May
16
2018
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Pluralsight prices its IPO at $15 per share, raising over $300M

Pluralsight priced the shares in its IPO at $15 this afternoon, above its previously set target range of between $12 and $14, and will raise as much as $357 million ahead of its public debut tomorrow morning.

Pluralsight offers software development courses, specifically ones targeting employees that are looking to advance in their careers by acquiring new skills in order to transition to higher-level roles. As knowledge workers become increasingly valuable, especially in larger enterprises with sprawling workforces, companies like Pluralsight have found a sweet spot in building tools that enable companies to help identify talent in their own workforce and train them, rather than have to aggressively search outside the company to satisfy their needs. The company has raised $310.5 million in its IPO, with underwriters having the option to purchase an additional 3.1 million shares and bring that up to $357 million.

The company is one of a continuing wave of enterprise IPOs this year, including multiple successful ones like zScalar and Dropbox — the latter of which was more of a flagship as both a hotly-anticipated one and as a company that possesses a unique business model. But nonetheless, it’s shown that there’s an appetite for enterprise startups looking to go public, which offers those companies a way to raise capital in addition to offering their employees liquidity.

Pluralsight will be another of an increasing pack of unicorns in the Utah tech scene that are on their way to going public. Founded in 2004, Pluralsight was largely bootstrapped until its first financing round in 2013 where it raised $27.5 million from Insight Venture Partners. That firm is the company’s largest shareholder, and since then Pluralsight has raised nearly $200 million in financing.

Its The company’s IPO tomorrow will once again test the appetite for fresh IPOs among public investors. Enterprise companies generally offer a more stable batch for venture portfolios, with predictable and reliable growth that eventually carries it to an IPO with varying levels of success. They’re smaller than blockbuster consumer-ish IPOs, but they are the ones that can provide a stable return for funds like IVP.

May
10
2018
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Dropbox beats expectations for its first quarterly check-in with Wall Street

Dropbox made its debut as a public company earlier this year and today passed through its first milestone of reporting its results to public investors, and it more or less beat expectations set for Wall Street on the top and bottom line.

The company reported more revenue and beat expectations for earnings that Wall Street set, bringing in $316.3 million in revenue and appearing to pick up momentum among its paying user base. It also said it had 11.5 million paying users, a jump from last year. However, the stock was largely flat in extended trading. One small negative signal — and it definitely appears to be a small one — was that its GAAP gross margin slipped slightly to 61.9% from 62.3% a year earlier. Dropbox is a software company that’s supposed to have great margins as it begins to ramp up its own hardware, but that slipping margin may end up being something that investors will zero in on going forward. Still, as the company continues to ramp up the enterprise component of its business, the calculus of its business may change over time.

This is a pretty important moment for the company, as it was a darling in Silicon Valley and rocketed to a $10 billion valuation in the early phases of the Web 2.0 era but began to face a ton of criticism as to whether it could be a robust business as larger companies started to offer cloud storage as a perk and not a business. Dropbox then found itself going up against companies like Box and Microsoft as it worked to create an enterprise business, but all this was behind closed doors — and it wasn’t clear if it was able to successfully maneuver its way into a second big business. Now the company is beholden to public shareholders and has to show all this in the open, and it serves as a good barometer of not just storage and collaboration businesses, but also some companies that are looking to drastically simplify workflow processes and convert that into a real business (like Slack, for example).

Here’s the final scorecard for the company:

  • Q1 revenue: $316.3 million, compared to Wall Street estimates of $308.7 million (up 28% year over year.)
  • Q1 earnings: 8 cents per share adjusted, compared to Wall Street estimates of 5 cents per share adjusted.
  • Paying users: 11.5 million, up from 9.3 million in the same period last year.
  • GAAP gross margin: 61.9%, down from 62.3% last year in the same period last year.
  • Non-GAAP gross margin: 74.2%, up from 63.5% in the same period last year.
  • Free cash flow: $51.9 million, down from $56.5 million in the same period last year.

(The GAAP and non-GAAP comparison is typically related to share-based compensation, which is a key component of employee compensation and retention.)

Dropbox was largely considered to be a successful IPO, rising more than 40% in its trading debut. That does mean that it may have left some money on the table, but its operating losses have been largely stable, even as it looks to woo larger enterprise customers as it — which is a bit of a taller order than its typical growth amid consumers that’s heavily driven by organic growth. Those larger enterprise customers offer more stable, and larger, revenue streams than a consumer base that faces a variety of options as many companies start to offer free storage. The company is now worth well over that original $10 billion valuation as a public company. Dropbox says it has more than 500 million users.

