Since the market has been a little slow of late we are taking some extra time to get ahead of the curve and examine some recent filings before they start marketing their deals. Below is a sampling of the more interesting, mostly technology and internet-oriented companies, that caught our eye along with some basic facts. (In many cases the filings are preliminary without pricing and valuation metrics included.)
King Digital Entertainment (KING) – This deal promises to be a monster since this developer of mobile games struck gold with Candy Crush Saga. Revenues increased from $164M in 2012 to $1.88B (yes billion!) in 2013. Net income went from $7.8M in 2012 to $567M in 2013. It’s interesting to note that neither Goldman Sachs nor Morgan Stanley is on this deal. There is most certainly a story there. As it stands JP Morgan, Credit Suisse and BofA are leading with a cast of 10 other co-managers tagging along. The company is based in Dublin, Ireland. We’re hoping for an interesting roadshow.
Borderfree (BRDR) operates a proprietary technology and services platform that enables retailers in the United States to transact with consumers in approximately 100 countries and territories worldwide. Its customers include retailers, department stores, apparel brands, and lifestyle brands that sell a range of physical goods online, including apparel, handbags, jewelry, sporting goods, home décor, and toys. Sounds a little like SPS Commerce (SPSC) and E2open (EOPN) both of which have done very well. Revenues for 2013 were $110M up from $81M YoY. Still making small losses.
A10 Networks (ATEN) provides application delivery controllers for optimizing data center performance; carrier grade network address translation that offers address and protocol translation services for service provider networks; and a distributed denial of service threat protection system for network-wide security protection. Its solutions enable enterprises, service providers, Web giants, and government organizations to enhance, secure, and optimize the performance of their data center applications and networks. The company delivers its solutions on optimized hardware appliances and as virtual appliances across its Thunder Series and AX Series product families. Sounds like an F5 (FFIV) competitor at first glance.
Aerohive Networks (HIVE) delivers cloud-based network management and mobility applications giving end-customers a unified and contextual view of their entire network edge. The company also offers a unified network management system, which enables end-customers and partners to create, deploy, and manage unified wired and wireless policies across their network. In addition, it provides hardware products, including access points, branch routers, and access switches. We’re estimating that the company lost $20M on $95M in revenue during 2013. Full-year financials will be dropped in prior to marketing no doubt. For a networking equipment company this one is fairly small. In general this combined HW/SW approach seems pretty risky and high cost.
Rimini Street (RMNI) provides enterprise software maintenance and support services including issue resolution and software bug fixes; and tax, legal, and regulatory support services, as well as application customization support, performance and interoperability analysis, and a direct hotline. Revenues for 2013 should be about $60M and generate a loss of $7-8M. Looks boring.
Castlight Health (CSLT) provides cloud-based software that enables enterprises to control their health care costs. The company offers Enterprise Healthcare Cloud through a suite of applications that transforms complex data from various internal and external sources into transparent and useful information for employers, and their employees and families. This might be more of a data-oriented than an industry-focused play but we’ll wait for the deal to begin marketing to dig deeper. The coveted duo of Goldman Sachs and Morgan Stanley are leading this one. Revenues for 2013 were are mere $13M but the bulk of that was, you guessed it, recurring SaaS revenue. The flavor everyone favors.
The Rubicon Project (RUBI) offers Advertising Automation Cloud, a scalable software platform that powers and optimizes a marketplace for the real time trading of digital advertising between buyers and sellers. This is a red hot space with names like Rocket Fuel (FUEL) doing very well post their explosive IPO. This one is another Goldman/Morgan tag team. Revenues for 2013 should be about $70-75M with $10M or so of losses.
Coupons.com (COUP) provides digital coupons, including coupons and coupon codes through its platform, which includes Web, mobile, and social channels that enable consumer packaged goods companies (CPGs) and retailers to deliver promotions and media advertisements to consumers at the point of purchasing decision. Its CPG customers comprise food, beverage, drug, personal, and household product manufacturers; and retailers consist of grocery, drug, and mass market merchandisers, as well as clothing, electronic, home improvement, and other stores. This is the new Catalina but on the internet. Revenues are growing 100% and should exceed $150M for 2013. Losses are significant but narrowing.
JD.com (TBD) will be another monster deal based on pure size. As a kind of Amazon.com for China this firm does $10B/year in sales, net margins are zero but one can expect this to be positioned as a raw growth story like Amazon (AMZN) was in the early days. JD.com offers electronics products; and general merchandise products, including audio and video products, and books. The company sells its products directly to customers through its Website jd.com and mobile applications. It also provides an online marketplace for third-party sellers to sell products to customers through its Website and mobile applications; and services, such as online advertising, transaction processing, and Internet financing, as well as a suite of value-added fulfillment and other services for third-party sellers on its online marketplace. JD.com, Inc.
Paylocity (PCTY) provides cloud-based payroll and human capital management (HCM) software solutions for medium-sized organizations in the United States. This is a somewhat dull but very solid space where investors can embrace the SaaS model in slower-growth but generally stick segments. Wageworks (WAGE) is a good example of a similar company. Often these smaller players get acquired by giants like ADP (ADP) or Paychex (PAYX). Revenues are running at $100M and generating small losses.
Resonant (RESN) is a weird one. Not clear they will make it out but they are an R&D stage company working on filter designs for radio frequency (RF) front-ends in the mobile device industry. It intends to develop a series of SAW duplexer designs for RF frequency bands; and reconfigurable filter designs that could be electronically programmed in real time for various RF frequency bands. The company has a collaboration with Skyworks (SWKS). It’s a small deal with only MDB Capital listed on the preliminary prospectus.
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