated			Net Book		Gross Fair		Accumulated			Net Book
	Value		Amortization			Value		Value		Amortization			Value
Customer relationships	$	11,835	$	(1,993	)	$	9,842	$	11,835	$	(1,684	)	$	10,151
Developed technology		3,265		(192	)		3,073		3,265		(28	)		3,237
Total	$	15,100	$	(2,185	)	$	12,915	$	15,100	$	(1,712	)	$	13,388

Acquired intangible assets, net, as of April 30, 2014 for discontinued operations are as follows (in thousands):

	April 30, 2014
	Gross Fair		Accumulated						Net Book
	Value		Amortization			Impairment			Value
Customer relationships	$	39,966	$	(7,463	)	$	(2,354	)	$	30,149
Developed technology		5,400		(3,390	)		(146	)		1,864
Domain name (indefinite useful life)		800		—			—			800
Total	$	46,166	$	(10,853	)	$	(2,500	)	$	32,813

Estimate of Future Amortization Expense for Definite-Lived Intangible Assets

The following table presents our estimate of future amortization expense for definite-lived intangible assets (in thousands):

Fiscal period:	Amount
Remaining nine months of Fiscal year 2015		1,418
Fiscal year 2016		1,890
Fiscal year 2017		1,890
Fiscal year 2018		1,890
Fiscal year 2019		1,856
Thereafter		3,971

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Operating activities:
Net loss	$ (11,565)	$ (17,368)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense	2,810	3,476
Loss on disposal of discontinued operations, net of tax	1,537
Stock-based expense	3,246	4,008
Bad debt expense	601	566
Excess tax benefit related to stock-based expense	(1)	(90)
Other non-cash expense	169	82
Changes in operating assets and liabilities:
Accounts receivable	435	2,507
Prepaid expenses and other current assets	(145)	(356)
Other non-current assets	(319)	(523)
Accounts payable	208	(474)
Accrued expenses and other current liabilities	(2,388)	1,729
Deferred revenue	2,349	(2,432)
Other liabilities, long-term	(349)	(239)
Net cash used in operating activities	(3,412)	(9,114)
Investing activities:
Acquisitions, net of cash acquired, and purchase of intangible asset		(205)
Proceeds from sale of discontinued operations	25,500
Purchases of property, equipment and capitalized internal-use software development costs	(3,280)	(3,963)
Purchases of short-term investments	(38,858)	(25,161)
Proceeds from maturities of short-term investments	11,655	21,250
Proceeds from sale of short-term investments		16,018
Net cash provided by (used in) investing activities	(4,983)	7,939
Financing activities:
Proceeds from employee stock compensation plans	1,156	2,837
Excess tax benefit related to stock-based expense	1	90
Net cash provided by financing activities	1,157	2,927
Effect of exchange rate fluctuations on cash and cash equivalents	8	(57)
Net change in cash and cash equivalents	(7,230)	1,695
Cash and cash equivalents at beginning of period	31,934	25,045
Cash and cash equivalents at end of period	24,704	26,740
Supplemental disclosure of other cash flow information:
Cash paid for income taxes	461	357
Cash paid for interest	$ 222

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Allowance for doubtful accounts	$ 2,432	$ 2,324
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	78,271,861	77,887,663
Common stock, shares outstanding	78,021,861	77,637,663
Treasury stock, shares	250,000	250,000

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Net Loss Per Share Applicable to Common Stockholders

3 Months Ended

Jul. 31, 2014

Net Loss Per Share Applicable to Common Stockholders

10. Net Loss Per Share Applicable to Common Stockholders

The following table sets forth the computations of net loss per share applicable to common stockholders for the three months ended July 31, 2014 and 2013, respectively (in thousands, except net loss per share data):

	Three Months Ended July 31,
	2014			2013
Net loss from continuing operations	$	(10,308	)	$	(17,646	)
Net income (loss) from discontinued operations, net of tax		(1,257	)		278
Net loss applicable to common stockholders	$	(11,565	)	$	(17,368	)
Basic and diluted loss per share
Continuing operations	$	(0.13	)	$	(0.23	)
Discontinued operations		(0.02	)		—
Basic and diluted loss per share:	$	(0.15	)	$	(0.23	)
Basic and diluted weighted average number of shares outstanding		77,766			73,983
Potentially dilutive securities (1):
Outstanding stock options		922			2,987
Restricted shares		170			188

⁽¹⁾  The impact of potentially dilutive securities on earnings per share is anti-dilutive in a period of net loss.

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Document and Entity Information	3 Months Ended
	Jul. 31, 2014	Aug. 29, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 31, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Trading Symbol	BV
Entity Registrant Name	Bazaarvoice Inc
Entity Central Index Key	0001330421
Current Fiscal Year End Date	--04-30
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		78,083,156

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Commitments and Contingencies

3 Months Ended

Jul. 31, 2014

Commitments and Contingencies

11. Commitments and Contingencies

In the ordinary course of business, the Company may be subject to various legal proceedings and claims including alleged infringement of third-party patents and other intellectual property rights. The Company reviews the status of each matter and records a provision for a liability when it is considered both probable that a liability has been incurred and that the amount of the loss can be reasonably estimated. These provisions are reviewed quarterly and adjusted as additional information becomes available. If either or both of the criteria are not met, the Company assesses whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, the Company discloses the estimate of the amount of loss or range of losses, discloses that the amount would not have a material effect on the Company’s condensed consolidated financial statements (if applicable) or discloses that an estimate of the possible loss or range of loss cannot be made. Legal fees are recognized as incurred when the legal services are provided, and therefore are not recognized as a part of a loss contingency accrual.

