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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
 Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal
    Year Ended September 30, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number
    000-27241
 KEYNOTE SYSTEMS, INC.
 (Exact name of Registrant as
    specified in its charter)
  Delaware

94-3226488(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification No.)777 Mariners Island Blvd,

94404San Mateo, CA

(Zip Code)(Address of principal executive
    offices)   Registrants telephone number, including area code:
 (650) 403-2400
  Securities registered pursuant to Section 12(b) of the
    Act:
   Title of Each Class:

Name of Each Exchange on Which Registered:Common Stock, $0.001 Par Value Per Share, and the
    Associated Stock Purchase Rights

The NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE:




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##### 





KEYNOTE
    SYSTEMS, INC.
    ANNUAL REPORT ON
    FORM 10-K
    FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010
    TABLE OF CONTENTS
  PagePART IITEM 1:


Business


4ITEM 1A:


Risk Factors


14ITEM 1B:


Unresolved Staff Comments


23ITEM 2:


Properties


23ITEM 3:


Legal Proceedings


23ITEM 4:


(Removed and Reserved)


24ITEM 4A:


Executive Officers


25PART IIITEM 5:


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


27ITEM 6:


Selected Consolidated Financial Data


30ITEM 7:


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


31ITEM 7A:


Quantitative and Qualitative Disclosures About
    Market Risk


53ITEM 8:


Financial Statements and Supplementary Data


54ITEM 9:


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


90ITEM 9A:


Controls and Procedures


90ITEM 9B:


Other Information


90PART IIIITEM 10:


Directors, Executive Officers and Corporate
    Governance


91ITEM 11:


Executive Compensation


91ITEM 12:


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


91ITEM 13:


Certain Relationships and Related Transactions,
    and Director Independence


91ITEM 14:


Principal Accounting Fees and Services


91PART IVITEM 15:


Exhibits, Financial Statement Schedules


91Signatures


94EX-21.01EX-23.01EX-31.1EX-31.2EX-32.1EX-32.2




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FORWARD-LOOKING
    STATEMENTS
  Except for historical information, this annual report
    contains forward-looking statements within the meaning of
    Section 27A of the Securities Act of 1933 and
    Section 21E of the Securities Exchange Act of 1934. These
    forward-looking statements involve risks and uncertainties,
    including, among other things, statements regarding our
    anticipated costs and expenses and revenue mix. These
    forward-looking statements include, among others, statements
    including the words expects,
    anticipates, intends,
    believes and similar language. Our actual results
    may differ significantly from those projected in the
    forward-looking statements. Factors that might cause or
    contribute to these differences include, but are not limited to,
    those discussed in the section entitled Risk Factors
    in Item 1A of Part I of this report, and elsewhere in
    this report. You should also carefully review the risks
    described in other documents we file from time to time with the
    Securities and Exchange Commission, including the quarterly
    reports on
    Form 10-Q
    and current reports on
    Form 8-K
    that we may file in fiscal 2011. You are cautioned not to place
    undue reliance on the forward-looking statements, which speak
    only as of the date of this annual report on Form
    10-K. Except
    as required by law, we undertake no obligation to publicly
    release any revisions to the forward-looking statements or
    reflect events or circumstances after the date of this document.
    No person is authorized to make any forward-looking statements
    on behalf of Keynote Systems, Inc. other than its authorized
    officers and then only through its external communications
    processes. Accordingly, you should not rely on any
    forward-looking statements regarding Keynote Systems, Inc. from
    any other sources and we undertake no obligation to correct or
    clarify any such forward-looking statements, except as required
    by federal securities law.
  ® ® ® ® ® ® ® ® ® ® ® ® ® tm tm tm
 3




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##### Table of Contents



PART I
  Item 1.
    Business  Overview
      
   Internet
    Cloud Products and Services
   4




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Transaction Perspective
  Application Perspective
  Streaming Perspective
  Private Agents end-to-end
  Performance Scoreboard
  Enterprise Adapters
  Red Alert
  LoadPro
 5




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Test Perspective
  Keynote Internet Testing Environment (KITE) point-and-click
    
    Performance Insightsdeliver a blend of Keynotes
    Web site monitoring software and custom consulting, tailored to
    our customers specific needs. Using Keynotes
    measurement technology, we measure our customers business
    critical applications to provide in-depth analysis of their Web
    site. Based on this data, our consultants prepare a monthly
    management report with key performance indicators, as well as
    monitoring trends and in-depth diagnosis of issues and events.
    Web Site Performance Assessmentmonitors Web site
    performance from the end-users perspective to measure in
    real time an
    e-business
    at the application, transaction, and infrastructure level.
    Keynotes consultants take this data, analyze it and
    deliver detailed input on strategies our customers can deploy
    immediately to improve Web performance.
    Automated Reportingeliminates manual effort required to
    customize, format and display performance data from our products
    and services. Automated Reporting
    e-mails
    reports, including performance metrics, SLO compliance,
    competitive intelligence, and industry benchmarking, at
    requested intervals.
    Custom Competitive Researchprovides Web site monitoring
    services with a clear picture of how a Web site compares to
    peers and provides actionable recommendations for
    differentiation from the peer group.  Mobile
    Cloud Products and Services
    System Integrated Test Environment (SITE) System
  GlobalRoamer
 6




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Mobile Device Perspective (MDP)
  Mobile Web Perspective (MWP)
  Mobile Internet Testing Environment (MITE)
    
    Professional Servicesto improve operational and business
    performance.
    Mobile Competitive Monitoring and Analysisto provide a
    comprehensive view of performance and end-user experience,
    benchmarked against the competition.
    Mobile Insightsto provide comprehensive data from an
    end-users perspective, along with detailed analysis and
    recommendations based on Keynotes collective experience in
    the mobile market.  Real User
    Experience Testing
    WebEffective
 7




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Visitor Insights
  Custom Research Products
  
    Mobile Web UX (User Experience) Testingefficiently
    assesses the likely performance of a Web site as accessed by
    iPhone users utilizing proven online research methodologies and
    Keynotes WebEffective software platform.
    Competitive Intelligence Researchprovides detailed
    analysis on competitive Web sites, along with actionable
    recommendations that could help differentiate a Web site from
    its competition.
    Brand and Value Proposition Researchis a custom
    engagement that explores the customers perception of brand
    in the marketplace, isolating the online experience to uncover
    how exposure to a Web site impacts brand image 
    before and after customers interact with a Web site.
    Web Site Design Researchprovides actionable insights for
    new Web site prototype and concept ideas, releasing new products
    or pilot-testing new services before they are put into
    development.
    Web Site UX (User Experience) Assessment Researchprovides a clear picture of how customers are actually
    experiencing a Web site. The research provides insights into how
    to eliminate obstacles that cause customers to leave a Web site,
    provides actionable recommendations on how to acquire more
    customers at a lower cost, and drive sales by creating a
    user-friendly experience.
    Customer Acquisition Researchenables our customers to
    follow panelists as they seek information and products on the
    Web, without directing them to a specific Web site. By learning
    how users navigate the Web and perform transactions, our
    customers can determine if they are reaching users in the most
    effective way.
    Continuous Benchmarking Researchestablishes key metrics
    to assess the effectiveness of a Web site over an extended
    period of time. The research enables customers to determine Web
    site improvements that need to be made and, after
    implementation, the effect of the improvements.  Keynote
    Global Monitoring Network
    Measurement
    and Data Collection Infrastructure
  and/or
   8




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e-mail
    Operations
    and Data Centers
    Reporting
    and Analysis Tools
    
    SMS and Email Alerts.  Our customers can be
    notified by email, text message or pager when download times
    exceed a particular value in specific cities or error counts
    indicate that a Web site or application is unresponsive.
    Daily Email Reports.  Our customers can receive
    a daily email that summarizes the performance and availability
    of measured Web sites and applications, with comparisons to
    industry averages over the same time period.
    Web-Based Analysis.  Using their Web browsers
    and a password, our customers can access our online dashboard,
    MyKeynote, to retrieve, view and analyze measurement data in
    multiple formats.
    Data APIs.  Our customers can retrieve
    measurement data through an API, or through bulk file transfers
    using an industry-standard file-transfer protocol. This allows
    our customers to incorporate our measurement data within their
    own custom data-analysis applications. 9




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Customers
       Business-to-Business
          Sales,
    Marketing and Customer Support
  Sales
    e-business
  Marketing
  e-business
    Customer
    Support and Maintenance
   10




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Development
    Competition
           11




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Intellectual
    Property
    Intellectual
    Property Assets
  ® ® ® ® ® ® ® ® ® ® ® ® ® tm tm tm
      Protection
    of Our Intellectual Property
       12




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Licensed
    Technology
    Foreign
    and Domestic Operations and Geographic Data
    Form 10-K.
  Employees
    About
    Us
  (650) 403-2400. www.keynote.com Form 10-K, Form 10-Q, Form 8-K,
 13




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Item 1A.
    Risk
    Factors  Our
    quarterly financial results are subject to significant
    fluctuations, and if our future results are below the
    expectations of investors, the price of our common stock may
    decline.
    
