Briefing.com: The Next Big Thing

THE NEXT BIG THING | Updated: 14-Mar-14
In-depth fundamental analysis of upcoming IPOs and spin-offs, as well as commentary that highlights trading-oriented secondary plays on highly-anticipated new issues.

The Week Ahead (QTWO, PCTY, ATEN, BRDR, AKBA, AMBR, MDWD, VSAR, TSLX ...CSLT)

Castlight Health (CSLT), a cloud computing company developing software that seeks to lower health insurance costs for employees and corporations, launched higher at the opening this morning with an astounding 134% pop from its IPO price. CSLT's moon-shot comes at a fortunate time for next week's batch of IPOs as there are four companies that characterize themselves as "cloud computing companies." Given the strong appetite for these software companies, we would expect demand to be healthy, so the pricings and openings should be solid -- assuming a stable broader market. The question becomes, though, how much upside will remain once they do open for trading? Should these deals open sharply higher, the prudent strategy (at least from an investment, not short-term trading standpoint) could be to wait for the initial buzz to wear off and re-visit them once the stock price comes back down to Earth.

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*New IPO Grading Table: In order to provide more clarity and insight into how we derive our grades for IPOs, we have included a new IPO Grading Table in the "Conclusion & Briefing.com Grade" section for our full IPO previews. This is not meant to be an all-inclusive list of all the factors used for grading purposes, but it does include some of the most prominent fundamental areas that we look at.

Q2 Holdings (QTWO)			Fundamental Grade: B
Lead Underwriters	Shares Offered	Expected Price Range	Expected Deal Size	Expected Trade Date
JP Morgan, Stifel	7.8 M	$11-$13	$93.1 M	March 20

Co-Managers: RBC Capital Markets, Raymond James, Canaccord Genuity, Needham & Co

Q2 Holdings (QTWO), which has developed a suite of virtual banking services delivered through a SaaS model, figures to see plenty of interest when it goes public on March 20. Like many other recent cloud IPOs, its financials don't look particularly strong at this point. But, by-and-large, IPO investors have been willing to look past a lack of profitability, instead, focusing on topline growth and growth potential.

QTWO has an interesting story and one that is likely to resonate with most growth-minded investors. Its cloud-based software is specifically tailored for regional and community financial institutions, or RCFIs. There are a few compelling aspects to this opportunity.

First, as we discuss in more detail below, the size of the opportunity is significant. There are more than 13,500 banks and credit unions within this target market in the U.S. Second, unlike massive money center banks, most of these smaller regional banks lack the resources and/or personnel to develop and implement virtual banking services like digital banking on mobile devices, online money transfer/bill pay and balance viewing, or a modern data gathering system. Not only does QTWO offer a "clean slate" for which regional banks can work with to deliver mobile services, but, it also has developed 190 integrations for legacy systems for these banks to use.

Lastly, consumers are increasingly demanding more robust mobile and online capabilities in the financial services market. On this point, a research report by Celent estimates that U.S. financial institutions will spend nearly $13 billion this year on new initiatives heavily focused on enhancing online, mobile, and tablet banking capabilities.

The opportunity ahead of QTWO is attractive and may be best illustrated by its success in Texas, where its operations started. As of today, QTWO is only about 3% penetrated in terms of its total addressable market. However, in Texas, where it is has a longer track record, it is 18% penetrated, illustrating that banks are finding value in its offering and demonstrating the potential it has on a national basis. Its revenue growth, while still solid, isn't sky-rocketing by triple digit rates. But, over the past twelve months, the company has more than doubled its sales staff, so the topline could be poised to pick up in the near future.

How QTWO Generates Revenue

QTWO mainly generates revenue through subscription fees which are based on the number of solutions purchased by its customers, the number of registered users, and the number of bill-pay and other transactions users conduct using its offering, in excess of the levels included in the standard subscription fee. The initial term of a contract averages over five years.

It also generates revenue through the implementation and customer support of its platform.

Market Opportunity

There is plenty of runway ahead for QTWO, which is what makes this deal especially appealing. As noted above, there are about 13,500 financial institutions within QTWO's target market, and as of December 31, 2013, it had a little over 300 customers. Therefore, it is only about 3% penetrated at this point. In dollar terms, QTWO believes that the RCFI market is greater than $3.5 billion annually.

In our intro, we discussed how many regional banks are not fully up to speed on some of the latest technological advances. This may include online banking capabilities like online bill pay and statement viewing, access to accounts via mobile devices, and just making the transition between physical branches and digital channels more seamless. Since regional banks are largely still using old legacy systems that are expensive to maintain and update, QTWO's offering could look enticing to many of these financial institutions looking for a way to provide better, more up-dated services to their clients and prospective clients.

In terms of competition, QTWO lists Insight Corp, First Data Corp, and ACI Worldwide among its competitors. During its road show presentation, it didn't seem to be overly concerned about the competitive landscape saying that its platform is much more robust than anything else currently available.

Financials & Valuation

*In Mlns	FY11	FY12	FY13
Revenue*	$27.0	$41.1	$56.9
Revenue Growth (Y/Y)	N/A	+52%	+38%
Gross Margin	45.2%	38.7%	36.2%
Loss From Operations*	($1.7)	($7.1)	($17.1)
Adj. EBITDA	($277)K	($4.4) M	($12.3) M
Cash Flow from Operations*	($1.1)	($3.0)	($1.5)
Cash & Equivalents*	$15.4	$9.1	$18.7
Long Term Debt*	N/A	$0	$6.3
Revenue Retention Rate	126%	136%	128%
Churn	5.4%	3.6%	3.5%

Similar to many up-and-coming tech IPOs, QTWO's revenue growth is solid -- albeit, not as strong as some other recent cloud IPOs we have seen -- and, it also is not profitable. The lack of profitability definitely is not a "deal-killer" as investors, for the most part, have been willing to overlook operating losses in favor of topline growth. However, what is somewhat discouraging here is that its operating losses are widening and its gross margin is trending in the wrong direction -- and not just by a trivial amount.

On the positive side, its revenue retention rate is very impressive, above the 100% mark, and its churn rate has been low. The high revenue retention rate illustrates QTWO's ability to retain its installed customer base and expand their use of its products, generating more revenue from existing clients.

What really jumps off the page, though, is the degradation of its gross margin, which has slid from 45.2% in FY11 to 36.2% in FY13. There appears to be a couple main factors at play here. First, personnel costs have been ramping higher as it has bolstered its customer support team. Also, direct costs associated with bill-pay transaction processing and other third party intellectual property included in its product has increased as the number of new registered users and transactions process also rise.

Taking a closer look at its FY13 results, revenue climbed by $15.8 million, or 38% year/year, to $56.9 million Of this increase, $12.7 million was generated from a combination of client retention and growth from existing customers, and the addition of registered users from new installed customers. The remaining $3.1 million in revenue growth was generated from increases in the number of transactions made.

