Rally Software, a company that provides Agile project management applications for software development, has filed its initial S-1 for a public offering. According to this filing, the company will raise as much as $70 million in the offering (but often these numbers are just placeholders).

Rally’s products and services help businesses implement Agile software development and Lean practices with the right combination of tools, services and best practices. According to the filing, as of October 31, 2012, the company had 154,982 paid users and more than 1,000 customers, including 36 of the Fortune 100 companies. Rally’s clients include Cisco, Microsoft, Aol, and Hewlett-Packard. Rally currently employees 285 staffers.

In terms of revenue, fiscal 2011 sales came in at $29.7 million. This grew to $41.3 million for revenue in 2012, up 29 percent. For the nine months ended October 31, 2011 and 2012, total revenue grew from $30.1 million to $41.4 million, up 38 percent.

For Fiscal 2012, Agile Software’s renewal rate among existing customers was 129 percent, taking into account paid seat nonrenewals, upgrades and downgrades.

The Boulder, Colorado-based company is not yet profitable, and recorded net losses of $9.9 million, $11.6 million and $6.7 million in fiscal 2011, 2012 and the nine months ended October 31, 2012, respectively. The company has been fairly acquisitive over the past few years, buying AgileZen and Flowdock among others.

The company, which competes with another fellow IPO hopeful Atlassian, has raised close to $70 million in funding from Mohr Davidow Ventures, Greylock, Boulder Ventures, and others.

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Zynga just filed a document with the SEC outlining new terms in its agreement with Facebook. Overall, it seems that Zynga and Facebook establishing a little more distance and flexibility in their relationship, with Zynga being treated more like any other Facebook developer.

According to the filing, any “standard Zynga game page” that uses Facebook data will now be governed Facebook’s standard terms of service. That means games on Zynga’s new-ish Zynga.com platform are no longer obligated to use Facebook ad units and Facebook credits. In exchange, Zynga’s right to cross-promote its non-Facebook games using Facebook data and email addresses is now limited by the standard terms.

The filing also states that Facebook no longer has the exclusive rights to Zynga’s social game launches. Of course, Zynga still plans to have a big presence on Facebook, saying its games “will generally be available through the Facebook web site concurrent with, or shortly following, the time such game is made available on another social platform or a Zynga property.”

Zynga and Facebook made a five-year deal back in 2010, after a standoff for several months. (You can read more details about the old deal here.) However, Zynga has been trying to decrease its dependence on Facebook through efforts like Zynga.com, while in Facebook’s most recent earnings call, CEO Mark Zuckerberg said Facebook’s payments to Zynga have dropped 20 percent year-over-year.

As pointed out by AllThingsD’s Mike Isaac, the amendment also states that as of March 31 of next year, “Facebook will no longer be prohibited from developing its own games,” although Facebook denies that it has any intention to actually build its own games. Sources close to Facebook-Zynga negotiations tell us Facebook didn’t even want the clause in the filing.

Here’s a statement from Zynga Chief Revenue Officer Barry Cottle:

Zynga’s mission is to connect the world through games. In order to do this, Zynga is focused on building enduring relationships with consumers across all platforms from Facebook and Zynga.com on the web to tablets and mobile. Our amended agreement with Facebook continues our long and successful partnership while also allowing us the flexibility to ensure the universal availability of our products and services.

And you can see the Facebook filing here, which basically covers the same ground.

Update: As of 6:35pm Eastern, Zynga’s stock price is down 12.98 percent in after-hours trading.

Article courtesy of TechCrunch

Carl Icahn could be on the warpath again, this time with Netflix as his target. Through a number of investment vehicles, Icahn has taken what amounts to a 9.98 percent stake in the subscription video company.

Icahn, of course, is best known as an activist shareholder who advocates for change in companies that he believes are not well run, and as a result, undervalued. He spent several years agitating the top brass at Yahoo, after founder and then-CEO Jerry Yang turned down a $45 billion acquisition offer from Microsoft. (Just some perspective: Yahoo’s current market cap is under $20 billion today.) After that, Icahn entered a proxy battle and was able to get himself and some compatriots installed on the Yahoo board.

Of course, we all know how that played out: After about a year-and-a-half Icahn stepped down from the board and eventually sold his stake in the company after having not accomplished much. But boy, was it a fun show to watch!

According to an SEC filing, Icahn has bought a big chunk of Netflix stock — nearly 10 percent altogether. It’s not clear exactly what his intentions are, but according to the filing, the investment was made because Icahn believes the stock is undervalued. And he might have a point: Netflix was once sitting pretty at about $300 a share, but has fallen fast over the past 12 months or so. Shares in the company were hovering around $60 after another disappointing earnings report last week.

