The summer IPO hiatus will be brief this year and it’s clear from new filings that a heap of deals, especially in technology, are gearing up for September.
There are no deals on the schedule this week as we head into Labor Day. Last week we covered the Palantir filing which is to be a direct listing. If you missed it you can read it here: Parsing Palantir Part I.
Last week we had a surge of 28 new filings. While 10 of these were “placeholder” SPAC filings there are a number of regular-way IPO filings we’re excited about. Here’s a rundown:
GoodRx (GDRX) is a popular online platform for consumers to compare prices for prescription drugs. The name taps into the popular HealthTech theme (Livongo/Teledoc) and gets a boost from the drive to increase transparency and price efficiency in the US healthcare system. Unlike many other technology companies, GoodRx is not just growing rapidly but is massively profitable. They’ll do ~$600M in revenue this year and generate close to ~$200M in operating profit. Morgan Stanley is lead with an army of underwriters and co-managers.
The much-anticipated cloud data software company Snowflake (SNOW) has filed for a $2B IPO. Revenues this year will double to something just over $500M. As usual for a SaaS model, they are still losing money at the operating line. One interesting wrinkle here is it looks like they will provide a shorter lockup period for lower-level employees to sell some portion of their shares. Snowflake offers a cloud-native data warehouse that offers some unique advantages in terms of scaling up and handling large numbers of concurrent users. They are built on other cloud services like Amazon AWS and Microsoft Azure but have built a layer on top that automates many functions and prevents the typical bottlenecks that bedevil data analytics systems at scale. There are 23 banks on the cover with the usual suspects leading.
Unity Software (U) is looking to do a $1B IPO and will be of interest to people who liked Agora (API) which offers a communications infrastructure platform well-suited to mobile gaming. Unity is on the 3D content side and has impressive statistics as a technology platform for thousands of developers. Their engine allows developers to create 3D content that is interactive in real-time – a linchpin of most new games now. Unity should do about ~$600M in revenue this year and still loses money at the operating line.
Project management and productivity software company Asana (SANA?) has filed for a direct listing. They will be looked at in the context of SmartSheet (SMAR), Slack (WORK), and Atlassian (TEAM). Noted VC Tomasz Tunguz put together some notes on their S1 with some comparative metrics we will link to here: Asana S1 Notes. We’ll have our own views on it once we see the roadshow.
On the smaller end of the software spectrum, JFrog (FROG) is in the DevOps space and provides tools to help organizations build and release software updates faster. As software has become the lifeblood of many businesses the management of it is critical. JFrog is focused on the concept of a “continuous release cycle” where small changes can be made, tested, and deployed seamlessly. Revenue for 2020 should be ~$150M and the company should be able to turn profitable this year.
There’s also Sumo Logic (SUMO) which is a smaller version of Splunk (SPLK) that is trying to differentiate based on their ability to provide more continuous, more AI-driven intelligence. They are at a $200M run rate in terms of revenue and $100M run rate in terms of annual losses. We’ll see how they position against the other players. At first glance, it looks like they offer lower-end pricing and an easier way to get started.
American Well (AMWL) is another digital health company coming public. They have all done very well so far and we expect the trend to continue as the US healthcare system evolves to a more customer and value-based business. This company has long had a very strong story so it should resonate well. Their business is still very much in the red. On revenues of $122M for the 1H 2020, they lost $113M.
For those with technology fatigue, we have a good old fashioned industrial company coming public in Pactiv Evergreen (PTEV). These guys make all the containers your food and beverages come in. From egg containers to trays, cups, cartons, bags, and boxes. It’s not glamorous or high profit but Pactiv dominates in the markets they serve generating ~$5B in annual revenues. I expect they will pitch EBITDA and cash flow to get investors more excited. Maybe there are some product innovations they will showcase in the roadshow that might translate into some margin expansion.
On the intriguing side of the ledger is COMPASS Pathways (CMPS) one of the first psilocybin-based biotechnology companies. This one is in Phase 2 for treating depression. There’s a lot of interest in using psilocybin and other substances like MDMA to treat forms of mental illness like depression and PTSD.