Gross margin dipped from 36.2% from 38.7% as its cost of revenue increased by 44%. The culprit here was the aforementioned increases in personnel costs and bill-pay transaction costs. It's also worth pointing out that during its road show presentation, QTWO commented that it has more than doubled its sales staff over the past twelve months. So, this could further dampen margins going forward. The drop in gross margin, as well as the deceleration in revenue growth, caused its operating loss to widen to ($17.1) million from ($7.1) million in FY12.

In terms of its valuation, its P/S metric doesn't look to egregious at about 6.6x FY13 revenue. If we assume 30% revenue growth for FY14, its P/S on a forward basis drops to about 5x. That is actually pretty reasonable compared to past cloud IPOs. Of course, QTWO very well could open with a massive premium versus its IPO price, thereby creating a much less attractive valuation. But, as it stands now, its proposed valuation looks good.

Conclusion & Briefing.com Grade: B

While by no means a perfectly clean story, there is still plenty to like with this IPO. The company is early in its growth curve and it has lots of room for expansion ahead. In order to tap into this addressable market of more than 13,500 banks and credit unions, the company is aggressively building its sales force, doubling it from a year ago. The success QTWO has exhibited in Texas -- its original market -- is encouraging as it has 18% market penetration there compared to 3% nationally. If it can repeat its success in other markets, the company is set up for strong growth ahead.

There are blemishes on its financials, though. Not surprisingly, the company is not profitable. This, by itself, is not a major knock on QTWO given how young the company is. But, what is a bit more concerning is its falling gross margin and widening operation losses. The company has set its longer-term gross margin target at 60%+ with operating income growth of 15-20%. The company is far away from hitting those targets, but, movement towards those goals in the near term would be a positive development.

We also feel its valuation looks reasonable with a trailing P/S of about 6.6x FY13 revenue, based on the mid-point of the expected price range. We believe this valuation does leave some room on the upside, but, as always, the question is how much of a premium will there be to its IPO price once it opens for trading. A 50%+ pop at the open would make its valuation look much less appealing, wiping out much of its upside potential.

To wrap up, this is an IPO that we like and we believe it should see solid interest next week. Should it open with a reasonable premium, we feel it would be an IPO worthy of strong consideration.

IPO Grading Category	Negative	Neutral	Positive
Deal Specifics (Underwriters, Float)			X
Growth Rates/Growth Potential			X
Profitability	X
Valuation			X
Balance Sheet		X
Peer Performance		X

Paylocity Holding (PCTY)			Fundamental Grade: A-
Lead Underwriters	Shares Offered	Expected Price Range	Expected Deal Size	Expected Trade Date
Deutsche Bank, BofA Merrill Lynch William Blair	6.7 M	$14-$16	$100.1 M	March 19

Co-Managers: JMP Securities, Raymond James, Needham

PCTY is a provider of cloud-based payroll & Human Capital Management (HCM) software. Right off the bat, investors are going to be comparing this one to Workday (WDAY), and perhaps to the less-well known but very successful Cornerstone Ondemand (CSOD).

So what is PCTY's competitive position vis-a-vis Workday (WDAY)? As it turns out, the two companies are very similar in terms of their payroll & HCM offerings, but they target very different markets. WDAY targets enterprise customers, while PCTY is focused exclusively on the mid-market.

This should be a successful deal: PCTY has good underwriters (BofA Merrill & Deutsche Bank), the company will go public with a small float (5 mln shares), and PCTY has good growth characteristics (strong revenue growth, rising margins, hovering near profitability). As such, in the days leading up to the IPO you might hear commentators referring to PCTY as a "baby WDAY."

The Business

PCTY, which was founded in 1997, is a provider of cloud-based payroll and HCM software to the mid-market, which is defined as businesses with 20 to 1,000 employees. The company's flagship payroll product is Web Pay, which handles the full range of payroll-related processing, compliance, and reporting tasks. The company views Web Pay as a "gateway" product that leads customers to adopt other products within their suite, such as:

• HR: employee record management and compliance & reporting
• Impressions: social media collaboration tools
• Performance Management: a single system to track and store employee reviews and manage employee goals
• Web Time: tracks time and attendance
• Web Benefits: manages employee benefits, integrated with insurance carrier systems

By the end of FY13 (June), PCTY had 6,850 customers, which on average have about 100 employees each. PCTY's suite is designed to be a “horizontal” product, so the company has customers in a wide range of industries such as business services, financial services, healthcare, manufacturing, restaurants, retail, technology, etc. Revenues are well-diversified, as no customer accounted for more than 1% of revenues during the past 3 years.

While WDAY is the behemoth in the enterprise segment (defined as companies with more than 1,000 employees), PCTY believes that the mid-market is significantly underpenetrated, as it contains over a half a million companies employing an estimated 40 million people. PCTY believes that they are only 2% penetrated in this market segment.

So how big is the mid-market opportunity in dollar terms? Management estimates that their Total Addressable Market (TAM) is quite large, at $8 billion. (The assumptions behind this number are as follows: if those 40 million mid-market employees each purchase PCTY's entire suite, which costs $200/employee per year, then that would equal $8 billion.) Over time, the size of the TAM could increase as the company rolls out new products.

Regarding competition, the company doesn't provide much in the way of specifics in terms of their target mid-market segment. Their prospectus lists enterprise-focused companies such as Ultimate Software (ULTI), Workday (WDAY), SAP AG (SAP), Oracle (ORCL), and Ceridian; payroll service providers such as Automatic Data Processing (ADP), Paychex (PAYX), and other regional providers; and singles out Cornerstone OnDemand (CSOD) as an HCM point product competitor. But in terms of who they consistently bump up against in deals, PCTY didn't provide much color.

Financials

During the three fiscal years (ended June), sales have grown at a +40% CAGR, from $39 mln in FY11 (June) to $55 mln in FY12 to $77 mln in FY13; this growth rate has continued in the first half of FY14, with 1H14 sales growing +40% to $46 mln. PCTY says that recurring revenue makes up 94% of sales, giving them excellent visibility.

Over the past three fiscal years, PCTY's client count has been climbing by 25% per year (to 6,850 at the end of FY13), while average revenue per client has also grown steadily during the same period, albeit at a slower clip of 11% (from $8,533 in FY11 to $10,623 in FY13). It’s worth noting that once PCTY goes public, its debut quarter will be Q3 (March), which is seasonally their strongest quarter.

Gross margin has been inching higher, from 51% in FY11 to 52% in FY12 to 53% in FY13. This is well below the company's long-term goal of gross margins between 65-70%, as the company is focused right now on new customer implementations, which carry a negative margin. The company's recurring revenue gross margin is currently 65%, and since implementation time is so short (3-6 weeks), new customers quickly start contributing to recurring gross margins.

Looking at EBITDA margins, PCTY reported an 8% EBITDA margin in FY13 (June), but expects that margin to eventually expand to 20-25% as the company gains scale.

The company has swung back and forth between small losses and profits in recent years, posting a loss of $774k in FY11, a profit of $998K in FY12, and a loss of $2.3 million in FY13. Typical for a SaaS company though, while net income hovers around break-even, the company has been reporting positive cash flow from operations, with $5.0 million in FY11, $8.6 million in FY12, and $6.2 million in FY13 (which equates to cash flow margins of 13%, 16%, and 8%, respectively).