    Fluctuations of foreign exchange rates;
    The effect of global economic conditions on customers and
    partners;
    The rate of new and renewed subscriptions for our services,
    particularly large customers;
    The amount and timing of any reductions or increases by our
    customers in their usage of our products and services;
    Our ability to increase the number of Web sites we measure and
    the scope of products and services we offer our existing
    customers in a particular quarter;
    The timing and service period of orders received during a
    quarter, especially from new customers;
    Our ability to successfully introduce new products and services
    to offset any reductions in revenue from products and services
    that are not as widely used or that are experiencing decreased
    demand such as some of our Internet Cloud services;
    The level of sales of our Mobile Cloud products and services and
    the timing of customer acceptance during the period;
    The timing and amount of professional services revenue, which is
    difficult to predict because of its dependence on the number of
    professional services engagements in any given period, the size
    of these engagements, and our ability to continue our existing
    engagements and secure new engagements from customers;
    The timing and amount of operating costs, including unforeseen
    or unplanned operating expenses, sales and marketing
    investments, and capital expenditures;
    Seasonal factors, such as our LoadPro services which are
    typically higher in our first fiscal quarter due to customers
    preparing their Web sites for the holiday buying season;
    Future accounting pronouncements and changes in accounting
    policies;
    Future macroeconomic conditions in our domestic and
    international markets, as well as the general level of
    discretionary IT spending;
    The timing and amount, if any, of impairment charges related to
    potential write down of acquired assets in acquisitions or
    charges related to the amortization of intangible assets from
    acquisitions; and
    The cost associated with and the integration of future
    acquisitions or divestures.  period-to-period
  Our
    business, which includes our operating results and financial
    condition, is susceptible to additional risks associated with
    international operations.
   14




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non-United non-United
    
    currency exchange rate fluctuations, primarily the Euro;
    seasonal fluctuations in purchasing patterns;
    unexpected changes in regulatory requirements;
    maintaining and servicing computer systems in distant locations;
    longer accounts receivable payment cycles and difficulties in
    collecting accounts receivable;
    difficulties in managing and staffing international operations;
    potentially adverse tax consequences, including restrictions on
    the repatriation of earnings;
    the burdens of complying with a wide variety of foreign laws;
    difficulties in establishing and enforcing our intellectual
    property rights in some countries; and
    political or economic instability, war or terrorism in the
    countries where we are doing business.  e-business
  We
    have incurred in the past and may, in the future, incur losses,
    and we may not sustain profitability.
   15




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The
    success of our business depends on maintaining a large customer
    base, either by customers renewing their subscriptions for our
    products and services and purchasing additional products and
    services or by obtaining new customers.
  and/or
    If our
    Mobile Cloud products and services decline, we may not be able
    to grow our revenue and our results of operations will be
    harmed.
    The
    inability of our products and services to perform properly could
    result in loss of or delay in revenue, injury to our reputation
    or other harm to our business.
      A
    disruption to our global monitoring network infrastructure could
    impair our ability to serve and retain existing customers or
    attract new customers.
   16




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A
    limited number of customers account for a significant portion of
    our revenue, and the loss of a major customer could harm our
    operating results.
    Our
    investment in sales and marketing may not yield increased
    customers or revenue.
    Our
    business could be harmed by adverse economic conditions or
    reduced spending on information technology.
  and/or
 17




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We
    must retain qualified personnel in a competitive marketplace, or
    we may not be able to grow our business.
    If we
    do not complement our direct sales force with relationships with
    other companies to help market our products and services, we may
    not be able to grow our business.
        If the
    market does not accept our professional services, our results of
    operations could be harmed.
    We
    face competition that could make it difficult for us to acquire
    and retain customers.
    Hewlett-Packard
 18




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If we
    do not continually improve our products and services in response
    to technological changes, including changes to the Internet and
    mobile networks, we may encounter difficulties retaining
    existing customers and attracting new customers.
      The
    market price of our common stock can be volatile.
   19




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If we
    were required to write down all or part of our goodwill, our net
    income and net worth could be materially adversely
    affected.
    Our
    cash, cash equivalents and short-term investments are managed
    through various banks around the world and we may realize losses
    on these.
    If the
    protection of our proprietary technology is inadequate, our
    competitors may gain access to our technology, and our market
    share could decline.
        Others
    might bring infringement claims which could harm our
    business.
   20




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Our
    measurement computers and mobile devices are located at sites
    that we do not own or operate, and it could be difficult for us
    to maintain or repair them if they do not function
    properly.
  day-to-day
  The
    success of our business depends on the continued use of Internet
    and mobile networks by business and consumers for
    e-business
    and communications and, if usage of these networks declines, our
    operating results and working capital would be
    harmed.
    
    security concerns, including the potential for fraud or theft of
    stored data and information communicated over Internet and
    mobile networks;
    inconsistent quality of service, including outages of popular
    Web sites and mobile networks;
    delay in the development or adoption of new standards;
    inability to integrate business applications with the
    Internet; and
    the need to operate with multiple and frequently incompatible
    products.  Improvements
    to the infrastructure of Internet and mobile networks could
    reduce or eliminate demand for our Internet and Mobile Cloud
    products and services.
    If we
    need to raise additional capital and are unable to do so, our
    business could be harmed.
   21




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We
    have anti-takeover protections that may delay or prevent a
    change in control that could benefit our
    stockholders.
    
    our stockholders may take action only at a meeting and not by
    written consent;
    our Board must be given advance notice regarding
    stockholder-sponsored proposals for consideration at annual
    meetings and for stockholder nominations for the election of
    directors; and
    special meetings of our stockholders may be called only by our
    Board of Directors, the Chairman of the Board, our Chief
    Executive Officer or our President, not by our stockholders.    We may
    face difficulties assimilating, and may incur costs associated
    with, any future acquisitions.
    
    difficulties in assimilating acquired personnel, operations and
    technologies;
    difficulties in managing a larger organization with
    geographically dispersed operations;
    unanticipated costs associated with the acquisition or incurring
    of additional unknown liabilities;
    diversion of managements attention from other business
    concerns;
    entry in new businesses in which we have little direct
    experience;
    difficulties in marketing additional services to the acquired
    companies customer base or to our customer base;
    adverse effects on existing business relationships with
    resellers of our products and services, our customers and other
    business partners;
    the need to integrate or enhance the systems of an acquired
    business;
    impairment charges related to potential write down of acquired
    assets in acquisitions;
    failure to realize any of the anticipated benefits of the
    acquisition; and
    use of substantial portions of our available cash, or dilution
    in equity if stock is used, to consummate the acquisition
    and/or
    operate the acquired business.  Failure
    to maintain effective internal controls and changes to existing
    regulations may increase our costs and risk of noncompliance as
    well as adversely affect our stock price, revenue, and reported
    financial results.
   22




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Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties      Item 3.
    Legal
    Proceedings  class-action
   23




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##### Table of Contents



Simmonds v. JPMorgan
    Chase & Co., et al. No. 07-1634,
    Item 4.
    (Removed
    and Reserved) 24




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##### Table of Contents



Item 4A.
    Executive
    Officers    Name

Age

PositionUmang Gupta


61


Chairman of the Board and Chief Executive OfficerCurtis Smith


45


Chief Financial OfficerAnshu Agarwal


41


Vice President of MarketingDonald Aoki


53


Senior Vice President of Keynote Professional ServicesVik Chaudhary


45


Vice President of Product Management and Corporate DevelopmentAdil Kaya


43


Managing Director of Keynote SIGOSKrishna Khadloya


51


Vice President of EngineeringJeffrey Kraatz


56


Senior Vice President of Worldwide Sales and ServicesMartin Löhlein


44


Managing Director of Keynote SIGOSDavid Peterson


49


Chief Accounting OfficerEric Stokesberry


42


Vice President of Operations   Umang Gupta
  Curtis Smith
  Anshu Agarwal
  Donald Aoki
  Vik Chaudhary
 25




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##### Table of Contents



Adil Kaya
  Krishna Khadloya
  Jeffrey Kraatz business-to-business
  Martin Löhlein
  David Peterson
  Eric Stokesberry
 26




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##### Table of Contents



PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Price
    Range of Common Stock
    High


LowFiscal Year ended September 30, 2010:Fourth Quarter

$
11.92


$
8.89Third Quarter


12.18



8.96Second Quarter


11.93



9.47First Quarter


11.88



9.18Fiscal Year ended September 30, 2009:Fourth Quarter

$
11.32


$
7.25Third Quarter


9.24



6.76Second Quarter


9.47



6.61First Quarter


13.52



6.34       Dividend
    Policy
   27




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##### Table of Contents



Equity
    Plans
    (c)(a)





Number of SharesNumber of Shares to


(b)


Remaining Available forbe Issued Upon


Weighted Average


Equity Compensation PlansExercise of


Exercise Price of


(Excluding Shares ReflectedPlan Category

Outstanding Options


Outstanding Options


in Column (a))Equity compensation plans approved by stockholders


4,527,726
(1)