On June 12, 2012, the Company acquired PowerReviews, Inc. (“PowerReviews”), a provider of social commerce solutions based in San Francisco, California. The total consideration paid for this transaction was $150.8 million, including the issuance of 6.4 million shares of the Company’s common stock and assumption of vested and unvested options to purchase the common stock of PowerReviews equivalent to options to purchase 1.7 million shares of the Company’s common stock, but excluding the potential cash proceeds that may arise from the exercise of these assumed options. On January 10, 2013, the U.S. Department of Justice (the “DOJ”) filed a complaint against the Company with the U.S. District Court for the Northern District of California, San Francisco Division (the “Court”), alleging that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18 and seeking the Company’s divestiture of assets sufficient to create a competing business that can replace the competitive significance of PowerReviews in the marketplace. On January 8, 2014, the Court ruled that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18. On April 24, 2014, the Company entered into a Joint Stipulation with the DOJ to resolve the DOJ’s claims in the antitrust action challenging the acquisition of PowerReviews and, together with the DOJ, the Company submitted a proposed order to the Court (the “Order”). Under the terms of the Joint Stipulation and the Order, the Company was required to divest all of the assets of the PowerReviews business. On June 4, 2014, the Company entered into a definitive agreement to divest PowerReviews, LLC, the successor to PowerReviews, to Wavetable Labs, LLC (“Wavetable”) for $30.0 million in cash, $4.5 million of which is to be held in escrow as partial security for the Company’s indemnification obligations under the definitive agreement. The terms of this transaction were approved by the DOJ on June 26, 2014, and the transaction was completed on July 2, 2014. Wavetable subsequently changed its name to PowerReviews. As a result of the foregoing, PowerReviews revenues, related expenses and loss on disposal, net of tax, are components of “loss from discontinued operations” in the Condensed Consolidated Statement of Operations. On the Condensed Consolidated Balance Sheets, the assets and liabilities of the discontinued operations of PowerReviews have been presented as ‘Assets held for sale’ and ‘Liabilities held for sale,’ respectively. The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations.

The Company realized a total loss on the disposal of PowerReviews of $10.7 million; of which, $9.2 million was recognized as an estimated loss on disposal of discontinued operations during the fiscal year ended April 30, 2014. The Company recognized the incremental loss of $1.5 million in the current fiscal quarter (See Note 3).

On March 12, 2013, a purported shareholder derivative action was filed in the Texas State District Court for Travis County, Texas against certain of the Company’s officers and directors, former officers and directors, and against the Company as nominal defendant. The original petition in this matter alleged claims purportedly on behalf of the Company against the individual defendants for corporate waste, breaches of fiduciary duties and breaches of the Company’s corporate policies in connection with the acquisition of PowerReviews and certain of the Company’s officers’ and directors’ sales of shares of the Company’s stock. The original petition requested declaratory judgment, a disgorgement of $91.4 million in proceeds received from such sales of the Company’s stock, unspecified damages on behalf of the Company, reasonable attorneys’, accountants’ and experts’ fees, and equitable relief. On October 23, 2013, the court granted a motion filed by the Company and individual defendants and ruled that the plaintiff’s original petition failed to allege particularized facts sufficient to excuse plaintiff from making pre-suit demand on the Company’s Board of Directors. The court ordered the plaintiff to file an amended complaint within 30 days setting forth particularized facts sufficient to excuse demand. On November 22, 2013, the plaintiff filed its amended petition, which again asserted claims for corporate waste, breaches of fiduciary duties and breaches of the Company’s corporate policies in connection with the acquisition of PowerReviews and certain of the Company’s officers’ and directors’ sales of shares of the Company’s stock. The court stayed the lawsuit and its ruling on the motion for summary judgment to allow the parties to participate in mediation. On July 9, 2014, the parties attended mediation and agreed to preliminary settlement terms, subject to board approval, court approval, and notice to the Company’s shareholder. The Company does not expect the settlement to have a material impact on the Company’s condensed consolidated financial statements.

As of July 31, 2014, the Company was in the process of assessing the sales tax status of the Bazaarvoice enterprise service offering with sales tax agencies in certain states in which it operates. Based on the limited information received from certain of these states, the Company cannot determine with certainty the historical time period for which these services were taxable, and, for certain states, which of its service offerings and features these states may determine to be subject to state sales tax. The Company currently estimates that its liability, net of amounts to be recovered from clients, will be between $2.8 million and $3.3 million. The Company has accrued a liability of $3.1 million, representing the best estimate of the amount within this range that will probably be incurred to settle these obligations. The estimated range includes continuing to execute its action plan for recovering these amounts due from the Company’s clients. If it is determined that the time period in which the products are taxable or the portion of the Company’s product offering subject to state sales tax is greater than that used to determine the accrual as of July 31, 2014, or if there are changes in our underlying assumptions, then the actual liability incurred will likely approach the higher end of the current estimated range.

