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The Week Ahead (GRUB, IMS, RUBI, OPWR, FIVN, CORI, TEDU, SCYX ... KING)
After a very busy week for the IPO market, which saw ten IPOs price, it will be full-throttle ahead again next week with another eight new deals expected. In terms of performance, IPOs have lost some luster of late, most notably illustrated by King Digital Entertainment's (KING) IPO, which has been a complete dud. There are a number of interesting IPOs next week, but there is one that will likely garner the most attention. The company operates the largest online and mobile platform for restaurant take-out orders. Its growth has been solid, it has a lot of runway for future growth, and, unlike many recent IPOs, it is already profitable. The main hang-up is its valuation, which may leave a bad taste in some investors' mouths.
*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.
| Grubhub (GRUB) |
Fundamental Grade: B |
|
Lead Underwriters |
Shares Offered |
Expected Price Range |
Expected Deal Size |
Expected Trade Date |
| Citigroup, Morgan Stanley, Allen & Company |
7.0 M |
$20-$22 |
$147.6 M |
April 4 |
Co-Managers: BMO Capital Markets, Canaccord Genuity, Raymond James, William Blair GRUB, the largest online and mobile platform for restaurant take-out orders, will generate plenty of buzz when its 7.0 million share IPO launches next week. There is ample cause for the excitement, too, due to its high revenue growth, the massive opportunity ahead of it, and its attractive business model which, so far, has generated strong cash flow and profitability. GRUB may also remind investors of another successful recent IPO in the restaurant space, Open Table (OPEN), which focuses more on mobile and online restaurant reservations, rather than take out. That IPO is currently up by more than 200% versus its opening price back in May of 2009. There are some concerns and issues, though, that investors should be aware of. First, as has been pointed out recently in the press, the revenue growth number that GRUB touts for FY13 is not the cleanest year/year comparison. We discuss this in more detail in the financial section, but, for FY13, GRUB's results are for a combined GrubHub-Seamless company, as it completed its merger on August 8, 2013. No problem there, but, what has drawn some attention is that for FY12, GRUB only includes Seamless' results, instead of a Pro Forma combined company. This, naturally, inflates its revenue growth rate as it does not provide a true year/year comparison. To be fair, GRUB does provide pro forma revenue for a combined company in 2012 in the financial section at the end of the prospectus, and it's not like Groupon (GRPN), whose in-house generated metric of "Gross Billings" caused confusion among investors and analysts at the time of its IPO. That said, GRUB's more "meaningful" revenue figure would be very easy for investors to miss which may rub some the wrong way. Another concern we have is its valuation, which will be on the high side. The company is profitable, a rarity for internet/mobile based IPOs, so investors may be willing to pay a higher premium. But, if GRUB prices strongly and opens for trading well above its IPO price, the remaining upside for investors could be limited. All in all, we do find this IPO to offer a compelling opportunity, mostly because of its market leading position and the huge addressable market ahead of it. The economics of its business model looks attractive too as the incremental margin on each order received is 73% of the sale. Despite being a younger company, it has already achieved profitability -- even as it heavily invests in its business. A Closer Look at GRUBGRUB is the leading online and mobile platform for pick-up and delivery of restaurant orders, or, takeout. It connects diners with local restaurants -- primarily, independent restaurants, which represent about 61% of all U.S. restaurants. As of December 31, 2013. it had 28,800 restaurants and 3.4 million active users in its network, processing an average of 135,000 orders daily last year. To rewind a bit, the Grub-Hub platform was founded in 2004. In August of 2013, it acquired Seamless, which was spun-off from Aramark Corp. (ARMK) in October of 2012. In 1999, Seamless began as a corporate online ordering system for employee meals, billing, and invoicing automation. In 2005, the Seamless Platform began taking orders from individual customers and then in 2010, it launched its first iPhone application. The merger combined the two largest players in the market and greatly expanded its geographic reach, with GrubHub focused on the Chicago market, and Seamless with exposure to New York, Washington D.C, and other east coast cities. The process for a diner looking to order food is very simple. First, a user searches for a local restaurant using GRUB's mobile app, or online, then he or she can order through the site or app, and finally, the restaurant prepares and delivers the food. The value proposition for the diner is that they can find new restaurants they may have never heard of, they don't have to phone in orders, and they can track their order, giving them better visibility. The benefits for restaurants may be even more pronounced. Specifically, they are able to quickly reach a large pool of prospective