In terms of the balance sheet, PCTY is expected to have $69 mln in cash following the IPO, and no debt.

Conclusion & Fundamental Grade: A-

There’s a lot to like about PCTY: The company has fast revenue growth, expanding margins, is hovering around profitability, and has consistently been generating positive operating cash flow. The company is squarely focused on the mid-market of the payroll & HCM market, so they’re not in WDAY’s crosshairs (yet), and the TAM is quite large and underpenetrated.

Looking at peer performance, WDAY of course has been an extremely successful IPO, having appreciated +250% from its October 2012 IPO price of $28. Lesser known HCM peer CSOD has been equally successful, up more than +300% from its March 2011 IPO price of $13.

It should be noted though, that PCTY is not growing as fast as WDAY, with the latter’s sales growing at a much faster clip despite WDAY’s much larger size. Also, PCTY management doesn’t have the same history of success as WDAY, but that’s probably an unfair comparison. However, PCTY does strike us as a promising, well-run SaaS company that has targeted a large, but underserved market segment.

In terms of valuation, based on the current price range of $14-16, PCTY is valued at about 8x trailing 12-month sales, which is actually fairly reasonable given where other cloud software peers trade. Of course, if recent history is any guide, there is no way that PCTY will open near the IPO price, so it’s likely that investors who don’t get an allocation will be greeted with a much loftier multiple once it opens for trading. In such a jittery broad market environment, a huge pop at the open will add a big element of risk to the equation.

IPO Grading Category	Negative	Neutral	Positive
Deal Specifics (Underwriters, Float)			X
Growth Rates/Growth Potential			X
Profitability		X
Valuation		X
Balance Sheet			X
Peer Performance			X

A10 Networks (ATEN)			Fundamental Grade: B
Lead Underwriters	Shares Offered	Expected Price Range	Expected Deal Size	Expected Trade Date
Morgan Stanley, BofA Merrill Lynch, JP Morgan RBC Capital Markets	12.5 M	$13-$15	$175.0 M	March 21

Co-Managers: Pacific Crest, Oppenheimer

A10 Networks (ATEN), which is a supplier of network equipment that optimizes data center performance, is set to price its 12.5 million share IPO next week in the $13-15 range. Of the 12.5 million shares being offered, 9.0 million are being offered by the company and the remaining 3.5 million are being offered by selling stockholders. A10 should have a market cap around $825 million, assuming the mid-point of the expected range. A10 does not plan to pay a dividend for the foreseeable future. This deal is being led by Morgan Stanley, BofA Merrill, JP Morgan, RBC, PacCrest and OpCo.

What They Do

A10 Networks is primarily a supplier of Application Delivery Controllers (ADCs) which allow customers to accelerate, secure and optimize the performance of their data center networks. Its products are built on its Advanced Core Operating System (ACOS) platform which is designed to offer substantially greater performance and security relative to prior generation application networking products. A10's software-based ACOS architecture also provides the flexibility that allows the company to offer additional products down the road.

A10 currently offers three software-based application networking products: 1) Application Delivery Controllers (ADCs) which optimize data center performance; 2) Carrier Grade Network Address Translation (CGN) which provide address and protocol translation services for service providers and 3) Distributed Denial of Service Threat Protection System (TPS) for security protection. A10 offers these products both on optimized hardware appliances and as virtual appliances across its Thunder Series and AX Series product families.

A10's ACOS platform architecture is optimized for modern 64-bit CPUs which increasingly have multiple parallel processing cores that operate within a single CPU for higher efficiency and performance scalability. In order to maximize the capabilities of these increasingly dense multi-core CPUs, ACOS uses a proprietary shared memory architecture that provides all cores with simultaneous access to common memory. This shared memory architecture is what differentiates next generation vendors like A10 from first generation technology vendors.

How much faster is it? A10 believes that its products can process two to five times more web transactions in certain head to head product comparisons per unit of computing and memory resources, power, rack space or list price. ACOS's high performance design enables A10's products to address a wide range of today's performance-driven networking challenges. For example, A10 has expanded its products' capabilities to defend against the rising volume of large scale, sophisticated cyber security threats. The flexible software design of ACOS enables customers to deploy A10's products across a number of new models for IT operations, such as managed hosting of their network by a third party provider and Internet cloud-based applications and networks.

Customers: Its customers are about evenly split between Enterprise (53% of 2013 revenue) and Service Providers (47%). The geographic breakdown of 2013 revenue is as follows: US 48%, Japan 28%, Asia/Pacific (non-Japan) 11%, EMEA 8% and other 5%. A10 has its largest market share position in Japan. A10 has sold its products to more than 2,900 customers across 65 countries, including three of the top four US wireless carriers, seven of the top ten US cable providers and the top three wireless carriers in Japan.

Industry Background

Companies are increasingly dependent on their websites and data center infrastructure for business operations. IT administrators struggle to ensure continuous availability of these resources in the face of escalating performance expectations, demands to migrate to cloud computing and increasingly sophisticated cyber security attacks. IT administrators are therefore seeking new application networking technologies to optimize the performance and security of data center applications and networks.

IP traffic for cloud-based applications is expected to grow at a 35% CAGR from 2012 through 2017, while data center traffic is forecast to grow at a 25% CAGR over the same period. As organizations move their business to the cloud, they need application networking platforms optimized for cloud computing that can scale with the performance demands and security expectations of this growth. Also, the rapid growth of mobile devices has overwhelmed the current IP addressing scheme, IPv4, which will be fully exhausted in major markets such as the US, Europe and Asia by 2015. To support this rapid growth, the industry is transitioning to the next-generation addressing system, IPv6. As this transition unfolds, application networking technology will play an increasingly significant role in managing two Internet connection standards, simultaneously extending the viability of IPv4 and enabling end-customers to move to the IPv6 standard.

Cybercriminals are increasingly targeting the data centers of organizations of every type. One particular cyber threat, DDoS, is particularly nefarious and presents a significant threat to any network. As these and other types of attacks have become more frequent and sophisticated, organizations increasingly rely on application networking technologies for defense.

Finally, companies are enhancing the performance of their networks by increasing the data traffic speeds of their data center networks from the 1 and 10 Gigabit Ethernet rates in use over the last ten years to 40 Gigabit Ethernet currently and evolving to 100 Gigabit Ethernet as soon as 2015. These companies require high performance application networking technology to ensure data center application and network performance are maintained despite rapidly escalating data rates.

Competitors: In terms of the competition, A10 believes that its main competitors are as follows. In the ADC market, A10 believes it's well established in this market and it competes against F5 Networks (FFIV), Brocade Communications (BRCD), Cisco Systems (CSCO), Citrix Systems (CTXS) and Radware (RDWR). Within the CGN market, A10 believes that its products primarily compete against products originally designed for other networking purposes, such as edge routers and security appliances from vendors such as Alcatel-Lucent, Cisco and Juniper Networks (JNPR). A10 is a new entrant into the DDoS market (security threats) as it just launched its DDoS detection and mitigation platform, TPS, in January 2014. Its principle competitors in this market are Arbor Networks, a subsidiary of Danaher (DHR) and Radware.