From the filing:

The Reporting Persons acquired the Shares with the belief that the Shares were undervalued due to the Issuer’s dominant market position and international growth prospects. The Reporting Persons believe Netflix may hold significant strategic value for a variety of significantly larger companies that are engaging in more direct competition with one another due to the evolution of the internet, mobile, and traditional industry. The Reporting Persons are considering ways for the Issuer to maximize shareholder value but have reached no conclusion. The Reporting Persons may in the future seek to have discussions with the Issuer.

It’s those last two sentences that you should pay attention to. Icahn believes he can maximize shareholder value and may seek to have discussions with Netflix to unlock that potential.

Are you ready for another Icahn proxy battle? I’m grabbing my popcorn just thinking about it.

UPDATE: Netflix, btw, declined to comment for this story.

Article courtesy of TechCrunch

Workday, a company offering online tools for enterprises to manage human resources, payroll, and finances, just filed an S-1 form declaring its intention to raise up to $400 million in an IPO.

Reuters reported in July that the company had quietly filed for an IPO but was able to keep the documents secret for a while longer thanks to the JOBS Act. Now it’s official — the S-1 is online, and the details are out.

The filing says that in its most recent fiscal year (ending January 31, 2012), Workday brought in $134.4 million in revenue (an increase of 98 percent year-over-year), with a net loss of $79.6 million.

The company was founded in 2005 (apparently it first incorporated under the name “North Tahoe Power Tools”, which is awesome) by Dave Duffield and Aneel Bhusri, both former executives at PeopleSoft. They’re still the company’s co-CEOs, and the filing says they still control a majority of the voting stock. Investors include Greylock Partners and New Enterprise Associates.

Here’s how the company describes itself:

Workday is a leading provider of enterprise cloud-based applications for human capital management (HCM), payroll, financial management, time tracking, procurement and employee expense management. We achieved this leadership position through our innovative and adaptable technology, focus on the consumer Internet experience and cloud delivery model. Further, we believe we are the only company to provide this complete set of unified cloud-based applications to enterprises. Our applications are designed for global enterprises to manage complex and dynamic operating environments. We provide our customers highly adaptable, accessible and reliable applications to manage critical business functions that enable them to optimize their financial and human capital resources.

Among the risk factors listed on the filing is the fact that Workday has lost money every year, “and we do not expect to be profitable for the foreseeable future.” Many of the other concerns are pretty much what you’d expect from most companies in the enterprise software-as-a-service market — the “intensely competitive” industry, the risk of a security breach, the long sales cycles, and the dependence on third-party data centers. The company also notes that the majority of revenues come from its Human Capital Management application, rather than the full suite of products.

Article courtesy of TechCrunch

PayPal co-founder and famed investor Peter Thiel has sold the majority of his shares in Facebook, according to an SEC filing. Thiel has sold 20.6 million Class A shares, leaving him with only 5.6 million shares, all of which are Class A.

A significant portion of the filing seems to be on behalf of the Founders Fund, in which Thiel is a partner. Other entities named in the filing include Lembas LLC and Rivendell One LLC, both of which are Thiel holding companies and Lord of the Rings references.

Thiel sold the shares at an average price of $19.73, earning him nearly $400 million for his original $500,000 investment.

As Bloomberg reported last week, Thiel converted 9 million Class B shares (which have greater voting rights, but are more difficult to trade publicly) to Class A shares before Facebook’s post-IPO lock expired, signaling that he could be moving some of his shares.

It’s tough to read too much into this right now. On the one hand, Thiel has held the stock for eight years and he could just be making a business decision to move on.

On the other hand, it isn’t good for Facebook that one of its earliest and most high-profile investors is selling the stock while it’s down to almost half its IPO price. Imagine being a Facebook employee right now and seeing Thiel sell the majority of his stock at what many are hoping is its low point. Just a few days ago, CEO Mark Zuckerberg told employees in a meeting that the stock drop has been “painful.” I wonder how will he describe the drop at the next Facebook Board of Directors meeting, on which Thiel sits.

In an SEC filing, Google spelled out why it paid $12.4 billion for hardware maker Motorola Mobility, in a deal that closed in May. $5.5 billion of the total price was for intellectual property, specifically “patents and developed technology.” Another $2.9 billion was attributed to cash acquired, $2.6 billion was for “goodwill,” $730 million for customer relationships and $670 million was for “other net assets acquired.”

And in case you’re wondering, Google says that goodwill is “primarily attributed to the synergies expected to arise after the acquisition.” Yep, they said synergies.

At the time of the original acquisition, Google said that the deal would help to “supercharge” the Android ecosystem, meaning that Motorola will continue to make Android devices under Google, obviously. However, in order to gain approval from China, Google had to remain “free and open source” for the next five years.