$
11.51
(2)


1,558,028
(3)Total


4,527,726


$
11.51



1,558,028     (1)
    
    This number includes 4,039,133 stock options outstanding and
    488,593 RSUs issued under the 1999 Equity Incentive Plan.(2)
    
    These weighted average exercise prices do not reflect the shares
    that will be issued upon the vesting of outstanding awards under
    RSUs.(3)
    
    There were 1,418,950 shares that remained available for
    grant under the 1999 Equity Incentive Plan and
    139,078 shares that remained available for grant under the
    1999 Employee Stock Purchase Plan. All of the shares available
    for grant under the 1999 Equity Incentive Plan may be issued as
    restricted stock.  Purchases
    of Equity Securities
   28




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##### Table of Contents



Stock
    Price Performance Graph
  The information contained in the Performance Graph shall not
    be deemed to be soliciting material or
    filed with the SEC or subject to the liabilities of
    Section 18 of the Securities Exchange Act of 1934, as
    amended (the Exchange Act), except to the extent
    that we specifically incorporate it by reference into a document
    filed under the Securities Act of 1933, as amended (the
    Securities Act) or the Exchange Act.
    Cumulative
    Total Return
  
  September 30,2005


2006


2007


2008


2009


2010Keynote Systems, Inc.

$
100


$
81


$
106


$
102


$
73


$
90NASDAQ Composite Index

$
100


$
105


$
126


$
97


$
99


$
110iShares S&P North Amer Tech-Software

$
100


$
105


$
122


$
107


$
106


$
126  29




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##### Table of Contents



Item 6.
    Selected
    Consolidated Financial Data  Form 10-K. Form 10-K.
  Year Ended September 30,2010


2009


2008(2)


2007(1)


2006(In thousands, except per share data)Consolidated Statement of Operations Data:Total revenue, net

$
79,851


$
80,107


$
76,908


$
67,754


$
55,508Net income (loss)

$
1,686


$
3,257


$
(2,764
)

$
(4,691
)

$
(7,534
)Basic net income (loss) per share

$
0.11


$
0.23


$
(0.18
)

$
(0.27
)

$
(0.41
)Diluted net income (loss) per share

$
0.11


$
0.23


$
(0.18
)

$
(0.27
)

$
(0.41
)Shares used in computing basic and diluted net income (loss) per
    share:Basic


14,708



14,323



15,522



17,533



18,278Diluted


14,969



14,394



15,522



17,533



18,278Cash dividends declared per common share

$
0.20















   September 30,2010


2009


2008(2)


2007(1)


2006(In thousands)Consolidated Balance Sheet Data:Cash, cash equivalents and short-term investments

$
66,352


$
57,968


$
49,331


$
107,935


$
90,751Total assets

$
186,522


$
182,219


$
175,844


$
229,480


$
199,152Long-term portion of capital lease obligation









$
17


$
31


$
50Total stockholders equity

$
151,364


$
150,020


$
137,511


$
190,885


$
173,389     (1)
    
    The results of operations for fiscal 2007 included net tax
    expense of $4.1 million that included deferred income tax
    expense totaling approximately $5.5 million associated with
    the increase in the valuation allowance against our net deferred
    tax assets.(2)
    
    The results of operations for fiscal 2008 included net tax
    expense of $1.0 million that included deferred income tax
    expense totaling approximately $3.1 million associated with
    the increase in the valuation allowance against our net deferred
    tax assets.   30




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Except for historical information, this Report contains
    forward-looking statements within the meaning of
    Section 27A of the Securities Act of 1933 and
    Section 21E of the Securities Exchange Act of 1934. These
    forward-looking statements involve risks and uncertainties,
    including, among other things, statements regarding our
    anticipated costs and expenses and revenue mix. Forward-looking
    statements include, among others, those statements including the
    words expects, anticipates,
    intends, believes and similar language.
    Our actual results may differ significantly from those projected
    in the forward-looking statements. Factors that might cause or
    contribute to such differences include, but are not limited to,
    those discussed in Item 1A Risk Factors. You
    should carefully review the risks described in other documents
    we file from time to time with the Securities and Exchange
    Commission, including the Quarterly Reports on
    Form 10-Q
    or Current Reports on
    Form 8-K
    that we file in the current fiscal year. You are cautioned not
    to place undue reliance on the forward-looking statements, which
    speak only as of the date of this Annual Report on Form
    10-K. Except
    as required by law, we undertake no obligation to publicly
    release any revisions to the forward-looking statements or
    reflect events or circumstances after the date of this
    document.
  Overview
    and/or
     31




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
    continuing to drive growth in our Internet and Mobile Cloud
    products and services, as we believe that revenue growth is the
    primary factor in creating stockholder value;
    growing Web measurement revenue (such as Transaction Perspective
    and Application Perspective which have increased over the past
    three quarters) in order to increase Internet revenues;
    growing our overall customer base to support the growth of our
    Internet and Mobile revenue;
    continuing to control our expenses in fiscal 2011 to maintain
    and improve profitability, particularly because of the economic
    uncertainties that continue to exist; and
    challenges faced due to the current economic environment as this
    affects our customers ability to purchase our products and
    services.    Critical
    Accounting Policies and Estimates
  Form 10-K
  
    Revenue recognition
    Allowance for doubtful accounts and billing allowance
    Goodwill, identifiable intangible assets, and long-lived assets
    Stock-based compensation
    Income taxes, deferred income tax assets and deferred income tax
    liabilities  Revenue
    Recognition
    
    Persuasive evidence of an arrangement exists,
    Delivery of the product or service has occurred,
    Fee is fixed or determinable, and
    Collection is deemed reasonably assured.  customer-by-customer
 32




---



##### Table of Contents



Subscription
    Services Revenue
      Ratable
    Licenses Revenue
        Professional
    Services Revenue
   33




---



##### Table of Contents



Deferred
    Revenue
        Domestic


International


Total(In thousands)Net deferred revenue

$
4,631


$
16,834


$
21,465Add back: unpaid deferred revenue


2,584



3,191



5,775Gross deferred revenue at September 30, 2010

$
7,215


$
20,025


$
27,240Net deferred revenue

$
5,880


$
12,948


$
18,828Add back: unpaid deferred revenue


1,665



1,810



3,475Gross deferred revenue at September 30, 2009

$
7,545


$
14,758


$
22,303   Allowance
    for Doubtful Accounts and Billing Allowance
      Goodwill,
    Identifiable Intangibles Assets, and Long-Lived
    Assets
   34




---



##### Table of Contents




    significant changes in the manner of our use of the acquired
    assets or the strategy of our overall business;
    significant negative industry or economic trends;
    significant decline in our stock price for a sustained
    period; and
    our market capitalization relative to net book value.  and/or
    Stock-based
    Compensation
    Income
    Taxes, Deferred Income Tax Assets and Deferred Income Tax
    Liabilities
     35




---



##### Table of Contents



36




---



##### Table of Contents



Results
    of Operations
    Year Ended September 30,2010


2009


2008Net revenue:Subscription services


61.2
%


56.9
%


58.9
%Ratable licenses


27.8



30.8



28.4Professional services


11.0



12.3



12.7Total revenue, net


100.0



100.0



100.0Costs and expenses:Costs of revenue:Direct costs of subscription services


10.9



10.8



10.8Direct costs of ratable licenses


8.6



7.6



8.5Direct costs of professional services


7.2



7.4



9.2Development


15.0



15.3



16.4Operations


9.6



10.3



11.2Amortization of intangible assets  software


2.0



1.4



1.3Sales and marketing


31.9



29.8



33.4General and administrative


13.1



12.9



13.2Excess occupancy income


(1.9
)


(1.3
)


(1.5
)Amortization of intangible assets  other


0.8



1.3



2.8Lease abandonment expense






0.8



Total costs and expenses


97.2



96.3



105.3Income (loss) from operations


2.8



3.7



(5.3
)Interest income


0.5



1.1



3.9Other income (expenses)


(0.1
)


0.6



(0.9
)Provision for income taxes


(1.1
)


(1.3
)


(1.3
)Net income (loss)


2.1
%


4.1
%


(3.6
)%   Net
    Revenue
  2010


% Change

2009


% Change

2008Net revenue:Subscription services

$
48,860



7%


$
45,597



1%


$
45,314Ratable licenses


22,203



(10)%



24,623



13%



21,820Professional services


8,788



(11)%



9,887



1%



9,774Total net revenue

$
79,851



%


$
80,107



4%


$
76,908   Subscription
    Services
   37




---



##### Table of Contents



Ratable
    Licenses
        Professional
    Services
     38




---



##### Table of Contents



Subscription

Ratable

ProfessionalServices

Licenses

ServicesInternet Test and Measurement:Internet Subscriptions  Web MeasurementApplication Perspective