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Revenue	$ 45,977	$ 40,319
Cost of revenue	16,356	12,117
Gross profit	29,621	28,202
Operating expenses:
Sales and marketing	20,995	20,996
Research and development	9,730	8,924
General and administrative	7,893	8,536
Acquisition-related and other	492	7,504
Amortization of acquired intangible assets	309	282
Total operating expenses	39,419	46,242
Operating loss	(9,798)	(18,040)
Other income (expense), net:
Interest income	6	66
Other expense	(504)	(63)
Total other income (expense), net	(498)	3
Loss from continuing operations before income taxes	(10,296)	(18,037)
Income tax expense (benefit)	12	(391)
Net loss from continuing operations	(10,308)	(17,646)
Income (loss) from discontinued operations, net of tax	(1,257)	278
Net loss applicable to common stockholders	$ (11,565)	$ (17,368)
Net loss per share applicable to common stockholders:
Continuing operations	$ (0.13)	$ (0.23)
Discontinued operations	$ (0.02)
Basic and diluted loss per share	$ (0.15)	$ (0.23)
Basic and diluted weighted average number of shares outstanding	77,766	73,983

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Business Combinations

3 Months Ended

Jul. 31, 2014

Business Combinations

5. Business Combinations

On April 15, 2014, during the fourth quarter of fiscal year 2014, the Company acquired FeedMagnet Inc. (“FeedMagnet”) for $9.3 million in cash. FeedMagnet was a privately-owned social media curation company that enables brands to collect, curate and display consumer-generated images, video and social content on their websites and other marketing properties. The Company accounted for the FeedMagnet acquisition using the acquisition method of accounting. As of July 31, 2014, the Company did not record any adjustments to the preliminary purchase price allocation.

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Fair Value of Financial Assets and Liabilities

3 Months Ended

Jul. 31, 2014

Fair Value of Financial Assets and Liabilities

4. Fair Value of Financial Assets and Liabilities

The following table summarizes the Company’s cash and cash equivalents as of July 31, 2014 and April 30, 2014 (in thousands):

	July 31, 2014		April 30, 2014
Demand deposit accounts	$	21,674	$	24,721
Money market funds		1,442		6,971
Certificates of deposit		—		242
Municipal bonds		887		—
U.S. Treasury bills		701		—
Total cash and cash equivalents	$	24,704	$	31,934

The following table summarizes the Company’s short-term investments as of July 31, 2014 (in thousands):

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Certificates of deposit	$	7,230	$	1	$	(7	)	$	7,224
Municipal bonds		3,377		31		(1	)		3,407
Commercial paper		5,997		—		(1	)		5,996
U.S. Treasury notes		51,258		14		(1	)		51,271
Total short-term investments	$	67,862	$	46	$	(10	)	$	67,898

The following table summarizes the Company’s short-term investments as of April 30, 2014 (in thousands):

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Certificates of deposit	$	7,466	$	17	$	(9	)	$	7,474
U.S. Treasury notes		33,226		2		(2	)		33,226
Total short-term investments	$	40,692	$	19	$	(11	)	$	40,700

All short-term investments had original maturity dates of less than 12 months at July 31, 2014 and April 30, 2014. Realized gains and losses from the sale of short-term investments were not material for the three months ended July 31, 2014 and 2013.

The following table summarizes the fair value of the Company’s financial assets and liabilities that were measured on a recurring basis as of July 31, 2014 and April 30, 2014 (in thousands):

	Fair Value Measurements at July 31, 2014								Fair Value Measurements at April 30, 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	1,442	$	—	$	—	$	1,442	$	6,971	$	—	$	—	$	6,971
Certificates of deposit		—		—		—		—		242		—		—		242
Municipal bonds		—		887		—		887		—		—		—		—
U.S. Treasury bills		701		—		—		701		—		—		—		—
Total cash equivalents		2,143		887		—		3,030		7,213		—		—		7,213
Restricted cash		500		—		—		500		604		—		—		604
Short-term investments:
Certificates of deposit		—		7,224		—		7,224		—		7,474		—		7,474
Municipal bonds		—		3,407		—		3,407		—		—		—		—
Commercial paper		—		5,996		—		5,996		—		—		—		—
U.S. Treasury notes		51,271		—		—		51,271		33,226		—		—		33,226
Total short-term investments		51,271		16,627		—		67,898		33,226		7,474		—		40,700
Total assets	$	53,914	$	17,514	$	—	$	71,428	$	41,043	$	7,474	$	—	$	48,517

The Company measures certain assets, including property and equipment, goodwill and intangible assets, at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. The Company evaluates transfers between levels at the end of the fiscal year and assumes that any identified transfers are deemed to have occurred at the end of the reporting year. There were no transfers between levels in any of the periods presented.

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Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Jul. 31, 2014

Summary of Cash and Cash Equivalents

The following table summarizes the Company’s cash and cash equivalents as of July 31, 2014 and April 30, 2014 (in thousands):

	July 31, 2014		April 30, 2014
Demand deposit accounts	$	21,674	$	24,721
Money market funds		1,442		6,971
Certificates of deposit		—		242
Municipal bonds		887		—
U.S. Treasury bills		701		—
Total cash and cash equivalents	$	24,704	$	31,934

Summary of Short-Term Investments

The following table summarizes the Company’s short-term investments as of July 31, 2014 (in thousands):

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Certificates of deposit	$	7,230	$	1	$	(7	)	$	7,224
Municipal bonds		3,377		31		(1	)		3,407
Commercial paper		5,997		—		(1	)		5,996
U.S. Treasury notes		51,258		14		(1	)		51,271
Total short-term investments	$	67,862	$	46	$	(10	)	$	67,898

The following table summarizes the Company’s short-term investments as of April 30, 2014 (in thousands):