The Evolution of Next Generation Platforms

Conventional networking equipment is built on custom designed semiconductors and is limited to only basic data forwarding and security functions based on a narrow range of address fields within a data packet. Due to these rigid designs and limited capabilities, conventional networking equipment cannot process more advanced application data and thus cannot effectively perform application-layer networking functions. To address these shortcomings, first-generation application networking products were developed that could inspect and take action based upon the specific application of data traffic. This capability is referred to as being application-aware.

First generation application networking products were able to improve application performance and security in ways not possible for conventional networking equipment. Examples of these first-generation application networking products include server load balancers and intrusion prevention systems. However, these first-generation products have fundamental limitations, including general purpose computing architectures that do not provide for sharing of memory resources and thus cannot fully utilize the functionality of modern, multi-core processors. These products lack the performance capabilities necessary to rapidly analyze application data at the rates necessary to meet performance and security requirements in modern data centers.

In order to address these increasingly complex network challenges, a new generation of application-aware networking platforms is needed in order to look deeply into application content, modify content for performance optimization and forward the traffic more quickly. First-generation application networking technology has been unable to respond effectively to the requirements of modern applications and cloud computing. Next-generation application networking technology must be flexible and agile to address the increasing array of networking challenges. A10 believes that the total worldwide addressable market for next-generation application networking is in excess of $12 billion.

Financials

Taking a quick look at the financials, as you'll see in the table below, A10's revenue is divided among products and services. Product revenue is mostly the hardware appliances that have A10's ACOS software installed on them. Purchase of a hardware appliance includes a perpetual license to the included software. Services revenue is mostly from post contract support (PCS) such as technical support, hardware repair and software upgrades.

A10 is seeing strong revenue growth. In 2013, revenue grew by 18% to $142 million. That 18% was a deceleration from the 32% growth seen in 2012. However, that's not too much of a concern as 2012 was helped by some unusually large orders from Japanese wireless carriers as they expanded their mobile network capacity to address growth in data traffic. That helped to artificially spike that 2012 revenue number higher. The normal growth is probably somewhere in the middle. Revenue from Japan declined by a third in 2013 as those customers wound up deploying a lot of that 2012 equipment in 2013. Japan accounted for about half of A10's revenue in 2012 so to see that geography drop by a third in 2013 had a big impact on revenue. Japan accounted for 28% of revenue in 2013.

However, it was not just Japan. Management is convinced that its protracted litigation with Brocade Comms (BRCD) had an impact on 2013 revenue due to the uncertainty created by injunctions issued in the matter. Although the injunctions did not prevent A10 from selling its redesigned products, several customers informed the company that they would not purchase any A10 products until that dispute was settled. A10 settled the lawsuit with Brocade in May 2013 by paying BRCD $75 million. Management does seem to be correct that the litigation impacted them. For example, 1H13 revenue rose by just 10% YoY but after the case was settled in May 2013, 2H13 revenue rose by 25% YoY.

In terms of margins, gross margin has consistently stayed in the high-70% range. However, operating, net and adjusted EBITDA margins have declined the past couple of years even when you exclude litigation costs. Much of the decline was related to A10's decision to significantly boost its sales and R&D teams in order to take the company to the next level. Its sales & marketing headcount increased from 158 at the end of 2011 to 205 at the end of 2012 to 262 at the end of 2013. R&D headcount increased from 134 at the end of 2011 to 176 at the end of 2012 to 210 at the end of 2013.

The new hires caused operating margin to decline to -8% in 2013 from 7.1% in 2012. We think a competitive ADC market may also be to blame. The good news is that A10's target for operating margin is in the 21-25% range as they say they have a lot of operating leverage in their model. However, the result is that A10 was unprofitable in 2013 after reporting non-GAAP profits in 2011 and 2012.

Conclusion & Briefing.com Grade: B

Our sense is that A10 Networks will generate a good amount of interest when it makes its IPO debut next week. It has its flaws but A10 is generally seen as an up-and-coming player in the ADC space against more established rivals like F5 and Citrix Systems. A10 is seen as a next-generation type of network play as general purpose computing architectures do not provide for sharing of memory resources. A10 is able to fully utilize the functionality of modern, multi-core processors.

There are negatives to the story. A10's revenue growth rate slowed in 2013. Management makes the argument that 2012 was helped by some unusually large orders from Japan and the Brocade litigation scared some customers away. We hope that's all it was but that is a bit of a concern. We are also concerned about margins declining each of the past two years. In fairness, they did hire a lot of sales and R&D people, there have been some recent product launches and the Japan/Brocade issues probably hurt as well. They have a robust 21-25% operating margin target so hopefully margins will bounce back soon.

It's important to note that the ADC market has gotten quite competitive in recent years. CSCO left the ADC market in 2012 as it was getting pummeled by next generation vendors like FFIV and CTXS. A10 is more similar to these latter two than to Cisco. It may be that this competitive environment is pressuring margins as well.

Another negative on A10 is the perception that that the company may be poaching other companies' technology. In January 2013, an appeals court upheld a lower court verdict that said A10 infringed Brocade's patents. A10 wound up settling for $75 million a few months later. Then, in May 2013, Radware filed suit against A10 alleging that A10's AX and EX products infringe its patents. Then, in November 2013, Parallel Networks, a patent holding company, filed a lawsuit against A10. These latter cases are ongoing. It was good to see A10 settle its lawsuit with Brocade but that case went on for a long time and damage was done, they probably should have settled earlier. It seems the dispute scared away potential customers.

Overall, we think this IPO will be in demand. We have concerns about the financials, but it's a Morgan Stanley-led tech deal with a small float (12.5 million shares). It also helps that probably their closest competitor FFIV is up 35% since early November and is near a new 52-wk high. RVBD has also been strong, fueled by takeover speculation. However, CTXS and RDWR have not been doing great lately. Also, at the mid-point of the expected range, A10 would be pegged at a LTM price/sales of 5.8x, which is quite reasonable for a tech IPO although the stock very well may open much higher.

Globoforce (THNX)			Fundamental Grade:
Lead Underwriters	Shares Offered	Expected Price Range	Expected Deal Size	Expected Trade Date
JP Morgan, Credit Suisse UBS, Stifel	4.4 M	$16-$18	$75.1 M	March 21

Co-Managers: Raymond James

New ICON: We wanted to alert you to a subtle change and a new "Notable" icon in this section of our "The Week Ahead" report. Our goal is to provide more in-depth previews on the IPOs that we believe are highest in quality and/or will generate the most interest from investors and traders. You will find those previews in the section above.

However, while the IPOs contained in the "Other IPOs On The Calendar" section either have clear fundamental flaws or are unlikely to create much buzz, occasionally there will be some that we feel warrant extra attention. These may be highly speculative names operating in a hot sector, or, simply names that we feel could work in the current environment. With that in mind, we have added a new "Notable" icon to help distinguish which IPOs in this section are also worth keeping on the radar.

