UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Year Ended December 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 001-34777
 BroadSoft, Inc.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    52 2130962(I.R.S. Employer Identification No.)9737 Washingtonian Boulevard, Suite 350, 
Gaithersburg, MD
(Address of principal executive offices)
    
    20878
(Zip Code)
 (301) 977-9440
 (former name, former address and former fiscal year, if changed since last report)
 
 Securities Registered Pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value
    
    NASDAQ Global Market
 Securities Registered Pursuant to Section 12(g) of the Act: None
 
 o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




---



##### 



TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    4Item 1A.
    
    Risk Factors
    
    15Item 1B.
    
    Unresolved Staff Comments
    
    35Item 2.
    
    Properties
    
    35Item 3.
    
    Legal Proceedings
    
    35Item 4.
    
    Removed and Reserved
    
    36PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity Securities
    
    36Item 6.
    
    Selected Consolidated Financial Data
    
    38Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    39Item 7A.
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    58Item 8.
    
    Financial Statements and Supplementary Data
    
    59Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    97Item 9A.
    
    Controls and Procedures
    
    97Item 9B.
    
    Other Information
    
    98PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    99Item 11.
    
    Executive Compensation
    
    99Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters
    
    99Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    99Item 14.
    
    Principal Accountant Fees and Services
    
    99PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    100SIGNATURES
    
    
    
    101Ex-10.5EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
 2




---



##### 




    
    our dependence on the success of BroadWorks;
    
    our dependence on our service provider customers to sell services using our
applications;
    
    claims that we infringe intellectual property rights of others;
    
    our ability to protect our intellectual property;
    
    intense competition;
    
    any potential loss of or reductions in orders from certain significant customers;
    
    our ability to predict our revenue, operating results and gross margin accurately;
    
    the length and unpredictability of our sales cycles;
    
    our ability to expand our product offerings;
    
    our international operations;
    
    our significant reliance on distribution partners in international markets;
    
    our ability to sell our products in certain markets;
    
    our ability to manage our growth;
    
    the attraction and retention of qualified employees and key personnel;
    
    the interoperability of our products with service provider networks;
    
    the quality of our products and services, including any undetected errors or bugs in
oursoftware; and
    
    our ability to maintain proper and effective internal controls.
  3




---



##### 



PART I
 Item 1. Business
 Overview
     Industry
  4




---



##### 



Demand for Voice and Multimedia Services
  Enterprises
   
    
    Accelerating rate of technology change. Communications technology is evolving rapidly,
with the frequent introduction of new devices and services and an increase in the number of
ways people interact. Keeping pace with this change becomes difficult and expensive in a
CPE-based environment where the investment to interoperate with new devices or provide new
services must be fully borne by the enterprise. Furthermore, CPE vendors operate
proprietary systems with typically higher prices and limited selection of end-point
devices. As new services are added, equipment upgrades are often required and, unless the
equipment of all constituents within the enterprise is upgraded, functionality can remain
limited. Furthermore, as mobile and other communications services are increasingly
integrated, the difficulty of using a CPE-based approach is compounded by the complexity of
these additions. Cloud-based hosted services deliver communications services from the
network itself, are centrally managed by the service provider and deliver uniform service
across an enterprise. This increased efficiency and the ability of service providers to
offer new services across their entire subscriber base also allows service providers to
deliver services at lower cost.
    
    Shift towards unified communications. UC is the integration of voice and video calling
and conferencing with instant and text messaging, presence information, collaboration tools
and e-mail. UC increases significantly the number of devices to be supported, the number of
network interconnect points and the associated amount of required network integration. We
also believe
 5




---



##### 



UC increases the pace at which enterprises will seek to introduce new
services. CPE-based UC solutions can be complex, expensive and consume significant time and
resources as compared to cloud-based solutions.
    
    Increased acceptance of cloud-based services. Enterprises are increasingly obtaining
mission-critical IT services, such as computing and storage, from the cloud. We believe the
positive experiences and savings enterprises can achieve with cloud-based IT systems will
drive enterprises to continue to move other important functions, such as communications
services, into the cloud.
 Consumers
    Challenges in Enabling Multimedia Services on IP-based Networks
  
    
    Coordinating delivery of a large and rapidly increasing number of applications. Each
new application requires coordination within the service providers network to ensure that
the application is authorized, appropriately charged for and delivered in a way that is
appropriate to the end-user based on the device and user preferences.
 6




---



##### 




    
    Operating across heterogeneous network elements and devices. Most service providers
networks consist of network equipment and software from multiple vendors. In addition,
service providers subscribers and end-users operate a variety of devices. New applications
must seamlessly navigate these varied network elements and devices without impacting
functionality.
    
    Ensuring high levels of reliability and quality. Service providers and their
subscribers are accustomed to a high level of reliability and quality and expect similar
levels of reliability and quality from new applications.
    
    Efficiently scaling as more subscribers are added. As more subscribers purchase
applications and service providers acquire new subscribers, service providers need to be
able to efficiently add capacity without increasing complexity.
  The BroadSoft Solution
   
    
    Rapid delivery of enterprise and consumer multimedia services from a single platform.
We believe BroadWorks provides the most extensive set of features and applications
available on a single platform for fixed-line, mobile and cable broadband access networks,
for both enterprise and consumer applications.
    
    Demonstrated carrier adoption globally across many service provider networks. Over 450
service providers in more than 65 countries have purchased our software, including 16 of
the top 25 telecommunications service providers globally.
    
    Broad interoperability across network equipment vendors, network architectures and
devices. BroadWorks interoperates with all significant network architectures (such as IMS
and Next Generation Network architectures), access types, infrastructures and protocols and
integrates and interoperates with the major network equipment vendors core network
solutions.
    
    Extensive technology and device partner ecosystem. BroadWorks interoperates with more
than 450 devices, including more than 400 customer CPE devices, such as IP phones,
computer-based soft-phones, conferencing devices, IP gateways, mobile phones and consumer
electronics.
 7




---



##### 




    
    Scalable architecture and carrier-grade reliability. Our applications are designed to
scale to support hundreds of millions of subscribers with a carrier-grade level of
reliability.
    
    Leadership in emerging standards and requirements. We are actively involved in the
development of the IMS, session initiation protocol, or SIP, and MMTel standards, as well
as several other standards that we expect to shape our market in the future. BroadWorks is
the application server supporting what we believe to be the worlds largest IMS deployment,
based on the number of subscribers.
 Our Strategy
  
    
    Extend our technology leadership and product depth and breadth. We intend to provide an
industry-leading solution through continued focus on product innovation and substantial
investment in research and development for new features, applications and services.
    
    Drive revenue growth by:
 
    
    Assisting our current service provider customers to sell more of their
currently-deployed BroadWorks services. We support our service provider customers
by regularly offering enhanced and new features to their current applications as
well as providing tools and training to help them market their services to
subscribers.
    
    Selling new applications and features to our current service provider
customers. Although our initial engagement with a service provider may be for a
single initiative or business unit, once BroadWorks is implemented by a service
provider, we believe we are well-positioned to sell additional applications and
features to that service provider, including our newly announced set of BroadCloud
offerings.
    
    Continuing to acquire new customers. Our customers are located around
the world and include 16 of the top 25 telecommunications service providers
globally. We believe we are well positioned to grow by adding customers in regions
where we already have a strong presence, by expanding our geographic footprint and
by penetrating more deeply into some types of service provider customers, such as
additional cable and mobile service providers.
 
    
    Pursue selected acquisitions and collaborations that complement our strategy. We
intend to continue to pursue acquisitions and collaborations where we believe they are
strategic to strengthen our leadership position.
 Our Products
  BroadSoft Enterprise Applications
 Hosted Unified Communications
  8




---



##### 




    
    PBX functionality such as call control, call waiting, call forwarding and conference
calling, in each case across multiple locations;
    
    real-time multimedia communications support for voice and video calling;
    
    integration of offerings across fixed and mobile devices and networks;
    
    integrated voice, video and fax messaging;
    
    enhanced features such as auto attendants, call centers and conferencing;
    
    UC features, such as presence awareness, IM and e-mail integration and collaboration;
    
    quality of service monitoring and reporting;
    
    open APIs for third-party application development that complement the core call control
functionality;
    
    clients, which are devices and software that request information, for feature control
and administration;
    
    regulatory functions such as emergency calling (E911) and lawful intercept (CALEA); and
    
    geographic redundancy and disaster recovery.
 SIP Trunking
   BroadSoft Consumer Applications
  9




---



##### 



BroadCloud
  BroadSoft Xtended
  
    
    Expanding familiarity with web services APIs. The powerful RESTful Xtended Services
Interface, or Xsi, exposes the BroadWorks platform to other applications;
    
    Maintaining community. An innovative developer community driven by the Xtended
developer program is created; and
    
    Promoting commerce. The Xtended Marketplace allows developers to monetize their
applications by enabling end-users of BroadSoft-powered networks to directly browse and
purchase their applications through online Application Stores, most often from their
service providers.
  Technology
    
    
    SIP. We believe that we have the industrys most customer-tested and fully functioned
SIP stack. Because we developed the software ourselves, we can rapidly customize it and
resolve any related issues. We have developed SIP extensions for many advanced PBX
functions such as
 10




---



##### 



advanced call control and bridged line appearances. Our SIP stack
provides programmable controls on a per-device basis to allow for maximum compatibility and
interoperability. We have achieved full interoperability with over 450 SIP-based devices
and applications. We have validated our stack and deployed it with leading IMS core network
vendors.
    
    Java-based. BroadWorks is one of the first real-time Java-based applications in the
telecommunications industry. Java allows for rapid software development with better quality
than traditional programming languages such as C/C++, without reliance on third-party
service delivery platforms. We manage all of the BroadWorks software source code with the
exception of the database technology, which is provided by Oracle. We leverage open source
software, when appropriate, for swift time-to-market and reduced research and development
expenses.
    
    Call control. We have developed a patented architecture for service definition, service
execution, interface abstraction, event routing and service precedence. This provides an
extensible pattern for creating and adding new services and/or interfaces without an impact
on existing functionality. Interfaces are abstracted so that services can be written to
work with any protocol. This approach yields a product that we believe is easier to test
and consequently has fewer defects as evidenced by current support for over 150 services.
BroadSoft has evolved the service operating system to natively support the IMS call model.
    
    Geographic redundancy. We have designed a geographic redundancy solution tailored for
call control that requires no special software and uses standard IP networking
configurations with standard IP addressing. This solution supports seamless failover for
server outages and IP networking issues. It also allows for placement of servers in any
geography without distance limitations. The solution is supported by leading IMS core
network vendors and session border
controller vendors. Our solution has proven greater than 99.999% reliability with over five
years of historical data.
    
    Common OAMP platform. BroadWorks has a common management container for all BroadSoft
servers, providing consistent functions for operations, administration, management and
provisioning, or OAMP. It supports identical carrier grade management interfaces on all
servers and includes functions for command line interfaces, alarms, statistics,
configuration, charging, security and provisioning. It is fully tested and validated with
leading carrier network management systems and customer care systems and proven carrier
grade in over 50 Tier 1 telecommunications service providers. It works on standard servers
as well as virtualized servers.
    
    Media resource framework. We have developed a completely software-based media resource
framework for dual-tone multi-frequency detection, media playback, recording, conferencing
and repeating. The framework supports all de facto standard audio and video codecs. It
supports the Internet Engineering Task Force, or IETF, and the 3rd Generation Partnership
Project, or 3GPP, standard protocols, including the standard format for specifying
interactive voice dialogues between a human and a computer (VoiceXML) and call control
extensible markup language, or CCXML, which provides telephony support to VoiceXML. The
framework can be integrated with all leading voice recognition and text-to-speech engines.
Using an exclusively software-based technology has allowed us to offer a very high capacity
media server using low-cost, off-the-shelf hardware platforms. We developed the media
server framework internally using open source software. We believe that it not only
provides us with a technical advantage over our competition, but also a strong commercial
advantage since we can bundle this technology with BroadWorks.
 Global Support Services
  11




---



##### 




    
    Pre-sales support. Our worldwide sales engineering group works with our direct sales
force to provide demonstrations, architecture consulting, interoperability testing and
related services in connection with product sales opportunities to establish the
capability, functionality, scalability and interoperability of our software with a service
providers network.
    
    Professional services. Our professional services group provides installation services,
such as planning, consulting and staging of software on the customers hardware, as well as
installation and network integration services, project management and remote upgrades. We
also offer our customers the option of longer-term engagements in the form of resident
engineering services. In addition, we offer a full suite of consulting services including
network planning, network architecture definition, back office consulting and solution
verification.
    
    Global operations centers. We maintain operations centers around the world to provide
our customers with product life-cycle services, such as platform support and maintenance
services. Members of our technical assistance center and regional project management and
professional services teams provide remote assistance to customers via these locations and
our in-depth web support portal, including periodic updates for our software products, and
product documentation. To respond to our customers needs, our technical assistance
personnel are available 24 hours a day, seven days a week and accessible by phone, e-mail
and, when required, on-site via a professional services engagement.
    