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Certificates of deposit	$	7,466	$	17	$	(9	)	$	7,474
U.S. Treasury notes		33,226		2		(2	)		33,226
Total short-term investments	$	40,692	$	19	$	(11	)	$	40,700

Summary of Fair Value of Financial Assets and Liabilities

The following table summarizes the fair value of the Company’s financial assets and liabilities that were measured on a recurring basis as of July 31, 2014 and April 30, 2014 (in thousands):

	Fair Value Measurements at July 31, 2014								Fair Value Measurements at April 30, 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	1,442	$	—	$	—	$	1,442	$	6,971	$	—	$	—	$	6,971
Certificates of deposit		—		—		—		—		242		—		—		242
Municipal bonds		—		887		—		887		—		—		—		—
U.S. Treasury bills		701		—		—		701		—		—		—		—
Total cash equivalents		2,143		887		—		3,030		7,213		—		—		7,213
Restricted cash		500		—		—		500		604		—		—		604
Short-term investments:
Certificates of deposit		—		7,224		—		7,224		—		7,474		—		7,474
Municipal bonds		—		3,407		—		3,407		—		—		—		—
Commercial paper		—		5,996		—		5,996		—		—		—		—
U.S. Treasury notes		51,271		—		—		51,271		33,226		—		—		33,226
Total short-term investments		51,271		16,627		—		67,898		33,226		7,474		—		40,700
Total assets	$	53,914	$	17,514	$	—	$	71,428	$	41,043	$	7,474	$	—	$	48,517

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Subsequent Events

3 Months Ended

Jul. 31, 2014

Subsequent Events

12. Subsequent Events

On August 20, 2014, the Company was informed that the DOJ is investigating whether the Company retained any PowerReviews technology in violation of the Joint Stipulation and Order. Due to the early stage of this investigation, it is not possible to reliably predict the outcome. The Company cannot currently estimate what, if any, possible loss or range of loss could result from the investigation.

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Income Taxes

3 Months Ended

Jul. 31, 2014

Income Taxes

8. Income Taxes

The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities will be recognized in the period that includes the enactment date. A valuation allowance is established against the deferred tax assets to reduce their carrying value to an amount that is more likely than not to be realized.

The Company computes its interim provision for income taxes by applying the estimated annual effective tax rate to income from operations and adjusts the provision for discrete tax items occurring in the period. For continuing operations, the Company’s effective tax rate for the three months ended July 31, 2014 was (0.1) percent compared to 2.2 percent for the three months ended July 31, 2013. During the three months ended July 31, 2014, the foreign and state income tax expense was primarily offset by the income tax benefit from the Texas state research and development credit. During the three months ended July 31, 2013, an additional benefit of $0.4 million was recorded as a discrete item related to the 2013 Texas state research and development credit which was enacted in the quarter.

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Goodwill

3 Months Ended

Jul. 31, 2014

Goodwill

6. Goodwill

As of July 31, 2014 and April 30, 2014, the Company had goodwill in the amount of $139.2 million. The Company assesses goodwill for impairment annually in the fourth fiscal quarter, or more frequently if other indicators of potential impairment arise. There were no potential indicators of impairment as of July 31, 2014.

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Acquired Intangible Assets, net

3 Months Ended

Jul. 31, 2014

Acquired Intangible Assets, net

7. Acquired Intangible Assets, net

Acquired intangible assets, net, as of July 31, 2014 and April 30, 2014 for continuing operations are as follows (in thousands):

	July 31, 2014							April 30, 2014
	Gross Fair		Accumulated			Net Book		Gross Fair		Accumulated			Net Book
	Value		Amortization			Value		Value		Amortization			Value
Customer relationships	$	11,835	$	(1,993	)	$	9,842	$	11,835	$	(1,684	)	$	10,151
Developed technology		3,265		(192	)		3,073		3,265		(28	)		3,237
Total	$	15,100	$	(2,185	)	$	12,915	$	15,100	$	(1,712	)	$	13,388

Acquired intangible assets, net, as of April 30, 2014 for discontinued operations are as follows (in thousands):

	April 30, 2014
	Gross Fair		Accumulated						Net Book
	Value		Amortization			Impairment			Value
Customer relationships	$	39,966	$	(7,463	)	$	(2,354	)	$	30,149
Developed technology		5,400		(3,390	)		(146	)		1,864
Domain name (indefinite useful life)		800		—			—			800
Total	$	46,166	$	(10,853	)	$	(2,500	)	$	32,813

The sale of the PowerReviews business was completed on July 2, 2014; as such, there were no acquired intangible assets, net, for discontinued operations as of July 31, 2014.

The amortization of customer relationships is recorded as amortization expense and the amortization for developed technology is amortized to cost of revenue.

