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Equity Monday: Tesla buys bitcoin, Nexthink raises and Bumble
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and be sure to check out last week’s main ep that dug into Robinhood, Miami and a host of other topics.
This morning we had a pile of news to get through. Here’s the rundown:
- Pony.ai raised another $100 million, which underscores our growing thesis that there is no amount of money yet that will produce the tech required for self-driving cars to work. Perhaps we will get there, but it is going to cost a pretty penny or two.
- Sticking to cars, the Apple-Kia tie-up is kaput, which we should have known the moment it became known. Apple previously bought startup Drive.ai back in 2019, of course.
- Vroom, a 2020 IPO, bought a Super Bowl ad. Who would have expected that? Its shares are up, however, after the ad.
- Still on the car beat, Tesla bought $1.5 billion in bitcoin, and may accept the stuff as tender to buy its vehicles in the future. The move sent the price of bitcoin higher.
- Clubhouse got banned in China.
- Phable raised $12 million, Nexthink raised $180 million and Bumble is targeting a higher share price in its impending IPO.
- And we may have figured out the ∆ between what investors are saying about the seed market, and what data has largely said.
Equity drops every Monday at 7:00 a.m. PST and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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Jamf ups its IPO range, now targets a valuation of up to $2.7B
Today Jamf, a software company that helps other firms manage their Apple devices, raised its IPO price range.
The company had previously targeted a $17 to $19 per-share range. A new SEC filing from the firm today details a far higher $21 to $23 per-share IPO price interval.
Jamf still intends to sell up to 18.4 million shares in its debut, including 13.5 million in primary stock, 2.5 million shares from existing shareholders and an underwriter option worth 2.4 million shares. The whole whack at $21 to $23 per share would tally between $386.4 million and $423.2 million, though not all those funds would flow to the company.
At the low and high-end of its new IPO range, Jamf is worth between $2.44 billion and $2.68 billion, steep upgrades from its prior valuation range of $1.98 billion to $2.21 billion.
Jamf follows in the footsteps of recent IPOs like nCino, Vroom and others in seeing demand for its public offering allow its pricing to track higher the closer it gets to its public offering. Such demand from public-market investors indicates there is ample demand for debut shares in mid-2020, a fact that could spur other companies to the exit market.
Coinbase, Airbnb and DoorDash are three such companies that are expected to debut in the next year’s time, give or take a quarter or two.
Results, multiples
In anticipation of the Jamf debut that should come this week, let’s chat about the company’s recent performance.
Observe the following table from the most-recent Jamf S-1/A:
From even a quick glance we can learn much from this data. We can see that Jamf is growing, has improving gross margins and has managed to swing from an operating loss to operating profit in Q2 2020, compared to Q2 2019. And, for you fans out there of adjusted metrics, that Jamf managed to generate more non-GAAP operating income in its most recent period than the year-ago quarter.
In more precise terms:
- Jamf grew from 26.5% to 29.0% on a year-over-year basis in Q2 2020
- Its gross margin grew by 6% in gross terms, and 8.3% in relative terms
- Its non-GAAP operating income grew 123.4%, to 150.9% in Q2 2020 compared to the year-ago quarter
Profits! Growth! Software! Improving margins! It’s not a huge surprise that Jamf managed to bolster its IPO price range.
Finally, for the SaaS-heads out there, the following:
This data lets us have a little fun. Recall that we have seen possible valuations for Jamf at IPO that started at $1.98 billion to $2.21 billion, and now include $2.44 billion and $2.68 billion? With our two ARR ranges for the end of Q2, we can now come up with eight ARR multiples for Jamf, from the low-end of its initial IPO price estimate, to the top-end of its new range.
Here they are:
- Multiple at $1.98 billion valuation and $238 million ARR: 8.3x
- Multiple at $1.98 billion valuation and $241 million ARR: 8.2x
- Multiple at $2.21 billion valuation and $238 million ARR: 9.3x
- Multiple at $2.21 billion valuation and $241 million ARR: 9.2x
- Multiple at $2.44 billion valuation and $238 million ARR: 10.3x
- Multiple at $2.44 billion valuation and $241 million ARR: 10.1x
- Multiple at $2.68 billion valuation and $238 million ARR: 11.3x
- Multiple at $2.68 billion valuation and $241 million ARR: 11.2x
From that perspective, the pricing changes feel a bit more modest, even if they work out to a huge spread on a valuation basis.
Regardless, this is the current state of the Jamf IPO. Rackspace also filed a new S-1/A today, but we can’t find anything useful in it. A bit like the Jamf S-1/A from Friday. Perhaps we’ll get a new Rackspace document soon with pricing notes.
And, of course, like the rest of the world we await the Palantir S-1 with bated breath. Consider that our white whale.
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Agora’s above-range pricing underscores a welcoming IPO market
In a move that highlights how open the American IPO window may be at the moment, China-based Agora priced its public offering at $20 per share last night, ahead of its $16 to $18 proposed price range. (Update: As noted here, the company has a second HQ in California.)
