Upland Software, Inc. will soon join the rarefied air of Austin-based public companies. The company announced that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for a proposed initial public offering of its common stock in an effort to raise $50M in capital. It was founded by Jack McDonald, former CEO of Perficient, and Chairman of the Greater Austin Chamber of Commerce.
The company was originally named Silverback Acquisitions, and over the past few years has been making acquisitions of complementary software companies.
- PowerSteering was acquired in February 2012 for $13M.
- Tenrox was acquired in February 2012 for $15.3M
- EPM Live was acquired in November 2012 for $7.7M.
- FileBound was acquired in May 2013 for $14.7M.
- ComSci was acquired in November 2013 for $7.6M
- Clickability was acquired in December 2013 for $12.3M
The company had total revenues of $41M in 2013, and in the first half of 2014 has already reported $31.8M in revenue. If they merely repeated first half revenue in the second half of the year, the company will double year over year. Revenue growth is certainly enabled by the acquisition model, yet profits remain elusive for the company, recording $13.1M in losses so far this year.
The company is backed by Austin Ventures.
In the “you knew this was coming” category, Bazaarvoice filed for an Initial Public Offering (IPO) of it’s stock today. The news is being covered by TechCrunch and The Statesman. The company is one of the fastest growing in Austin, going from 70 employees in April 2007 to over 600 today. In conversations with company co-founder and CEO Brett Hurt, he has always characterized the company’s financial condition by saying that they could stop growing and be a profitable company any time they wanted to. But as long as the market for their software continues to be strong, the company will invest in losses.
The offering is anticipated to raise around $80M in cash for the company. The underwriters are some of the top names on Wall Street including Morgan Stanley, Deutsche Bank Securities, and Credit Suisse Securities. Typical IPO’s are priced in the $12 – $14 per share range, and with BV’s 46M shares outstanding that would be a total company valuation of over half a billion dollars. An offering price has not been set, so I’m totally guessing and using round numbers, but it sounds about right to me.
This offering would make Austin Venture’s stock worth over $200M. Insiders call this type of deal a “fund maker” meaning whichever fund invested in the company would provide a solid return to their limited partners. In reality investments have probably been made from several year’s funds, which can prop up the returns in lower performing funds.
If you enjoy reading long-winded financial infoporn, you can find the registration statement on the SEC website here. It shows things like the company’s revenue growth rate in the past three years from $22M to $38M to $64M.
So, Austin entrepreneurs and other members of the tech community, let’s go out and build a few more great companies like this, shall we?
Austin is about to witness a wave of financial liquidity in the technology community not seen since 1999. Please join me in wishing and hoping that unforeseen circumstances don’t disrupt a hallmark in the chapter of Austin history.
Back in 2006 and early 2007 Austin had seen a positive upswing in investment, consumer spending, and a generally healthy economy since about 2004. Just enough time to get sales up, profits up, growth rates back in line, and find a deal. And by “deal” I mean either a profitable sale or an IPO. An exit. A liquidity event for investors.
This isn’t just a case of the rich getting richer. Certainly the venture investors would make great returns when HomeAway or CreditCards.com would go public. But more importantly, early employees, executives, and the entrepreneurs would see a wave of financial success. That liquidity is what begins the next cycle of innovation.
It’s the VP-level people at a Vignette, Tivoli, Trilogy, Motive, Dell, etc, that pocket a few million dollars and suddenly want to strike out and do their own thing. Chase their own dream. Solve a problem that’s needed solving for a long time.
In the crash of 2007 we missed out on that. We had a handful of companies that were about to get liquid, but the financial markets crashed so hard and so fast that they couldn’t get a deal done. In turn, that left a black hole of startup tech innovation in Austin that lasted for about 3 years. During those years we didn’t have executives that got liquid and began the entrepreneurship cycle all over again.
Well my friends, we are about to see the window open again for Austin. If we can get some deals done in this town, we’ll see a follow-on explosion in tech entrepreneurial activity.
Austin-based chip development firm Wintegra updated their 2006 IPO filing on Friday. The current plan is to raise $115M on a valuation of somewhere between $250M – $500M. The offering will be led by Barclay’s and Deutsche Bank Securities. The people gaining some liquidity from this deal include funds Magma, Concord, and Genesis, chip makers Marvell and Texas Instruments, and CEO Jacob Ben-Zvi.