The following table presents our estimate of future amortization expense for definite-lived intangible assets (in thousands):

Fiscal period:	Amount
Remaining nine months of Fiscal year 2015		1,418
Fiscal year 2016		1,890
Fiscal year 2017		1,890
Fiscal year 2018		1,890
Fiscal year 2019		1,856
Thereafter		3,971

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Debt

3 Months Ended

Jul. 31, 2014

Debt

9. Debt

On July 18, 2007, the Company entered into a loan and security agreement (“Loan Agreement”) with a financial institution, which was most recently amended in June 2013. As amended, the Loan Agreement provides for a revolving line of credit with a borrowing capacity of up to the lesser of (a) $30.0 million or (b) 100% of eligible monthly service fees as defined in the Loan Agreement, inclusive of any amounts outstanding under the $2.7 million sublimit for corporate credit card and letter of credit services. The revolving line of credit expires on January 31, 2015 with all advances immediately due and payable. The revolving line of credit bears interest at the prime based rate as defined in the Loan Agreement except during any period of time during which, in accordance with the Loan Agreement, the line bears interest at the daily adjusting LIBOR rate plus 2.5%. Borrowings under the revolving line of credit are collateralized by substantially all assets of the Company and of its U.S. subsidiaries. The Loan Agreement contains certain financial covenants. As of July 31, 2014 and April 30, 2014, the Company had drawn down $1.6 million in the form of letter of credits as security deposits for its leased corporate headquarters. On February 21, 2014, the Company drew down $27.0 million of its unused balance of the revolving line of credit. The outstanding loan balance is subject to all terms and conditions described above in the Loan Agreement and its subsequent amendments. The unused balance of the revolving line of credit was $1.4 million as of July 31, 2014 and April 30, 2014. The Company was in compliance with all financial covenants as of July 31, 2014 and April 30, 2014.

On November 4, 2008, the Company entered into a pledge and security agreement with a financial institution for a standby letter of credit for credit card services from a separate financial institution. As amended, the agreement provides for a standby letter of credit for credit card services in an amount not to exceed $0.5 million. The Company pledged a security interest in its money market account, in which the balance must equal at least the credit extended. This letter of credit expires annually, and the pledged security interest is recorded as short-term restricted cash in the Company’s condensed consolidated financial statements.

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Summary of Fair Value of Financial Assets and Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 24,704	$ 31,934
Short-term investments	67,898	40,700
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	3,030	7,213
Restricted cash	500	604
Short-term investments	67,898	40,700
Total assets	71,428	48,517
Fair Value, Measurements, Recurring | Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		242
Short-term investments	7,224	7,474
Fair Value, Measurements, Recurring | Municipal Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	887
Short-term investments	3,407
Fair Value, Measurements, Recurring | Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	5,996
Fair Value, Measurements, Recurring | US Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	701
Short-term investments	51,271	33,226
Fair Value, Measurements, Recurring | Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,442	6,971
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	2,143	7,213
Restricted cash	500	604
Short-term investments	51,271	33,226
Total assets	53,914	41,043
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		242
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | US Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	701
Short-term investments	51,271	33,226
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,442	6,971
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	887
Short-term investments	16,627	7,474
Total assets	17,514	7,474
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	7,224	7,474
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Municipal Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	887
Short-term investments	3,407
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	$ 5,996

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Jul. 31, 2014

Estimated Useful Lives of Property Plant and Equipment

Depreciation and amortization is computed utilizing the straight-line method over the estimated useful lives of the related assets as follows:

Computer equipment	3 years
Furniture and fixtures	5 years
Office equipment	5 years
Software	3 years
Leasehold improvements	Shorter of estimated useful life or the lease term

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Estimated Useful Lives of Property Plant and Equipment (Detail)	3 Months Ended
	Jul. 31, 2014
Computer Equipment
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years
Office Equipment
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years
Software
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Estimated useful life	Shorter of estimated useful life or the lease term

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Debt - Additional Information (Detail) (USD $) In Millions, unless otherwise specified									3 Months Ended
	Jul. 31, 2014	Apr. 30, 2014	Feb. 21, 2014	Nov. 04, 2008	Jul. 31, 2014 Unused lines of Credit	Apr. 30, 2014 Unused lines of Credit	Jul. 31, 2014 Revolving Credit Facility Amendment Five	Jul. 31, 2014 Combined Letter Of Credit And Credit Card Services Sub facility	Jul. 31, 2014 Line of Credit	Jul. 31, 2014 Line of Credit Daily adjusting LIBOR rate	Jul. 31, 2014 Line of Credit Amendment Agreement
Debt Instrument [Line Items]
Revolving line of credit with a borrowing capacity							$ 30.0	$ 2.7
Line of credit facility current borrowing capacity percentage							100.00%
Loan and security agreement, issue date									Jul. 18, 2007		Jun. 30, 2013
Loan and security agreement, expiration date									Jan. 31, 2015
Interest above daily adjusting LIBOR rate										2.50%
Letter of credit drawn	1.6	1.6		0.5
Revolving line of credit drawn			27.0
Unused revolving line of credit					$ 1.4	$ 1.4

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Condensed Consolidated Statements of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Net loss from continuing operations	$ (10,308)	$ (17,646)
Other comprehensive gain (loss), net of tax:
Foreign currency translation adjustment	(2)	(61)
Unrealized gain (loss) on investments	47	(48)
Total other comprehensive gain (loss), net of tax	45	(109)
Comprehensive loss	$ (10,263)	$ (17,755)