Since going public, the stock has had its ups and downs, but for the most part hasn’t dipped below that significant jump it saw from day one. Keeping that number propped up — and growing — is an important part of growing a business as a public company as it waves off more intense scrutiny and pressure for change from public shareholders, as well as offering competitive compensation packages for incoming employees in order to attract the best talent. It’s also good for morale as it offers a kind of grade for how the company is doing in the eyes of the public, though CEOs of companies often say they are committed toward long-term goals. The company’s shares are up around 11% since going public.

While there have been a wave of enterprise IPOs this year, including zScalar and Pluralsight’s upcoming IPO, Dropbox was largely considered to be a potential gauge of whether the IPO window was still open this year because of its hybrid nature. Dropbox started off as a consumer company based around a dead-simple approach of hosting and sharing files online, and used that to build a massive user base even as the cost of cloud storage was rapidly commoditized. But it also is building a robust enterprise-focus business, and continues to roll out a variety of tools to woo those businesses with consistent updates to products like its document tool Paper. Last month, the company started rolling out templates, as it looked to make traditional workflow processes easier and easier for companies in order to capture their interest much in the same way it captured the interest of consumers at large.

Apr
27
2018
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DocuSign CEO: ‘we’re becoming a verb,’ company up 37% following public debut

DocuSign CEO Dan Springer was all smiles at the Nasdaq on Friday, following the company’s public debut.

And he had a lot to be happy about. After pricing the IPO at a better-than-expected $29, the company raised $629 million. Then DocuSign finished its first day of trading at $39.73, up 37% in its debut.

Springer, who took over DocuSign just last year, spoke with TechCrunch in a video interview about the direction of the company. “We’ve figured out a way to help businesses really transform the way they operate,” he said about document-signing business. The goal is to “make their life more simple.”

But when asked about the competitive landscape which includes Adobe Sign and HelloSign, Springer was confident that DocuSign is well-positioned to remain the market leader. “We’re becoming a verb,” he said. Springer believes that DocuSign has convinced large enterprises that it is the most secure platform.

Yet the IPO was a long-time coming. The company was formed in 2003 and raised over $500 million over the years from Sigma Partners, Ignition Partners, Frazier Technology Partners, Bain Capital Ventures and Kleiner Perkins, amongst others. It is not uncommon for a venture-backed company to take a decade to go public, but 15 years is atypical, for those that ever reach this coveted milestone.

Dell Technologies Capital president Scott Darling, who sits on the board of DocuSign, said that now was the time to go public because he believes the company “is well positioned to continue aggressively pursuing the $25 billion e-signature market and further revolutionizing how business agreements are handled in the digital age.”

Sales are growing, but it is not yet profitable. DocuSign brought in $518.5 million in revenue for its fiscal year ending in 2018. This is an increase from $381.5 million last year and $250.5 million the year before. Losses for this year were $52.3 million, reduced from $115.4 million last year and, $122.6 million for 2016.

Springer says DocuSign won’t be in the red for much longer. The company is “on that fantastic path to GAAP profitability.” He believes that international expansion is a big opportunity for growth.

Apr
27
2018
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DocuSign pops 30% and Smartsheet 23% in their debuts on Nasdaq and NYSE

Enterprise tech IPOs continue to roar in 2018. Today, not one but two enterprise tech companies, DocuSign and Smartsheet, saw their share prices pop as they made their debuts on to the public markets.

As of 1:33 New York time, DocuSign is trading at $40.22, up 39 percent from its IPO price and giving the company a market cap of over $6 billion. Smartsheet is at $19.35, up 29 percent and giving it a market cap of $1.8 billion. We’ll continue to update these numbers during the day.

Smartsheet was first out of the gates. Trading on NYSE under the ticker SMAR, the company clocked an opening price of $18.40. This represented a pop of 22.7 percent on its IPO pricing of $15 yesterday evening — itself a higher figure than the expected range of $12-$14. The company, whose primary product is a workplace collaboration and project management platform (it competes with the likes of Basecamp, Wrike and Asana), raised $150 million in its IPO and is currently trading around $18.30/share.

Later in the day, DocuSign — a company that facilitates e-signatures and other features to speed up contractural negotiations online, competing against the likes of AdobeSign and HelloSign — also started to trade, and it saw an even bigger pop. Trading on Nasdaq under DOCU, the stock opened at $37.75, which worked out to a jump of 30 percent on its IPO price last night of $29. Like Smartsheet, DocuSign had priced its IPO higher than the expected range of $26-$28, raising $629 million in the process.