    Training. We offer an array of training services to our customers, which include
systems administration, provisioning and advanced diagnostic courses. We present these
courses regularly at our regional centers and headquarters and we also can deliver versions
of the courses at customer sites. We also offer product and feature training via streaming
video courses, which we refer to as our eLearning offerings, as well as a full product
certification program that is available through our BroadSoft University website.
    
    Market acceleration. Our go-to-market consultants help service providers prepare to
launch, market and sell their service offerings to their end-users. We generally seek to
help them by providing a best-practice framework and resources such as templates, marketing
workshops and planning guides, to accelerate the launch and development of our applications
to their network subscribers.
  Sales and Marketing
  Direct sales
 Distribution partners
 12




---



##### 



Marketing and product management
 Customers
   Research and Development
  Competition
  13




---



##### 



Intellectual Property
    14




---



##### 



Employees
  Our Corporate Information
  Item 1A. Risk Factors
 Set forth below and elsewhere in this Annual Report on Form 10-K, and in other documents we file
with the SEC, are risks and uncertainties that could cause actual results to differ materially from
the results contemplated by the forward-looking statements contained in this Annual Report on Form
10-K. Because of the following factors, as well as other variables affecting our operating results,
past financial performance should not be considered as a reliable indicator of future performance
and investors should not use historical trends to anticipate results or trends in future periods.
 Risks Related to Our Business
 We are substantially dependent upon the commercial success of one product, BroadWorks. If the
market for BroadWorks does not develop as we anticipate, our revenue may decline or fail to grow,
which would adversely affect our operating results and financial condition.
   15




---



##### 



Infringement claims are common in our industry and third parties, including competitors, have and
could in the future assert infringement claims against us including for past infringement, which
could force us to redesign our software and incur significant costs.
    
    
    be time consuming and costly to defend;
    
    divert our managements attention and resources;
    
    cause product shipment and installation delays;
    
    require us to redesign our products, which may not be feasible or cost-effective;
    
    cause us to cease producing, licensing or using software or products that incorporate
challenged intellectual property;
    
    damage our reputation and cause customer reluctance to license our products; or
    
    require us to pay amounts for past infringement or enter into royalty or licensing
agreements to obtain the right to use a necessary product or component, which may not be
available on terms acceptable to us, or at all.
  16




---



##### 



We are generally obligated to indemnify our customers for certain expenses and liabilities
resulting from intellectual property infringement claims regarding our software, which could force
us to incur substantial costs.
  We may be unable to adequately protect our intellectual property rights in internally developed
systems and software and efforts to protect them may be costly.
   17




---



##### 



We may not be able to obtain necessary licenses of third-party technology on acceptable terms, or
at all, which could delay product sales and development and adversely impact product quality.
  Our success depends in large part on service providers continued deployment of, and investment in,
their IP-based networks.
  The loss of, or a significant reduction in orders from, one or more major customers or through one
or more major distribution partners would reduce our revenue and harm our results.
  18




---



##### 



We have incurred losses in the past and may incur further losses in the future and our revenue may
not grow or may decline.
  Our revenue, operating results and gross margin can fluctuate significantly and unpredictably from
quarter to quarter and from year to year, and we expect they will continue to do so, which could
cause the trading price of our stock to decline.
  
    
    demand for our products and the timing and size of customer orders;
    
    length of sales cycles;
    
    length of time of deployment of our products by our customers;
    
    customers budgetary constraints;
    
    competitive pressures; and
    
    general economic conditions.
   19




---



##### 



Lengthy and unpredictable sales cycles may force us either to assume unfavorable pricing or payment
terms and conditions or to abandon a sale altogether.
  Our products must interoperate with many different networks, software applications and hardware
products, and this interoperability will depend on the continued prevalence of open standards.
  20




---



##### 



We may not be able to detect errors or defects in our products until after full deployment and
product liability claims by customers could result in substantial costs.
   
    
    damage to our reputation, which may result in the loss of existing or potential
customers and market share;
    
    payment of liquidated damages for performance failures;
    
    loss of, or delay in, revenue recognition;
    
    increased service, support, warranty, product replacement and product liability
insurance costs, as well as a diversion of development resources; and
 21




---



##### 




    
    costly and time-consuming legal actions by our customers, which could result in
significant damages.
  The quality of our support and services offerings is important to our customers, and if we fail to
offer high quality support and services, customers may not buy our products and our revenue may
decline.
  
    
    loss of customers and market share;
    
    a failure to attract new customers, including in new geographic regions;
    
    increased service, support and warranty costs and a diversion of development resources;
and
    
    network performance penalties, including liquidated damages for periods of time that
our customers networks are inoperable.
  If we do not introduce and sell new and enhanced products in a timely manner, customers may not buy
our products and our revenue may decline.
   22




---



##### 



We may have difficulty managing our growth, which could limit our ability to increase sales and
adversely affect our business, operating results and financial condition.
  
    
    manage a larger organization;
    
    increase our sales and marketing efforts and add additional sales and marketing
personnel in various regions worldwide;
    
    recruit, hire and train additional qualified staff;
    
    control expenses;
    
    manage operations in multiple global locations and time zones;
    
    broaden our customer support capabilities;
    
    integrate acquisitions, such as our acquisitions of Packet Island, Inc., or Packet Island and Casabi, Inc., or
Casabi;
    
    implement appropriate operational, administrative and financial systems to support our
growth; and
    
    maintain effective financial disclosure controls and procedures.
  We depend largely on the continued services of our co-founders, Michael Tessler, our President and
Chief Executive Officer, and Scott Hoffpauir, our Chief Technology Officer, and the loss of either
of them may impair our ability to grow our business.
  23




---



##### 



If we are unable to retain or hire key personnel, our ability to develop, market and sell products
could be harmed.
   Our exposure to the credit risks of our customers may make it difficult to collect accounts
receivable and could adversely affect our operating results and financial condition.
  The worldwide economic downturn may adversely affect our operating results and financial condition.
  24




---



##### 



We have made a number of acquisitions, and we may undertake additional strategic transactions to
further expand our business, which may pose risks to our business and dilute the ownership of our
stockholders.
   
    
    diverting management time and potentially disrupting business;
    
    expenses, distractions and potential claims resulting from acquisitions, whether or not
they are completed;
    
    reducing our cash available for operations and other uses;
    
    retaining and integrating employees from any businesses we acquire;
    
    the issuance of dilutive equity securities or the incurrence or assumption of debt to
finance the acquisition;
    
    incurring possible impairment charges, contingent liabilities, amortization expense or
write-offs of goodwill;
    
    integrating and supporting acquired businesses, products or technologies;
    
    integrating various accounting, management, information, human resources and other
systems to permit effective management;
    
    unexpected capital expenditure requirements;
    
    insufficient revenues to offset increased expenses associated with the acquisitions;
    
    opportunity costs associated with committing time and capital to such acquisitions; and
    
    acquisition-related litigation.
 25




---



##### 



Our use of open source software could impose limitations on our ability to commercialize our products.
  If we fail to maintain proper and effective internal controls, our ability to produce accurate
financial statements could be impaired, which would adversely affect our operating results, our
ability to operate our business and our stock price.
    26




---



##### 



We incur significant costs as a result of being a public company, which may adversely affect our
operating results and financial condition.
   Man-made problems such as computer viruses or terrorism may disrupt our operations and could
adversely affect our operating results and financial condition.
  Changes in effective tax rates or adverse outcomes resulting from examination of our income or
other tax returns could adversely affect our operating results and financial condition.
  
    
    earnings being lower than anticipated in countries where we have lower statutory tax
rates and higher than anticipated earnings in countries where we have higher statutory tax
rates;
 27




---



##### 




    
    changes in the valuation of our deferred tax assets and liabilities;
    
    expiration of, or lapses in, the research and development tax credit laws;
    
    expiration or non-utilization of net operating losses;
    
    tax effects of stock-based compensation;
    
    costs related to intercompany restructurings; or
    
    changes in tax laws, regulations, accounting principles or interpretations thereof.
   Risks Related to the Telecommunications Industry
 We face intense competition in our markets, especially from larger, better-known companies, and we
may lack sufficient financial or other resources to maintain or improve our competitive position.
   
    
    emphasizing their own size and perceived stability against our smaller size and narrower
recognition;
    
    providing customers one-stop shopping options for the purchase of network equipment
and application server software;
    
    offering customers financing assistance;
    
    making early announcements of competing products and employing extensive marketing
efforts;
    
    assisting customers with marketing and advertising directed at their subscribers; and
    
    asserting infringement of their intellectual property rights.
  28




---



##### 



Competitive pressures in the telecommunications industry may increase and impact our customers
purchasing decisions, which could reduce our revenue.
   
    
    potentially making it difficult to accurately forecast revenue and manage our business;
    
    exposing us to potential unexpected declines in revenue; and
    
    exposing us to potential losses because we expect that a high percentage of our
operating expenses will continue to be fixed in the short-term.
  Our business depends upon the success of service providers who are vulnerable to competition from
free or low-cost providers of IP-based communications services.
    Consolidation in the telecommunications industry will likely continue and result in delays or
reductions in capital expenditure plans and increased competitive pricing pressures, which could
reduce our revenue.
 29




---



##### 



Regulation of IP-based networks and commerce may increase, compliance with these regulations may be
time-consuming, difficult and costly and, if we fail to comply, our sales might decrease.
  
 Risks Related to Our International Operations
 We are exposed to risks related to our international operations and failure to manage these risks
may adversely affect our operating results and financial condition.
   30




---



##### 




    
    requirements or preferences for domestic products, which could reduce demand for our
products;
    
    differing technical standards, existing or future regulatory and certification
requirements and required product features and functionality;
    
    management communication and integration problems related to entering new markets with
different languages, cultures and political systems;
    
    greater difficulty in collecting accounts receivable and longer collection periods;
    
    difficulties and costs of staffing and managing foreign operations;
    
    the uncertainty of protection for intellectual property rights in some countries;
    
    potentially adverse tax consequences, including regulatory requirements regarding our
ability to repatriate profits to the United States; and
    
    political and economic instability and terrorism.
  We rely significantly on distribution partners to sell our products in international markets, the
loss of which could materially reduce our revenue.
    31




---



##### 



We are subject to governmental export and import controls that could subject us to liability or
impair our ability to compete in international markets.
 
 We may not successfully sell our products in certain geographic markets or develop and manage new
sales channels in accordance with our business plan.
  Risks Related to Ownership of Our Common Stock
 Our stock price may be volatile, and you may not be able to resell shares of our common stock at or
above the price you paid.
  32




---



##### 




    
    a slowdown in the telecommunications industry or the general economy;
    
    quarterly or annual variations in our results of operations or those of our competitors;
    
    changes in earnings estimates or recommendations by securities analysts;
    
    announcements by us or our competitors of new products or services, significant
contracts, commercial relationships, capital commitments or acquisitions;
    
    developments with respect to intellectual property rights;
    
    our ability to develop and market new and enhanced products on a timely basis;
    
    our commencement of, or involvement in, litigation;
    
    departure of key personnel; and
    
    changes in governmental regulations.
  Securities analysts may not publish favorable research or reports about our business or may publish
no information which could cause our stock price or trading volume to decline.
  Our executive officers, directors, principal stockholders and their respective affiliates could
exert significant influence over matters requiring stockholder approval, which may not be in your
best interests.
  33




---



##### 



Our management might apply our available capital resources in ways that do not increase the value
of your investment.
  The market price of our common stock could drop substantially if a significant number of shares of
our common stock are sold into the market.
    34




---



##### 



We do not intend to pay dividends for the foreseeable future and our stock may not appreciate in
value.
  Provisions in our charter documents and under Delaware law could discourage potential acquisition
proposals, could delay, deter or prevent a change in control and could limit the price certain
investors might be willing to pay for our common stock.
  Item 1B. Unresolved Staff Comments
  Item 2. Properties
  Item 3. Legal Proceedings
  35




---



##### 



Item 4. Removed and Reserved
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Market Information for Common Stock
   2010First Quarter
    
    
    Second Quarter
    
    
    Third Quarter
    
    
    Fourth QuarterHigh
    
    NA
    
    $
    9.00
    
    
    $
    10.42
    
    
    $
    27.19Low
    
    NA
    
    
    7.83
    
    
    
    7.34
    
    
    
    8.70
 Dividend Policy
  Stockholders
  Stock Performance Graph
   36




---



##### 



Use of Proceeds from Public Offering of Common Stock
  Recent Sale of Unregistered Securities
  Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  37




---



##### 



Item 6. Selected Consolidated Financial Data
   Statement of Operations Data:
 Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands, except per share data)Revenue:Licenses
    
    $
    53,302
    
    
    $
    37,942
    
    
    $
    40,121
    
    
    $
    46,328
    
    
    $
    28,280Maintenance and professional services
    
    
    42,321
    
    
    
    30,945
    
    
    
    21,708
    
    
    
    15,272
    
    
    
    8,559Total revenue
    
    
    95,623
    
    
    
    68,887
    
    
    
    61,829
    
    
    
    61,600
    
    
    
    36,839Cost of revenue:Licenses (1)
    