Borderfree (BRDR) Expected IPO Date: March 21 Industry: e-Commerce Technology

Lead Underwriters

Credit Suisse, RBC Capital Markets, Pacific Crest

Shares Offered

5.0 M

Expected Price Range

$14-$16

Expected Deal Size
$75.0 M

Revenue*

$110.5 M

Y/Y Rev Growth*
+36%

Net Inc/Loss*
($654)K

Y/Y Net Inc. Growth*
NMF

BRDR focuses on cross-border ecommerce, operating a platform that enables U.S. retailers to transact with consumers in more than 100 countries and territories worldwide. Its customers use its platform to develop a seamless global ecommerce business across the web, mobile, and in-store channels to sell to international customers. BRDR manages all aspects of the international shopping experience, including site localization, multi-currency pricing, payment processing, fraud management, landed cost calculation, customs clearance and brokerage, and global logistics services.

Its customers include some of the largest U.S. retailers including Aeropostale, J. Crew, Lands' End, Macy's Neiman Marcus, Under Armor, and Williams-Sonoma. As of December 31, 2013, its total customer count stood at 91.

It derives its revenue from fees paid to it by its customers based on a percentage of their sales generated through BRDR's platform. Its customer contracts typically have multi-year initial terms ranging from one to four years, followed by one-year renewal periods. It generates additional revenue from fulfillment services, foreign exchange and other transaction related fees.

The market opportunity for international cross-border ecommerce is large, with cross-border consumers expected to spend $24 bln on physical goods from U.S. online retailers in 2014. However, BRDR believes the market remains significantly under-monetized by U.S. retailers today. Many U.S.-based online retailers view international expansion as important to their overall business strategies, yet international ecommerce revenues are limited today for many of these retailers.

*FYE13

Akebia Therapeutics (AKBA) Expected IPO Date: March 20 Industry: Pharmaceuticals

Lead Underwriters

Morgan Stanley, Credit Suisse, UBS

Shares Offered

4.9 M

Expected Price Range

$14-$16

Expected Deal Size
$76.0 M

Revenue*

Y/Y Rev Growth*
--

Net Inc/Loss*
($13.2) M

Y/Y Net Inc. Growth*
NMF

AKBA is a biopharmaceutical company focused on developing proprietary therapeutics based on hypoxia inducible factor (HIF) biology, and the commercialization of these products for patients with kidney disease. HIF is the primary regulator of the production of red blood cells in the body and a potentially novel mechanism for treating anemia.

Its lead product candidate, AKB-6548, is being developed as a once-daily oral therapy that has successfully completed a Phase 2a proof of concept study demonstrating that AKB-6548 safely and predictably raised hemoglobin levels in patients with anemia secondary to chronic kidney disease (CKD) not requiring dialysis.

AKBA is conducting a Phase 2b trial in patients with anemia secondary to CKD who are not dependent on dialysis and expect data to be available in 4Q14. It has also initiated a development program for patients dependent on dialysis. If the results of the trial are positive, AKBA expects to initiate Phase 3 trials for anemia secondary to CKD in 2015 and would anticipate submitting a New Drug Application in the U.S. by 2018 if the Phase 3 data are favorable.

AKBA owns worldwide rights to its HIF-based product candidates -- including AKB-6548. If approved by regulatory authorities, it plans to commercialize AKB-6548 in the U.S. by itself and intends to seek one or more collaborators to commercialize the product candidate in addition markets.

*FYE13

Amber Road (AMBR) Expected IPO Date: March 21 Industry: Internet Software

Lead Underwriters

Pacific Crest, Canaccord Genuity, Needham, Raymond James

Shares Offered

6.5 M

Expected Price Range

$10.50-$12.50

Expected Deal Size
$75.0 M

Revenue*

$52.5 M

Y/Y Rev Growth*
+21%

Net Inc/Loss*
($14.4) M

Y/Y Net Inc. Growth*
NMF

AMBR is a provider of a cloud-based global trade management (GTM) platform, automating import and export processes to enable goods to flow across international borders more efficiently and profitably, in a compliant way. Its platform combines software, trade content sourced from government agencies and transportation providers in 125 countries, and a global supply chain network connecting its customers with their trading partners -- including suppliers, freight forwarders, customs brokers, and transportation carriers.

The company delivers its product in individual models, or as a suite, depending on the customer's needs. AMBR's GTM suite automates many trade functions helping to minimize import & export costs, optimize transportation, track shipments within a supply chain, and automate compliance with regulations and free trade agreements. The company says that its GTM solution drives value to its customers through faster and more predictable delivery times, less labor, reduced in-transit inventories, and reduced international trading costs such as brokerage fees, logistics fees, transportation costs and customs duties.

It sells its offering to many of the largest companies in the world, including companies such as General Electric, Monsanto, Sherwin Williams, Tyco, and Walmart. Although its customers are headquartered primarily in the U.S. and Europe, it has deployed its platform in more than 80 countries.

AMBR states that sustained increases in global trade volumes are driving demand for its software. For example, the U.S. Department of Commerce reported that in 2012, U.S. companies imported approximately $2.3 trillion of goods and exported approximately $1.5 trillion of goods. In addition to rising global trade volumes, importers and exporters must cope with growing supply chain complexity. A single shipment may involve more than a dozen parties, multiple languages, time zones, currencies, modes of transport and a large number of ever-changing laws and regulations. AMBR's platform addresses the growing complexity of the global trade landscape.

*FYE13

MediWound (MDWD) Expected IPO Date: March 30 Industry: Pharmaceuticals

Lead Underwriters

Credit Suisse, Jefferies, BMO Capital Markets

Shares Offered

5.0 M

Expected Price Range

$14-$16

Expected Deal Size
$75.0 M

Revenue*

Y/Y Rev Growth*
--

Net Inc/Loss*
($15.4) M

Y/Y Net Inc. Growth*
NMF

MDWD is a biopharmaceutical company focused on developing & commercializing products to treat unmet needs in the fields of severe burns, chronic, and other hard-to-heal wounds and connective tissue disorders. Its biopharmaceutical product, NexoBrid, received marketing authorization from the European Medicines Agency (EMA) in December 2012 for removal of dead or damaged tissue (known as eschar) in adults with deep partial and full thickness thermal burns.

NexoBrid is a topically-applied product that removes eschar in four hours without harming the surrounding healthy tissues. The removal of eschar is a procedure also known as debridement, which is a critical first step in the successful healing of severe burns. The company says that NexoBrid's rapid and selective debridement alleviates the known risks associated with eschar such as infection, eventual sepsis, wound deterioration and consequential scarring.

The company launched NexoBrid in December 2013 in the E.U. through its wholly-owned subsidiary, targeting burn specialists in burn centers and hospital burn units. It plans to initiate a Phase 3 pivotal study in the U.S. in 1H14 to support a Biologics Licence Application (BLA) submission to the FDA.