customers through GRUB's platform, instead of the traditional approach of distributing menus for customers to take home, or, other traditional means of advertising. Furthermore, there is no up-front costs for the restaurants as they are only required to pay a commission on any sales made through GRUB's platform, and, restaurants are able to reach customers at the exact time customers are looking for a takeout order. Lastly, restaurants receive more orders at full menu prices at higher margins. There is no wait staff or tables needed for take-out. The proliferation of mobile devices has been a significant catalyst for GRUB's growth. Orders placed on mobile devices increased from approximately 20% of consumer orders during the quarter ended December 31, 2011 to approximately 43% of consumer orders during the quarter ended December 31, 2013. GRUB monetizes the orders placed through mobile applications using the same rate as orders placed through its websites. On the topic of monetization, GRUB generates a commission on each order received through its platform. Restaurants pay a minimum rate per order and then they choose a rate above that. The higher the rate they choose, the higher the priority they will have in GRUB's platform. Huge Opportunity for GRUBThe aspect to GRUB's story that we find most compelling is the size of the market opportunity ahead of it, combined with the fact that it is the largest, most-recognizable name in the space. During the road show presentation, management described its addressable market as highly-fragmented with more than 350,000 independent restaurants. This represents an addressable market of about $8.5-$9.5 billion. At this point, GRUB says that it only has penetrated about 2% of this addressable market.In regards to specific growth strategies, the company is looking to grow the number of restaurants under its platform, both in existing markets and new ones. In the past, the company has been an active acquirer of companies to expand its reach. In addition to its more high-profile purchase of Seamless, the company also bought Dotmenu, which owned Campusfood and Allmenus. It wouldn't be surprising to see the company continue to roll-up smaller competitors in the space in order to expand its reach. Financials & Valuation
| * In Mlns |
FY11 | FY12 | FY13
|
|
Revenue* |
$60.6 | $82.3 | $137.1** |
|
Revenue Growth (Y/Y) |
N/A | +36% | +67%** |
| GAAP Net Income* | $15.2 | $7.9 | $6.7 |
| Adjusted EBITDA* |
$14.8 | $17.2 | $38.1 |
| Cash Flow from Operations* | $32.1 | $29.6 | $40.8 | | Cash & Equivalents* | N/A | $41.2 | $86.5 | | Long Term Debt | N/A | $0 | $0 | | Active Diners | 689,000 | 986,000 | 3,421,000 | | Daily Average Grubs | 45,700 | 62,000 | 107,900 | | Gross Food Sales* | $412.2 M | $568.8 M | $1.015 B |
**Important to note that 2013 results include Seamless Holdings through August 8, 2013 -- when it completed the merger -- and of GrubHub, the combined company, for the remainder of the period. The period of 1/1/13-8/6/13 and FY12 only include Seamless' results, instead of a pro forma combined GrubHub/Seamless entity.
Overall, GRUB's financial results are solid. Revenue growth has been strong, but, it's growth for FY13 does deserve further explanation - more on that in a minute. The company is profitable, which is not exactly a common trait among recent IPOs. Additionally, it is generating a lot of cash flow and its balance sheet is in very good shape. Its key metrics outside of the main income statement numbers are also all trending higher.
Looking at FY13 specifically, revenue grew by 67% to $137.1 million. However, this is not really the best apples-to-apples comparison. The reason being, the first seven months of 2013 and all of FY12's revenue of $82.3 million only include Seamless, rather than a pro forma combined Seamless + GrubHub business. This doesn't give us a very "clean" look at what its true revenue growth was for FY13, on a pro forma basis. However, at the end of its prospectus, GRUB does provide pro forma FY12 and FY13 revenue figures of $118.9 million and $170.1 million, respectively. If we use these numbers instead, its FY13 year/year revenue growth would be 43%, well below the 67% rate. The problem isn't so much that its revenue growth may not be quite as strong as advertised -- it's more the way in which it is "hidden" that may leave a bad taste in peoples' mouths.
That aside, the revenue growth was primarily driven by the growth in active diners, which more than tripled from 986K to over 3.4 million. "Daily Average Grubs", defined as the number of revenue generating orders placed divided by the number of days for a given period, also climbed sharply higher, up about 74% in FY13 to 107,900.
As expected, GRUB's Sales & Marketing expense increased by a healthy amount, up 39% to $37.3 million. Relative to other internet, or tech IPOs, though, the company actually has shown some decent restraint here. It is not unusual for a young internet-based company to increase its Sales & Marketing by high double digit, or even triple digit, rates. GRUB's Operations & Support expense grew by a faster clip, up 88% to $34.2 million. This expense includes credit card transaction fees and customer care costs -- an area where GRUB has been investing. The company has increased its headcount in this area.