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Discontinued Operations

3 Months Ended

Jul. 31, 2014

Discontinued Operations

3. Discontinued Operations

On June 12, 2012, the Company acquired PowerReviews, a provider of social commerce solutions based in San Francisco, California. The total consideration paid for this transaction was $150.8 million, including the issuance of 6.4 million shares of the Company’s common stock and assumption of vested and unvested options to purchase the common stock of PowerReviews equivalent to options to purchase 1.7 million shares of the Company’s common stock, but excluding the potential cash proceeds that may arise from the exercise of these assumed options. On January 10, 2013, the DOJ filed a complaint against the Company with the U.S. District Court for the Northern District of California, San Francisco Division (the “Court”), alleging that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18 and seeking the Company’s divestiture of assets sufficient to create a competing business that can replace the competitive significance of PowerReviews in the marketplace. On January 8, 2014, the Court ruled that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18. On June 4, 2014, the Company entered into a definitive agreement to divest PowerReviews, LLC (“PowerReviews”), the successor to PowerReviews, to Wavetable Labs, LLC (“Wavetable”) for $30.0 million in cash, $4.5 million of which is to be held in escrow as partial security for the Company’s indemnification obligations under the definitive agreement. Any reduction in proceeds of the escrow would be recorded as an additional loss. The terms of this transaction were approved by the DOJ on June 26, 2014, and the transaction was completed on July 2, 2014. Wavetable subsequently changed its name to PowerReviews. As a result of the foregoing, PowerReviews revenues, related expenses and loss on disposal, net of tax, are components of “loss from discontinued operations” in the Condensed Consolidated Statements of Operations. As of April 30, 2014, on the Condensed Consolidated Balance Sheets, the assets and liabilities of the discontinued operations of PowerReviews were presented as ‘Assets held for sale’ and ‘Liabilities held for sale,’ respectively. The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations for all periods presented.

The Company incurred a total loss on the disposal of the PowerReviews business of $10.7 million; of which, $9.2 million was recognized as an estimated loss on disposal of discontinued operations during the three months ended April 30, 2014. The additional $1.5 million loss was primarily caused by a decrease of $0.5 million in estimated cash proceeds and incremental transaction costs of $0.4 million. The Company recognized the additional loss of $1.5 million in the current quarter.

Summarized results from discontinued operations were as follows (in thousands):

	Three Months Ended July 31,
	2014			2013
Revenues from discontinued operations	$	2,535		$	4,252
Income from discontinued operations before income taxes	$	303		$	446
Income tax expense		23			168
Net income from discontinued operations		280			278
Loss on disposal of discontinued operations, net of tax		(1,537	)		—
Net income (loss) from discontinued operations, net of tax	$	(1,257	)	$	278

The carrying amounts of the major classes of assets and liabilities of discontinued operations were as follows (in thousands):

	July 2, 2014		April 30, 2014
ASSETS:
Restricted cash	$	104	$	—
Accounts receivable, net		1,097		1,036
Prepaid expenses and other current assets		48		49
Total current assets		1,249		1,085
Property and equipment, net		37		37
Goodwill		9,002		9,002
Acquired intangible assets, net		32,813		32,813
Total assets	$	43,101	$	42,937
LIABILITIES:
Accounts payable	$	76	$	221
Accrued expenses and other current liabilities		823		895
Deferred revenue		2,230		2,505
Total Liabilities	$	3,129	$	3,621

The Company recorded a loss on the disposal of discontinued operations of $1.5 million, net of tax, in the current quarter which was calculated as follows (in thousands):

Cash consideration	$	30,000
Less:
Basis in net assets as of July 2, 2014		39,972
Costs incurred directly attributable to the transaction		1,039
Loss before income taxes		(11,011	)
Income tax benefit		(282	)
Loss on disposal of discontinued operations, net of taxes		(10,729	)
Loss on disposal of discontinued operations, net of taxes, previously recognized		9,192
Loss on disposal of discontinued operations, net of tax, recognized in current period	$	(1,537	)

The carrying amount of assets held for sale in the condensed consolidated balance sheet was calculated as follows (in thousands):

	April 30, 2014
Total assets of discontinued operations	$	42,937
Estimated loss on disposal of discontinued operations, net of tax		(9,192	)
Assets held for sale	$	33,745

The sale of the PowerReviews business was completed on July 2, 2014; as such, there were no assets held for sale as of July 31, 2014. The $4.5 million held in escrow is recorded as a receivable in “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheet as of July 31, 2014.

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Discontinued Operations - Additional Information (Detail) (USD $) Share data in Millions, unless otherwise specified	0 Months Ended	3 Months Ended	12 Months Ended		0 Months Ended		0 Months Ended
	Jun. 04, 2014	Jul. 31, 2014	Apr. 30, 2014	Jun. 04, 2014	Jun. 12, 2012 PowerReviews	Jun. 12, 2012 PowerReviews	Jun. 12, 2012 PowerReviews Common Stock
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Business acquisition total consideration					$ 150,800,000
Shares of common Stock issued in business acquisition					6.4		6.4
Number of vested and unvested options equivalent to the acquired company's options						1.7
Proceeds from disposition	30,000,000	30,000,000
Amount that will be placed into escrow as partial security for the Company's indemnification obligations				4,500,000
Loss on disposal of discontinued operations, net of taxes		(10,729,000)
Loss on disposal of discontinued operations, net of taxes, previously recognized			(9,192,000)
Loss on disposal of discontinued operations, net of tax, recognized in current period		(1,537,000)
Decrease in estimated cash proceeds		500,000
Incremental transaction costs		$ 400,000

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Acquired Intangible Asset Net - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Acquired Intangible Assets Amortization [Line Items]
Acquired intangible assets	$ 12,915	$ 13,388
Discontinued Operations
Acquired Intangible Assets Amortization [Line Items]
Acquired intangible assets	$ 0	$ 32,813

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Jul. 31, 2014

Fiscal Year

Fiscal Year

The Company’s fiscal year end is April 30. References to fiscal year 2015, for example, refer to the fiscal year ending April 30, 2015.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, allowance for doubtful accounts, income taxes, stock-based expense, accrued liabilities, useful lives of property and equipment and capitalized software development costs, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from the estimates made by management with respect to these items.