XStreaming Perspective

XTransaction Perspective

XInternet Subscriptions  OtherEnterprise Adapters

XKeynote Internet Testing Environment (KITE)

XPerformance Scoreboard

XPrivate Agents

XRed Alert

XTest Perspective

XLoadPro

XWebEffective

XInternet EngagementsProfessional Services





XAutomated Reporting





XCustom Competitive Research





XCustomer Research Products





XLoadPro





XMobile Competitive Monitoring Analysis





XMobile Insights





XPerformance Insights





XVisitor Insights





XWebEffective





XWeb Site Performance Assessment





XMobile Test and Measurement:Mobile SubscriptionMobile Device Perspective (MDP)

XMobile Web Perspective (MWP)

XGlobalRoamer

XMobile Internet Testing Environment (MITE)

XMobile Ratable LicensesSystem Integrated Test Environment (SITE)



X  39




---



##### Table of Contents



2010


% Change


2009


% Change


2008Internet Subscriptions  Web Measurement

$
26,452



(1
)%

$
26,772



(4
)%

$
27,837Internet Subscriptions  Other


12,036



11
%


10,810



2
%


10,595Internet Engagements


8,788



(11
)%


9,887



1
%


9,774Total Internet net revenue


47,276




%


47,469



(2
)%


48,206Mobile Subscription


10,372



29
%


8,015



16
%


6,882Mobile Ratable Licenses


22,203



(10
)%


24,623



13
%


21,820Total Mobile net revenue


32,575




%


32,638



14
%


28,702Total net revenue

$
79,851




%

$
80,107



4
%

$
76,908     2010


2009


2008Internet net revenue


59
%


59
%


63
%Mobile net revenue


41



41



37Total net revenue


100
%


100
%


100
%   Internet
    Net Revenue
      Mobile
    Net Revenue
     40




---



##### Table of Contents



Costs
    and Expenses:
  Direct
    Costs of Subscription Services, Ratable Licenses and
    Professional Services
  2010


% Change


2009


% Change


2008Direct costs of subscription services

$
8,720



1
%

$
8,655



4
%

$
8,324Direct costs of ratable licenses

$
6,870



13
%

$
6,079



(7
)%

$
6,558Direct costs of professional services

$
5,737



(4
)%

$
5,958



(16
)%

$
7,113   Direct
    Costs of Subscription Services
        Direct
    Costs of Ratable Licenses
        Direct
    Costs of Professional Services
   41




---



##### Table of Contents



Development
  2010


% Change


2009


% Change


2008Development

$
11,978



(2
)%

$
12,186



(3
)%

$
12,608         Operations
  2010


% Change


2009


% Change


2008Operations

$
7,661



(7
)%

$
8,264



(4
)%

$
8,576         Sales
    and Marketing
  2010


% Change


2009


% Change


2008Sales and marketing

$
25,469



7
%

$
23,863



(7
)%

$
25,705        42




---



##### Table of Contents



General
    and Administrative
  2010


% Change


2009


% Change


2008General and administrative

$
10,460



1
%

$
10,332



2
%

$
10,142         Excess
    Occupancy Income
  2010


% Change


2009


% Change


2008Rental income

$
(3,039
)


17
%

$
(2,605
)


1
%

$
(2,584
)Rental and other expenses


1,552



(2
)%


1,585



15
%


1,374Excess occupancy income

$
(1,487
)


46
%

$
(1,020
)


(16
)%

$
(1,210
)         Amortization
    of Identifiable Intangible Assets
  2010


% Change


2009


% Change


2008Amortization of identifiable intangible assets 
    software

$
1,585



37
%

$
1,160



16
%

$
1,000Amortization of identifiable intangible assets  other


626



(40
)%


1,050



(51
)%


2,148Total amortization of identifiable intangible assets

$
2,211




%

$
2,210



(30
)%

$
3,148    43




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##### Table of Contents



Technology

TechnologyBased-

Based-

CustomerSoftware

Other

Based

Trademark

Covenant

Backlog

Total$
2,960


$



$
469


$
443


$
11


$
31


$
3,914   Lease
    abandonment expense
    Interest
    Income and Other Income (Expense), net
  2010


% Change


2009


% Change


2008Interest income

$
459



(46
)%

$
853



(72
)%

$
3,025Other income (expense), net


(108
)


(123
)%


478



168
%


(699
)Interest income and other income (expense), net

$
351



(74
)%

$
1,331



(43
)%

$
2,326         Provision
    for Income Taxes
  2010


% Change


2009


% Change


2008Provision for income taxes

$
897



(12
)%

$
1,019



(1
)%

$
1,034    44




---



##### Table of Contents



Stock-based
    Compensation Expense
     45




---



##### Table of Contents



2010


2009


2008Direct costs of ratable licenses

$
72


$
78


$
246Direct costs of professional services


353



494



462Development


778



969



993Operations


440



554



644Sales and marketing


1,244



1,580



1,532General and administrative


478



717



680Total

$
3,365


$
4,392


$
4,557   Non-GAAP Financial
    Measures and Other Operational Data
    Non-GAAP Net
    Income and Non-GAAP Net Income Per Share
    2010


2009


2008GAAP net income (loss)

$
1,686


$
3,257


$
(2,764
)Stock-based compensation


3,365



4,392



4,557Amortization of intangible assets software


1,585



1,160



1,000Amortization of intangible assets other


626



1,050



2,148Provision for income taxes


897



1,019



1,034Cash taxes from on-going operations*


(544
)


(78
)


(1,670
)Non-GAAP net income

$
7,615


$
10,800


$
4,305Weighted average diluted common shares outstanding:


14,969



14,394



16,098Non-GAAP net income per share

$
0.51


$
0.75


$
0.27     *
    
    Cash taxes from on-going operations for the year ended
    September 30, 2009 excludes a onetime cash payment of
    $4.1 million related to an agreement to purchase certain
    intangible assets from our German subsidiary. Cash taxes from
    on-going operations for the year ended September 30, 2009
    differs from the amounts previously publicly announced as a
    result of reconciling these amounts to the cash flow statements. 46




---



##### Table of Contents



Adjusted
    EBITDA
    2010


2009


2008GAAP net income (loss)

$
1,686


$
3,257


$
(2,764
)Stock-based compensation


3,365



4,392



4,557Amortization of intangible assets software


1,585



1,160



1,000Amortization of intangible assets other


626



1,050



2,148Depreciation


4,462



4,854



5,139Provision for income taxes


897



1,019



1,034Interest income and other income (expense), net


(351
)


(1,331
)


(2,326
)Adjusted EBITDA

$
12,270


$
14,401


$
8,788   Free
    Cash Flow
    2010


2009


2008Cash flow provided by operations

$
12,731


$
8,799


$
5,280Purchases of property, equipment and software


(3,229
)


(3,444
)


(8,422
)Free cash flow

$
9,502


$
5,355


$
(3,142
)   Gross
    Deferred Revenue
    2010


2009


2008Net deferred revenue

$
21,465


$
18,828


$
19,933Unpaid deferred revenue


5,775



3,475



4,756Gross deferred revenue

$
27,240


$
22,303


$
24,689  47




---



##### Table of Contents



Other
    Operational Data
    Quarter Ended September 30,2010


2009


2008Worldwide customers (approximately)


2,800



2,800



2,800Quarterly Internet Web measurement subscription net revenue (in
    thousands)

$
7,105


$
6,370


$
7,348Average monthly Internet pages measured


26,800



18,000



13,900Average monthly revenue per Internet page*

$
88


$
118


$
176     *
    
    Average monthly revenue per Internet page is calculated as:
    (quarterly Internet Web measurement subscription net
    revenue/3 months)/ average monthly Internet pages measured.
    Internet Web measurement subscription net revenue consists of
    our Application Perspective, Transaction Perspective, and
    Streaming Perspective subscription services.     48




---



##### Table of Contents



Liquidity
    and Capital Resources
  September 30,2010


2009Cash, cash equivalents and short-term investments

$
66,352


$
57,968Accounts receivable, net

$
9,094


$
6,403Working capital

$
54,820


$
44,749Days sales in accounts receivable (DSO)*


41



30     *
    
    DSO for the fourth fiscal quarter is calculated as: (ending net
    accounts receivable / net sales for the three month period)
    multiplied by number of days in the period    2010


2009


2008Cash provided by operating activities

$
12,731


$
8,799


$
5,280Cash provided by (used in) investing activities

$
(40,149
)

$
(2,731
)

$
48,142Cash provided by (used in) financing activities

$
666


$
2,726


$
(53,646
)   Cash,
    cash equivalents and short-term investments and working
    capital
    Cash
    flows from operating activities
       49




---



##### Table of Contents



Cash
    flows from investing activities
        Cash
    flows from financing activities
        Commitments
    and Contractual Obligations
   50




---



##### Table of Contents



Payment Due by PeriodLess Than


2-3


4-5


More ThanTotal


1 Year


Years


Years


5 YearsContractual Obligations: Operating Leases

$
2,659


$
794


$
1,030


$
695


$
140Contingent Commitments: Bandwidth and
    Co-location


1,492



1,267



225







Total

$
4,151


$
2,061


$
1,255


$
695


$
140       and/or
    Off
    Balance Sheet Arrangements
    Recent
    Accounting Pronouncements
   51