In the case of both companies, they are coming to the market with net losses on their balance sheets, but evidence of strong revenue growth. And in a period that seems to be a generally strong market for IPOs at the moment, combined with the generally positive climate for cloud-based enterprise services (with both Microsoft and Amazon crediting their cloud businesses for their own strong earnings), that rising tide appears to be lifting these two boats.

DocuSign reported $518.5 million in revenue for its fiscal year ending in 2018 in its IPO filings, up from $381.5 million last year and $250.5 million in 2016. Losses were $52.3 million, but that figure was halved over 2017, when it posted a net loss of $115.4 million. DocuSign’s customers include T-Mobile, Salesforce, Morgan Stanley and Bank of America.

Smartsheet reported 3.6 million users in its IPO filings, with business customers including Cisco and Starbucks. The company brought in $111.3 million in revenue for its fiscal 2018 year, but as with many SaaS companies, it’s going public with a loss. Specifically in 2018 it reported a loss of $49.1 million for 2018, up from a net loss of $15.2 million and $14.3 million in 2017 and 2016 respectively.

Other strong enterprise tech public offerings this year have included Dropbox, Zscaler, Cardlytics, Zuora and Pivotal. All of them closed above their opening prices, in what is shaping up to be a huge year for tech IPOs overall.

We’ll update the pricing as the day progresses.

Apr
12
2018
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Subscription biller Zuora soars 43% following IPO

Subscription biller Zuora was well-received by stock market investors on Thursday, following its public debut. After pricing its IPO at $14 and raising $154 million, the company closed at $20, valuing the company around $2 billion.

It was also much higher than expected. The company said in its filings that it planned to price its shares between $9 and $11, before it raised that range to $11 to $13.

Founder and CEO Tien Tzuo told TechCrunch that he believes “a bet on us is really a bet on an entire shift to a new business model, to a subscription economy.” He is optimistic that subscriptions are the “business model of the future.”

Zuora sees itself as an early pioneer in a growing category. The company believes that more businesses will shift their business models to subscriptions, across sectors like media and entertainment, transportation, publishing, industrial goods and retail.

It helps its 950 customers manage subscriptions, including billing and revenue recognition. Zuora touts that it has 15 of the Fortune 100 businesses as clients.

Zuora’s revenue for its fiscal 2018 year was $167.9 million. This was up from $113 million in 2017 and $92.2 million the year before. Losses remained constant in this timeframe, from $48.2 million in 2016 to $47.2 million in 2018.

“We have a history of net losses, anticipate increasing our operating expenses in the future, and may not achieve or sustain profitability,” warned the requisite risk factors section of the filing.

It also acknowledged a competitive landscape. Oracle and SAP are amongst the companies offering software in the ERP (enterprise resource planning) category. It also competes with other startups like Chargebee.

The largest shareholders are Benchmark, which owned 11.1% prior to the IPO . Founder and CEO Tien Tzuo owned 10.2%. Others with a significant stake included Wellington Management, Shasta Ventures, Tenaya Capital and Redpoint.

The San Mateo, California-based company previously raised over $240 million, dating back to 2007.

Zuora listed on the New York Stock Exchange, under the ticker “ZUO.” Goldman Sachs and Morgan Stanley worked as lead underwriters on the deal. Fenwick & West and Wilson Sonsini served as counsel.

After a slow start to the year for tech IPOs, there has been a flurry of activity in recent weeks. Dropbox and Spotify were amongst the recent public debuts. We also have DocuSign, Pivotal and Smartsheet on the horizon.

Mar
27
2018
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Rackspace may reportedly go public again after a $4.3B deal took it private in 2016

Rackspace, which was taken private in a $4.3 billion deal in August 2016 by private equity firm Apollo Global Management, is reportedly in consideration for an IPO by the firm, according to a report by Bloomberg.

The company could have an enterprise value of up to $10 billion, according to the report. Rackspace opted to go private in an increasingly challenging climate that faced competition on all sides from much more well capitalized companies like Amazon, Microsoft, and Google. Despite getting an early start in the cloud hosting space, Rackspace found itself quickly focusing on services in order to continue to gain traction. But under scrutiny from Wall Street as a public company, it’s harder to make that kind of a pivot.

Bloomberg reports that the firm has held early talks with advisers and may seek to begin the process by the end of the year, and these processes can always change over time. Rackspace offers managed services, including data migration, architecture to support on-boarding, and ongoing operational support for companies looking to work with cloud providers like AWS, Google Cloud and Azure. Since going private, Rackspace acquired Datapipe, and in July said it would begin working with Pivotal to continue to expand its managed services business.