    
    4,879
    
    
    
    4,432
    
    
    
    4,404
    
    
    
    4,899
    
    
    
    5,012Maintenance and professional services (1)
    
    
    14,369
    
    
    
    12,142
    
    
    
    8,649
    
    
    
    7,270
    
    
    
    3,471Amortization of intangibles
    
    
    794
    
    
    
    800
    
    
    
    414
    
    
    
    400
    
    
    
    400Total cost of revenue
    
    
    20,042
    
    
    
    17,374
    
    
    
    13,467
    
    
    
    12,569
    
    
    
    8,883Gross profit
    
    
    75,581
    
    
    
    51,513
    
    
    
    48,362
    
    
    
    49,031
    
    
    
    27,956Operating expenses:Sales and marketing (1)
    
    
    31,818
    
    
    
    28,534
    
    
    
    30,774
    
    
    
    26,431
    
    
    
    19,234Research and development (1)
    
    
    19,616
    
    
    
    16,625
    
    
    
    15,876
    
    
    
    12,763
    
    
    
    11,568General and administrative (1)
    
    
    14,103
    
    
    
    11,405
    
    
    
    12,074
    
    
    
    10,295
    
    
    
    5,849Total operating expenses
    
    
    65,537
    
    
    
    56,564
    
    
    
    58,724
    
    
    
    49,489
    
    
    
    36,651Income (loss) from operations
    
    
    10,044
    
    
    
    (5,051
    )
    
    
    (10,362
    )
    
    
    (458
    )
    
    
    (8,695
    )Other expense (income), net:
    
    
    883
    
    
    
    1,469
    
    
    
    (78
    )
    
    
    279
    
    
    
    (204
    )Income (loss) before income taxes
    
    
    9,161
    
    
    
    (6,520
    )
    
    
    (10,284
    )
    
    
    (737
    )
    
    
    (8,491
    )Provision for income taxes
    
    
    1,169
    
    
    
    1,333
    
    
    
    952
    
    
    
    1,021
    
    
    
    515Net income (loss)
    
    
    7,992
    
    
    
    (7,853
    )
    
    
    (11,236
    )
    
    
    (1,758
    )
    
    
    (9,006
    )Net income (loss) attributable to noncontrolling interest
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (75
    )
    
    
    (125
    )Net income (loss) attributable to BroadSoft, Inc.
    
    $
    7,992
    
    
    $
    (7,849
    )
    
    $
    (11,236
    )
    
    $
    (1,683
    )
    
    $
    (8,881
    )Net income (loss) per common share available to BroadSoft,
Inc. common stockholders:Basic
    
    $
    0.49
    
    
    $
    (1.25
    )
    
    $
    (1.81
    )
    
    $
    (0.28
    )
    
    $
    (1.60
    )Diluted
    
    $
    0.32
    
    
    $
    (1.25
    )
    
    $
    (1.81
    )
    
    $
    (0.28
    )
    
    $
    (1.60
    )Weighted average common shares outstanding:Basic
    
    
    16,263
    
    
    
    6,285
    
    
    
    6,208
    
    
    
    6,067
    
    
    
    5,543Diluted
    
    
    24,721
    
    
    
    6,285
    
    
    
    6,208
    
    
    
    6,067
    
    
    
    5,543
 
 (1)
    
    Stock-based compensation expense included above: Cost of revenue
    
    $
    210
    
    
    $
    325
    
    
    $
    182
    
    
    $
    163
    
    
    $
    194Sales and marketing
    
    
    882
    
    
    
    1,088
    
    
    
    856
    
    
    
    628
    
    
    
    463Research and development
    
    
    638
    
    
    
    741
    
    
    
    456
    
    
    
    255
    
    
    
    258General and administrative
    
    
    1,278
    
    
    
    1,475
    
    
    
    1,422
    
    
    
    622
    
    
    
    398
 38




---



##### 



Balance Sheet Data:
 As of December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands)Cash and cash equivalents
    
    $
    47,254
    
    
    $
    22,869
    
    
    $
    14,353
    
    
    $
    10,717
    
    
    $
    6,554Working capital
    
    
    35,268
    
    
    
    2,924
    
    
    
    5,918
    
    
    
    3,200
    
    
    
    (7,326
    )Total assets
    
    
    127,356
    
    
    
    66,663
    
    
    
    55,808
    
    
    
    33,167
    
    
    
    28,579Notes payable and bank loans, less current portion
    
    
    800
    
    
    
    14,035
    
    
    
    18,838
    
    
    
    
    
    
    
    2,412Total liabilities
    
    
    74,811
    
    
    
    71,277
    
    
    
    56,846
    
    
    
    28,063
    
    
    
    33,905Total stockholders equity (deficit)
    
    
    52,545
    
    
    
    (77,800
    )
    
    
    (72,724
    )
    
    
    (64,082
    )
    
    
    (64,212
    )
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Company Overview
   2010 Public Offerings
   Key Financial Highlights
  
    
    Total revenue increased by 39%, or $26.7 million, to $95.6 million, compared to $68.9
million for the year ended December 31, 2009;
    
    During 2010, deferred revenue increased $19.2 million to $59.3 million, relative to
deferred revenue of $40.0 million in 2009;
 39




---



##### 




    
    Gross profit and gross margin were $75.6 million and 79%, respectively, compared to
$51.5 million and 75%, respectively, in 2009;
    
    Operating income increased to $10.0 million, compared to a loss of $5.1 million in 2009;
    
    Net income increased to $8.0 million, compared to net loss of $7.8 million in 2009; and
    
    Cash provided by operating activities for 2010 was $19.4 million, compared to $10.4
million for 2009.
 Components of Operating Results
 Revenue
   
    
    Licenses. We derive license revenue from the sale of perpetual software licenses. We
price our software based on the types of features and applications provided and on the
number of subscriber licenses sold. These factors impact the average selling price of our
licenses and the comparability of average selling prices. Our license revenue may vary
significantly from quarter to quarter or from year to year as a result of long sales and
deployment cycles, variations in customer ordering practices and the application of
managements judgment in applying complex revenue recognition rules. Our deferred license
revenue balance consists of software orders that do not meet all the criteria for revenue
recognition. We are unable to predict the proportion of orders that will meet all the
criteria for revenue recognition relative to those orders that will not meet all such
criteria and, as a result, we cannot forecast whether any historical trends in recognized
license revenue and deferred license revenue will continue.
    
    Maintenance and professional services. We generally sell annual maintenance contracts
with our software licenses. These contracts provide for software updates, upgrades and
technical support. Our typical warranty on licensed software is 90 days and, during this
period, our customers are entitled to receive maintenance and support without the purchase
of a maintenance contract. After the expiration of the warranty period, our customers must
purchase an annual maintenance contract to continue receiving ongoing software maintenance
and customer support. We also sell professional services, which consist of implementation,
training and consulting services.
 Cost of Revenue
  
    
    Cost of license revenue. A substantial majority of the cost of license revenue consists
of royalties paid to third parties whose technology or products are sold as part of
BroadWorks and, to a lesser extent, amortization of acquired technology. Most of these
royalty payments are for the underlying embedded data base technology within BroadWorks for
which we currently pay a fixed fee per quarter. Such costs are expensed in the period in
which they are incurred.
    
    Cost of maintenance and professional services revenue. Cost of maintenance and
professional services revenue consists primarily of personnel-related expenses and other
direct costs associated with the support, maintenance and implementation of our software
licenses, as well as training and consulting services. Personnel expenses include salaries,
commissions, benefits, bonuses, reimbursement of expenses and stock-based compensation.
Such costs are expensed in the period in which they are incurred.
 40




---



##### 



Gross Profit
  
    
    Mix of license, maintenance and professional services revenue. We generate higher gross
margins on license revenue compared to maintenance and professional services revenue.
    
    Growth or decline of license revenue. A substantial portion of cost of license revenue
is fixed and is expensed in the period in which it occurs. This cost consists primarily of
the royalty payments to our embedded database provider. If license revenue increases, these
fixed payments will decline as a percentage of revenue. If license revenue declines, these
fixed payments will increase as a percentage of revenue.
    
    Impact of deferred revenue. If revenue is deferred because we are unable to determine
vendor-specific objective evidence, or VSOE, of fair value for any undelivered element
within an arrangement, all of the revenue derived from the arrangement is deferred,
including license, maintenance and professional services revenue, until all elements for
which we could not determine VSOE have been delivered. However, the cost of revenue,
including the costs of license, maintenance and professional services, is expensed in the
period in which it is incurred. Therefore, if relatively more revenue is deferred in a
particular period, gross margin would decline in that period. Because the ability to
recognize revenue on sales depends largely on the terms of the sale arrangement, and
because we are not able to predict the proportion of orders that will not meet all the
criteria for revenue recognition, we cannot forecast whether any historical trends in gross
margin will continue.
 Operating Expenses
  Sales and marketing expenses
 Research and development expenses
 General and administrative expenses
 41




---



##### 



Stock-Based Compensation
    Other (Income) Expense, Net
  Income Tax Expense
  Critical Accounting Policies and Significant Judgments and Estimates
   42




---



##### 



Revenue Recognition
    License Revenue
      43




---



##### 



Maintenance and Professional Services Revenue
    Software Development Costs
  Accounts Receivable and Allowance for Doubtful Accounts
  44




---



##### 



Business Combinations
   Goodwill
   
    
    a significant adverse change in our business climate;
    
    unanticipated competition;
    
    a loss of key personnel;
    
    a more likely than not expectation that a significant portion of our business will be
sold; or
    
    the testing for recoverability of a significant asset group within the reporting unit.
   45




---



##### 



Intangible Assets
   Customer relationships
    
    5  7 yearsDeveloped technology
    
    4  5 yearsNon-complete agreement
    
    1 yearsTradenames
    
    4 years
 Impairment of Long-Lived Assets
  
    
    a significant adverse change in the extent or manner in which a long-lived asset is
being used or in its physical condition;
    
    a current-period operating or cash flow loss combined with a history of operating or
cash flow losses or a projection or forecast that demonstrates continuing losses associated
with the use of a long-lived asset; or
    
    a current expectation that, more likely than not, a long-lived asset will be sold or
otherwise disposed of significantly before the end of its previously estimated useful life.
  Income Taxes
  46




---



##### 



Recent Accounting Pronouncements
    47




---



##### 



Results of Operations
 Comparison of the years ended December 31, 2010 and 2009
 Revenue
 Year Ended December 31,2010
    
    
    2009Percent
    
    
    
    
    
    
    Percent
    
    
    Period-to-Periodof Total
    
    
    
    
    
    
    of Total
    
    
    ChangeAmount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    Amount
    
    
    Percentage(dollars in thousands)Revenue by Type:Licenses
    
    $
    53,302
    
    
    
    56
    %
    
    $
    37,942
    
    
    
    55
    %
    
    $
    15,360
    
    
    
    40
    %Maintenance and
professional services
    
    
    42,321
    
    
    
    44
    
    
    
    30,945
    
    
    
    45
    
    
    
    11,376
    
    
    
    37Total revenue
    
    $
    95,623
    
    
    
    100
    %
    
    $
    68,887
    
    
    
    100
    %
    
    $
    26,736
    
    
    
    39
    %Revenue by Geography:Americas
    
    $
    57,693
    
    
    
    60
    %
    
    $
    40,380
    
    
    
    59
    %
    
    $
    17,313
    
    
    
    43
    %EMEA
    
    
    23,617
    
    
    
    25
    
    
    
    17,969
    
    
    
    26
    
    
    
    5,648
    
    
    
    31APAC
    
    
    14,313
    
    
    
    15
    
    
    
    10,538
    
    
    
    15
    
    
    
    3,775
    
    
    
    36Total revenue
    
    $
    95,623
    
    
    
    100
    %
    
    $
    68,887
    
    
    
    100
    %
    
    $
    26,736
    
    
    
    39
    %
   License Revenue
  48




---



##### 



Maintenance and Professional Services Revenue
  Cost of Revenue and Gross Profit
 Year Ended December 31,2010
    
    
    2009Percent
    
    
    
    
    
    
    Percentof
    
    
    
    
    
    
    ofRelated
    
    
    
    
    
    
    Related
    
    
    Period-to-Period ChangeAmount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    Amount
    
    
    Percentage(dollars in thousands)Cost of Revenue:Licenses (1)
    
    $
    5,673
    
    
    
    11
    %
    
    $
    5,232
    
    
    
    14
    %
    
    $
    441
    
    
    
    8
    %Maintenance and
professional services
    
    
    14,369
    
    
    
    34
    
    
    
    12,142
    
    
    
    39
    
    
    
    2,227
    
    
    
    18Total cost of revenue
    
    $
    20,042
    
    
    
    21
    %
    
    $
    17,374
    
    
    
    25
    %
    
    $
    2,668
    
    
    
    15
    %Gross Profit:Licenses (1)
    
    $
    47,629
    
    
    
    89
    %
    
    $
    32,710
    
    
    
    86
    %
    
    $
    14,919
    
    
    
    46
    %Maintenance and
professional services
    
    
    27,952
    
    
    