---



##### Table of Contents



52




---



##### Table of Contents



Item 7A.
    Quantitative
    And Qualitative Disclosures About Market Risk    Interest
    Rate Sensitivity
    Foreign
    Currency Fluctuations
   53




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Keynote
    Systems, Inc. and Subsidiaries
  Index to
    Consolidated Financial Statements
  Report of Independent Registered Public
    Accounting Firm

55Consolidated Balance Sheets

56Consolidated Statements of Operations

57Consolidated Statements of Stockholders
    Equity and Comprehensive Income (Loss)

58Consolidated Statements of Cash Flows

59Notes to Consolidated Financial Statements

60  54




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm            Internal Control  Integrated Framework
      55




---



##### Table of Contents



Keynote
    Systems, Inc. and SubsidiariesConsolidated Balance Sheets
  September 30,2010


2009(In thousands, except share amounts and par value)ASSETSCurrent assets:Cash and cash equivalents

$
23,241


$
51,383Short-term investments


43,111



6,585Total cash, cash equivalents and short-term investments


66,352



57,968Accounts receivable, less allowance for doubtful accounts of $50
    and $112, respectively, and less billing reserve of $150 and
    $150, respectively


9,094



6,403Prepaids, deferred costs and other current assets


3,571



3,517Inventories


1,286



1,222Deferred tax assets


3,749



2,913Total current assets


84,052



72,023Deferred costs and other long-term assets


1,599



3,024Property, equipment and software, net


33,432



34,778Goodwill


63,166



66,078Identifiable intangible assets, net


3,914



6,255Long-term deferred tax assets


359



61Total assets

$
186,522


$
182,219LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
1,748


$
1,147Accrued expenses


7,945



8,466Deferred revenue


19,539



17,661Total current liabilities


29,232



27,274Deferred rent and other long-term liabilities


3,605



3,344Long-term deferred revenue


1,926



1,167Long-term deferred tax liability


395



414Total liabilities


35,158



32,199Commitments and contingencies (see Note 8)Stockholders equity:Common stock, $0.001 par value; 100,000,000 shares
    authorized; 14,942,571 and 14,501,176 shares issued and
    outstanding, respectively


15



14Additional paid-in capital


286,761



282,653Accumulated deficit


(137,928
)


(139,614
)Accumulated other comprehensive income


2,516



6,967Total stockholders equity


151,364



150,020Total liabilities and stockholders equity

$
186,522


$
182,219    56




---



##### Table of Contents



Keynote
    Systems, Inc. and SubsidiariesConsolidated Statements of Operations
  Year Ended September 30,2010


2009


2008(In thousands, except pershare amounts)Net revenue:Subscription services

$
48,860


$
45,597


$
45,314Ratable licenses


22,203



24,623



21,820Professional services


8,788



9,887



9,774Total net revenue


79,851



80,107



76,908Costs and expenses:Costs of revenue:Direct costs of subscription services


8,720



8,655



8,324Direct costs of ratable licenses


6,870



6,079



6,558Direct costs of professional services


5,737



5,958



7,113Development


11,978



12,186



12,608Operations


7,661



8,264



8,576Amortization of intangible assets  software


1,585



1,160



1,000Total costs of revenue


42,551



42,302



44,179Sales and marketing


25,469



23,863



25,705General and administrative


10,460



10,332



10,142Excess occupancy income


(1,487
)


(1,020
)


(1,210
)Amortization of intangible assets  other


626



1,050



2,148Lease abandonment expense






635



Total costs and expenses*


77,619



77,162



80,964Income (loss) from operations


2,232



2,945



(4,056
)Interest income


459



853



3,025Other income (expense), net


(108
)


478



(699
)Income (loss) before provision for income taxes


2,583



4,276



(1,730
)Provision for income taxes


(897
)


(1,019
)


(1,034
)Net income (loss)

$
1,686


$
3,257


$
(2,764
)Net income (loss) per share:Basic

$
0.11


$
0.23


$
(0.18
)Diluted

$
0.11


$
0.23


$
(0.18
)Shares used in computing basic and diluted net income (loss) per
    share:Basic


14,708



14,323



15,522Diluted


14,969



14,394



15,522Cash dividends declared per common share

$
0.20


$



$
     *
    
    Stock-based compensation by category: Direct cost of ratable licenses

$
72


$
78


$
246Direct cost of professional services


353



494



462Development


778



969



993Operations


440



554



644Sales and marketing


1,244



1,580



1,532General and administrative


478



717



680    57




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Consolidated Statements of Stockholders
    Equity and Comprehensive Income (Loss)
  AccumulatedAdditional





Other


TotalCommon Stock


Treasury Stock


Paid-in


Accumulated


Comprehensive


Stockholders


ComprehensiveShares


Amount


Shares


Amount


Capital


Deficit


Income


Equity


Income (Loss)(In thousands, except share amounts)Balance as of September 30, 2007


18,436,648


$
18



(92,000
)

$
(1,151
)

$
325,525


$
(140,188
)

$
6,681


$
190,885


$
290Cumulative effect of the adoption of uncertainty in income taxes
    (See Note 1)






















81







81



Adjusted balances, October 1, 2007


18,436,648


$
18



(92,000
)

$
(1,151
)

$
325,525


$
(140,107
)

$
6,681


$
190,966


$
290Repurchase of common stock










(5,000,000
)


(59,919
)


(151
)










(60,070
)


Issuance of common stock


750,533



1











6,450











6,451



Retirement of treasury stock


(5,092,000
)


(5
)


5,092,000



61,070



(61,065
)














Stock-based compensation


















4,557











4,557



Net loss






















(2,764
)






(2,764
)


(2,764
)Foreign currency translation


























(1,642
)


(1,642
)


(1,642
)Unrealized gain on available-for sale investments


























13



13



13Balance as of September 30, 2008


14,095,181


$
14






$



$
275,316


$
(142,871
)

$
5,052


$
137,511


$
(4,393
)Issuance of common stock


405,995















2,978











2,978



Stock-based compensation


















4,359











4,359



Net income






















3,257







3,257



3,257Foreign currency translation


























1,915



1,915



1,915Balance as of September 30, 2009


14,501,176


$
14






$



$
282,653


$
(139,614
)

$
6,967


$
150,020


$
5,172Issuance of common stock


441,395



1











3,628











3,629



Stock-based compensation


















3,427











3,427



Net income






















1,686







1,686



1,686Unrealized gain on available for sale investments


























65



65



65Dividends paid on common stock


















(2,947
)










(2,947
)


Foreign currency translation


























(4,516
)


(4,516
)


(4,516
)Balance as of September 30, 2010


14,942,571


$
15






$



$
286,761


$
(137,928
)

$
2,516


$
151,364


$
(2,765
)    58




---



##### Table of Contents



Keynote
    Systems, Inc. and SubsidiariesConsolidated Statements of Cash Flows
  Year Ended September 30,2010


2009


2008(In thousands)Cash flows from operating activities:Net income (loss)

$
1,686


$
3,257


$
(2,764
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization


4,462



4,854



5,139Loss on disposal of assets


109



27



Stock-based compensation


3,365



4,392



4,557Charges to bad debt and billing adjustment reserves


164



315



240Impairment of short-term investments










98(Accretion) amortization of debt investment (discount) premium


752



3



(464
)Amortization of identifiable intangible assets


2,211



2,210



3,148Excess tax benefits from stock-based compensation






(12
)


Amortization of prepaid tax asset


754



821



418Collection of tax credit receivable within deferred tax assets






637



Deferred tax assets and liabilities, net


(1,263
)


(107
)


(26
)Changes in assets and liabilities, net of acquired assets and
    assumed liabilities:Accounts receivable


(3,068
)


631



(1,622
)Inventories


(171
)


(102
)


(23
)Prepaids, deferred costs and other assets


257



(682
)


294Accounts payable and accrued expenses


528



(4,653
)


96Deferred revenue


2,945



(1,706
)


(2,067
)Prepaid tax asset






(1,086
)


(1,744
)Net cash provided by operating activities


12,731



8,799



5,280Cash flows from investing activities:Purchases of property, equipment and software


(3,229
)


(3,444
)


(5,865
)Acquired technology










(2,557
)Purchases of businesses and assets, net






(170
)


(1,697
)Purchases of short-term investments


(56,070
)


(15,918
)


(27,699
)Maturities and sales of short-term investments


19,150



16,801



85,960Net cash provided by (used in) investing activities


(40,149
)


(2,731
)


48,142Cash flows from financing activities:Payment of lease obligation


(16
)


(15
)


(26
)Payment of notes payable






(249
)


Excess tax benefits from stock-based compensation






12



Proceeds from issuance of common stock and exercise of stock
    options


3,629



2,978



6,450Common stock dividends


(2,947
)






