IPO Profile: SuccessFactors

SuccessFactor (SFSF), a provider of on-demand performance and talent management software, is expected to issue an IPO this week. The company, based in San Mateo, CA, hosts the software on third-party servers where it is accessible to customers through the Internet.

All quotations are from the company's most recent S-1 filings with links provided.

SUCCESSFACTORS (SFSF)
Business Overview (from prospectus)

SuccessFactors is the leading provider of on-demand performance and talent management software solutions that enable organizations to optimize the performance of their people to drive business results. We deliver our application suite on demand to organizations of all sizes across all industries and geographies. Our application suite is hosted on our servers located at third-party data centers, and customers access it over the Internet using a standard web browser. We strive to delight our customers by delivering innovative solutions, a broad range of performance and talent management content, process expertise and best practices knowledge gained from serving our large and varied customer base. We have over 1,400 customers across over 60 industries, with more than two million end users in over 150 countries using our application suite in 18 languages. Our customer base has organizations with as few as three and as many as 85,000 end users, including American Airlines, Inc., American Electric Power Service Corporation, AmerisourceBergen Corporation, Kimberly-Clark Corporation, Lowe’s Companies, Inc., Quintiles Transnational Corp., Sutter Health, Textron Inc., T-Mobile USA, Inc., U.S. Postal Inspection Service and Wachovia Corporation.

Offering: 10.8 million shares at $8.00 - $10.00 per share. Net proceeds of approximately $80.9 million will be used to repay debt, for working capital and for general corporate purposes.

Lead Underwriters: Morgan Stanley, Goldman Sachs

Financial Highlights:

Revenue increased $22.9 million, or 108%, from the nine months ended September 30, 2006 to the nine months ended September 30, 2007, primarily due to a $8.8 million increase in new business, which we define as revenue from new customers, and a $14.1 million increase in revenue from existing customers, which includes renewals and subscriptions for additional modules and end users. As of September 30, 2007, we had over 1,400 customers, as compared to 640 at September 30, 2006... Cost of revenue increased $7.0 million, or 68%, from the nine months ended September 30, 2006 to the nine months ended September 30, 2007, primarily due to an increase of $4.0 million in employee-related costs, $1.4 million in professional and outside service costs, $0.3 million in data center costs and $0.4 million in allocated overhead costs. Gross margin increased from 52% for the nine months ended September 30, 2006 to 61% for the nine months ended September 30, 2007... Sales and marketing expenses increased $28.0 million, or 130%, from the nine months ended September 30, 2006 to the nine months ended September 30, 2007.

Additional Resources:

• Company website
• TO'B HR Blog: 'SuccessFactors IPO ??? I’m going short'
• Human Capitalist: 'SuccessFactors IPO - My Take and What It Means for HCM'
• Donald H Taylor:'SuccessFactors IPO and the international element'
• Starr Tincup: 'SuccessFactors IPO'