March 13, 2019
Raj Dani
Chief Financial Officer
Roaring Fork Holding, Inc.
1001 17th Street, Suite 100
Denver, CO 80202
Re: Roaring Fork Holding, Inc.
Draft Registration Statement on Form S-1
Submitted February 14, 2019
CIK No. 0001679826
Dear Mr. Dani:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1 Submitted February 14, 2019
Prospectus Summary
Overview, page 1
1. You disclose your dollar-based net retention rate and number of large
customers to
demonstrate the success of your "land and expand" strategy. Further, you
state that an
increasing number of customers are deploying a combination of your
solutions across
multiple business units, functions and use cases in their initial
transaction. For additional
context, please disclose the number of customers on your platform, as
well as the number
of new customers and the number of existing customers that had greater
than $250,000 in
annual recurring revenue (ARR), for each period presented.
Raj Dani
FirstName LastNameRaj Dani
Roaring Fork Holding, Inc.
Comapany2019
March 13, NameRoaring Fork Holding, Inc.
March 13, 2019 Page 2
Page 2
FirstName LastName
Risk Factors
Risks Relating to Our Business
If we are unable to enhance and deploy our cloud-based offerings . . ., page 15
2. You disclose that your customers are increasingly adopting your
cloud-based offerings but
that you expect a majority of your revenue will be composed of
subscription term-based
license revenue for the foreseeable future because you anticipate that
your customers will
continue to require substantial on-premise and hybrid offerings.
Further, you disclose on
page 76 that subscription term-based license revenue represented 71%
and 64% of your
revenue for the year ended December 31, 2017 and the nine months ended
September 30,
2018, respectively. Please contextualize your disclosure by
specifically quantifying
revenue attributable to term-based contracts and SaaS contracts. Also,
please disclose the
weighted-average contract term of your subscription-based contracts.
Risks Relating to Our Indebtedness
Our existing indebtedness could adversely affect our business . . ., page 44
3. You state on page 135 that all the obligations under the Credit
Agreement are secured by
first-priority perfected security interests in substantially all your
and the guarantors'
assets. Please highlight such term in this risk factor.
Risks Relating to Our Common Stock and This Offering
Provisions of our corporate governance documents could make an acquisition . .
.., page 51
4. You state on page 139 that your certificate of incorporation will
provide that the directors
may only be removed for cause, and only by the affirmative vote of
holders of at least
66.66% in voting power, in the event that Vista beneficially owns less
than 40% in voting
power of your issued and outstanding stock. Please highlight such
provision in this risk
factor.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Key Business Metrics, page 75
5. You state that your dollar-based net retention rate exceeded 115% at
each of December
31, 2017 and September 30, 2018. Please provide the actual rate as of
each period
presented. To the extent there are variances between the rates, revise
to address
any known underlying material trends.
Results of Operations
Comparison of the Nine Months Ended September 30, 2017 and 2018
Revenue, page 81
6. Please provide an analysis of the causes for the material changes in
revenue. For example,
disclose the amount of revenue growth from acquiring new customers,
renewals of
Raj Dani
FirstName LastNameRaj Dani
Roaring Fork Holding, Inc.
Comapany2019
March 13, NameRoaring Fork Holding, Inc.
March 13, 2019 Page 3
Page 3
FirstName LastName
contracts with existing customers, expansion of contracts with
existing customers, and
sales of new solutions. In this regard, we note that these factors are
important to your
continued revenue growth. Refer to Item 303(a)(3) and Instruction 4 to
Item 303(a) of
Regulation S-K and Section III.D of SEC Release 33-6835.
Operating Expenses
Research and Development, page 83
7. You indicate that a factor contributing to the increase in research
and development
expenses was increased cloud-based hosting costs related to your SaaS
offerings. Explain
the nature and amount of the cloud-based hosting costs included within
research and
development expenses, and tell us what consideration you gave to
classifying such costs
as cost of revenue. In this regard, you indicate in the first
paragraph on page 77 that
subscription cost of revenue includes cloud infrastructure costs.
Benefit for Income Taxes, page 84
8. In your discussion of the benefit for income taxes for each of the
periods presented, please
address the significant underlying factors that materially impact your
effective tax rates.
In this regard, your discussion and analysis should provide insight
into the extent to which
reported financial information is indicative of future results. Refer
to Item 303(a)(3) and
Instruction 3 to Item 303(a) of Regulation S-K and Sections III.A and
III.D of SEC
Release 33-6835.
Business
Our Market Opportunity, page 107
9. You estimate that your market opportunity is greater than $25 billion
based on a formula
involving the total number of global companies above $500 million in
annual revenue and
your internal ARR data for customers above that threshold "across your
solutions and use
cases." On page 73, you indicate that you "primarily" target that type
of company. Please
clarify whether there are any material assumptions associated with
your market estimate,
including full deployment of solutions and use cases within each
revenue band. For
additional context, please disclose the total number of global
companies that you
identified for the purpose of this estimate and the total number of
customers with annual
revenue in excess of $500 million as of the end latest period
presented.
Partnership and Strategic Relationships
Technology Alliance, page 114
10. Please tell us whether a material percentage of your new business
derives from your 2016
partnership with Microsoft. If so, please disclose the material terms
of the underlying
agreement. Your disclosure states that channel partners have been
increasing in influence
and that 60% of your new business for the nine months ended September
30, 2018 was
channel-influenced.
Raj Dani
Roaring Fork Holding, Inc.
March 13, 2019
Page 4
Executive Compensation
Employment, Severance and Change in Control Arrangements
Letter Agreements, page 124
11. You disclose that the performance-based cash incentive bonus for each of
your Named
Executive Officers provides incentive payments correlated in part to
"the attainment of
pre-established objective financial goals." Please briefly describe the
financial goals that
applied to the non-equity incentive plan compensation that you paid to
these officers in
fiscal year 2018. Refer to Item 402(o) of Regulation S-K.
General
12. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
13. Please supplementally provide us with copies of any graphical material
or artwork you
intend to use in your prospectus. Upon review of such materials, we may
have further
comments. For guidance, consider Question 101.02 of our Securities Act
Forms
Compliance and Disclosure Interpretations.
You may contact Melissa Walsh, Senior Staff Accountant, at (202)
551-3224 or Stephen
Krikorian, Accounting Branch Chief, at (202) 551-3488 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Bernard Nolan,
Attorney-Adviser, at (202) 551-6515 or, in his absence, Barbara C. Jacobs,
Assistant Director, at
(202) 551-3735 with any other questions.
Sincerely,
FirstName LastNameRaj Dani Division of
Corporation Finance
Office of
Information Technologies
Comapany NameRoaring Fork Holding, Inc.
and Services
March 13, 2019 Page 4
cc: Robert E. Goedert, P.C.
FirstName LastName