Repurchase of outstanding common stock










(60,070
)Net cash provided by (used in) financing activities


666



2,726



(53,646
)Effect of exchange rate changes on cash and cash
    equivalents


(1,390
)


43



(105
)Net increase (decrease) in cash and cash equivalents


(28,142
)


8,837



(329
)Cash and cash equivalents at beginning of the year


51,383



42,546



42,875Cash and cash equivalents at end of the year

$
23,241


$
51,383


$
42,546Supplemental cash flow disclosure:Income taxes paid (net of refunds) during the year

$
544


$
4,164


$
1,670Noncash operating and investing activities:Acquisition of property, equipment and software on account at
    year end

$
105


$
31


$
113Retirement of treasury stock

$



$



$
61,070    59




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##### Table of Contents



Keynote
    Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements
  (1)  Summary
    of Significant Accounting Policies
    Basis
    of Presentation
    Revenue
    Recognition
    
    Persuasive evidence of an arrangement
    exists.  The Company considers a customer signed
    quote, contract, or purchase order to be evidence of an
    arrangement.
    Delivery of the product or service.  For
    subscription services, delivery is considered to occur when the
    customer has been provided with access to the subscription
    services. The Companys subscription services are generally
    delivered on a consistent basis over the period of the
    subscription. For professional services, delivery is considered
    to occur when the services or milestones are completed. For
    ratable licenses, delivery occurs when all elements of the
    arrangement have either been delivered or accepted, if
    acceptance language exists.
    Fee is fixed or determinable.  The Company
    considers the fee to be fixed or determinable if the fee is not
    subject to refund or adjustment and payment terms are standard.
    Collection is deemed reasonably
    assured.  Collection is deemed reasonably assured
    if it is expected that the customer will be able to pay amounts
    under the arrangement as payments become due. If it is
    determined that collection is not reasonably assured, then
    revenue is deferred and recognized upon cash collection.    Subscription Services Revenue:
   60




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##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Ratable Licenses Revenue:
      Professional Services Revenue:
   61




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Deferred Revenue:
  Deferred Costs:
  Financial
    Instruments
  Cash and
    Cash Equivalents and Short- Term Investments
    available-for-sale available-for-sale
  Fair
    Value Measurements
     62




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Inventories
  first-in,
  Property,
    Equipment and Software
    Accumulated
    Other Comprehensive Income
  , available-for-sale available-for-sale
    2010


2009Unrealized gain on investments

$
65


$
Cumulative translation adjustments


2,451



6,967Accumulated other comprehensive income

$
2,516


$
6,967    63




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Financial
    Instruments and Concentration of Credit Risk
            Write-Offs/Balance at


Charged to


Credit


Balance atBeginning


Operations/


Memos


End ofFiscal Years

of Period


Revenue


Issued


Period2010

$
262


$
164


$
(226
)

$
2002009

$
268


$
315


$
(321
)

$
2622008

$
284


$
240


$
(256
)

$
268     Lease
    Abandonment Accrual
    Lease abandonment liability, September 30, 2009

$
696Lease payments to lessor


(266
)Sublease proceeds


101Payment of lease termination costs


(63
)Lease abandonment liability, September 30, 2010

$
468  64




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Excess
    Occupancy Income
    Fiscal Years

Total2011

$
2,4242012


1,7512013


3832014


95Thereafter


Total future minimum rents receivable

$
4,653   Goodwill
    and Long-Lived Assets
       65




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Stock-Based
    Compensation
    Determining Fair Value:
  Expected Volatility:
  Risk-free Interest Rate:
  Expected Term:
  Estimated Forfeitures:
  paid-in-capital
  66




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Income
    Taxes
  ,
    Development
      Net
    Income (Loss) Per Share
   67




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    September 30,2010


2009


2008Numerator:Net income (loss)

$
1,686


$
3,257


$
(2,764
)Denominator:Weighted average shares outstanding


14,708



14,323



15,522Effect of dilutive securities


261



71



Weighted average shares  diluted


14,969



14,394



15,522Basic net income (loss) per share

$
0.11


$
0.23


$
(0.18
)Diluted net income (loss) per share

$
0.11


$
0.23


$
(0.18
)     Advertising
    Costs
    Recent
    Accounting Pronouncements
     68




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
            (2)
    Cash,
    Cash Equivalents and Short-Term Investments   69




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Market ValueCash

$
17,732


$



$



$
17,732Money market funds


5,509











5,509Total cash and cash equivalents

$
23,241


$



$



$
23,241Fixed-term deposits

$
12,271


$



$



$
12,271Treasuries and agencies


3,101



10







3,111Corporate and municipal bonds


27,674



70



(15
)


27,729Total short-term investments

$
43,046


$
80


$
(15
)

$
43,111     Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Market ValueCash

$
20,492


$



$



$
20,492Money market funds


30,891











30,891Total cash and cash equivalents

$
51,383


$



$



$
51,383Fixed-term deposits

$
6,585


$



$



$
6,585Total short-term investments

$
6,585


$



$



$
6,585     
    If management intends to sell an impaired debt security, the
    impairment is considered other than temporary. If the entity
    does not intend to sell the impaired debt security, it must
    still assess whether it is more likely than not that it will be
    required to sell the security.
    If management determines that it is more likely than not that it
    will be required to sell the security before recovery of the
    amortized cost basis of the security, the impairment is
    considered other than temporary.
    If management determines that it does not intend to sell an
    impaired debt security and, that it is not more likely than not
    that it will be required to sell such a security before recovery
    of the securitys amortized cost basis, the entity must
    assess whether it expects to recover the entire amortized cost
    basis of the security.   70




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Less than 12 Months


12 Months or Greater


TotalUnrealized





Unrealized





UnrealizedSecurity Description

Fair Value


Loss


Fair Value


Loss


Fair Value


LossAs of September 30, 2010:Fixed term deposits

$
12,271


$



$



$



$
12,271


$
Treasuries and agencies


3,111















3,111



Corporate and municipal bonds


27,729



(15
)










27,729



(15
)Total

$
43,111


$
(15
)

$



$



$
43,111


$
(15
)As of September 30, 2009:Fixed term deposits

$
6,585


$



$



$



$
6,585


$
Total

$
6,585


$



$



$



$
6,585


$
   available-for-sale
  EstimatedCost


Fair ValueDue in less than one year

$
30,063


$
30,090Due in more than one year and less than two years


12,983



13,021Total

$
43,046


$
43,111   (3)
    Fair
    Value Measurements      
    Level 1 inputs are based on quoted prices in active markets
    for identical assets or liabilities.
    Level 2 inputs are based on quoted prices for similar
    instruments in active markets, quoted prices for identical or
    similar instruments in markets that are not active, and
    model-based valuation techniques for which all significant
    assumptions are observable in the market or can be corroborated
    by observable market data for substantially the full term of the
    assets or liabilities.
    Level 3 inputs are generally unobservable and typically
    reflect managements estimates of assumptions that market
    participants would use in pricing the asset or liability. The
    fair values are therefore determined using model-based
    techniques that include option pricing models, discounted cash
    flow models, and similar techniques. 71




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     Quoted Pricesin Active


SignificantMarkets for


Other


SignificantIdentical


Observable


UnobservableInstruments


Inputs


Inputs(Level 1)


(Level 2)


(Level 3)


TotalCash and cash equivalents:Money market funds

$
5,509


$



$



$
5,509Short-term investments:Fixed-term deposits






12,271







12,271Corporate and municipal bonds


27,729











27,729Treasuries and agencies


3,111











3,111Total assets measured at fair value

$
36,349


$
12,271


$



$
48,620     (4)
    Consolidated
    Financial Statement Details    Prepaids,
    Deferred Costs and Other Current Assets
  September 30,2010


2009Prepaid expenses

$
1,591


$
1,554Deferred costs of revenue


806



580Income tax receivable


425



971Security deposits, advances, and interest receivable


590



43Other assets


159



369Total

$
3,571


$
3,517   Property,
    equipment and software
  September 30,2010


2009Land

$
14,150


$
14,150Computer equipment and software


31,874



29,551Building


21,614



21,875Furniture and fixtures


2,151



2,169Leasehold and building improvements


1,155



1,179Construction in progress


292



38371,236



69,307Less accumulated depreciation and amortization


(37,804
)


(34,529
)Total

$
33,432


$
34,778  72




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Deferred
    Costs and Other Long-Term Assets
  September 30,2010


2009Prepaid tax asset

$
823


$
1,710Deferred costs of revenue


209



421Tenant rent receivable


163



280Deposits


221



264Prepaid expenses


183



349Total

$
1,599


$
3,024   Accrued
    Expenses*
  September 30,2010


2009Accrued employee compensation

$
4,040


$
4,417Accrued audit and professional fees


334



429Income and other taxes


1,016



844Other accrued expenses


2,555



2,776Total

$
7,945


$
8,466     *
    
    The current portion of capital lease obligation has been
    included in other accrued expenses to conform to the current
    year presentation. Additionally, certain amounts in other
    accrued expenses at September 30, 2009 have been
    reclassified to the other components of accrued expenses to
    correct their classification.  Deferred
    Rent and Other Long-term Liabilities
  September 30,2010


2009Income and other taxes

$
3,029


$
2,643Deferred rent


392



506Other long-term liabilities


184



195Total

$
3,605


$
3,344   (5)
    Goodwill
    and Identifiable Intangible Assets    Balance at September 30, 2008

$
64,396Additional goodwill for the acquisition of Zandan S.A.