In addition to the E.U and U.S, MDWD plans to launch in other international markets as well, such as Latin America and certain Asian countries. Furthermore, it is using its patented proteolytic enzyme technology -- which underlies NexoBrid -- for use in other indications such as debridement of chronic and other hard-to-heal wounds. A Phase 2 proof-of-concept study demonstrated the efficacy in various chronic and hard-to-heal wounds and it plans to initiate a Phase 2 study by 1H14.

*FYE13

Versartis (VSAR) Expected IPO Date: March 31 Industry: Pharmaceuticals

Lead Underwriters

Morgan Stanley, Citigroup

Shares Offered

4.6 M

Expected Price Range

$16-$19

Expected Deal Size

Revenue*

Y/Y Rev Growth*

Net Inc/Loss*

Y/Y Net Inc. Growth*

VSAR is an endocrine-focused biopharmaceutical company initially developing its long-acting recombinant human growth hormone, VRS-317, for growth hormone deficiency (GHD). The company says that a key limitation to current recombinant human growth hormone (rhGH) products is that they carry the burden of daily injections over multiple years, often resulting in poor compliance, which in turn can lead to sub-optimal treatment outcomes in GHD patients.

VRS-317 is a new chemical entity, combining the same rhGH amino acid sequence utilized in currently approved rhGH products, with a proprietary in-licensed half-life extension technology to enable less frequent administration. VSAR is currently conducting the Phase 2a stage of its pediatric GHD clinical trial. The primary efficacy endpoint in the ongoing Phase 2a stage of this trial is six month mean height velocity, and it expects to have complete six month mean height velocity data by June 2014.

VRS-317 is intended to reduce the burden of daily treatment by requiring many fewer injections, potentially improving treatment outcomes. Its first targeted indication for VRS-317 is pediatric GHD, representing an existing target market of ~$1.5 billion. Based on market research, VSAR believes that the market for daily rhGH products is likely to grow to over $4 bln by 2018. The company believes that VRS-317, if approved, would not only take significant market share versus current daily rhGH products, but would further expand the overall rhGH market due to its greater convenience of administration.

The company may develop VRS-317 for adult GHD, idiopathic short stature, or ISS, which is short stature of unknown cause, and Turner Syndrome, which is an X-chromosomal deficit or deletion in females. Adult GHD, ISS and Turner Syndrome together account for approximately 30% of the global rhGH market. VSAR has global rights to VRS-317 and, if VRS-317 is approved, given the highly concentrated prescriber base, it intends to commercialize it with its own specialty sales force in the United States and Canada, and potentially other geographies.

*FYE13

TPG Specialty Lending (TSLX) Expected IPO Date: March 31 Industry: Specialty Finance

Lead Underwriters

JP Morgan, BofA Merrill Lynch, Goldman Sachs, Citigroup, Wells Fargo, Barclays

Shares Offered

7.0 M

Expected Price Range

$16-$17

Expected Deal Size
$280.5 M

Revenue*

Y/Y Rev Growth*
--

Net Inc/Loss*
--

Y/Y Net Inc. Growth*
--

TSLX is a specialty finance company focused on lending to middle-market companies. By middle-market companies, it means companies that have annual EBITDA of $10-$250 mln. It generates revenue primarily in the form of interest income from the investments it holds. Additionally, it generates income from dividends on direct equity investments, capital gains on the sales of loans, debt, and equity securities, and various loan origination fees.

Since TSLX began its operations in July 2011, it has originated more than $2.6 bln aggregate principal amount of investments and retained approximately $1.7 bln aggregate principal amount of these investments on its balance sheet prior to any subsequent exits and repayments.

It focuses on U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities.

*FYE13

Castlight Health (CSLT): Castlight Health Rockets Higher, Creating Eye-Popping Valuation ... Published on 3/14/14.

Not to beat a dead horse, here, but, here is an updated look at its valuation after CSLT's mind-boggling open. With a recent price of around $41.75, its market cap is now about $3.15 billion. CSLT identified its total addressable market size to be about $5 billion. The company did $13 million in revenue last year. That creates a trailing P/S of 242x. If we are to assume 200% revenue growth for FY14, its P/S on a forward basis would be 81x. In my recollection, there are no IPOs in recent history that approach those levels. FireEye (FEYE) had a very rich valuation, currently at about 70x on a trailing basis, 18x on a forward basis, but that looks like a value stock compared to CSLT.

CSLT is nowhere near profitability, and likely won't be for some time. It can be argued that most pharmaceutical companies that have gone public recently aren't profitable -- or even generating revenue yet -- and those too have seen huge gains. Then again, it can also be argued that perhaps those unprofitable pharmaceutical IPOs were also beneficiaries of some over-exuberance as well.

In our report on CSLT this morning (click here to access), we commented that valuation probably won't play a factor in today's action. It certainly is not. It may not be a factor over the next few trading days either. However, once the delirium dissipates, the stock will be prone to a potentially wicked sell-off as traders cash in on their short term profits. In other words, tread very, very carefully with this one.

In this section of our weekly column, we provide a rolling list of each IPO to price over the past few months. Additionally, performance measures will be included in the table, as well as our grade or sentiment reading, if applicable.

If you would like to copy and paste the recent IPO tickers into your chart watchlist or spreadsheet, click here to pull up an un-formatted ticker list.