GRUB is, and has been profitable, generating GAAP net income of $6.7 million in FY13. That is down from $7.9 million in FY12, but, a major cause for the decline is attributable to a large jump in income taxes. For FY13, its income tax expense shot up to $8.1 million from $813K. The company explains that this increase was the result of the creation of Seamless Holdings, which was taxed as a C-Corporation effective October, 28 2012. Prior to that, Seamless was a limited liability company, considered as a flow-through entity for both federal and the majority of state income taxes. Because of this extraordinary item, it may be more useful to look at Adjusted EBITDA, which soared 122% to $38.1 million.
While not perfectly clean, the financials are a net positive for GRUB. Unfortunately, the valuation does look rich. Based on the mid-point of the proposed price range, its trailing P/S would be about 12x. If we assume 30-50% revenue growth for FY14, its Forward P/S would be roughly between 8-9x. It does look a little better on an Enterprise Value/Sales basis, given its strong cash balance. Including estimated proceeds from its IPO, its estimated Forward P/S would fall to 7-8x. But, even using this more "friendly" metric, the valuation still looks elevated.
Conclusion & Briefing.com Grade: B
Although we do have some concerns, this is an IPO that we like overall. Revenue growth isn't sky-rocketing higher, but, the topline is growing at a respectable clip, and the company hasn't really stepped on the accelerator in terms of ramping Sales & Marketing. That is one reason why it is profitable already, while most other internet/tech IPOs have been rapidly expanding its sales forces at the expense of profitability. GRUB could certainly go down that path, but, it is definitely encouraging to know that its model is a profitable one.
There is plenty of room for growth, too. At the moment, it serves about 28,800 restaurants, and it has identified a total of 350,000 restaurants in its target market in the U.S alone. That equates to about an 8% penetration rate. Its acquisition of Seamless gave it scale and size, and now the company is much larger than any of its competitors. This puts it in prime position to pick up more market share and become the dominant player in online/mobile take-out.
So, we feel the growth potential ahead of it is intriguing. However, investors are being asked to pay a fairly high price for that growth potential. If GRUB prices well -- say, at the high end of the expected range -- and then hypothetically opens with a 20% pop, its trailing EV/Sales would be around 14x and about 10x on an estimated 1-Year Forward basis. We have seen more egregious valuations from recent IPOs, but, that those metrics are definitely high.
We also pointed out the way that GRUB presented its FY13 revenue growth rate. Should GRUB have provided a clearer picture of what its revenue growth would be on a pro forma basis, as a combined GrubHub-Seamless entity in FY12? Probably. But, GRUB is certainly not the first IPO candidate to "put its best face forward". We did want to make mention of this though, because, especially with a younger management team - like GRPN and ZNGA before it - something like this could be a negative for sentiment.
To conclude, we're not necessarily pounding the table on this deal, primarily because of its lofty valuation. We do like the fact that it is already profitable and that it has a lot of runway ahead of it, but, if it opens sharply above its IPO price, we worry that the upside may be limited due to that rich valuation. Therefore, we believe that perhaps the best way to go forward with GRUB would be: 1). See how it opens. If it opens with a huge premium to its IPO price, wait for it to cool off. Over the past couple of weeks, we have seen IPOs that have opened with massive gains get slammed lower - CSLT, PCTY, AMBR, BRDR, COUP, among others; 2). If it opens with a reasonable pop, or no pop, scale in with a smaller opening position. After the initial volatility has played itself out, perhaps after a few days of trading, and a better reading on the sentiment/direction of the stock is available, consider adding to the original position.
| IPO Grading Category | Negative | Neutral | Positive
| Deal Specifics
(Underwriters, Float) |
|
| X | Current Growth Rates |
|
| X | | Growth Outlook |
| | X | | Profitability |
|
| X | | Valuation | X |
|
| | Balance Sheet |
|
| X | | Peer Performance |
| X |
|
| IMS Health Holdings (IMS) |
Fundamental Grade: B- |
|
Lead Underwriters |
Shares Offered |
Expected Price Range |
Expected Deal Size |
Expected Trade Date |
JP Morgan, Goldman Sachs, Morgan Stanley, BofA Merrill Lynch
Barclays, Deutsche Bank, Wells Fargo |
65.0 M |
$18-$21 |
$1.28 B |
April 4 |
Co-Managers: HSBC, TPG Capital, SunTrust Robinson Humphrey, Mizuho Securities, RBC Capital Markets, Piper Jaffray, William Blair, Drexel Hamilton, Leerink Partners, Stifel
Business Background
IMS provides prescription sales and market research to drugmakers, medical device companies, government agencies and policymakers. IMS has one of the largest and most comprehensive collections of healthcare information in the world, spanning sales, prescription and promotional data, medical claims, electronic medical records and social media. Its scaled and growing data set, containing over 10 petabytes of unique data, includes over 85% of the world’s prescriptions by sales revenue and approximately 400 million comprehensive, longitudinal, anonymous patient records. IMS standardizes, organizes, structures and integrates this data by applying sophisticated analytics and leveraging its infrastructure to help clients run their organizations more efficiently and make better decisions to improve their operational and financial performance.
