Demandware serves customers who demand a simplified way to facilitate e-commerce. The company's Demandware Commerce platform is an on-demand software-as-a-service (SaSS) that connects users to up-to-date tools for designing and maintaining websites, mobile apps, and other digital shopping avenues. It uses data centers to monitor customers' websites worldwide. Major customers include retailers Barneys New York, Crocs, Jones Group, and Columbia Sportswear. Demandware receives a share of the revenue its customers generate using the SaSS; it also collects subscription fees for platform use. The company has offices in the US, Netherlands, France, and Germany. It was formed in 2004 and filed to go public in 2011.
Demandware plans to use its anticipated $100 million in IPO proceeds to fund growth and for general corporate purposes including possible acquisitions, though none are planned at this time. The company's four-pronged growth strategy includes increasing existing customers' use of the product, growing its customer base across Europe, moving into new markets (smaller businesses and Asia), and improving its technology. It spends an average of $5 million a year on R&D for product improvement like spreading the company's platform to smart phones, tablet computers, in-store kiosks, and other mobile devices.
Subscriptions, which are priced based on variable revenue-sharing agreements, account for more than 60% of sales. System configuration, integration, and training services make up the remainder. While the company's revenue and gross profit have grown exponentially the last three years, it just began to show positive income from operations ($1.03 million) and net income ($309 thousand) in 2010. One move that helped the company turn the corner was an increased reliance on employees rather than third-party contractors to provide its services.
Founder and chairman Stephan Schambach owns about 20% of the company, pre-IPO. – less