    66
    
    
    
    18,803
    
    
    
    61
    
    
    
    9,149
    
    
    
    49Total gross profit
    
    $
    75,581
    
    
    
    79
    %
    
    $
    51,513
    
    
    
    75
    %
    
    $
    24,068
    
    
    
    47
    %
 
 (1)
    
    Includes amortization of intangibles aggregating $794 and $800 for 2010 and 2009,
respectively.    49




---



##### 



Operating Expenses
 Year Ended December 31,2010
    
    
    2009Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of Total
    
    
    Period-to-Period ChangeAmount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    Amount
    
    
    Percentage(dollars in thousands)Sales and marketing
    
    $
    31,818
    
    
    
    33
    %
    
    $
    28,534
    
    
    
    41
    %
    
    $
    3,284
    
    
    
    12
    %Research and development
    
    
    19,616
    
    
    
    21
    
    
    
    16,625
    
    
    
    24
    
    
    
    2,991
    
    
    
    18General and administrative
    
    
    14,103
    
    
    
    15
    
    
    
    11,405
    
    
    
    17
    
    
    
    2,698
    
    
    
    24Total operating expenses
    
    $
    65,537
    
    
    
    69
    %
    
    $
    56,564
    
    
    
    82
    %
    
    $
    8,973
    
    
    
    16
    %
 Sales and Marketing
 Research and Development
 General and Administrative
 Income (losses) from Operations
  Other (Income) Expense
 Year Ended December 31,2010
    
    
    2009Percent
    
    
    
    
    
    
    Percent
    
    
    Period-to-Periodof Total
    
    
    
    
    
    
    of Total
    
    
    ChangeAmount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    Amount
    
    
    Percentage(dollars in thousands)Interest income
    
    $
    (52
    )
    
    
    *
    
    
    $
    (39
    )
    
    
    *
    
    
    $
    (13
    )
    
    
    33
    %Interest expense
    
    
    757
    
    
    
    1
    %
    
    
    1,398
    
    
    
    2
    %
    
    
    (641
    )
    
    
    (46
    )Other expense
    
    
    178
    
    
    
    *
    
    
    
    110
    
    
    
    *
    
    
    
    68
    
    
    
    62Total other expense
    
    $
    883
    
    
    
    1
    %
    
    $
    1,469
    
    
    
    2
    %
    
    $
    (586
    )
    
    
    (40
    )%
 
 *
    
    Less than 1%  50




---



##### 



Provision for Income Taxes
  Comparison of the Years Ended December 31, 2009 and 2008
 Revenue
 Year Ended December 31,2009
    
    
    2008Percent
    
    
    
    
    
    
    Percent
    
    
    Period-to-Periodof Total
    
    
    
    
    
    
    of Total
    
    
    ChangeAmount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    Amount
    
    
    Percentage(dollars in thousands)Revenue by Type:Licenses
    
    $
    37,942
    
    
    
    55
    %
    
    $
    40,121
    
    
    
    65
    %
    
    $
    (2,179
    )
    
    
    (5
    )%Maintenance andprofessional services
    
    
    30,945
    
    
    
    45
    
    
    
    21,708
    
    
    
    35
    
    
    
    9,237
    
    
    
    43Total revenue
    
    $
    68,887
    
    
    
    100
    %
    
    $
    61,829
    
    
    
    100
    %
    
    $
    7,058
    
    
    
    11
    %Revenue by Geography:Americas
    
    $
    40,380
    
    
    
    59
    %
    
    $
    32,954
    
    
    
    53
    %
    
    $
    7,426
    
    
    
    23
    %EMEA
    
    
    17,969
    
    
    
    26
    
    
    
    21,078
    
    
    
    34
    
    
    
    (3,109
    )
    
    
    (15
    )APAC
    
    
    10,538
    
    
    
    15
    
    
    
    7,797
    
    
    
    13
    
    
    
    2,741
    
    
    
    35Total revenue
    
    $
    68,887
    
    
    
    100
    %
    
    $
    61,829
    
    
    
    100
    %
    
    $
    7,058
    
    
    
    11
    %
   51




---



##### 



License Revenue
  Maintenance and Professional Services Revenue
  Cost of Revenue and Gross Profit
 Year Ended December 31,2009
    
    
    2008Percent
    
    
    
    
    
    
    Percentof
    
    
    
    
    
    
    ofRelated
    
    
    
    
    
    
    Related
    
    
    Period-to-Period ChangeAmount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    Amount
    
    
    Percentage(dollars in thousands)Cost of Revenue:Licenses (1)
    
    $
    5,232
    
    
    
    14
    %
    
    $
    4,818
    
    
    
    12
    %
    
    $
    414
    
    
    
    9
    %Maintenance and
professional services
    
    
    12,142
    
    
    
    39
    
    
    
    8,649
    
    
    
    40
    
    
    
    3,493
    
    
    
    40Total cost of revenue
    
    $
    17,374
    
    
    
    25
    %
    
    $
    13,467
    
    
    
    22
    %
    
    $
    3,907
    
    
    
    29
    %Gross Profit:Licenses (1)
    
    $
    32,710
    
    
    
    86
    %
    
    $
    35,303
    
    
    
    88
    %
    
    $
    (2,593
    )
    
    
    (7
    )%Maintenance and
professional services
    
    
    18,803
    
    
    
    61
    
    
    
    13,059
    
    
    
    60
    
    
    
    5,744
    
    
    
    44Total gross profit
    
    $
    51,513
    
    
    
    75
    %
    
    $
    48,362
    
    
    
    78
    %
    
    $
    3,151
    
    
    
    7
    %
 
 (1)
    
    Includes amortization of intangibles aggregating $800 and $414 for 2009 and 2008,
respectively.   52




---



##### 



Operating Expenses
 Year Ended December 31,2009
    
    
    2008Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of Total
    
    
    Period-to-Period ChangeAmount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    Amount
    
    
    Percentage(dollars in thousands)Sales and marketing
    
    $
    28,534
    
    
    
    41
    %
    
    $
    30,774
    
    
    
    50
    %
    
    $
    (2,240
    )
    
    
    (7
    )%Research and development
    
    
    16,625
    
    
    
    24
    
    
    
    15,876
    
    
    
    26
    
    
    
    749
    
    
    
    5General and administrative
    
    
    11,405
    
    
    
    17
    
    
    
    12,074
    
    
    
    20
    
    
    
    (669
    )
    
    
    (6
    )Total operating expenses
    
    $
    56,564
    
    
    
    82
    %
    
    $
    58,724
    
    
    
    96
    %
    
    $
    (2,160
    )
    
    
    (4
    )%
 Sales and Marketing
 Research and Development
 General and Administrative
 Loss from Operations
  53




---



##### 



Other Expense (Income)
 Year Ended December 31,2009
    
    
    2008Percent
    
    
    
    
    
    
    Percent
    
    
    Period-to-Periodof Total
    
    
    
    
    
    
    of Total
    
    
    ChangeAmount
    
    
    Revenue
    
    
    Amount
    
    
    Revenue
    
    
    Amount
    
    
    Percentage(dollars in thousands)Interest income
    
    $
    (39
    )
    
    
    *
    
    
    $
    (173
    )
    
    
    *
    
    
    $
    134
    
    
    
    (77
    )%Interest expense
    
    
    1,398
    
    
    
    2
    %
    
    
    521
    
    
    
    1
    %
    
    
    877
    
    
    
    168Other expense (income)
    
    
    110
    
    
    
    *
    
    
    
    (426
    )
    
    
    (1
    )%
    
    
    536
    
    
    NMTotal other expense (income)
    
    $
    1,469
    
    
    
    2
    %
    
    $
    (78
    )
    
    
    *
    
    
    $
    1,547
    
    
    NM
 
 *
    
    Less than 1%NM=Not meaningful   Provision for Income Taxes
  Liquidity and Capital Resources
 Resources
   54




---



##### 



Cash and Cash Equivalents, Accounts Receivable and Working Capital
  As of December 31,2010
    
    
    2009Cash and cash equivalents
    
    $
    47,254
    
    
    $
    22,869Accounts receivable, net
    
    
    40,491
    
    
    
    25,471Working capital
    
    
    35,268
    
    
    
    2,924
 For the years ended December 31,2010
    
    
    2009
    
    
    2008Cash provided by (used in):Operating activities
    
    $
    19,386
    
    
    $
    10,427
    
    
    $
    (5,011
    )Investing activities
    
    
    (24,274
    )
    
    
    694
    
    
    
    (8,776
    )Financing activities
    
    
    29,203
    
    
    
    (2,684
    )
    
    
    17,597
  Operating Activities
    55




---



##### 



Investing Activities
     Financing Activities
    Credit Facilities
 ORIX Loan
  Bank of America Installment Loan
  56




---



##### 



Operating and Capital Expenditure Requirements
   Contractual Obligations
  Payments Due by YearLess than
    
    
    
    
    
    
    
    
    
    
    More Than 5Total
    
    
    1 year
    
    
    1 - 3 years
    
    
    3 - 5 years
    
    
    yearsOperating lease obligations
    
    $
    8,664
    
    
    $
    1,318
    
    
    $
    2,323
    
    
    $
    2,664
    
    
    $
    2,359Bank of America
installment loan
    
    
    1,970
    
    
    
    1,170
    
    
    
    800
    
    
    
    
    
    
    
    Total
    
    $
    10,634
    
    
    $
    2,488
    
    
    $
    3,123
    
    
    $
    2,664
    
    
    $
    2,359
   Off-Balance Sheet Arrangements
  57




---



##### 



Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
  Foreign Currency Exchange Risk
  58




---



##### 



Item 8.
    
    Financial Statements and Supplementary Data
 Index to Consolidated Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    
    60Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    61Consolidated Statements of Income (Loss) for the Years Ended December 31, 2010, 2009 and 2008
    
    
    62Consolidated Statements of Stockholders Equity (Deficit) for the Years Ended December 31, 2010,
2009 and 2008
    
    
    63Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008
    
    
    64Notes to Consolidated Financial Statements
    
    
    65
 59




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       60




---



##### 



BroadSoft, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
 December 31,
    
    
    December 31,2010
    
    
    2009(In thousands, except shareand per share data)Assets:Current assets:Cash and cash equivalents
    
    $
    47,254
    
    
    $
    22,869Short-term investments
    
    
    13,703
    
    
    
    Accounts receivable, net of allowance for doubtful accounts of $38 and $169 atDecember 31, 2010 and December 31, 2009, respectively
    
    
    40,491
    
    
    
    25,471Other current assets
    
    
    4,866
    
    
    
    4,829Total current assets
    
    
    106,314
    
    
    
    53,169Long-term assets:Property and equipment, net
    
    
    3,590
    
    
    
    1,563Long-term investments
    
    
    4,970
    
    
    
    Restricted cash
    
    
    972
    
    
    
    599Intangible assets, net
    
    
    3,709
    
    
    
    3,163Goodwill
    
    
    6,226
    
    
    
    4,728Other long-term assets
    
    
    1,575
    
    
    
    3,441Total long-term assets
    
    
    21,042
    
    
    
    13,494Total assets
    
    $
    127,356
    
    
    $
    66,663Liabilities, redeemable preferred stock, redeemable convertible preferred stock
and stockholders equity (deficit):Current liabilities:Accounts payable and accrued expenses
    
    $
    12,439
    
    
    $
    11,903Notes payable and bank loans, current portion
    
    
    1,170
    
    
    
    4,536Deferred revenue, current portion
    
    
    57,437
    
    
    
    33,806Total current liabilities
    
    
    71,046
    
    
    
    50,245Notes payable and bank loans
    
    
    800
    
    
    
    14,035Deferred revenue, net of current portion
    
    
    1,827
    
    
    
    6,241Other long-term liabilities
    
    
    1,138
    
    
    
    756Total liabilities
    
    74,811
    
    
    71,277Commitments and contingencies (Note 13)Redeemable preferred stock and redeemable convertible preferred stock:Series A redeemable preferred stock, par value $0.01 per share; no and
9,000,000
shares authorized, issued and outstanding at
December 31, 2010 and
December 31, 2009, respectively
    
    
    
    
    
    
    4,320Redeemable convertible preferred stock, par value
$0.01 per share, issuable in series: no and 71,364,939 shares
authorized at December 31,
2010 and December 31,
2009, respectively; no and 11,831,481 shares issued
and outstanding
at December 31, 2010 and December 31, 2009, respectively
    
    
    
    
    
    
    68,866Total redeemable preferred stock and
redeemable convertible preferred stock
    
    
    
    
    
    
    73,186Stockholders equity (deficit):BroadSoft, Inc. stockholders equity (deficit):Preferred stock, $0.01 par value per share; 5,000,000 and no shares
authorized,
at December 31, 2010 and December 31, 2009, respectively; no shares issued and
outstanding
    
    
    
    
    
    
    Common stock, par value $0.01 per share; 100,000,000 and 139,100,000
shares
authorized at December 31, 2010 and December 31, 2009,
respectively; 25,452,227
and 6,320,110 shares issued and outstanding at
December 31, 2010 and December
31, 2009, respectively
    