At $20 per share, the 17.5 million shares sold in its debut raised $350 million, a huge haul for a company that reported around 10% of that figure in Q1 2020 revenue. Provided that your humble servant is doing his Class A to ADS share conversion calculations correctly, Agora is worth about $2 billion at its IPO price.
Agora raised well over $100 million while a private company, backed by GGV Capital, Coatue and others, according to Crunchbase data.
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Agora is an API-powered company that allows customers to embed real-time video and voice abilities in their applications; appropriately, the company’s ticker symbol in America will be “API.”
With an annual run rate of $142.2 million, a $2 billion valuation gives Agora a run-rate multiple of around 14x. That’s rich, but not stratospheric. Perhaps Agora wasn’t able to command a higher multiple due to its sub-70% margins (68.8% in Q1)?
Agora’s financials make its IPO pricing a neat puzzle, so let’s pull apart the good and the bad to better understand why the market was willing to pay more than the company anticipated.
After that short exercise, we’ll make note of the current IPO climate, inclusive of what we learn from Agora. (Spoiler for unicorns out there: Things look good.)
The good, the bad, the odd
We can’t calculate Agora’s enterprise value with confidence until we get updated filings. But taking into account the company’s pre-IPO cash and liabilities, its implied enterprise value/run rate is something around 13x. (That figure will dip if the company’s shares don’t rise after its debut, as its cash position rises from its share sale; more on enterprise values here.)
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IPOs that could happen soon, cannot happen soon enough
Earlier today we took a look at two companies that have filed to go public, nCino and GoHealth. The pair join Lemonade in a march toward the public markets.
But those three firms are hardly alone. We know that DoorDash filed privately earlier this year (it also raised a pile of cash lately, so its IPO may not be in a hurry), and Postmates filed privately last year.
Even more, there are a number of companies whose IPOs we anticipate in short order. So, what follows is our incredibly scientific survey of impending IPOs, starting with those closest to the gate. This list is focused on companies that were at one point venture-backed startups, even if they have become behemoths in the intervening years.
We’ll start with companies that have filed and are moving toward debuts in the next few weeks:
- nCino: This SaaS company is growing nicely, and has pretty good overall economics. We covered its financial history here. Its debut will be a win for North Carolina.
- GoHealth: A Chicago success story that was swallowed by private equity last year, GoHealth is now an incredibly complicated company and offering that features lots of long-term indebtedness. But, its exit should provide reasonable returns to its current owner’s backers, who held onto the firm for less than a year before trying to flip it.
- Lemonade: Lemonade’s IPO is an important moment for a number of modern insurance companies like Root, MetroMile, Kin and others. Not that they all sell the same type of insurance, mind, they don’t. Lemonade does rental and home insurance, while Root and MetroMile are focused on autos, for example. But if Lemonade manages a strong offering, it could provide tailwind to its fellow neo-insurance providers all the same.
- Agora: We’re catching up on the Agora debut. The China-based company’s IPO filing details a company that provides other companies and developers the ability to “embed real-time video and voice functionalities into their applications without the need to develop the technology or build the underlying infrastructure themselves” via APIs. This sounds a bit like what Daily.co is building, if you recall that round. Agora is a company that has good operating income and net income before “accretion on convertible redeemable preferred shares to redemption value.” With that in hand, the company’s earnings are sharply negative. Read that how you want. Agora wants to raise between $280 million and $315 million.
And, next, companies that have filed privately but are still hanging back:
- DoorDash: With lots of new money, DoorDash may not be in a rush to go public. That said, this offering is easily a top-three, most-anticipated offering. And as the company certainly wants to get out while the markets are recovered, perhaps there’s some ambient pressure on the firm to make its private IPO filing public.
- Postmates: Postmates filed privately to go public last year. Since then it has raised a bunch more money. It’s now just keeping along. Go public, Postmates! We want to see your numbers!
- Asana: Asana filed privately to go public earlier this year, which was exciting. Then it didn’t go public, which wasn’t. It’s doing some stuff with Microsoft lately, which is neat. But when we asked the company to stop messing about and give us that S-1, co-founder Dustin Moskovitz told us “No!” Adding to this particular trail of breadcrumbs, Asana crossed the $100 million ARR mark over a year ago, and added some new board members in the interim.
- BigCommerce: Bloomberg reported earlier today that the company is going public, and has filed privately to do so. BigCommerce is an Austin-based SaaS service that provides e-commerce tools to merchants. It’s like an American Shopify, kinda. And backed by over $200 million in venture capital, there’s a lot of bets riding on its eventual debut. Save us the wait, BigCommerce, and file publicly today.
And here are companies that are making the sort of noise that one might make before finally going public:
- Airbnb: Airbnb promised to go public, then COVID-19 happened, and the company had to raise a bunch of expensive capital and lay off around a quarter of its staff. But now it’s bouncing back, and could still go public this year, according to its CEO. Please do, Airbnb, I want to see your numbers.