In a blog post, CEO Larry Page talked about how the combination of the two companies would also “enhance competition and offer consumers accelerating innovation, greater choice, and wonderful user experiences,” – words that implied that Google would soon have a heavy hand in the new devices’ development, whatever they may end up being. Meanwhile, the patents that Google acquired through the deal would help Google fight off competitors Apple, Microsoft, and others. Oracle, for example, sued Google for copyright infringement in 2010, but Google won that battle in court this year.

During this month’s earnings call, Google declined to give specifics as to its strategy with Motorola going forward, but the decent reviews of Google’s Nexus 7 tablet (built with ASUS) do demonstrate that when Google gets involved on the hardware side, it can produce devices that anyone would like…even Apple fans. We still don’t know what’s up with Moto’s Home business, though, and the filing didn’t provide any further clues in terms of Google’s plans there.

But dollar amounts aside, the real reason why Google bought Motorola is spelled out quite plainly in the filing. “Intense competition,” says Google. (Ahem, Apple, right?)

We face intense competition. If we do not continue to innovate and provide products and services that are useful to users, we may not remain competitive, and our revenues and operating results could be adversely affected.

Article courtesy of TechCrunch

Facebook just filed a new S-1 with the SEC. We’ve sifted through what’s new and one noticeable change is the inclusion of commentary about Yahoo’s patent suit against Facebook as a risk factor.

From the filing: “From time to time, we receive notice letters from patent holders alleging that certain of our products and services infringe their patent rights. Some of these have resulted in litigation against us. For example, on March 12, 2012, Yahoo filed a lawsuit against us in the U.S. District Court for the Northern District of California that alleges that a number of our products infringe the claims of ten of Yahoo’s patents that Yahoo claims relate to “advertising,” “social networking,” “privacy,” “customization,” and “messaging.” Yahoo is seeking unspecified damages, a damage multiplier for alleged willful infringement, and an injunction.”

As we heard a few weeks ago, Yahoo is suing Facebook over alleged infringement of ten “method” patents by the social network. You can read more details about the patents in question here.

Facebook says it has not yet filed an answer or any counter claims to Yahoo’s complaint, but does “intend to vigorously defend this lawsuit.” Also, Facebook states: This litigation is still in its early stages and the final outcome, including our liability, if any, with respect to these claims, is uncertain. If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition, or results of operations.

In the previous S-1 filing frpm early March, Facebook acknowledged that Yahoo sent a letter alleging that the social network was infringing on their patents. At the time, Yahoo had not yet filed the lawsuit. Now that legal action has been taken, Facebook is recognizing this in the filing. The takeaway here is that Facebook is recognizing that the Yahoo suit is a risk factor for the company and could have a negative impact on its business. Last week, Facebook announced it would be buying 750 patents from IBM to shore up against potential legal attacks from patent trolls.

In relation to another legal matter, Facebook also added its intentions to dismiss Paul Ceglia’s lawsuit. From the filing: On March 26, 2012, we filed a motion to dismiss Mr. Ceglia’s complaint and a motion for judgment on the pleadings. We continue to believe that Mr. Ceglia is attempting to perpetrate a fraud on the court and we intend to continue to defend the case vigorously.

Article courtesy of TechCrunch

Zynga has just released a new S-1 in connection with its secondary offering. The company is looking to sell up to 43 million shares (42,969,153 shares to be exact). Zynga’s CEO Mark Pincus will sell 15 percent of his shares, which is worth around $227 million based on yesterday’s stock price. Pincus’ voting power post-sale will go from 36.5 percent to 35.9 percent, according to the filing.

Investors IVP, SilverLake, Union Square Ventures, Google, Reid Hoffman are also selling in the offering, as is board member Jeffrey Katzenberg. Owen Van Natta, General Counsel Reggis Davis, COO John Schappert and CFO Dave Wehner are selling shares as well (see chart below).

Other employees (larger shareholders) who holding an aggregate of approximately 114,000,000 shares will be released from lock-ups to allow them to sell shares, on closing of the offering. But these employees will still be subject to a blackout period and won’t be able to sell until after the company’s first quarter earnings release in the last week of April.

As we reported a few weeks ago, Zynga is trying to manage the lock-up period for employees that could negatively affect the company’s share price. The company says it’s doing this to “facilitate an orderly distribution of shares and to increase the company’s public float,” basically trying to avoid a situation that has happened to other companies with recent initial public offerings where employees dump stock and the share price plummets.

Another interesting tidbit from the filing: we know Zynga bought OMGPOP, the maker of massive Pictionary-like hit Draw Something, as the company announced this week. We’d heard the acquisition price was around $210 million. In the filing, Zynga states that it bought the game developer for a “purchase consideration of approximately $180 million in cash.”