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

Unaudited Interim Financial Information

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements and notes have been prepared in accordance with GAAP, as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification for interim financial information and Article 10 of Regulation S-X issued by the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by GAAP for annual fiscal reporting periods. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and cash flows. The results of operations for the three months ended July 31, 2014 are not necessarily indicative of results that may be expected for the fiscal year ending April 30, 2015 or any other period.

Concentrations of Credit Risk and Significant Customers

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, and trade receivables. The Company’s cash and cash equivalents are placed with high-credit-quality financial institutions and issuers, and at times may exceed federally insured limits. The Company has not experienced any loss relating to cash and cash equivalents in these accounts. The Company maintains an allowance for doubtful accounts receivable balances, performs periodic credit evaluations of its clients and generally does not require collateral of its clients.

No single client accounted for 10% or more of accounts receivable as of July 31, 2014 or April 30, 2014. No single client accounted for 10% or more of total revenue for the three months ended July 31, 2014 or 2013.

Revenue Recognition

Revenue Recognition

In general, the Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the client, (iii) the fee is fixed or determinable and (iv) collectability is reasonably assured.

The Company generates revenue primarily from sales of the following services:

Software as a Service (“SaaS”)

The Company generates SaaS revenue principally from the sale of subscriptions to its hosted social commerce platform and sells its application services pursuant to service agreements that are generally one year in length. The client does not have the right to take possession of the software supporting the application service at any time, nor do the arrangements contain general rights of return. The Company accounts for these arrangements by recognizing the arrangement consideration for the application service ratably over the term of the related agreement, commencing upon the later of the agreement start date or when all revenue recognition criteria have been met.

Media

Media revenue consists primarily of fees charged to advertisers when their advertisements are displayed on websites owned by various third-parties (“Publishers”). The Company has revenue sharing agreements with these Publishers. The Company receives a fee from the advertisers and pays the Publishers based on their contractual revenue-share. Media revenues earned from the advertisers are recognized on a net basis as the Company has determined that it is acting as an agent in these transactions.

The Company’s agreements do not currently combine SaaS and Media services.

Deferred Revenue

Deferred Revenue

Deferred revenue consists of billings or payments in advance of revenue recognition and is recognized as revenue recognition criteria are met. The Company invoices clients in a variety of installments and, consequently, the deferred revenue balance does not represent the total contract value of its non-cancelable subscription agreements. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue and the remaining portion is recorded as non-current deferred revenue.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments acquired with an original maturity of three months or less at the date of purchase and readily convertible to known amounts of cash to be cash equivalents. Cash and cash equivalents are deposited with banks in demand deposit accounts. Cash equivalents are stated at cost, which approximates market value, because of the short maturity of these instruments.

Short-term Investments

Short-term Investments

Short-term investments consist of U.S. Treasury securities and agency securities that are a guaranteed obligation of the U.S. Government and are classified as available-for-sale securities. The Company may or may not hold securities with stated maturities greater than one year until maturity. After consideration of its risks versus reward objectives, as well as its liquidity requirements, the Company may sell these securities prior to their stated maturities. As the Company views these securities as available to support current operations, it has classified all available-for-sale securities as short-term. Available-for-sale securities are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. For the periods presented, realized and unrealized gains and losses on short-term investments were not material. An impairment charge is recorded in the consolidated statements of operations for declines in fair value below the cost of an individual investment that are deemed to be other-than-temporary. The Company assesses whether a decline in value is temporary based on the length of time that the fair market value has been below cost, the severity of the decline, as well as the intent and ability to hold, or plans to sell, the investment. There have been no impairment charges recognized related to short-term investments for the three months ended July 31, 2014 or 2013.

Restricted Cash

Restricted Cash

The Company’s restricted cash consists of a standby letter of credit under its Pledge and Security Agreement for corporate credit card services, secured by its money market account (See Note 9).

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate their respective fair values, due to the short-term nature of the instruments.

The Company applies the authoritative guidance on fair value measurements for financial assets and liabilities. The guidance defines fair value, thereby eliminating inconsistencies in guidance found in various prior accounting pronouncements, and increases disclosures surrounding fair value calculations. The guidance establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company.

Level 2: Inputs that are observable in the marketplace other than those inputs classified as Level 1.

Level 3: Inputs that are unobservable in the marketplace which require the Company to develop its own assumptions.

Derivative Financial Instruments

Derivative Financial Instruments

As a result of the Company’s international operations, it is exposed to various market risks that may affect its consolidated results of operations, cash flows and financial position. These market risks include, but are not limited to, fluctuations in currency exchange rates. The Company’s primary foreign currency exposures are in Euros and British Pound Sterling. The Company faces exposure to adverse movements in currency exchange rates as the financial results of certain of its operations are translated from local currency into U.S. dollars upon consolidation. Additionally, foreign exchange rate fluctuations on transactions denominated in currencies other than the functional currency result in gains and losses that are reflected in income.

The Company may enter into derivative instruments to hedge certain net exposures of non-U.S. dollar-denominated assets and liabilities, even though it does not elect to apply hedge accounting or hedge accounting does not apply. Gains and losses resulting from a change in fair value of these derivatives are reflected in income in the period in which the change occurs and are recognized on the consolidated statement of operations in other income (expense). Cash flows from these contracts are classified within net cash used in operating activities on the consolidated statements of cash flows.