Rackspace isn’t alone in companies that have found themselves opting to go private, such as Dell going private in 2013 in a $24.4 billion deal, in order to resolve issues with its business model without the quarter-to-quarter fiduciary obligations to public investors. Former Qualcomm executive chairman Paul Jacobs, too, expressed some interest in buying out Qualcomm in a process that would take the company private. There are different motivations for all these operations, but each has the same underlying principle: make some agile moves under the purview of a public owner rather than release financial statements every three months or so and watch the stock continue to tumble.

Should Rackspace actually end up going public, it would both catch a wave of successful IPOs like Zscalar and Dropbox — though things could definitely change by the end of the year — as well as an increased need by companies to manage their services in cloud environments. So, it makes sense that the private equity firm would consider taking it public to capitalize on Wall Street’s interest at this time in the latter half.

A spokesperson for Rackspace said the company does not comment on rumors or speculation. We also reached out to Apollo Global Management and will update the post when we hear back.

Mar
22
2018
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Dropbox prices above its original range at $21 as it heads toward an IPO

Dropbox today said it is pricing above the range it originally set ahead of its public listing tomorrow, handing the company a valuation inching ever-closer to its original $10 billion valuation.

Dropbox earlier this week said it would price its initial public offering in a range between $18 and $20 per share, settling on a valuation near $8 billion at the high end of the range (or closer to $8.75 billion, based on its fully-diluted share count). With the new pricing, Dropbox will be valuing itself at around $8.4 billion — or a hair above $9 billion based on its fully-diluted share count. That $18 to $20 range, too, was a step up from its original proposed range, which fell between $16 and $18. Dropbox will be raising more than $700 million in the IPO, in addition to existing shareholders selling more than 9 million shares as part of the process.

What all this means is that Dropbox initially tested the waters to gauge interest, and clearly there was a lot. Companies sometimes set conservative price ranges (though this isn’t always the case) and then revise upwards as they see how much interest there is in potential investors buying shares at that price. Dropbox will make its public debut tomorrow, and the usual process here aims to get as much value for the company as possible while still ensuring the so-called IPO “pop” — usually a jump of around 20%. We’ll probably get the formal price in the form of an SEC filing this evening as it gets ready to list tomorrow.

Should that be successful, Dropbox would fall above the valuation of its last financing round, which gave the company a $10 billion valuation amid a hype wave of consumer startups. Dropbox, one of the original pioneers of online storage, in recent years has found itself looking to slowly scoop up more and more enterprise customers as it tries to create a second lucrative line of business. The company deploys a classic playbook of attracting initial customers within teams and then growing up to the point it reaches the C-Suite of companies, though the reverse is certainly possible as Dropbox matures over time.

CNBC first reported the news.

Mar
20
2018
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Salesforce is reportedly in talks to acquire Mulesoft and the stock is going nuts

After previously investing in Mulesoft, it looks like Salesforce may finish off the deal and is in advanced talks to acquire the data management software provider altogether, according to a report from Reuters this morning.

Mulesoft works with companies to bring together different sources of data like varying APIs. That’s important for companies that have data coming in from all over the place, whether that’s online applications or actual devices, and the company says it has Netflix and Spotify as customers. It would also give Salesforce another piece of the lock-in puzzle for enterprises that need to increasingly manage larger and larger pools of data as they look to start pumping out machine learning tools that can act on all that data.

As usual, these talks could fall apart — we saw this happen with Twitter a few years ago after the company looked at buying what was essentially the largest customer service channel on the planet (as in, great for whining at brands) — but Reuters reports that the deal could be announced as soon as this week. Mulesoft’s stock jumped nearly 20% this year after it went public last year amid a wave of enterprise IPOs jumping through the so-called IPO window while it’s open.

Salesforce is increasingly making a push into AI with products like Einstein, which it launched in 2016. Those tools give businesses predictive services and recommendations, a hallmark of what can come out of increasing piles of data based on customer activity. But all of that data has to come from somewhere, and for now, there are providers outside of the Salesforce ecosystem that stitch all that together. Having it all in one central place makes it easier to parse them through these machine learning algorithms and start building predictive models for their operations.

We reached out to Salesforce and Mulesoft for comment and will update the post when we hear back.

Mar
19
2018
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DocuSign has filed confidentially for IPO

DocuSign is gearing up to go public in the next six months, sources tell TechCrunch.

The company, which pioneered the e-signature, has now filed confidentially, we are hearing. Utilizing a commonly used provision of the JOBS Act, DocuSign submitted its IPO filing behind closed doors and will reveal it weeks before its public debut.