90Translation adjustments


1,592Balance at September 30, 2009

$
66,078Translation adjustments


(2,912
)Balance at September 30, 2010

$
63,166  73




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Technology


TechnologyBased-


Based-


CustomerSoftware


Other


Based


Trademark


Covenant


Backlog


TotalAs of September 30, 2010:Gross carrying value

$
7,944


$
11,845


$
8,071


$
1,382


$
38


$
113


$
29,393Accumulated amortization


(4,984
)


(11,845
)


(7,602
)


(939
)


(27
)


(82
)


(25,479
)Net carrying value

$
2,960


$



$
469


$
443


$
11


$
31


$
3,914As of September 30, 2009:Gross carrying value

$
8,125


$
11,845


$
8,190


$
1,407


$
40


$
121


$
29,728Accumulated amortization


(3,422
)


(11,834
)


(7,391
)


(733
)


(23
)


(70
)


(23,473
)Net carrying value

$
4,703


$
11


$
799


$
674


$
17


$
51


$
6,255       Fiscal Years

Total2011

$
2,2512012


1,3782013


285Total

$
3,914Weighted average remaining useful lives as of September 30,
    2010 (years)


2.3   (6)
    Stockholders
    Equity  1999
    Equity Incentive Plan
   74




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    1999
    Employee Stock Purchase Plan
    Stock-Based
    Compensation
  Stock
    Options
    AverageWeighted


Remaining


AggregateAverage


Contractual


IntrinsicShares


Exercise Price


Term (Years)


ValueOutstanding at September 30, 2008


5,948


$
14.67



6.5Granted


67



10.16Exercised


(241
)


7.16Forfeited or canceled


(916
)


32.29Expired


(56
)


12.00Outstanding at September 30, 2009


4,802


$
11.65



5.8Granted






Exercised


(280
)


8.91Forfeited or canceled


(67
)


12.52Expired


(416
)


14.76Outstanding at September 30, 2010


4,039


$
11.51



4.9


$
2,647Vested and expected to vest


4,008


$
11.51



4.9


$
2,637Exercisable at September 30, 2010


3,644


$
11.44



4.6


$
2,501    75




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Options OutstandingWeightedAverage





Options ExercisableRemaining


Weighted





WeightedNumber of


Contractual


Average


Number of


AverageShares


Life


Exercise


Shares


ExerciseRange of Exercise Prices

Outstanding


(In Years)


Price


Exercisable


Price$ 7.25-$ 9.30


415,235



1.64


$
8.21



398,216


$
8.22$ 9.35-$10.62


404,148



5.88



10.27



385,325



10.28$10.66-$10.97


460,163



4.28



10.84



405,149



10.86$11.00-$11.00


452,502



5.43



11.00



452,502



11.00$11.01-$11.61


55,803



6.32



11.46



30,104



11.33$11.68-$11.68


522,000



5.34



11.68



522,000



11.68$11.75-$11.98


442,911



5.12



11.97



374,557



11.97$12.00-$12.74


406,631



5.76



12.48



311,859



12.46$12.76-$13.25


405,381



4.08



12.98



403,474



12.98$13.28-$24.25


474,362



5.99



13.91



360,678



13.974,039,136



4.88


$
11.51



3,643,864


$
11.44           2010


2009


2008Volatility






39.1
%


33.4
%Risk-free interest rates






2.04
%


3.29
%Expected life (in years)






4.5



4.4Dividend yield










    76




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Purchase
    Plan
    2010


2009


2008Volatility


62.9
%


55.4
%


37.8
%Risk-free interest rates


0.51
%


1.04
%


2.81
%Expected life (in years)


1.25



1.25



1.25Dividend yield


0.20
%






   Restricted
    Stock Units (RSU)
    WeightedAverageGrant DateShares


Fair ValueBalance at September 30, 2008





$
Granted


487



8.90Vested


(16
)


9.43Cancelled


(1
)


7.59Balance at September 30, 2009


470


$
8.88Granted


60



9.05Vested






Cancelled


(41
)


7.59Balance at September 30, 2010


489


$
9.07       Stock
    Repurchase Plan
  Rule 10b5-1 Rule 10b-18
 77




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Stockholder
    Rights Plan
    Dividends
    Record Date

Payment Date

Dividend Per Share

Total Dividend PaidDecember 1, 2009

December 15, 2009


$0.05



$727,000March 1, 2010

March 15, 2010


$0.05



$731,000June 1, 2010

June 15, 2010


$0.05



$743,000September 1, 2010

September 15, 2010


$0.05



$746,000   (7)
    Income
    Taxes    Year Ended September 30,2010


2009


2008United States

$
1,736


$
3,473


$
(2,656
)Foreign


847



803



926Income (loss) before income taxes

$
2,583


$
4,276


$
(1,730
)  78




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended September 30,2010


2009


2008Current:Federal

$
41


$
43


$
Foreign


2,131



1,130



947State


52



115



(7
)Total current tax expense


2,224



1,288



940Deferred:Federal


69



69



67Foreign


(1,410
)


(345
)


18State


14



7



9Total deferred tax expense


(1,327
)


(269
)


94Total provision for income taxes

$
897


$
1,019


$
1,034     Year Ended September 30,2010


2009


2008Federal tax expense (benefit) at statutory rate

$
904


$
1,497


$
(605
)State tax expense, net of federal tax effect


26



628



1,590Non-deductible expenses and other


282



653



1,058Change in valuation allowance for federal and state deferred tax
    assets


(788
)


(2,229
)


(1,650
)Foreign tax differential


473



470



641Total expense

$
897


$
1,019


$
1,034  79




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    September 30,2010


2009Deferred tax assets:Accruals, reserves and other

$
8,040


$
6,503Capitalized research and development


855



1,393Intangibles related to acquisition


5,593



5,936Property and equipment


23,470



22,947Net operating loss carryforwards


25,432



26,190Tax credit carryforwards


1,412



1,349Gross deferred tax assets


64,802



64,318Valuation allowance


(60,594
)


(61,082
)Total deferred tax assets


4,208



3,236Deferred tax liabilities:Intangible assets


(495
)


(676
)Net deferred taxes

$
3,713


$
2,560Reported as:Current deferred tax assets

$
3,749


$
2,913Non-current deferred tax assets


359



61Non-current deferred tax liabilities


(395
)


(414
)Net deferred taxes

$
3,713


$
2,560         paid-in-capital
 80




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
             81




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Beginning balance as of October 1, 2007 (upon
    adoption)

$
5,049Increases related to prior year tax positions


76Decreases related to prior year tax positions


Increases related to current year tax positions


1,287Decreases related to lapse of statute of limitations


(6
)Ending balance at September 30, 2008

$
6,406Increases related to prior year tax positions


472Decreases related to prior year tax positions


(300
)Increases related to current year tax positions


482Decreases related to lapse of statute of limitations


(28
)Ending balance at September 30, 2009

$
7,032Increases related to prior year tax positions


51Decreases related to prior year tax positions


(112
)Increases related to current year tax positions


77Decreases related to settlement with taxing authorities


(25
)Ending balance at September 30, 2010

$
7,023        82




---



##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (8)
    Commitments
    and Contingencies  Leases
    OperatingFiscal Year

Leases2011

$
7942012


5662013


4642014


3442015


351Thereafter


140Total minimum lease payments*

$
2,659     *
    
    Future minimum lease payments exclude sublease proceeds of
    $1.0 million.    Commitments
    Legal
    Proceedings
  class-action
   83




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##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Simmonds v. JPMorgan
    Chase & Co., et al. No. 07-1634,
    Warranties
   84




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##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Indemnification
  and/or
  Guarantees
   85




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##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (9)
    Geographic
    and Segment Information    Subscription

Ratable

ProfessionalServices

Licenses

ServicesInternet Test and Measurement:Internet Subscriptions  Web MeasurementApplication Perspective


XStreaming Perspective


XTransaction Perspective


XInternet Subscriptions  OtherEnterprise Adapters


XKeynote Internet Testing Environment (KITE)


XPerformance Scoreboard


XPrivate Agents


XRed Alert


XTest Perspective


XLoadPro


XWebEffective


XInternet EngagementsProfessional Services










XAutomated Reporting










XCustom Competitive Research










XCustomer Research Products










XLoadPro










XMobile Competitive Monitoring Analysis










XMobile Insights










XPerformance Insights










XVisitor Insights










XWebEffective










XWeb Site Performance Assessment










XMobile Test and Measurement:Mobile SubscriptionMobile Device Perspective (MDP)