The company also said that its top three games accounted for 83%, 78% and 57% of its online game revenue in 2009, 2010 and 2011, respectively.

Zynga’s share price closed at $13.74 in yesterday’s trading.

Article courtesy of TechCrunch

Make no mistake about Facebook’s ambitions. “There are more than two billion global Internet users,” its S-1 filing states, “…and we aim to connect all of them.” As evidence of its ability to reach this goal, the company says that it already has some countries with above 80% penetration rates among users.

The problem, as the filing also notes, is that “our rates of user and revenue growth will decline over time.” A quick analysis of the worldwide monthly and daily active user counts in the document shows this phenomenon is already in full effect. From quarterly gains of above 20% for much of 2009, both monthly and daily increases fell to above 10% in 2010, and then to the single digits in 2011.

The good news for Facebook is that the numerical gains don’t show as clear of a decline. While the last quarter of 2011 ended a little lower than many previous ones, at 45 million new MAU and 26 million new DAU, that has yet to be a trend. Growth rates inherently decline as size increases, so Facebook could eventually get much bigger than its current 845 million MAU and 483 million DAU if it continues to grow month over month, even if the rate of growth declines further.

Facebook’s filing, meanwhile, shares a little more about how it’s going to get bigger — basically, by continuing to grow in populated countries where it is still small, as you can read between the lines here:

We have achieved varying levels of penetration within the population of Internet users in different countries. For example, in countries such as Chile, Turkey, and Venezuela we estimate that we have penetration rates of greater than 80% of Internet users; in countries such as the United Kingdom and the United States we estimate that we have penetration rates of approximately 60%; in countries such as Brazil, Germany, and India we estimate that we have penetration rates o approximately 20-30%; in countries such as Japan, Russia, and South Korea we estimate that we have penetration rates of less than 15%; and in China, where Facebook access is restricted, we have near 0% penetration.

The company goes on to say that it expects its monthly active user counts to continue growing as more and more of the 6.8 billion people in the world get broadband and mobile internet access, particularly in developing markets. “Growth in MAUs depends on our ability to retain our current users, re-engage with inactive users, and add new users, including by extending our reach across mobile platforms.”

But the filing also includes a word of warning about further growth rate declines:

We believe that our rates of user and revenue growth will decline over time. For example, our annual revenue grew 154% from 2009 to 2010 and 88% from 2010 to 2011. Historically, our user growth has been a primary driver of growth in our revenue. Our user growth and revenue growth rates will inevitably slow as we achieve higher market penetration rates, as our revenue increases to higher levels, and as we experience increased competition. As our growth rates decline, investors’ perceptions of our business may be adversely affected and the market price of our Class A common stock could decline.

[Top image via NASA]

Article courtesy of TechCrunch

Within Facebook’s S-1, the social network revealed that its Payments business is bringing in $557 million in revenue per year. As the company explains, it currently requires Payments integration in games on Facebook. But according to the filing, Facebook is considering what could be very big moves in the payments space.

From the filing, Facebook writes that “we may seek to extend the use of Payments to other types of apps in the future.” It’s not specific about what these other apps are, but they could include anything that somehow uses Facebook. Dating apps, social shopping apps, news-reading apps — who knows? The filing is meant to paint a broad picture of where Facebook is headed, and the line could just be a simple aside for potential investors. But still, any developer running payments in a way that connects to Facebook should keep it in mind.

Currently, via its payments product, Facebook is taking a 30 percent cut of all payments of virtual goods transacted within games on the network. Zynga accounted for approximately 12% of Facebook’s revenue, much of which was comprised of revenue derived from these payments processing fees. Payments are a huge revenue generator for Facebook.

Facebook says that in the future, it will be invested in ‘enhancing’ payments offerings and “in making the Payments experience on Facebook as convenient as possible for users and Platform developers.” the company also states that financial results each quarter will be based on the Facebook’s “ability to increase payments and other fees revenue.” Facebook is also anticipating a rise in payment processing costs as the company “increases Payments volumes and add new payment methods.”

Some of the challenges to a more expansive payments products, says Facebook, are regulatory issues on the U.S., Europe and in other countries. From the filing: To increase flexibility in how our use of Payments may evolve and to mitigate regulatory uncertainty, we have applied for certain money transmitter licenses and expect to apply for additional money transmitter licenses in the United States, which will generally require us to demonstrate compliance with many domestic laws in these areas. this refers to the fact that Facebook has been creating separate entities for its Payments product.

There is certainly no guarantee that Facebook is going to become the next PayPal, but considering the amount of times the payments business was mentioned in the filing, as well as statement of the potential plans for expansion, it could be a significant business in Facebook’s future as a public company.

Article courtesy of TechCrunch