- Palantir: I am loath to include Palantir in this list, as it’s been on future IPO lists since time immemorial (here’s an example); but, hey, maybe this time it will happen. Why do we think that? Here are two headlines to make it plain: “Palantir Notches $500M Ahead Of Potential IPO” from June 19th, and “Palantir to File IPO in Weeks For Possible Fall Debut” from June 11, 2020. So, yeah, this is a thing.
All of the above is a jam, and I am stoked to dig through the S-1 trenches with you.
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Stop with the Vroom and gloom on Wall Street
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
This time around we’re recording what we call an Equity Shot, a single-topic show that we pull together whenever there’s a news item of sufficient weight that it demands we break our regular cadence and record a little more.
So Danny and Tash and Alex got together to discuss the recent Vroom IPO and Lemonade filing to go public. These are topics that TechCrunch has covered quite a lot lately, so here’s a chronology to help you keep it all straight:
- We dug into Vroom’s economics detailed in its IPO filing
- TechCrunch covered hoped-for price range
- We reported on Vroom’s raised IPO pricing range
- Lemonade filed to go public and we dug into its numbers
- A bit more on the Lemonade IPO filing and what we can learn from it
- And here’s our coverage on Vroom’s final IPO pricing
So you can catch up as you need to. What matters is that public investors have swooned over the Vroom IPO, pushing its pricing and, today, more than doubling its value as a public company. It’s a huge debut, and that bodes well for other gross-margin-light businesses — unicorns, even — that might want to go public.
The IPO window is pretty open, it appears. And best of all, we three disagreed quite a bit this week. It’s a fun show.
OK, that’s enough from us. We are back on Friday. Take care, and keep up the good fight.
Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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The rise of low-margin, no-margin unicorns
Yesterday evening, Vroom, a digital used car retailer, priced its IPO at $22 per share, a figure that was a full $7 above the low end of its first proposed IPO price range. The venture-backed firm first proposed a $15 to $17 per-share IPO price range, which it later raised to $18 to $20 per share.
Pricing at $22 per share meant that there was strong demand for the company’s equity during its IPO process. Pricing strength doesn’t guarantee performance as a public company, but it does provide a proxy for investor interest.
TechCrunch has covered a few IPOs lately, noting along the way that some recent offerings have featured heavy financial backing and incredibly slim margins. Not profit margins, mind, those don’t exist for the firms we’re talking about — we’re discussing gross margins, the most basic element of corporate profitability.
Gross margins are part of why software companies are so valuable. Their incredibly strong gross margins make their revenues, and therefore their operations, attractive to investors; higher gross margins mean more money left over to cover expenses and redistribute to shareholders via dividends and buybacks. Lower gross margin businesses, in contrast, have less money once they are done paying for revenue costs, making it harder for those companies to cover operating costs, let alone give away leftover funds to their owners.
So it has been to our surprise that Kingsoft Cloud, Vroom, and, soon, Lemonade are seeing such strong responses. It’s perhaps even more surprising that these companies managed to raise as much private capital as they did in their youth, despite not sporting gross margins that track with what we expect from venture-backed, tech and tech-ish companies.
With markets at all-time highs — and thus comparable valuations contentedly stretched — it’s probably a great time to take low-margin, growth-y companies public. But that doesn’t mean the situation makes perfect financial sense.
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The IPO window is open (again)
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
ZoomInfo went public yesterday. After pricing its IPO $1 ahead of its proposed range at $21 per share, the company closed its first day’s trading worth $34.00, up 61.9%, according to Yahoo Finance. Then the company gained another 5.2% in after-hours trading.
Whether you feel that this SaaS player was worth the revenue multiple its original, $8 billion valuation dictated — let alone that same multiple times 1.6x — the message from the offering was clear: the IPO window is open.
This is not news to a few companies looking to take advantage of today’s strong equity prices.
Used-car marketplace Vroom is looking to get its shares public before its Q2 numbers come out, despite a history of slim gross profit generation. The company hopes to go public for as much as $1.9 billion, a modest uptick from its final private valuations.
We’ll get another dose of data when Vroom does price — how much investors are willing to pay for slim-margin revenue will tell us a bit more than what we learned from ZoomInfo, which has far superior gross margins. Investors have already signaled that they are content to value high-margin software-ish revenues richly. Vroom is more of a question, but if it does price strongly we’ll know public investors are looking for any piece of growth they can find.
This brings us to the latest news: Amwell has confidentially filed to go public. Formerly known as American Well, CNBC reports that the venture-backed telehealth company has dramatically expanded its customer base:
Telemedicine has seen an uptick in recent months, as people in need of health services turned to phone calls and video chats so they could avoid exposure to COVID-19. The company told CNBC last month that it’s seen a 1,000% increase in visits due to coronavirus, and closer to 3,000% to 4,000% in some places.
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