This article is from WeChat official account:SandhillRoad (ID: Sandhill-Road), author: Alex Clayton, title figure from: vision China
From the perspective of product form, the North American SaaS market, basic software is also ushering in the rapid development and IPO window period. From 2018 to 2019, the number of IPO cases of basic software companies increased significantly. The development of databases, information security, system monitoring, and multi-cloud management is accelerating.
Meritech Capital’s review of 2019 High-growth SaaS IPOs: In the 12 SaaS companies that were listed on the US stock market during 2019 and grew rapidly, basic software companies accounted for more than 1/3.
Such as cloud application monitoring platform Datadog, network security service provider Cloudflare, network security software developer Crowdstrike, cloud infrastructure monitoring and digital experience manager Dynatrace, etc.
2019 High-growth SaaS IPOs
Note: Among them, the two companies are PE Owned-Ping Identity
Based on the current trend of (in North America)PE acquiring software, such as Vista and Thoma Bravo, it can be speculated that there will be more More and more PE Owned SaaS IPOs.
Overall overview
1) For the above 12 companies, the median time from establishment to listing is 10 years.
Source: Company S-1’s; Unit: Year
2) As of the listed Quarter, the past 12 months(LTM Revenue at IPO Quarter) The median value is US$242 million.
Source: Company S-1’s; Unit: $M
3) The YOY Growth Rate of total revenue, the median value is 47.9%. Among them, CrowdStrike and Zoom(YOY Growth Rate) grew the fastest, reaching 107.8%.
Source: Company S-1’s
4) LTM Subscription or Recurring Revenue /Total Revenue (the last twelve months subscription/recurring revenue, as a percentage of total revenue Ratio), the median is 97.3%.
Source: Company S-1’s
5) As of the listing quarter, the median Implied ARR was $278 million.
Note: Implied ARR = Quarterly subscription revenue * 4, is the forecast of future ARR.
Source: Company S-1’s; Unit: $M
6) During the IPO season, the new net increase in Implied ARR, with a median value of $19.1 million.
Source: Company S-1’s; Unit: $M
7) The median value of LTM GAAP Gross Margin is 75%
Source: Company S-1’s; Unit: $M
8) LTM GAAP Operating Margin, median -23%
Unsurprisingly, most of the above-mentioned SaaS listed companies are operating at a loss. The median value of LTM GAAP Operating Margin is approximately -23%.
Source: Company S-1’s
9) Net income retention rate during the IPO season(Dollar-based Expansion/Net Dollar Retention at IPO Quarter) The median value of span> is 126%.
Among them, Crowdstrike and Datadog are in the top two positions, 147% and 146% respectively.
Source: Company S-1’s
10) Average subscription revenue per customer during IPO season(average ACV or annual contract value)< strong>, the median value is $24.9K.
Medallia, which focuses on large enterprises, and Bill.com, which targets small and medium-sized enterprises, have the largest and smallest average ACV respectively.
Source: Company S-1’s
11)Total Full-time Employees (FTEs) at IPO Quarter, with a median value of 1141 people.
Source: Company S-1’s
12) LTM Revenue per Full-time Employee, with a median value of approximately $224,000.
Source: Company S-1’s
13) Sales efficiency: The median payback period is 20 months.
Note: CAC ratio is used here, and the specific calculation method is CAC ratio=implied net new ARR * gross margin / sales and marketing spend of prior quarter.
It is not difficult to see from the above that Medallia has the longest payback cycle due to its high average ACV and high cost of acquiring large customers, with a median of 45 months. Zoom’s customer acquisition cost is low, so the Payback cycle is the shortest, with a median value of about 9 months.
14) Raising funds in the primary market(Equity Capital )Amount, median value is 2.7 One hundred million U.S. dollars.
Source: Company S-1’s; Unit: $M
Note: The two PE Owned companies mentioned above-Ping Identity(By Vista Equity Partners)and Dynatrace (By Thoma Bravo) is not listed here.
15) Implied Cash Burn to IPO, with a median value of approximately US$178 million.
Implied Cash Burn = Cash on the balance sheet at IPO quarter -total equity capital raised
It is worth noting that Zoom is the fastest-growing and most efficient SaaS company and generated positive Cash when it went public.
Source: Company S-1’s; Unit: $M
Note: Some of the venture capital dollars were likely secondary, which is not reported, so the data above is a proxy for total burn.
16) The market value at the time of listing, with a median value of approximately US$3.49 billion.
Source: Company S-1’s; Unit: $M
17) IPO Size($M), with a median value of US$374 million.
Note: Slack is listed through Direct listing and has not raised initial capital from public market investors, so it is not included in the table below.
Source: Company S-1’s; Unit: $M
18) Stock price performance after IPO
These companies started trading in 2019, although some companies are still in a lock-up period. On the whole, these companies have gained huge appreciation in the open market.
As of the above statistical time (14-Feb-2020), the median return from IPO price is approximately 59%.
Source: Public market trading data. As of 14-Feb-2020. Assumes WORK reference price of $26
19) EV / NTM Revenue Multiples, median value is 14.7X
Source: Public market trading data and FactSet estimates as of 14-Feb-2020
20) Forward / NTM (next-twelve-months)Revenue Growth is average, SaaS company revenue growth, and its valuation multiple Into a positive correlation. The NTM(next-twelve-month) median growth rates of the following companies are 30%.
In addition, it should be noted that most high-growth SaaS companies tend to exceed expectations in the first few quarters after IPO, so the following data estimates may be conservative.
Source: Wall Street Research as of 14-Feb-2020
Summary of key data: SaaS companies listed in 2019