    
    255
    
    
    
    63Additional paid-in capital
    
    
    142,508
    
    
    
    20,340Accumulated other comprehensive loss
    
    
    (1,736
    )
    
    
    (1,725
    )Accumulated deficit
    
    
    (88,482
    )
    
    
    (96,474
    )Total BroadSoft, Inc. stockholders equity (deficit)
    
    
    52,545
    
    
    
    (77,796
    )Noncontrolling interest
    
    
    
    
    
    
    (4
    )Total stockholders equity (deficit)
    
    
    52,545
    
    
    
    (77,800
    )Total liabilities and stockholders equity (deficit)
    
    $
    127,356
    
    
    $
    66,663
  61




---



##### 



BroadSoft, Inc.  CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 (in thousands, except share and per share data)
 Year ended December 31,2010
    
    
    2009
    
    
    2008(In thousands, except per share data)Revenue:Licenses
    
    $
    53,302
    
    
    $
    37,942
    
    
    $
    40,121Maintenance and professional services
    
    
    42,321
    
    
    
    30,945
    
    
    
    21,708Total revenue
    
    
    95,623
    
    
    
    68,887
    
    
    
    61,829Cost of revenue:Licenses
    
    
    4,879
    
    
    
    4,432
    
    
    
    4,404Maintenance and professional services
    
    
    14,369
    
    
    
    12,142
    
    
    
    8,649Amortization of intangibles
    
    
    794
    
    
    
    800
    
    
    
    414Total cost of revenue
    
    
    20,042
    
    
    
    17,374
    
    
    
    13,467Gross profit
    
    
    75,581
    
    
    
    51,513
    
    
    
    48,362Operating expenses:Sales and marketing
    
    
    31,818
    
    
    
    28,534
    
    
    
    30,774Research and development
    
    
    19,616
    
    
    
    16,625
    
    
    
    15,876General and administrative
    
    
    14,103
    
    
    
    11,405
    
    
    
    12,074Total operating expenses
    
    
    65,537
    
    
    
    56,564
    
    
    
    58,724Income (loss) from operations
    
    
    10,044
    
    
    
    (5,051
    )
    
    
    (10,362
    )Other expense (income):Interest income
    
    
    (52
    )
    
    
    (39
    )
    
    
    (173
    )Interest expense
    
    
    757
    
    
    
    1,398
    
    
    
    521Other expense (income)
    
    
    178
    
    
    
    110
    
    
    
    (426
    )Total other expense (income)
    
    
    883
    
    
    
    1,469
    
    
    
    (78
    )Income (loss) before income taxes
    
    
    9,161
    
    
    
    (6,520
    )
    
    
    (10,284
    )Provision for income taxes
    
    
    1,169
    
    
    
    1,333
    
    
    
    952Net income (loss)
    
    
    7,992
    
    
    
    (7,853
    )
    
    
    (11,236
    )Net income (loss) attributable to noncontrolling interest
    
    
    
    
    
    
    (4
    )
    
    
    Net income (loss) attributable to BroadSoft, Inc.
    
    $
    7,992
    
    
    $
    (7,849
    )
    
    $
    (11,236
    )Net income (loss) per common share available to BroadSoft, Inc.
common stockholders:Basic
    
    $
    0.49
    
    
    $
    (1.25
    )
    
    $
    (1.81
    )Diluted
    
    $
    0.32
    
    
    $
    (1.25
    )
    
    $
    (1.81
    )Weighted average common shares outstanding:Basic
    
    
    16,263
    
    
    
    6,285
    
    
    
    6,208Diluted
    
    
    24,721
    
    
    
    6,285
    
    
    
    6,208Stock-based compensation expense included above:Cost of revenue
    
    $
    210
    
    
    $
    325
    
    
    $
    182Sales and marketing
    
    
    882
    
    
    
    1,088
    
    
    
    856Research and development
    
    
    638
    
    
    
    741
    
    
    
    456General and administrative
    
    
    1,278
    
    
    
    1,475
    
    
    
    1,422
  62




---



##### 



BroadSoft, Inc.
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) AND COMPREHENSIVE
INCOME
 (in thousands)
 BroadSoft, Inc. Stockholders Equity (Deficit)AccumulatedTotal
    
    
    
    
    
    
    Common Stock Par Value
    
    
    
    
    
    
    OtherStockholders
    
    
    Comprehensive
    
    
    $0.01 Per Share
    
    
    Additional Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    NoncontrollingEquity (Deficit)
    
    
    (Loss) Income
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Loss
    
    
    Deficit
    
    
    InterestBalance December 31, 2007
    
    $
    (64,082
    )
    
    
    
    
    
    
    6,146
    
    
    $
    62
    
    
    $
    13,757
    
    
    $
    (512
    )
    
    $
    (77,389
    )
    
    $
    Exercise of stock options and net effect of
early exercises
    
    
    188
    
    
    
    
    
    
    
    113
    
    
    
    1
    
    
    
    187
    
    
    
    
    
    
    
    
    
    
    
    Stock based compensation expense
    
    
    2,916
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,916
    
    
    
    
    
    
    
    
    
    
    
    Fair value of warrants
    
    
    136
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136
    
    
    
    
    
    
    
    
    
    
    
    Accretion of preferred stock
    
    
    (400
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (400
    )
    
    
    
    
    
    
    
    
    
    
    Comprehensive loss:Net loss
    
    
    (11,236
    )
    
    $
    (11,236
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,236
    )
    
    
    Other comprehensive loss:Foreign currency translation adjustment
    
    
    (246
    )
    
    
    (246
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (246
    )
    
    
    
    
    
    
    Comprehensive loss
    
    
    (11,482
    )
    
    $
    (11,482
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance December 31, 2008
    
    $
    (72,724
    )
    
    
    
    
    
    
    6,259
    
    
    $
    63
    
    
    $
    16,596
    
    
    $
    (758
    )
    
    $
    (88,625
    )
    
    $
    Exercise of stock options and net effect of
early exercises
    
    
    160
    
    
    
    
    
    
    
    61
    
    
    
    
    
    
    
    160
    
    
    
    
    
    
    
    Stock based compensation expense
    
    
    3,629
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,629
    
    
    
    
    
    
    
    Accretion of preferred stock
    
    
    (45
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45
    )
    
    
    
    
    
    
    Comprehensive loss:Net loss
    
    
    (7,853
    )
    
    $
    (7,853
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,849
    )
    
    
    (4
    )Other comprehensive loss:Foreign currency translation adjustment
    
    
    (967
    )
    
    
    (967
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (967
    )
    
    
    
    
    
    
    Comprehensive loss
    
    
    (8,820
    )
    
    $
    (8,820
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance December 31, 2009
    
    $
    (77,800
    )
    
    
    
    
    
    
    6,320
    
    
    $
    63
    
    
    $
    20,340
    
    
    $
    (1,725
    )
    
    $
    (96,474
    )
    
    $
    (4
    )Issuance of common stock from IPO, net of
discounts and issuance costs
    
    
    39,951
    
    
    
    
    
    
    
    5,048
    
    
    
    50
    
    
    
    39,901
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock from follow-on
offering, net of discounts and issuance costs
    
    
    9,932
    
    
    
    
    
    
    
    500
    
    
    
    5
    
    
    
    9,927Redeemable convertible preferred stock
converted to common stock at IPO
    
    
    68,866
    
    
    
    
    
    
    
    12,962
    
    
    
    130
    
    
    
    68,736
    
    
    
    
    
    
    
    
    
    
    
    Reclassification of warrant liability upon IPO
    
    
    262
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262
    
    
    
    
    
    
    
    
    
    
    
    Warrant exercise
    
    
    100
    
    
    
    
    
    
    
    112
    
    
    
    1
    
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock for exercise of
stock options and vesting of RSUs, net of
effect of early exercises and withholding
tax
    
    
    241
    
    
    
    
    
    
    
    510
    
    
    
    6
    
    
    
    235
    
    
    
    
    
    
    
    
    
    
    
    Sale of shares to noncontrolling interest
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Stock based compensation expense
    
    
    3,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,008
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive loss:Net income
    
    
    7,992
    
    
    $
    7,992
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,992
    
    
    
    Other comprehensive income:Unrealized loss on investments
    
    
    (2
    )
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    Foreign currency translation adjustment
    
    
    (9
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    Comprehensive income
    
    
    7,981
    
    
    $
    7,981
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance December 31, 2010
    
    $
    52,545
    
    
    
    
    
    
    
    25,452
    
    
    $
    255
    
    
    $
    142,508
    
    
    $
    (1,736
    )
    
    $
    (88,482
    )
    
    $
    
  63




---



##### 



BroadSoft, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    7,992
    
    
    $
    (7,853
    )
    
    $
    (11,236
    )Adjustment to reconcile net loss to net cash  provided by (used in) operating activities:Depreciation and amortization
    
    
    2,348
    
    
    
    2,209
    
    
    
    1,667Amortization of software licenses
    
    
    1,820
    
    
    
    1,820
    
    
    
    2,222Stock-based compensation expense
    
    
    3,008
    
    
    
    3,629
    
    
    
    2,916Provision (recovery) for doubtful accounts
    
    
    3
    
    
    
    59
    
    
    
    (3
    )Deferred income taxes
    
    
    7
    
    
    
    24
    
    
    
    (72
    )Impairment of property and equipment
    
    
    
    
    
    
    115
    
    
    
    Other
    
    
    
    
    
    
    101
    
    
    
    Change in fair value of preferred stock warrants and accretion of
debt discount
    
    
    (153
    )
    
    
    137
    
    
    
    (419
    )Changes in operating assets and liabilities (net of acquisitions):Accounts receivable
    
    
    (15,023
    )
    
    
    (4,147
    )
    
    
    (1,607
    )Other current and long-term assets
    
    
    (463
    )
    
    
    (1,004
    )
    
    
    (262
    )Accounts payable, accrued expenses and other long-term liabilities
    
    
    630
    
    
    
    (3,532
    )
    
    
    (679
    )Current and long-term deferred revenue
    
    
    19,217
    
    
    
    18,869
    
    
    
    2,462Net cash provided by (used in) operating activities
    
    
    19,386
    
    
    
    10,427
    
    
    
    (5,011
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (2,630
    )
    
    
    (769
    )
    
    
    (1,312
    )Purchase of intangible assets
    
    
    
    
    
    
    
    
    
    
    (6,371
    )Purchases of intangible assets resulting from contingent consideration
    
    
    (809
    )
    
    
    
    
    
    
    Payments for acquisitions, net of cash acquired
    
    
    (2,191
    )
    
    
    806
    
    
    
    (494
    )Proceeds from sale of subsidiary, net of cash surrendered
    
    
    
    
    
    
    (51
    )
    
    
    Purchases of marketable securities
    
    
    (18,673
    )
    
    
    
    
    
    
    Change in restricted cash
    
    
    29
    
    
    
    708
    
    
    
    (599
    )Net cash (used in) provided by investing activities
    
    
    (24,274
    )
    
    
    694
    
    
    
    (8,776
    )Cash flows from financing activities:Proceeds from the exercise of stock options
    
    
    762
    
    
    
    69
    
    
    
    135Proceeds from issuance of common stock in connection with Companys
IPO, net of issuance costs
    
    
    39,951
    
    
    
    
    
    
    
    Proceeds from issuance of common stock in connection with Companys
follow-on offering, net of issuance costs
    
    
    9,932
    
    
    
    
    
    
    
    Proceeds from the exercise of preferred stock warrants
    
    
    100
    
    
    
    
    
    
    
    Redemption of Series A redeemable preferred stock
    
    
    (4,320
    )
    
    
    
    
    
    
    Taxes paid on vesting of RSUs
    
    
    (525
    )
    
    
    
    
    
    
    Notes payable and bank loans  payments
    
    
    (16,697
    )
    
    
    (2,753
    )
    
    
    (3,259
    )Notes payable and bank loans  advances
    
    
    
    
    
    
    
    
    
    
    20,721Net cash provided by (used in) financing activities
    
    
    29,203
    
    
    
    (2,684
    )
    
    
    17,597Effect of exchange rate changes on cash and cash equivalents
    
    
    70
    
    
    
    79
    
    
    
    (174
    )Net increase in cash and cash equivalents
    
    
    24,385
    
    
    
    8,516
    
    
    
    3,636Cash and cash equivalents, beginning of period
    
    
    22,869
    
    
    
    14,353
    
    
    
    10,717Cash and cash equivalents, end of period
    
    
    47,254
    
    
    
    22,869
    
    
    
    14,353Supplemental disclosures:Cash paid for interest
    
    $
    655
    
    
    $
    1,451
    
    
    $
    517Cash paid for income taxes
    
    $
    1,261
    
    
    $
    1,977
    
    
    $
    1,154Supplemental schedule of non-cash investing and
financing activities:Series E redeemable convertible preferred stock issued for acquisition
    
    $
    
    
    
    $
    
    
    
    $
    2,100Series E-1 redeemable convertible preferred stock issued for
acquisition
    
    $
    
    
    