XMobile Web Perspective (MWP)


XGlobalRoamer


XMobile Internet Testing Environment (MITE)


XMobile Ratable LicensesSystem Integrated Test Environment (SITE)






X  86




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##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended September 30,2010


2009


2008Internet Subscriptions  Web Measurement

$
26,452


$
26,772


$
27,837Internet Subscriptions  Other


12,036



10,810



10,595Internet Engagements


8,788



9,887



9,774Total Internet net revenue


47,276



47,469



48,206Mobile Subscription


10,372



8,015



6,882Mobile Ratable Licenses


22,203



24,623



21,820Total Mobile net revenue


32,575



32,638



28,702Total net revenue

$
79,851


$
80,107


$
76,908     Year Ended September 30,2010


2009


2008United States

$
44,189


$
44,433


$
43,896Europe*


23,031



25,115



28,774Other*


12,631



10,559



4,238Total

$
79,851


$
80,107


$
76,908     *
    
    No individual country represents more than 10% of revenue.    September 30,2010


2009United States

$
32,213


$
33,685Germany


1,212



1,084Other


7



9Total

$
33,432


$
34,778  87




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##### Table of Contents



Keynote
    Systems, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (10)
    Supplementary
    Data (Unaudited)    2010Quarter Ended


Year EndedDecember 31,


March 31,


June 30,


September 30,


September 30,2009


2010


2010


2010


2010(In thousands, except per share data)Net revenue

$
20,709


$
19,356


$
19,273


$
20,513


$
79,851Gross profit

$
9,972


$
8,811


$
8,694


$
9,823


$
37,300Net income (loss)

$
981


$
(144
)

$
(315
)

$
1,164


$
1,686Basic net income (loss) per share

$
0.07


$
(0.01
)

$
(0.02
)

$
0.08


$
0.11Diluted net income (loss) per share

$
0.07


$
(0.01
)

$
(0.02
)

$
0.08


$
0.11   2009Quarter Ended


Year EndedDecember 31,


March 31,


June 30,


September 30,


September 30,2008


2009


2009


2009


2009(In thousands, except per share data)Net revenue

$
20,637


$
19,564


$
20,169


$
19,737


$
80,107Gross profit

$
9,682


$
8,384


$
10,258


$
9,481


$
37,805Net income (loss)

$
886


$
(258
)

$
2,092


$
537


$
3,257Basic net income (loss) per share

$
0.06


$
(0.02
)

$
0.15


$
0.04


$
0.23Diluted net income (loss) per share

$
0.06


$
(0.02
)

$
0.15


$
0.04


$
0.23     (11)
    Subsequent
    Events   88




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
      Internal Control  Integrated
    Framework
        Internal Control Integrated Framework
    DELOITTE &
    TOUCHE LLP
    89




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Changes
    in Internal Control over Financial Reporting
  Rule 13a-15(d) Rule 13a-15(f)
  Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rules 13a-15(f) 15d-15(f)
  Internal
    Control  Integrated Framework
    Item 9B.
    Other
    Information   90




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##### Table of Contents



PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance  www.keynote.com
  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
    Accounting Fees and Services    PART IV
  Item 15.
    Exhibits,
    Financial Statement Schedules  (a)  Documents to be filed as part of this
    report:
         91




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##### Table of Contents



Incorporated by ReferenceExhibit







Filing

Exhibit

FiledNo.

Exhibit

Form

File No.

Date

No.

Here-With3
.01

Amended and Restated Certificate of Incorporation.

S-1

333-94651

01-14-00


3.043
.02

Bylaws, as amended.

8-K

000-27241

12-10-09


3.013
.03

Certificate of Designations specifying the terms of the
    Series A Junior Participating Preferred Stock of
    registrant, as filed with the Secretary of State of the State of
    Delaware on October 28, 2002

8-A

000-27241

10-29-02


3.024
.01

Form of Specimen Stock Certificate for Keynote common stock.

S-1

333-82781

09-22-99


4.0110
.01

Form of Indemnity Agreement between Keynote and each of its
    directors and executive officers.

S-1

333-94651

01-14-00


10.01A10
.02

[Intentionally omitted]10
.03

Forms of stock option agreement and stock option exercise
    agreement under 1999 Equity Incentive Plan.

S-1

333-82781

08-23-99


10.0410
.03.1

1999 Equity Incentive Plan, as amended.

Schedule 14A

000-27241

01-22-09


Annex A10
.04

Forms of enrollment form, subscription agreement, notice of
    withdrawal and notice of suspension under 1999 Employee Stock
    Purchase Plan.

S-1

333-82781

08-23-99


10.0510
.04.1

1999 Employee Stock Purchase Plan, as amended.

Schedule 14A

000-27241

01-22-09


Annex B10
.05

401(k) Plan.

S-1

333-82781

07-13-99


10.0610
.06*

Employment Agreement dated as of December 9, 1997 between
    Keynote and Umang Gupta.

S-1

333-82781

07-13-99


10.0810
.07*

Amendment Agreement dated as of November 12, 2001 between
    Keynote and Umang Gupta.

10-Q

000-27241

02-14-02


10.0110
.09

[Intentionally omitted]10
.10*

Promotion Letter Agreement dated as of April 4, 2006
    between Keynote Systems, Inc. and Jeffrey Kraatz

10-Q

000-27241

08-09-06


10.510
.11*

Addendum to Stock Option Agreement dated as of April 1,
    2006 between Keynote Systems, Inc. and Jeffrey Kraatz

10-Q

000-27241

08-09-06


10.06 92




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##### Table of Contents



Incorporated by ReferenceExhibit







Filing

Exhibit

FiledNo.

Exhibit

Form

File No.

Date

No.

Here-With10
.12*

Promotion Letter Agreement dated as of April 12, 2006
    between Keynote Systems, Inc. and Eric Stokesberry

10-Q

000-27241

08-09-06


10.710
.13*

Addendum to Stock Option Agreement dated as of April 4,
    2006 between Keynote Systems, Inc. and Eric Stokesberry

10-Q

000-27241

08-09-06


10.810
.16*

Share Purchase and Transfer Agreement to acquire SIGOS
    Systemintegration GmbH (SIGOS) and the Shareholders
    of SIGOS dated April 3, 2006 among Keynote Systems+

10-Q

000-27241

08-09-06


10.1210
.18*

Employment Agreement between Keynote Systems, Inc. and Curtis
    Smith

10-Q

000-27241

08-06-10


10.121
.01

Subsidiaries of Keynote Systems, Inc.











X23
.01

Consent of Deloitte & Touche LLP, Independent
    Registered Public Accounting Firm











X31
.1

Certification of Periodic Report by Chief Executive Officer
    under Section 302 of the Sarbanes-Oxley Act of 2002











X31
.2

Certification of Periodic Report by Chief Financial Officer
    under Section 302 of the Sarbanes-Oxley Act of 2002











X32
.1

Certification of Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350 as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002**











X32
.2

Certification of Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350 as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002**











X     *
    
    Management contract or compensatory plan.**
    
    As contemplated by SEC Release
    No. 33-8212,
    these exhibits are furnished with this Annual Report on
    Form 10-K
    and are not deemed filed with the Securities and Exchange
    Commission and are not incorporated by reference in any filing
    of Keynote Systems, Inc. under the Securities Act of 1933 or the
    Securities Act of 1934, whether made before or after the date
    hereof and irrespective of any general incorporation language in
    such filings.+
    
    Confidential treatment has been requested with regards to
    certain portions of this document. Such portions were filed
    separately with the Commission. 93




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##### Table of Contents



SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the
    Securities Exchange Act of 1934, the Registrant has duly caused
    this report to be signed on its behalf by the undersigned,
    thereunto duly authorized, in the City of San Mateo, State
    of California, on this 10th day of December 2010.



KEYNOTE SYSTEMS, INC. By:
    /s/  UMANG
    GUPTA  Umang Gupta
    Form 10-K
    Name

Title

DatePrincipal Executive Officer:/s/  UMANG
    GUPTAUmang
    Gupta

Chairman of the Board, Chief Executive Officer and Director

December 10, 2010Principal Financial Officer:/s/  CURTIS
    H. SMITHCurtis
    H. Smith

Chief Financial Officer

December 10, 2010Principal Accounting Officer:/s/  DAVID
    F. PETERSONDavid
    F. Peterson

Chief Accounting Officer

December 10, 2010Additional Directors:/s/  JENNIFER
    M. JOHNSONJennifer
    M. Johnson

Director

December 10, 2010/s/  CHARLES
    BOESENBERGCharles
    Boesenberg

Director

December 10, 2010/s/  MOHAN
    GYANIMohan
    Gyani

Director

December 10, 2010/s/  RAYMOND
    L. OCAMPO JR.Raymond
    L. Ocampo Jr.

Director

December 10, 2010/s/  DR. DEBORAH
    RIEMANDr. Deborah
    Rieman

Director

December 10, 2010  94