When it first planned an IPO in 2006 the company had revenues of $31.9M. In 2009 the company had revenues of $28.6M, slightly less than their 2008 revenues. The company has been on a growth run lately, with Q1 revenues of $12.1M thanks to a strategic switch to focusing on mobile backhaul solutions.
“Sell on the growth,” I always say.
If you remember over a year ago we wrote about Convio pulling their IPO and turning the corner on profitability at the same time. Today they re-filed for an IPO, although at $57.5M this one is a little bit smaller. I’m sure while this registration was in the works, they had no idea about last week’s carnage, but by the time it gets priced and hits the street, this week’s Wall St. misery will be far behind us. They’ve received some great coverage.
One interesting note, last time the underwriter was Goldman Sachs, and this time the underwriters are Piper Jaffray and Thomas Weisal Partners. There’s probably a story in there somewhere.
Yes, it was over a year ago that we wrote about SolarWinds filing their S/1 registration statement with the Securities and Exchange Commission. Back then the company was hoping to raise $250M through the offering. A year later the amount of money being raised for the company has been adjust slightly to between $85.5M and $103.5M depending upon where the IPO actually prices (or if it prices).
Still, this is a major coup for SolarWinds, Austin, and the financial markets. Congratulations to everyone involved, and let’s hope that this is a sign that maybe we’ve hit bottom, and things are looking up!
The Rackspace (NASDAQ: RAX) IPO priced, floating 15 million shares at $12.50 per share, netting the company roughly $180M in cash, which is significantly lower than the $400 they hoped to raise. This gives the company a market cap of well over a billion dollars. Noting that good companies don’t go public in bad markets, Convio recently pulled their IPO to wait for better conditions. Rackspace pulled their IPO once in 2000 when the markets were bad, and now it appears that they just wanted to pull the trigger and get it done.
If your broker at Goldman Sachs couldn’t get you any shares, don’t fret. The shares opened at $10/share this morning and are trading at around $11.50.
I guess this wraps up our coverage of Rackspace as an emerging company, but it’s still fodder for the writers at TechCrunch!
Convio, an Austin-based company that provide SaaS CRM software for the non-profit market, is announcing record revenues today which has allowed them to turn the corner on profitabiity. In Q2 the company logged $14.7M in revenue, a 35% increase over the same quarter in 2007. Those sales numbers resulted in $1.3M in operating cash flow.
Almost a year ago, the company filed a registration statement with the SEC for an initial public offering (IPO) led by Goldman Sachs. We don’t have to tell you how ugly the public markets are these days. Convio CEO Gene Austin admits that good companies don’t go public in bad markets, and with Convio’s business growing soildly in the current economic environment, there is certainly no reason to push an IPO out the door. We expect the company to withdraw its S-1 registration statement today.
“We are pleased with our growth, record revenues, cash flow and profitability during a challenging economic period,” said Gene Austin, chief executive officer of Convio. “Nonprofits are buying solutions that will help them control costs, generate revenue and develop stronger relationships with their donors, volunteers and other supporters. Our results are testament to the mainstream acceptance of the on-demand model, our investment in strategic new products and services and our diverse set of proven applications as a cost-effective approach for nonprofits to drive results.”
Here’s some of the interesting items we’re following:
We don’t have a lot of details yet, but San Antonio-based Rackspace stands to raise around $400M with their Initial Public Offering (IPO). They’re taking the same route as Google, in terms of using an auction-style offering to help maximize the funds raised.
The financials are pretty interesting. The company has grown revenues very rapidly in the past few years, but it has also grown overhead pretty quickly. While revenues from 2005 through 2007 have grown from $138M to $223M to $362M, net income has not grown as sharply and actually went down from 2006 to 2007. You might be able to get away with that while you’re private, but Wall Street will hammer you for numbers like that.
The company says it has invested heavily in sales and marketing, additional data center capability, and their new cloud computing architecture (MOSSO). A quick search of comments about MOSSO reveals mixed reviews on the cloud technology, but high marks for support (which the company is know for).
It appears that key executives invested in the company through their personal investment companies, right alongside the venture investors. Management has some pretty good skin in the game, which also means they stand to make a killing when the lockup period expires.
We couldn’t find company founder Richard Yoo in the filing, which must mean he owns less than 5% of the stock. Not too surprising given the $40M in capital that has been poured into the company.