    $
    1,455
    
    
    $
    Fair value warrants issued in connection with financing facilities
    
    $
    
    
    
    $
    
    
    
    $
    136
  64




---



##### 



BroadSoft, Inc.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Years Ended December 31, 2010, 2009 and 2008
 1. Nature of Business
  2. Summary of Significant Accounting Policies
 Principles of Consolidation
  Use of Estimates
  65




---



##### 



Cash Equivalents and Restricted Cash
  Investments in Marketable Securities
  As of December 31, 2010Contracted
    
    
    Carryingmaturity
    
    
    valueMoney market funds
    
    demand
    
    $
    26,887U.S. agency notes
    
    12 - 67 days
    
    
    3,998Commercial paper
    
    60 - 76 days
    
    
    2,399Total cash and cash equivalents
    
    
    
    
    
    $
    33,284U.S. agency notes
    
    166 - 319 days
    
    $
    2,275Comercial paper
    
    147 - 319 days
    
    $
    4,995Corporate bonds
    
    60 - 319 days
    
    
    6,433Total short-term investments
    
    
    
    
    
    $
    13,703U.S. agency notes
    
    136 - 601 days
    
    $
    1,999Corporate bonds
    
    382 - 662 days
    
    
    2,971Total long-term investments
    
    
    
    
    
    $
    4,970
 Fair Value Measurements
  66




---



##### 



December 31, 2010
    
    
    December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    Value(in thousands)AssetsMoney market funds, U.S. agency notes, commercial paper and certificates of deposit *
    
    $
    34,458
    
    
    $
    34,458
    
    
    $
    8,167
    
    
    $
    8,167Short- and long-term investments
    
    
    18,673
    
    
    
    18,673
    
    
    
    
    
    
    
    Total assets
    
    $
    53,131
    
    
    $
    53,131
    
    
    $
    8,167
    
    
    $
    8,167LiabilitiesSeries C-1 preferred stock warrants
    
    $
    
    
    
    $
    
    
    
    $
    153
    
    
    $
    153Total liabilities
    
    $
    
    
    
    $
    
    
    
    $
    153
    
    
    $
    153
 
 *
    
    Does not include $14 million of operating cash balances Borrowings
  
    
    Level 1. Observable inputs based on unadjusted quoted prices in active markets for
identical instruments;
    
    Level 2. Inputs, other than quoted prices in active markets, that are observable either
directly or indirectly; and
    
    Level 3. Unobservable inputs for which there is little or no market data, which require
the reporting entity to develop its own assumptions.
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
 67




---



##### 



Balance atDecember 31,2010
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets:Money market funds
    
    $
    26,887
    
    
    $
    26,887
    
    
    $
    
    
    
    $
    U.S. agency notes
    
    
    3,998
    
    
    
    
    
    
    
    3,998
    
    
    
    Commercial paper
    
    
    2,399
    
    
    
    
    
    
    
    2,399
    
    
    
    Certificates of deposit
    
    
    1,174
    
    
    
    1,174
    
    
    
    
    
    
    
    Total cash equivalents and certificates of deposit
    
    $
    34,458
    
    
    $
    28,061
    
    
    $
    6,397
    
    
    $
    U.S. agency notes
    
    
    4,274
    
    
    
    
    
    
    
    4,274
    
    
    
    Commercial paper
    
    
    4,995
    
    
    
    
    
    
    
    4,995
    
    
    
    Corporate bonds
    
    
    9,404
    
    
    
    
    
    
    
    9,404
    
    
    
    Total investments
    
    $
    18,673
    
    
    $
    
    
    
    $
    18,673
    
    
    $
    Total assets
    
    $
    53,131
    
    
    $
    28,061
    
    
    $
    25,070
    
    
    $
 Balance atDecember 31,2009
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets:Money market funds
    
    $
    7,568
    
    
    $
    7,568
    
    
    $
    
    
    
    $
    Certificates of deposit
    
    
    599
    
    
    
    599
    
    
    
    
    
    
    
    Total
    
    $
    8,167
    
    
    $
    8,167
    
    
    $
    
    
    
    $
    Liabilities:Series C-1 preferred stock warrants (1)
    
    $
    153
    
    
    $
    
    
    
    $
    
    
    
    $
    153$
    153
    
    
    $
    
    
    
    $
    
    
    
    $
    153
 
 (1)
    
    Warrants to purchase Series C-1 redeemable convertible preferred stock are recorded as
liabilities within other long-term liabilities in the Companys December 31, 2009 consolidated balance
sheet. Fair value is determined using the Black-Scholes valuation model using the contractual
life of the warrant and reasonable assumptions for stock price volatility, expected dividend
yield and risk-free interest rates over the remaining contractual life of the warrants. The
fair value of the warrants is re-measured each reporting period and changes in fair value are
recognized in other income or expense in the Companys condensed consolidated statement of
operations. These warrants were converted to common stock warrants in connection with the IPO in June 2010
and were reclassified to APIC. As such, the Company no longer has Level 3 assets or
liabilities. Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs
  68




---



##### 



Series C-1 PreferredWarrantsBalance at December 31, 2008
    
    $
    (43
    )Total unrealized losses included
in earnings
    
    
    (110
    )Transfers out
    
    
    Balance at December 31, 2009
    
    $
    (153
    )Total unrealized losses included
in earnings
    
    
    (109
    )Conversion to common stock
warrants
    
    
    262Balance at December 31, 2010
    
    $
    
 Assets Measured at Fair Value on a Nonrecurring Basis
  Concentration of Credit Risk
   Year Ended December 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Revenue
    
    
    Accounts ReceivableCompany A
    
    
    9
    %
    
    
    11
    %
    
    
    17
    %
    
    
    14
    %
    
    
    12
    %Company B
    
    
    15
    %
    
    
    10
    
    
    
    *
    
    
    
    *
    
    
    
    *Company C
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    
    10
    %
 
 *
    
    Represented less than 10% Accounts Receivable and Allowance for Doubtful Accounts
  69




---



##### 



Property and Equipment
   Equipment
    
    3 yearsSoftware
    
    1.5 yearsFurniture and fixtures
    
    5 years
  Business Combinations
   Goodwill
   70




---



##### 



Goodwill and Intangibles.)
 Identifiable Intangible Assets
 Goodwill and Intangibles
  Customer relationships
    
    5 - 7 yearsDeveloped technology
    
    4 - 5 yearsNon-compete agreement
    
    1 yearTradenames
    
    4 years
 Impairment of Long-Lived Assets
 Sale of
Subsidiary
 Deferred Financing Costs
  71




---



##### 



Preferred Stock Warrants
   Year ended December 31,2010
    
    
    2009
    
    
    2008Range of assumptions:Risk-free interest rate
    
    
    0.41% - 2.52
    %
    
    
    0.47% - 2.69
    %
    
    
    0.51% - 2.48
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    56% - 57
    %
    
    
    57% - 72
    %
    
    
    59% - 63
    %Expected term (years)
    
    
    1.0 - 5.21
    
    
    
    1.2 - 5.5
    
    
    
    2.2 - 6.4Fair value of stock warrants
    
    $
    5.03 -           $6.28
    
    
    $
    2.64 -           $3.66
    
    
    $
    0.48 -        $1.20
 Revenue Recognition
  
    
    Persuasive evidence of an arrangement.An agreement signed by the Company and by the
customer, in conjunction with a non-cancelable purchase order or executed sales quote from
the customer, is deemed to represent persuasive evidence of an arrangement.
    
    Delivery has occurred.Delivery is deemed to have occurred when the customer is given
electronic access to the licensed software and a license key for the software has been
delivered or made available. If an arrangement contains a requirement to deliver additional
elements essential to the functionality of the delivered element, revenue associated with
the arrangement is recognized when delivery of the final element has occurred.
    
    Fees are fixed or determinable.The Company considers the fee to be fixed or
determinable unless the fee is subject to refund or adjustment or is not payable within
normal payment terms. If the fee is subject to refund or adjustment, revenue is recognized
when the refund or adjustment right lapses. If payment terms exceed the Companys normal
terms, revenue is recognized as the amounts become due and payable or upon the receipt of
cash if collection is not probable.
    
    Collection is probable.Each customer is evaluated for creditworthiness through a
credit review process at the inception of an arrangement. Collection is deemed probable if,
based upon the Companys evaluation, the Company expects that the customer will be able to
pay amounts under the arrangement as payments become due. If it is determined that
collection is not probable, revenue is deferred and recognized upon cash collection.
  72




---



##### 



Software Development Costs
  Deferred Revenue
  73




---



##### 



December 31,2010
    
    
    2009Licenses
    
    $
    25,628
    
    
    $
    19,562Maintenance and professional services
    
    
    33,636
    
    
    
    20,485$
    59,264
    
    
    $
    40,047Current portion
    
    $
    57,437
    
    
    $
    33,806Non-current portion
    
    
    1,827
    
    
    
    6,241$
    59,264
    
    
    $
    40,047
 Cost of Revenue
  Noncontrolling Interests
   74




---



##### 



Income Taxes
    Stock-Based Compensation
  Estimated Fair Value of Share-Based Payments
  Year ended December 31,2010
    
    
    2009
    
    
    2008Average assumptions:Risk-free interest rate
    
    
    1.9
    %
    
    
    1.7
    %
    
    
    1.9
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility
    
    
    61
    %
    
    
    61
    %
    
    
    38
    %Expected term (years)
    
    
    8.31
    
    
    
    6.0
    
    
    
    3.7
 75




---



##### 



Net Income (Loss) Per Common Share
  Year ended December 31,2010
    
    
    2009
    
    
    2008(in thousands except per share data)Net income (loss) attributable to BroadSoft, Inc.
    
    $
    7,992
    
    
    $
    (7,849
    )
    
    $
    (11,236
    )Weighted average basic common shares outstanding
    
    
    16,263
    
    
    
    6,285
    
    
    
    6,208Dilutive effect of stock-based awards
    
    
    2,253
    
    
    NA
    
    NADilutive effect of common stock warrants
    
    
    132
    
    
    NA
    
    NADilutive effect of if-converted preferred shares
    
    
    6,073
    
    
    NA
    
    NAWeighted average diluted common shares outstanding
    
    
    24,721
    
    
    
    6,285
    
    
    
    6,208Earnings (loss) per share:Basic
    
    $
    0.49
    
    
    $
    (1.25
    )
    
    $
    (1.81
    )Diluted
    
    $
    0.32
    
    
    $
    (1.25
    )
    
    $
    (1.81
    )
 76




---



##### 



Year ended December 31,2010
    
    
    2009
    
    
    2008(in thousands)Redeemable convertible preferred stock: *Series B-1
    
    
    
    
    
    
    1,413
    
    
    
    1,413Series C-1
    
    
    
    
    
    
    9,771
    
    
    
    9,771Series D
    
    
    
    
    
    
    805
    
    
    
    805Series E
    
    
    
    
    
    
    417
    
    
    
    10Series E-1
    
    
    
    
    
    
    51
    
    
    
    Warrants on Series C-1 preferred stock **
    
    
    
    
    
    
    46
    
    
    
    46Warrants on common stock
    
    
    
    
    
    
    117
    
    
    
    65Restricted stock units and awards
    
    
    
    
    
    
    143
    
    
    
    48Early exercise shares
    
    
    1
    
    
    
    21
    
    
    
    28Stock options
    
    
    185
    
    
    
    2,841
    
    
    
    2,696
 
 *
    
    All of the redeemable convertible preferred stock automatically converted to common stock upon
the closing of the IPO.**
    
    All of the Series C-1 preferred stock warrants were automatically converted to common stock
warrants upon the closing of the IPO. All of these warrants were exercised during 2010. Foreign Currency
  Recent Accounting Pronouncements
  77




---



##### 



3. Acquisitions
 Casabi
    78




---



##### 



Other current assets
    
    $
    67Property and equipment
    
    
    75Other long term assets
    
    
    20Customer relationships
    
    
    378Developed technology
    
    
    962Goodwill
    
    
    689Total purchase price
    
    $
    2,191
   Packet Island, Inc.
    79




---



##### 



Cash and cash equivalents
    
    $
    805Accounts receivable
    
    
    29Fixed assets and other current assets
    
    
    35Accounts payable and accrued expenses
    
    
    (64
    )Customer relationships
    
    
    100Developed technology
    
    
    300Goodwill
    
    
    250Total purchase price
    
    $
    1,455
   Sylantro Systems Corporation
   80




---



##### 



Cash and cash equivalents
    
    $
    635Accounts receivable
    
    
    2,698Prepaid expenses and other assets
    
    
    779Property and equipment
    
    
    248Accounts payable and accrued expenses
    
    
    (2,636
    )Accrued severance and contractual liabilities
    
    
    (1,510
    )Deferred revenue
    
    
    (2,337
    )Bad debt
    
    
    (1,227
    )Customer relationships
    
    
    2,200Developed technology
    
    
    300Trade name
    
    
    100Goodwill
    
    
    3,430Total purchase price
    
    $
    2,680
    M6 (application server business of GENBAND Inc.)
   81




---



##### 



Accounts receivable
    
    $
    1,616Other current assets
    
    
    119Property and equipment
    
    
    27Accounts payable and accrued expenses
    
    
    (359
    )Deferred revenue
    
    
    (1,694
    )Customer relationships
    
    
    817Developed technology
    
    
    182Non-compete agreement
    
    
    111Goodwill
    
    
    179Total purchase price
    
    $
    998
   Pro Forma Financial Information for Acquisitions of Packet Island, Sylantro, M6 and Casabi (unaudited)
   Years ended December 31,2010
    