Name	Ticker	IPO Date	IPO Price Vs. Expectation	Increase/Decrease in Deal Size	Open Price % Move Vs. IPO Price	Current Price % Move Vs. IPO Open Price	Total Return (Current Price Vs. IPO Price)	Fundamental Grade
Castlight Health	CSLT	3/15/14	$16/$13-$15	Increase	$37..50/+134%	--	--	B-
Dipexium Pharmaceuticals	DPRX	3/13/14	$12/$12-$14	Increase	$14.60/+22%	-4%	+17%	--
Galmed Pharma	GLMD	3/13/14	$13.50/$12-$14	Increase	$17/+26%	-16%	+6%	--
Achaogen	AKAO	3/12/14	$12/$12-$14	Increase	$12.85/+7%	+27%	+36%	--
Coupons.com	COUP	3/7/14	$16/$12-$14	Increase	$27.15/+70%	-1%	+68%	B-
Aquinox	AQXP	3/7/14	$11/$10-$12	Increase	$11.80/+7%	+17%	+25%	--
Recro Pharma	REPH	3/7/14	$8/$10-$12	Increase	$8.53/+7%	-3%	+4%	--
Varonis Systems	VRNS	2/28/14	$22/$19-$21	Increase	$39/+77%	+11%	+96%	B
Lumenis	LMNS	2/27/14	$12/$15-$17	No Change	$12.50/+4%	-3%	+1%	B
Semler Scientific	SMLR	2/20/14	$7/$7.50-$9.50	Increase	$6.00/-14%	+6%	-9%	--
Inogen	INGN	2/14/14	$16/$16-$18	No Change	$16/Flat	+25%	+25%	--
Concert Pharm	CNCE	2/13/14	$14/$12-$14	Increase	$15.75/+13%	-12%	-1%	B+
Amedica	AMDA	2/13/14	$5.75/$8-$10	Decrease	$6.16/+7%	+20%	+29%	--
Installed Building Products	IBP	2/13/14	$11/$14-$16	Decrease	$12.30/+12%	+18%	+32%	B+
Eagle Pharmaceuticals	EGRX	2/12/14	$15/$14-$16	No Change	$15.50/+3%	-5%	-1%	B+
Talmer Bancorp	TLMR	2/12/14	$13/$12.50-$14.50	No Change	$13.75/+6%	Flat	+5%	--
Flexion Therapeutics	FLXN	2/11/14	$12/$12-$14	No Change	$16/+33%	+23%	+52%	--
NephroGenex	NRX	2/11/14	$12/$12-$14	No Change	$12.12/+1%	-19%	-18%	--
Argos Therapeutics	ARGS	2/7/14	$8/$13-$15	Increase	$8.90/+11%	+24%	+38%	--
GeoPark	GPRK	2/7/14	$7/$7-$8	Decrease	$6.74/-4%	+15%	+10%	B
Revance Therapeutics	RVNC	2/6/14	$16/$14-$16	Increase	$21.00/+31%	+83%	+141%	B
Eleven Biotherapeutics	EBIO	2/6/14	$10/$13-$15	Increase	$10.35/+4%	+63%	+69%	--
Egalet	EGLT	2/6/14	$12/$11-$13	Increase	$12.50/+4%	+44%	+50%	--
Ladder Capital	LADR	2/6/14	$17/$16-$18	No Change	$16.60/-2%	+12%	+9%	--
CM Finance	CMFN	2/6/14	$15/$15	No Change	$15.30/+2%	+1%	+3%	--
Genocea Biosciences	GNCA	2/5/14	$12/$12-$14	No Change	$11.70/-3%	+58%	+54%	--
Auspex Pharma	ASPX	2/5/14	$12/$10-$12	Increase	$15/+25%	+101%	+151%	--
uniQure	QURE	2/5/14	$17/$13-$15	Increase	$17/Flat	-9%	-9%	--
Biocept	BIOC	2/5/14	$10/$10-$12	Increase	$10/Flat	-27%	-27%	--
Continental Building Products	CBPX	2/5/14	$14/$16-$18	Decrease	$14.66/+5%	+30%	+37%	B-
Intrawest Resorts	SNOW	1/31/14	$12/$15-$17	No Change	$11.11/-7%	+26%	+17%	C
Malibu Boats	MBUU	1/31/14	$14/$13-$15	No Change	$17.30/+24%	+36%	+68%	B+
Trevana	TRVN	1/31/14	$7/$12-$14	Decrease	$7.11/+2%	+31%	+33%	--
Ultragenyx Pharma	RARE	1/31/14	$21/$19-$20	Increase	$45.80/+118%	+32%	+188%	--
New Home Co	NWHM	1/31/14	$11/$15-$17	No Change	$11.50/+5%	+31%	+36%	B-
Cara Therapeutics	CARA	1/31/14	$11/$11-$13	No Change	$11.62/+6%	+59%	+68%	--
Dicerna Pharmaceuticals	DRNA	1/30/14	$15/$14	Increase	$30/+100%	+19%	+139%	--
Celladon	CLDN	1/30/14	$8/$14-$16	Increase Shares/Decrease Price Range	$9.90/+24%	+48%	+83%	--
North Atlantic Drilling	NADL	1/29/14	$9.25/$8.50-$10.00	No Change	$8.50/-8%	-3%	-10%	--
Care.com	CRCM	1/24/14	$17/$14-$16	No Change	$21.21/+25%	-16%	+5%	B+
Rice Energy	RICE	1/24/14	$21/$19-$21	Increase	$21.90/+4%	+11%	+16%	--
Santander Consumer USA	SC	1/23/14	$24/$24-$25	Increase	$25.75/+7%	-11%	-5%	--
EP Energy	EPE	1/17/14	$20/$23-$27	Decrease	$19.90/-1%	-7%	-7%	--
CHC Group	HELI	1/17/14	$10/$12-$14	Increase	$9.30/-7%	-17%	-23%	--
RSP Permian	RSPP	1/17/14	$19.50/$19-$21	No Change	$20.50/+5%	+26%	+33%	--
Cypress Energy Partners	CELP	1/16/14	$20/$19-$21	No Change	$20/Flat	+18%	+16%	--
AMC Entertainment	AMC	12/18/13	$18/$18-$20	No Change	$19.18/+7%	+24%	+33%	B-
Nimble Storage	NMBL	12/13/13	$21/$18-$20	Increase	$31.10/+48%	+37%	+102%	B
Cheniere Energy Partners	CQH	12/13/13	$20/$19-$21	Increase	$19.60/-2%	+6%	+4%	--
Fidelity & Guaranty Life	FGL	12/13/13	$17/$17-$19	No Change	$19/+12%	+25%	+40%	--
Hilton Hotels	HLT	12/12/13	$20/$18-$21	Increase	$21.30/+7%	+4%	+10%	B
TetraLogic	TLOG	12/12/13	$7/$7	Decrease	$7/Flat	+20%	+20%	--
Scorpio Bulkers	SALT	12/12/13	$9.75/$9.75	Increase	$9.75/Flat	-2%	-2%	--
Kindred Bio	KIN	12/12/13	$7/$6-$8	Increase	$8.75/+25%	+183%	+253%	--
CatchMark Timber Trust	CTT	12/12/13	$13.50/$13-$15	No Change	$13.50/Flat	-3%	-3%	--
Aramark Holdings	ARMK	12/12/13	$20/$20-$23	No Change	$20.26/+1%	+40%	+41%	--
Autohome	ATHM	12/11/13	$17/$12-$14	No Change	$30.23/+78%	+40%	+149%	B+
Valero Energy Partners	VLP	12/11/13	$23/$19-$21	No Change	$28.25/+23%	+34%	+64%	B+
Kofax	KFX	12/5/13	$5.85/$5.25-$6.25	No Change	$8/+37%	+8%	+48%	B-
Xencor	XNCR	12/4/13	$5.50/$7	Decrease	$5.95/+8%	+130%	+149%	--