Like Dropbox, which is finally going public this week, San Francisco-based DocuSign has been an anticipated IPO for several years now. It’s raised over $500 million since it was founded in 2003 and has been valued at $3 billion. Kleiner Perkins, Bain Capital, Intel Capital, GV (Google Ventures) and Dell are amongst the many well-known names which have invested in DocuSign.

But like many “unicorns” these days, the company took its time, spending 15 years as a private company. The DocuSign team decided that 2018 is the year for its debut and is targeting an IPO in either the second or third quarter.

DocuSign, which competes with HelloSign and Adobe Sign, amongst others, has been on a mission to get the world’s businesses to sign documents online. The team has worked with large enterprises like T-Mobile, Salesforce, Morgan Stanley and Bank of America.

Real estate, financial services, insurance and healthcare are amongst its key industries. Legal, sales and human resource departments frequently use DocuSign to send and sign documents.

In addition to large enterprises, DocuSign also offers services for small and mid-sized businesses. Individual consumers are able to use DocuSign services, too.

The company has a tiered business model, with corporations paying more for added services. Public investors will be evaluating DocuSign both on its revenue growth and customer retention.

North America is its largest market, but it’s also been focused on expanding throughout the world, including the U.K., France, Australia, Brazil, Singapore and Japan.

Since its inception, DocuSign has undergone several management changes. Early last year, Dan Springer took the helm. He was formerly CEO of Responsys, which went public and then was bought by Oracle for $1.5 billion.

Keith Krach, who is now chairman, had been running the company since 2011. Krach was previously CEO of Ariba, which was acquired by SAP for $4.3 billion.

DocuSign declined to comment.

The past few years have been slow for tech IPOs, which is a disappointment for Silicon Valley venture capitalists who can make a lot of money this way. But for the most part, enterprise tech companies have fared better than consumer tech companies, because strong customer retention makes it easier to predict growth.

Dropbox will debut this week and Spotify is slated to go public in April through a different process known as a “direct listing.” Zuora also recently revealed its IPO filing, implying that the company is expecting to debut in the coming weeks.

Mar
16
2018
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Enterprise subscription services provider Zuora has filed for an IPO

Zuora, which helps businesses handle subscription billing and forecasting, filed for an initial public offering this afternoon following on the heels of Dropbox’s filing earlier this month.

Zuora’s IPO may signal that Dropbox going public, and seeing a price range that while under its previous valuation seems relatively reasonable, may open the door for coming enterprise initial public offerings. Cloud security company Zscaler also made its debut earlier this week, with the stock doubling once it began trading on the Nasdaq. Zuora will list on the New York Stock Exchange under the ticker “ZUO.” Zuora CEO Tien Tzuo told The Information in October last year that it expected to go public this year.

Zuora’s numbers show some revenue growth, with its subscriptions services continue to grow. But its losses are a bit all over the place. While the costs for its subscription revenues is trending up, the costs for its professional services are also increasing dramatically, going from $6.2 million in Q4 2016 to $15.6 million in Q4 2017. The company had nearly $50 million in overall revenue in the fourth quarter last year, up from $30 million in Q4 2016.

But, as we can see, Zuora’s “professional services” revenue is an increasing share of the pie. In Q1 2016, professional services only amounted to 22% of Zuora’s revenue, and it’s up to 31% in the fourth quarter last year. It also accounts for a bigger share of Zuora’s costs of revenue, but it’s an area that it appears to be investing more.

Zuora’s core business revolves around helping companies with subscription businesses — like, say, Dropbox — better track their metrics like recurring revenue and retention rates. Zuora is riding a wave of enterprise companies finding traction within smaller teams as a free product and then graduating them into a subscription product as more and more people get on board. Eventually those companies hope to have a formal relationship with the company at a CIO level, and Zuora would hopefully grow up along with them.

Snap effectively opened the so-called “IPO window” in March last year, but both high-profile consumer IPOs — Blue Apron and Snap — have had significant issues since going public. While both consumer companies, it did spark a wave of enterprise IPOs looking to get out the door like Okta, Cardlytics, SailPoint and Aquantia. There have been other consumer IPOs like Stitch Fix, but for many firms, enterprise IPOs serve as the kinds of consistent returns with predictable revenue growth as they eventually march toward an IPO.

The filing says it will raise up to $100 million, but you can usually ignore that as it’s a placeholder. Zuora last raised $115 million in 2015, and was PitchBook data pegged the valuation at around $740 million, according to the Silicon Valley Business Journal. Benchmark Capital and Shasta Ventures are two big investors in the company, with Benchmark still owning around 11.1% of the company and Shasta Ventures owning 6.5%. CEO Tien Tzuo owns 10.2% of the company.

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