    
    2009
    
    
    2008(unaudited)Revenue
    
    $
    97,659
    
    
    $
    71,708
    
    
    $
    77,736Net income (loss)
    
    
    6,463
    
    
    
    (13,073
    )
    
    
    (29,732
    )Net income (loss) per common share, basic
    
    $
    0.40
    
    
    $
    (2.08
    )
    
    $
    (4.79
    )Net income (loss) per common share,
diluted
    
    $
    0.26
    
    
    $
    (2.08
    )
    
    $
    (4.79
    )
  4. Sale of Subsidiary
  82




---



##### 



5. Goodwill and Intangibles
   Balance as of December 31, 2008, gross
    
    $
    3,969Accumulated impairment loss
    
    
    Balance as of December 31, 2008, net
    
    
    3,969Increase in goodwill related to acquisitions
    
    
    905Purchase accounting adjustments
    
    
    (146
    )Balance as of December 31, 2009, gross
    
    
    4,728Accumulated impairment loss
    
    
    Balance as of December 31, 2009, net
    
    
    4,728Increase in goodwill related to acquisitions
    
    
    689Purchase accounting adjustments for contingent consideration
    
    
    809Balance as of December 31, 2010, net
    
    
    6,226Accumulated impairment loss
    
    
    Balance as of December 31, 2010, gross
    
    $
    6,226
   As of December 31, 2010
    
    
    As of December 31, 2009Gross Carrying
    
    
    Accumulated
    
    
    
    
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Net Amount
    
    
    Amount
    
    
    Amortization
    
    
    Net AmountCustomer relationships
    
    $
    3,495
    
    
    $
    1,190
    
    
    $
    2,305
    
    
    $
    3,117
    
    
    $
    630
    
    
    $
    2,487Developed technology
    
    
    1,715
    
    
    
    389
    
    
    
    1,326
    
    
    
    782
    
    
    
    181
    
    
    
    601Non-compete agreement
    
    
    111
    
    
    
    111
    
    
    
    
    
    
    
    111
    
    
    
    111
    
    
    
    Trade name
    
    
    129
    
    
    
    51
    
    
    
    78
    
    
    
    100
    
    
    
    25
    
    
    
    75Total
    
    $
    5,450
    
    
    $
    1,741
    
    
    $
    3,709
    
    
    $
    4,110
    
    
    $
    947
    
    
    $
    3,163
  83




---



##### 



2011
    
    $
    9442012
    
    
    8172013
    
    
    6962014
    
    
    6622015
    
    
    590Total amortization expense
    
    $
    3,709
 6. Property and Equipment
 Property and Equipment
  December 31,2010
    
    
    2009Equipment
    
    $
    4,857
    
    
    $
    3,236Software
    
    
    1,575
    
    
    
    1,078Furniture and fixtures
    
    
    545
    
    
    
    339Leasehold improvements
    
    
    2,090
    
    
    
    2,1109,067
    
    
    
    6,763Less accumulated depreciation and amortization
    
    
    (5,477
    )
    
    
    (5,200
    )Property and equipment, net
    
    $
    3,590
    
    
    $
    1,563
  Sale of Subsidiary
 7. Accounts payable and other current liabilities
  December 31,2010
    
    
    2009Accounts payable and accrued expenses
    
    $
    5,403
    
    
    $
    5,905Accrued compensation
    
    
    6,284
    
    
    
    4,704Accrued royalties
    
    
    373
    
    
    
    803Other
    
    
    379
    
    
    
    491Total
    
    $
    12,439
    
    
    $
    11,903
 8. Software Licenses
  84




---



##### 



9. Income Taxes
  Year ended December 31,2010
    
    
    2009
    
    
    2008Income (loss) before income taxes:United States
    
    $
    9,619
    
    
    $
    (8,118
    )
    
    $
    (12,335
    )Foreign
    
    
    (454
    )
    
    
    1,598
    
    
    
    2,051Income (loss) before income taxes
    
    
    9,165
    
    
    
    (6,520
    )
    
    
    (10,284
    )Provision for income taxes:Current:Federal and state
    
    $
    385
    
    
    $
    40
    
    
    $
    64Foreign
    
    
    863
    
    
    
    1,224
    
    
    
    1,042Total current
    
    $
    1,248
    
    
    $
    1,264
    
    
    $
    1,106Deferred:Federal and state
    
    $
    24
    
    
    $
    13
    
    
    $
    Foreign
    
    
    (103
    )
    
    
    56
    
    
    
    (154
    )Total deferred
    
    
    (79
    )
    
    
    69
    
    
    
    (154
    )Provision for income taxes
    
    $
    1,169
    
    
    $
    1,333
    
    
    $
    952
 85




---



##### 



December 31,2010
    
    
    2009Deferred tax assets:Net operating loss carry-forward
    
    $
    24,137
    
    
    $
    29,285Deferred revenue
    
    
    3,599
    
    
    
    2,788Depreciation
    
    
    715
    
    
    
    479Research tax credit carry-forward
    
    
    1,648
    
    
    
    1,784Other
    
    
    4,339
    
    
    
    3,789Total deferred tax assets
    
    
    34,438
    
    
    
    38,125Valuation allowance
    
    
    (33,499
    )
    
    
    (37,133
    )Net deferred tax assets
    
    
    939
    
    
    
    992Deferred tax liabilitiesAcquired intangibles
    
    
    (780
    )
    
    
    (915
    )Other
    
    
    (65
    )
    
    
    (67
    )Total deferred tax liabilities
    
    $
    (845
    )
    
    $
    (982
    )Net deferred tax assets
    
    
    94
    
    
    
    10
    86




---



##### 



Year ended December 31,2010
    
    
    2009
    
    
    2008Tax benefit based on federal statutory rate
    
    $
    3,113
    
    
    $
    (2,218
    )
    
    $
    (3,495
    )State taxes (benefit)
    
    
    369
    
    
    
    (230
    )
    
    
    (296
    )Foreign rate differential
    
    
    348
    
    
    
    591
    
    
    
    373Permanent items
    
    
    104
    
    
    
    260
    
    
    
    456Stock based compensation
    
    
    818
    
    
    
    566
    
    
    
    325Change in income tax valuation allowance
    
    
    (3,633
    )
    
    
    2,896
    
    
    
    4,178Other
    
    
    50
    
    
    
    (532
    )
    
    
    (589
    )Provision for income taxes
    
    $
    1,169
    
    
    $
    1,333
    
    
    $
    952
 Accounting for Uncertainty in Income Taxes
   87




---



##### 



Year ended December 31,2010
    
    
    2009
    
    
    2008Unrecognized tax benefits balance at January 1,
    
    $
    441
    
    
    $
    441
    
    
    $
    441Gross increase for tax positions of prior years
    
    
    177
    
    
    
    
    
    
    
    Unrecognized tax benefits balance at December 31,
    
    $
    618
    
    
    $
    441
    
    
    $
    441
   10. Borrowings
 Financing Facilities
    88




---



##### 



Installment Bank Loans
     2011
    
    $
    1,1702012
    
    
    800Total
    
    $
    1,970
 89




---



##### 



11. Stockholders Equity (Deficit)
 Reverse Stock Split and Public Offerings
     Preferred Stock
  90




---



##### 



Warrants
 Preferred Stock Warrants
  Common Stock Warrants
  12. Stock-based Compensation
 Equity Incentive Plans
   December 31,2010
    
    
    2009
    
    
    2008Stock options
    
    $
    1,488
    
    
    $
    3,541
    
    
    $
    2,600Restricted stock awards
    
    
    105
    
    
    
    88
    
    
    
    316Restricted stock units
    
    
    1,415
    
    
    
    
    
    
    
    Total recognized stock compensation expense
    
    $
    3,008
    
    
    $
    3,629
    
    
    $
    2,916
 91




---



##### 



Stock Options
  Weighted


AggregateWeighted
    

Average


IntrinsicNumber of
    
    
    Average
    

Remaining


Value as ofOptions
    
    
    Exercise
    

Contractual


DecemberOutstanding
    
    
    Price
    

Term (Years)


31, 2010Balance, December 31, 2009
    
    
    2,841,096
    
    
    $
    2.26Granted
    
    
    428,933
    
    
    
    8.93Exercised
    
    
    (353,317
    )
    
    
    2.16Forfeited
    
    
    (61,763
    )
    
    
    4.99Balance, December 31, 2010
    
    
    2,854,949
    
    
    $
    3.22
    

7.12


$59.0 millionVested at December 31, 2010
    
    
    1,977,388
    
    
    $
    2.29
    

7.04


$56.7 millionExerciseable at December 31, 2010
    
    
    2,468,856
    
    
    $
    2.24
    

6.50


$53.2 million
    Options OutstandingWeighted
    
    

    Options VestedWeighted
    
    
    Average
    
    
    
    
    
    
    WeightedAverage
    
    
    Remaining
    
    
    
    
    
    
    AverageRange of Exercise
    
    
    Number
    
    
    Exercise
    
    
    Contractual Term
    
    
    Number
    
    
    ExercisePrices
    
    
    Outstanding
    
    
    Price
    
    
    (Years)
    
    
    Vested
    
    
    Price$0.78$1.32
    
    
    
    410,977
    
    
    $
    0.81
    
    
    
    2.18
    
    
    
    410,977
    
    
    $
    0.81$2.40$2.40
    
    
    
    1,925,639
    
    
    
    2.40
    
    
    
    7.90
    
    
    
    1,440,370
    
    
    
    2.40$3.42$8.60
    
    
    
    153,484
    
    
    
    6.18
    
    
    
    5.38
    
    
    
    95,546
    
    
    
    4.78$9.00$9.00

    
    
    
    353,772
    
    
    
    9.00
    
    
    
    9.57
    
    
    
    20,467
    
    
    
    9.00$9.36$9.36
    
    
    
    11,077
    
    
    
    9.36
    
    
    
    1.25
    
    
    
    10,028
    
    
    
    9.36$0.78$9.36
    
    
    
    2,854,949
    
    
    $
    3.22
    
    
    
    7.12
    
    
    
    1,977,388
    
    
    $
    2.29
 Restricted Stock Units
  Number of
    
    
    WeightedRestricted
    
    
    Average GrantStock Units
    
    
    Date Fair ValueBalance, December 31, 2009
    
    
    197,630
    
    
    $
    3.68Granted
    
    
    308,190
    
    
    
    7.79Vested
    
    
    (212,389
    )
    
    
    3.91Forfeited
    
    
    (10,391
    )
    
    
    7.29Balance, December 31, 2010
    
    
    283,040
    
    
    $
    7.87
  92




---



##### 



Stock Option Repricing
  Stock Option Exchange
  Tax Benefits
   93




---



##### 



13. Commitments and Contingencies
 Leases
   OperatingLeasesYears Ending December 31:2011
    
    $
    1,3182012
    
    
    1,1712013
    
    
    1,1512014
    
    
    8972015 and thereafter
    
    
    4,127Total future minimum lease payments
    
    $
    8,664
 Indemnifications and Contingencies
    94




---



##### 



14. Segment and Geographic Information
   Year ended December 31,2010
    
    
    2009
    
    
    2008Revenues:United States
    
    $
    51,238
    
    
    $
    35,984
    
    
    $
    27,780EMEA
    
    
    23,617
    
    
    
    17,969
    
    
    
    21,078APAC
    
    
    14,313
    
    
    
    10,538
    
    
    
    7,797Other
    
    
    6,455
    
    
    
    4,396
    
    
    
    5,174$
    95,623
    
    
    $
    68,887
    
    
    $
    61,829
 December 31,2010
    
    
    2009Long-Lived Assets, netUnited States
    
    $
    5,375
    
    
    $
    4,861EMEA
    
    
    505
    
    
    
    41APAC
    
    
    70
    
    
    
    217Other
    
    
    187
    
    
    
    484$
    6,137
    
    
    $
    5,603
 15. 401(k) Defined Contribution Plan
  95




---



##### 



16. Quarterly Financial Data  (in thousands, except per share data)
 March
    
    
    June
    
    
    September
    
    
    December31, 2010
    
    
    30, 2010
    
    
    30, 2010
    
    
    31, 2010Total Revenues
    
    $
    17,805
    
    
    $
    19,771
    
    
    $
    22,273
    
    
    $
    35,774Gross profit
    
    
    13,011
    
    
    
    14,711
    
    
    
    17,384
    
    
    
    30,475(Loss) income from operations
    
    
    (1,854
    )
    
    
    (1,559
    )
    
    
    1,459
    
    
    
    11,998Net (loss) income  attributable
to BroadSoft, Inc.
    