The Company does not use financial instruments for trading or speculative purposes. The Company recognizes all derivative instruments on the balance sheet at fair value, and its derivative instruments are generally short-term in duration.

Derivative contracts were not material as of July 31, 2014 and April 30, 2014. The Company is exposed to the risk that counterparties to derivative contracts may fail to meet their contractual obligations.

Property, Equipment and Capitalized Internal-Use Software Development Costs

Property, Equipment and Capitalized Internal-Use Software Development Costs

Property and equipment is carried at cost less accumulated depreciation and amortization.

Depreciation and amortization is computed utilizing the straight-line method over the estimated useful lives of the related assets as follows:

Computer equipment	3 years
Furniture and fixtures	5 years
Office equipment	5 years
Software	3 years
Leasehold improvements	Shorter of estimated useful life or the lease term

When depreciable assets are sold or retired, the related cost and accumulated depreciation are removed from the accounts. Any gain or loss is included in other income (expense), net in the Company’s statement of operations. Major additions and betterments are capitalized. Maintenance and repairs which do not materially improve or extend the lives of the respective assets are charged to operating expenses as incurred.

The Company capitalizes certain development costs incurred in connection with its internal-use software. These capitalized costs are primarily related to its proprietary social commerce platform that is hosted by the Company and accessed by its clients on a subscription basis. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, direct internal and external costs are capitalized until the software is substantially complete and ready for its intended use. Maintenance and training costs are expensed as incurred. Internal-use software development costs are amortized on a straight-line basis over its estimated useful life, generally three years, into cost of revenue.

Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments

Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments

The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during the fourth quarter or more often if and when circumstances indicate that goodwill may not be recoverable (See Note 6).

Intangible assets are amortized over their useful lives. Each period the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. The carrying amounts of these assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets then the Company will recognize an impairment charge.

The Company evaluates the recoverability of its long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value (See Note 7).

Stock-Based Expense

Stock-Based Expense

The Company records stock-based expense based upon the fair value for all stock options, restricted stock units and restricted stock awards issued to all persons to the extent that such options vest. The fair value of restricted stock units and restricted stock awards is based on the number of shares granted and the closing price of our common stock on the date of grant. The fair value of stock options is calculated by the Black-Scholes option pricing model.

The Company recognizes stock-based expense on a straight-line basis over the respective vesting period, net of estimated forfeitures. The Company recognizes stock-based expense for shares issued pursuant to its Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the offering period of six months. The Company includes an estimated effect of forfeitures in its compensation cost and updates the estimated forfeiture rate through the final vesting date of the awards.

The Company currently recognizes an insignificant tax benefit resulting from compensation costs expensed in the financial statements, however the Company provides a valuation allowance against the majority of deferred tax asset resulting from this type of temporary difference since it expects that it will not have sufficient future taxable income to realize such benefit.

Income Taxes

Income Taxes

The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities will be recognized in the period that includes the enactment date. A valuation allowance is established against the deferred tax assets to reduce their carrying value to an amount that is more likely than not to be realized.

Foreign Currency Translation

Foreign Currency Translation

The U.S. dollar is the reporting currency for all periods presented. The functional currency of the Company’s foreign subsidiaries is generally the local currency. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are translated at the average rate during the period. Equity transactions are translated using historical exchange rates. Adjustments resulting from translating foreign currency financial statements into U.S. dollars are included in accumulated other comprehensive loss. Foreign currency transaction gains and losses are included in net loss for the period.

There have been no significant changes or updates to the Company’s significant accounting policies disclosed in its Annual report on Form 10-K the fiscal year ended April 30, 2014, filed on June 26, 2014.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Stock-based expense

In June 2014, the FASB issued Accounting Standards Update 2014-12, “Accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period,” (“ASU 2014-12”) which requires performance-based awards with a performance target that affects vesting and that could be achieved after an employee completes the requisite service period to be accounted for as a performance condition. If performance targets are clearly defined and it is probable that the performance condition will be achieved, stock-based expense should be recognized over the remaining requisite service period. This guidance will be effective for fiscal year ending April 30, 2017 with early adoption permitted. The Company is currently evaluating the impact of this standards update on the Company’s condensed consolidated financial statements.

Revenue

In May 2014, the FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”) which provides updated, comprehensive revenue recognition guidance for contracts with customers, including a new principles-based five step framework that eliminates much of the industry-specific guidance in current accounting literature. Under ASU 2014-09, revenue recognition is based on a core principle that companies recognize revenue in an amount consistent with the consideration it expects to be entitled to in exchange for the transfer of goods or services. The standards update also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of recognized revenue. This guidance will be effective for fiscal year ending April 30, 2018 and may be applied on either a full or modified retrospective basis, with early adoption not permitted. The Company is currently evaluating the impact of this standards update on the Company’s condensed consolidated financial statements.

Discontinued Operations

In April 2014, the FASB issued Accounting Standards Update 2014-08, “Reporting of Discontinued Operations and Disclosures of Disposals of Components of an entity,” (“ASU 2014-08”) which changes the criteria for determining which disposals can be presented as discontinued operations and requires new disclosures for individually significant dispositions that do not quality as discontinued operations. ASU 2014-08 is effective prospectively for fiscal years and interim reporting periods within those years beginning after December 15, 2014, with early adoption permitted for transactions that have not been reported in financial statements previously issued or available for issuance. The standard will be effective for the fiscal year ending April 30, 2016. The standard is not expected to have a material impact on the Company’s condensed consolidated financial statements.