Vince Holding	VNCE	11/22/13	$20/$17-$19	No Change	$29.60/+48%	-8%	+36%	A-
Oxford Immunotec	OXFD	11/22/13	$12/$13-$15	No Change	$14.00/+17%	+73%	+102%	--
500.com	WBAI	11/22/13	$13/$11-$13	Increase	$20.03/+54%	+106%	+215%	C
Sungy Mobile	GOMO	11/22/13	$11.22/$9.50-$11.50	No Change	$14.11/+26%	+98%	+149%	--
Ideal Power	IPWR	11/21/13	$5/$5	Increase	$5.25/+5%	+86%	+95%	--
Evogene	EVGN	11/21/13	$14.75/$17.16	No Change	$15.75/+7%	+24%	+33%	--
Navigator Holdings	NVGS	11/20/13	$19/$17-$19	Increase	$20.27/+7%	+20%	+28%	--
zulily	ZU	11/15/13	$22/$18-$20	Increase	$39/+77%	+58%	+179%	B+
Relypsa	RLYP	11/15/13	$11/$16-$19	No Change	$12.59/+14%	+237%	+286%	--
Tandem Diabetes Care	TNDM	11/14/13	$15/$13-$15	Increase	$19.50/+30%	+29%	+67%	--
Houghton Mifflin Harcourt	HMHC	11/14/13	$12/$14-$16	No Change	$14/+17%	+41%	+64%	--
Eros Intl	EROS	11/13/ 13	$11/$12-$13	Decrease	$11.22/+2%	+34%	+36%	--
Chegg	CHGG	11/13/13	$12.50/$9.50-$11.50	No Change	$10.96/-12%	-40%	-48%	B-
Dynagas LNG Partners	DLNG	11/13/13	$18/$19-$21	No Change	$17/-6%	+27%	+20%	--
Extended Stay America	STAY	11/13/13	$20/$18-$21	No Change	$21.01/+5%	+13%	+19%	B+
JGWPT Holdings	JGW	11/8/13	$14/$15-$16	Decrease	$13.38/-4%	+36%	+30%	--
NMI Holdings	NMIH	11/8/13	$13/$11-$13	No Change	$14/+8%	-16%	-9%	--
Twitter	TWTR	11/7/13	$26/$23-$25	Increase	$45.10/+73%	+19%	+106%	B+
StoneCastle Financial	BANX	11/7/13	$25/$25	Decrease	$25.05/Flat	-2%	-2%	--
LGI Homes	LGIH	11/7/13	$11/$13-$15	No Change	$12.26/+11%	+37%	+52%	B
Mavenir Systems	MVNR	11/7/13	$10/$15-$17	Increase	$11.71/+17%	+41%	+65%	B+
Norcraft Companies	NCFT	11/7/13	$16/$16-$18	Increase	$15.80/-1%	+8%	+7%	A-
Midcoast Energy Partners	MEP	11/7/13	$18/$19-$21	No Change	$17.08/-5%	+21%	+15%	--
Barracuda Networks	CUDA	11/6/13	$18/$18-$21	No Change	$22.48/+25%	+60%	+100%	B
Wix.com	WIX	11/6/13	$16.50/$14.50-$16.50	No Change	$18.50/+12%	+42%	+60%	--
Karypharm Therapeutics	KPTI	11/6/13	$16/$14-$16	Increase	$17.86/+12%	+121%	+146%	--
Avianca Holdings	AVH	11/6/13	$15/$17-$20	No Change	$13.95/-7%	+14%	+6%	--
Blue Capital Reinsurance	BCRH	11/6/13	$20/$20	No Change	$19.42/-3%	-11%	-13%	--
Arc Logistics	ARCX	11/6/13	$19/$19-$21	No Change	$19.16/+1%	+7%	+11%	--
Container Store	TCS	11/1/13	$18/$17-$18	Increase	$30/+67%	+17%	+95%	B-
Qunar	QUNR	11/1/13	$15/$12-$14	Increase	$33/+120%	-10%	+98%	--
Marcus & Millichap	MMI	10/31/13	$12/$14-$16	No Change	$13.24/+10%	+27%	+40%	--
58.com	WUBA	10/31/13	$17/$15-$16	Increase	$21/+24%	+140%	+198%	B+
Essent Group	ESNT	10/31/13	$17/$13.50-$15.50	No Change	$22.06/+30%	+6%	+38%	--
Criteo	CRTO	10/30/13	$31/$27-$29	Increase	$42/+35%	+20%	+62%	B+
Brixmor Property	BRX	10/30/13	$20/$19-$21	Increase	$20.68/+3%	+6%	+9%	--
Surgical Care Affiliates	SCAI	10/30/13	$24/$21-$24	No Change	$28/+16%	+10%	+28%	B+
Veracyte	VCYT	10/30/13	$13/$13-$15	Increase	$13/Flat	+31%	+31%	B+
Endurance Intl Group	EIGI	10/25/13	$12/$14-$16	Decrease	$11/-8%	+26%	+16%	B-
Commscope	COMM	10/25/13	$15/$18-$21	No Change	$15/Flat	+46%	+46%	C+
Sprague Resources	SRLP	10/25/13	$18/$19-$21	No Change	$17.37/-4%	+7%	+2%	--
Aerie Pharma	AERI	10/25/13	$10/$12-$14	Increase	$10.55/+6%	+96%	+107%	--
voxeljet	VJET	10/18/13	$13/$13-$15	No Change	$20/+54%	+49%	+128%	B
Abengoa	ABGB	10/17/13	$12.18/$12.18	No Change	$12.33/+1%	+83%	+86%	--
Veeva Systems	VEEV	10/16/13	$20/$16-$18	Increase	$38/+90%	-14%	+63%	A
Plains GP Holding	PAGP	10/16/13	$22/$22-$25	No Change	$22.81/+4%	+19%	+24%	--
Springleaf Holdings	LEAF	10/16/13	$17/$15-$17	Increase	$19.10/+12%	+35%	+52%	C
Antero Resources	AR	10/10/13	$44/$38-$42	Increase	$55.02/+25%	+8%	+35%	B-
MacroGenics	MGNX	10/10/13	$16/$14-$16	Increase	$24/+50%	+42%	+113%	--
Stonegate Mortgage	SGM	10/10/13	$16/$20-$22	Decrease	$17.19/+7%	-17%	-10%	--
Western Refining Logistics	WNRL	10/10/13	$22/$19-$21	Increase	$24.10/+10%	+25%	+37%	--
LDR Holding	LDRH	10/9/13	$15/$14-$16	No Change	$18.50/+23%	+114%	+164%	B-
SFX Entertainment	SFXE	10/9/13	$13/$11-$13	Increase	$13/Flat	-40%	-40%	--
QTS Realty Trust	QTS	10/9/13	$21/$27-$30	No Change	$22.44/+7%	+16%	+24%	--
Potbelly	PBPB	10/4/13	$14/$12-$13	Increase	$28.66/+105%	-30%	+43%	B+
OCI Partners	OCIP	10/4/13	$18/$19-$20	No Change	$ 17.26/-4%	+44%	+38%	--
Cherry Hill Mortgage	CHMI	10/4/13	$20/$20	No Change	$18.51/-7%	-1%	-8%	--
RE/MAX	RMAX	10/2/13	$22/$19-$21	No Change	$26.26/+19%	+19%	+43%	B-
Burlington Stores	BURL	10/2/13	$17/$14-$16	No Change	$23.04/+36%	+13%	+53%	B
Empire State Realty Trust	ESRT	10/2/13	$13/$13-$15	No Change	$13.06/Flat	+14%	+14%	--

The Next Big Thing team:

Lead Analyst: Dennis Hobein

Contributing Analysts: Jim Busch; Robert Reid; and Jeff Eckmann