    
    (2,624
    )
    
    
    (1,774
    )
    
    
    1,209
    
    
    
    11,181Net (loss) income per share:Basic
    
    
    (0.38
    )
    
    
    (0.20
    )
    
    
    0.05
    
    
    
    0.45Diluted
    
    
    (0.38
    )
    
    
    (0.20
    )
    
    
    0.05
    
    
    
    0.41
 March
    
    
    June
    
    
    September
    
    
    December31, 2009
    
    
    30, 2009
    
    
    30, 2009
    
    
    31, 2009Total Revenues
    
    $
    13,660
    
    
    $
    17,732
    
    
    $
    18,194
    
    
    $
    19,301Gross profit
    
    
    9,429
    
    
    
    12,747
    
    
    
    13,943
    
    
    
    15,394(Loss) income from operations
    
    
    (4,655
    )
    
    
    (1,923
    )
    
    
    362
    
    
    
    1,165Net (loss) income  attributable
to BroadSoft, Inc.
    
    
    (5,233
    )
    
    
    (2,642
    )
    
    
    (349
    )
    
    
    375Net (loss) income per share:Basic
    
    
    (0.84
    )
    
    
    (0.42
    )
    
    
    (0.06
    )
    
    
    0.06Diluted
    
    
    (0.84
    )
    
    
    (0.42
    )
    
    
    (0.06
    )
    
    
    0.05
 96




---



##### 



Item 9.

    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  Item 9A.

    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  97




---



##### 



Managements Annual Report on Internal Control over Financial Reporting and Attestation Report of
the Registered Public Accounting Firm
  Changes in Internal Control over Financial Reporting
  Item 9B.
    
    Other Information
  98




---



##### 



PART III
  Item 10.

    Directors, Executive Officers and Corporate Governance
  Item 11.

    Executive Compensation
  Item 12.

    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  Item 13.

    Certain Relationships and Related Transactions, and Director Independence
  Item 14.
Principal Accountant Fees and Services
  99




---



##### 



PART IV
 Item 15.

    Exhibits and Financial Statement Schedules
 (a) Financial Statements
  (b) Financial Statement Schedules
   SCHEDULE II  CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
 Balance at
    
    
    Additions Charged
    
    
    
    
    
    
    Additions Acquired from
    
    
    Balance at End ofBeginning of Year
    
    
    to Expense(1)
    
    
    Deductions(2)
    
    
    Business Combinations
    
    
    YearAllowance for doubtful accounts:Year ended December 31, 2008
    
    $
    112
    
    
    $
    14
    
    
    $
    (15
    )
    
    $
    
    
    
    $
    111Year ended December 31, 2009
    
    
    111
    
    
    
    58
    
    

    
    
    
    
    
    
    
    
    $
    169Year ended December 31, 2010
    
    
    169
    
    
    
    
    
    
    
    (131
    )
    
    
    
    
    
    $
    38Allowance for deferred tax assets:Year ended December 31, 2008
    
    $
    26,175
    
    
    $
    4,179
    
    
    $
    
    
    
    $
    3,482
    
    
    $
    33,836Year ended December 31, 2009
    
    
    33,836
    
    
    
    2,896
    
    
    
    
    
    
    
    401
    
    
    $
    37,133Year ended December 31, 2010
    
    
    37,133
    
    
    
    
    
    
    
    (3,634
    )
    
    
    
    
    
    $
    33,499
 
 (1)
    
    Amount represents charges to bad debt and increase to our valuation allowance.(2)
    
    Amount represents recoveries of accounts receivable previously charged to  the allowance and utilization of net operations losses against valuation allowance. (c) Exhibits
   100




---



##### 



SIGNATURES
  BROADSOFT, INC.By:
    /s/ JAMES A. THOLENJames A. TholenChief Financial Officer March 7, 2011  Signatures
    
    Title
    
    Date/s/ MICHAEL TESSLER
Michael Tessler
    
    President, Chief Executive Officer
and Director
(Principal Executive Officer)
    
    March 7, 2011/s/ JAMES A. THOLEN
James A. Tholen
    
    Chief Financial Officer (Principal
Financial and
Accounting Officer)
    
    March 7, 2011/S/ ROBERT P. GOODMAN
Robert P. Goodman
    
    Director and Chairman of the Board
    
    March 7, 2011/S/ JOHN J. GAVIN, JR
John J. Gavin, Jr.
    
    Director
    
    March 7, 2011/S/ DOUGLAS L. MAINE
Douglas L. Maine
    
    Director
    
    March 7, 2011/S/ JOHN D. MARKLEY, JR
John D. Markley, Jr.
    
    Director
    
    March 7, 2011/S/ DAVID BERNARDI
David Bernardi
    
    Director
    
    March 7, 2011/S/ CHARLES L. ILL, III
Charles L. Ill, III
    
    Director
    
    March 7, 2011
 101




---



##### 



Exhibit Index
 ExhibitNumber
    
    Description of Document2.1 (1)
    
    Asset Purchase Agreement by and among the Registrant, BroadSoft M6,
LLC and GENBAND Inc., dated as of August 14, 2008.2.2 (2)
    
    Amendment to Asset Purchase Agreement and Disclosure Schedule by
and among the Registrant, BroadSoft M6, LLC and GENBAND Inc., dated
as of August 27, 2008.2.3 (3)
    
    Agreement and Plan of Merger and Reorganization by and among the
Registrant, BroadSoft Sylantro, Inc., Sylantro Systems Corporation
and Shareholder Representative Services LLC, dated as of December
8, 2008.2.4 (4)
    
    Asset Purchase Agreement by and between Casabi, Inc. and BroadSoft
Casabi, LLC, dated as of October 12, 2010.3.1 (5)
    
    Amended and Restated Certificate of Incorporation of the Registrant.3.2 (6)
    
    Amended and Restated Bylaws of the Registrant.4.1 (7)
    
    Specimen Stock Certificate evidencing shares of common stock.4.2 (8)
    
    Fourth Amended and Restated Registration Rights Agreement, dated as
of June 26, 2007.4.3 (9)
    
    First Amendment to Fourth Amended and Restated Registration Rights
Agreement, dated as of November 25, 2008.4.4 (10)
    
    Second Amendment to Fourth Amended and Restated Registration Rights
Agreement, dated as of December 23, 2008.4.5 (11)
    
    Third Amendment to Fourth Amended and Restated Registration Rights
Agreement, dated as of October 19, 2009.4.6 (12)
    
    Fourth Amendment to Fourth Amended and Restated Registration Rights
Agreement, dated as of March 26, 2010.10.1 (13)
    
    BroadSoft, Inc. 1999 Stock Incentive Plan, as amended.10.2 (14)
    
    Form of Stock Option Grant Agreement for BroadSoft, Inc. 1999 Stock
Incentive Plan.10.3 (15)
    
    Form of Common Stock Purchase Agreement and Stock Restriction
Agreement for BroadSoft, Inc. 1999 Stock Incentive Plan.10.4 (16)
    
    Stock Restriction Agreement by and between James A. Tholen and the
Registrant, dated as of August 30, 2007.
 102




---



##### 



ExhibitNumber
    
    Description of Document10.5
    
    BroadSoft, Inc. Amended and Restated 2009 Equity Incentive Plan.10.6 (17)
    
    Form of Stock Option Agreement for BroadSoft, Inc. Amended and
Restated 2009 Equity Incentive Plan.10.7 (18)
    
    Form of Restricted Stock Unit Award Agreement for BroadSoft, Inc.
Amended and Restated 2009 Equity Incentive Plan.10.8 (19)
    
    Form of Indemnity Agreement entered into between the Registrant and
certain of its directors and its executive officers.10.9 (20)
    
    Form of Indemnity Agreement entered into between the Registrant and
certain of its directors.10.10 (21)
    
    Form of Executive Change in Control Severance Benefits Agreement
entered into between the Registrant and its executive officers.10.16 (22)
    
    Sublease Agreement, by and between Marriott International
Administrative Services, Inc. and the Registrant, dated as of April
13, 2010.10.17 (23)
    
    BroadSoft, Inc. Non-Employee Director Compensation Policy.21.1
    
    Subsidiaries of the Registrant.23.1
    
    Consent of PricewaterhouseCoopers LLP, Independent Registered
Public Accounting Firm.31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to Section 906 of Sarbanes Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes Oxley Act of 2002.
 
 (1)
    
    Filed as exhibit 2.1 to the Registrants Registration
Statement on Form S-1 (Registration No. 333-165484)
filed with the Securities and Exchange Commission on
March 15, 2010 and incorporated herein by reference.(2)
    
    Filed as exhibit 2.2 to the Registrants Registration
Statement on Form S-1 (Registration No. 333-165484)
filed with the Securities and Exchange Commission on
March 15, 2010 and incorporated herein by reference.(3)
    
    Filed as exhibit 2.3 to the Registrants Registration
Statement on Form S-1 (Registration No. 333-165484)
filed with the Securities and Exchange Commission on
March 15, 2010 and incorporated herein by reference. 103




---



##### 



(4)
    
    Filed as exhibit 99.1 to the Registrants Current
Report on Form 8-K (File No. 001-34777) filed with the
Securities and Exchange Commission on October 29, 2010
and incorporated herein by reference.(5)
    
    Filed as exhibit 3.1 to the Registrants Current
Report on Form 8-K (File No. 001-34777) filed with the
Securities and Exchange Commission on June 25, 2010
and incorporated herein by reference.(6)
    
    Filed as exhibit 3.6 to the Registrants Registration
Statement on Form S-1 (Registration No. 333-165484)
filed with the Securities and Exchange Commission on
March 15, 2010 and incorporated herein by reference.(7)
    
    Filed as exhibit 4.1 to the Registrants Registration
Statement on Form S-1 (Registration No. 333-165484)
filed with the Securities and Exchange Commission on
June 1, 2010 and incorporated herein by reference.(8)
    
    Filed as exhibit 4.5 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on March 15, 2010 and incorporated herein by
reference.(9)
    
    Filed as exhibit 4.6 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on March 15, 2010 and incorporated herein by
reference.(10)
    
    Filed as exhibit 4.7 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on March 15, 2010 and incorporated herein by
reference.(11)
    
    Filed as exhibit 4.8 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on March 15, 2010 and incorporated herein by
reference.(12)
    
    Filed as exhibit 4.9 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on April 16, 2010 and incorporated herein by
reference.(13)
    
    Filed as exhibit 10.1 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on March 15, 2010 and incorporated herein by
reference.(14)
    
    Filed as exhibit 10.2 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on March 15, 2010 and incorporated herein by
reference.(15)
    
    Filed as exhibit 10.3 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on March 15, 2010 and incorporated herein by
reference. 104




---



##### 



(16)
    
    Filed as exhibit 10.4 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on March 15, 2010 and incorporated herein by
reference.(17)
    
    Filed as exhibit 10.6 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on June 1, 2010 and incorporated herein by
reference.(18)
    
    Filed as exhibit 10.7 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on June 1, 2010 and incorporated herein by
reference.(19)
    
    Filed as exhibit 10.8 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on March 15, 2010 and incorporated herein by
reference.(20)
    
    Filed as exhibit 10.9 to the Registrants Registration Statement on
Form S-1 (Registration No. 333-165484) filed with the Securities and
Exchange Commission on March 15, 2010 and incorporated herein by
reference.(21)
    
    Filed as exhibit 10.10 to the Registrants Registration Statement
on Form S-1 (Registration No. 333-165484) filed with the Securities
and Exchange Commission on March 15, 2010 and incorporated herein by
reference.(22)
    
    Filed as exhibit 10.14 to the Registrants Registration Statement
on Form S-1 (Registration No. 333-165484) filed with the Securities
and Exchange Commission on March 15, 2010 and incorporated herein by
reference.(23)
    
    Filed as exhibit 10.15 to the Registrants Registration Statement
on Form S-1 (Registration No. 333-165484) filed with the Securities
and Exchange Commission on March 15, 2010 and incorporated herein by
reference.(24)
    
    Filed as exhibit 10.16 to the Registrants Registration Statement
on Form S-1 (Registration No. 333-165484) filed with the Securities
and Exchange Commission on March 15, 2010 and incorporated herein by
reference.(25)
    
    Filed as exhibit 10.17 to the Registrants Registration Statement
on Form S-1 (Registration No. 333-165484) filed with the Securities
and Exchange Commission on March 15, 2010 and incorporated herein by
reference.(26)
    
    Filed as exhibit 10.18 to the Registrants Registration Statement
on Form S-1 (Registration No. 333-165484) filed with the Securities
and Exchange Commission on April 16, 2010 and incorporated herein by
reference. 105




---



##### 



(27)
    
    Filed as exhibit 10.19 to the Registrants Registration Statement
on Form S-1 (Registration No. 333-165484) filed with the Securities
and Exchange Commission on April 16, 2010 and incorporated herein by
reference.(28)
    
    Filed as exhibit 10.20 to the Registrants Registration Statement
on Form S-1 (Registration No. 333-165484) filed with the Securities
and Exchange Commission on June 1, 2010 and incorporated herein by
reference. 106