Keynote Systems Inc. –

SAN MATEO, Calif. – Keynote Systems Inc., a provider of Internet performance measurement and diagnostic services, went public September 24, offering 4 million shares at $14 apiece. The company’s stock priced at the high end of its $12 to $14 filing range.

Underwritten by BancBoston Robertson Stephens, Hambrecht & Quist and Dain Rauscher Wessels, the initial public offering left 22.8 million shares outstanding.

Venture backers included Applewood Associates, Bessemer Venture Partners, VeriSign Inc. and GE Capital Equity Investments Inc. Shareholders will sell 125,000 shares of stock.

Keynote Systems provides products that enable e-commerce companies to measure and improve the quality of their Web sites by monitoring download time, transaction efficiency and access reliability.

The company will use the expected $49.7 million generated from the IPO, to obtain additional capital, create a public market for its common stock and facilitate future access to public equity markets. Keynote Systems also will use the proceeds for working capital, capital expenditures and for other general corporate purposes. A portion of the proceeds also might be used to invest in businesses, technologies or products that are complementary to the company’s business.

Keynote Systems has never been profitable, losing $2 million in 1997 and $2.9 million in 1998.

David Cowan, a general partner at Bessemer, joined the company’s board of directors in March 1998. Stratton Sclavos, president, chief executive officer and director at VeriSign, followed in April.

Keynote Systems – Selected Financial

(in thousands, except per share data)

Year Ended September 30 Nine Months Ended June 30

1996 1997 1998 1998 1999

Total revenue 30 81 1,539 948 4,109

Net loss -622 -2,049 -2,918 -1,878 -3,659

Net loss per share -0.23 -0.84 -1.1 -0.72 -0.91