IMS has a presence in over 100 countries with over 5K clients and generates 64% of its revenue from outside the US. IMS maintains long-standing relationships and high renewal rates with its clients. The average length of relationships with its top 25 clients, as measured by 2013 revenue, is over 25 years and the retention rate for the top 1K clients from 2012 to 2013 was ~99%. As such, IMS has significant visibility with about 70% of its revenue recurring annually.
IMS is coming back to market after running under private equity’s overview for the past few years. TPG Partners led consortium took the company private in early 2010 for ~$5.2 billion including debt. Since IMS was taken out, the company went on an acquisition spree. IMS bought 11 companies since it was itself acquired, 5 of which were purchased last year alone. Now, IMS is coming back to market at a median valuation of ~$6.5 billion, which could rise close to $7 billion at the high end of expectations.
Sales from IMS’ information offerings, including national and sub-national information services, represented 60% of 2013 revenue. Total sales from its technology services offerings, which include hosted and cloud-based applications, implementation services, subscription software, analytic services and consulting, represented the other 40% of revenue.
Finances
IMS has shown modest growth over the past two years and experienced an uptick in its growth rate last year. Keep in mind, this growth is hardly organic considering the company’s aggressive acquisition streak. Margins, however, remain slim. IMS only netted $82 million in profit from the over $2.5 billion in racked in from sales last year. Retiring some of its high debt burden should expand help margins post the IPO.
Like most private equity-backed IPOs, IMS is coming to market with a fair amount of debt. Still, the company expects to pay down much of its high interest loans from the IPO funding. IMS intends to use substantially all of the net proceeds from the offering to fund the redemption of the 12.5% Senior Notes and Senior PIK Notes.
Conclusion & Briefing.com Grade: B-
Considering the size of the deal, it’s not surprising that IMS attracted a number of top underwriters with JP Morgan, Goldman Sachs and Morgan Stanley taking the lead bookrunner responsibilities.
While it’s only a fraction of IMS’ size, Castlight (CSLT) is the latest heathcare tech company to go public. CSLT saw an enormous pop on its first day trading. This had many on the Street questioning its lofty valuation, and righty so. The stock has been in a free fall since. Even after losing half of its market value from its open, CSLT still trades at a very high multiple. IMS, by comparison, trades at a more reasonable 2.5x trailing sales.
In all, we like deal, but view it as fairly valued given its still large debt burden (held ~$4.6 bln in debt as of 12/31) and the dilution on the stock from the majority PE holders.
| 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 |
|
| Rubicon Project (RUBI) |
Fundamental Grade: B+ |
|
Lead Underwriters |
Shares Offered |
Expected Price Range |
Expected Deal Size |
Expected Trade Date |
Morgan Stanley, Goldman Sachs
RBC Capital Markets |
6.8 M |
$15-$17 |
$108.3 M |
April 2 |
Co-Managers: Needman, Oppenheimer
The Rubicon Project (RUBI), which operates an exchange where buyers and sellers of digital advertising can do business, is set to price its 6.77 million share IPO next week in the $15-17 range. Of the 6.77 million shares being offered, 5.42 million are being offered by the company and the remaining 1.35 million are being offered by selling stockholders. RUBI should have a market cap around $555 million, assuming the mid-point of the expected range, so it's pretty small. RUBI has never paid a dividend nor does it expect to for the foreseeable future. This deal is being led by Morgan Stanley, Goldman, RBC, Needham, OpCo and Luma Securities.
What They Do
In simple terms, RUBI is an online advertising technology firm based in Los Angeles. It operates one of the industry's largest independent real-time trading platforms for digital advertising. The company believes its pioneering cloud-based technology has created a new model for the advertising industry -- similar to what NASDAQ did for stock trading. No other company reaches more unique users in the US than The Rubicon Project.
RUBI's Advertising Automation Cloud (AAC) platform automates the buying and selling of online advertising. It has engineered one of the largest real-time cloud and Big Data computing systems, processing trillions of transactions within milliseconds each month. RUBI's automated advertising platform is used by more than 700 of the world's premium publishers to transact with over 100,000 ad brands globally.
How it Works?
An example would be a user visiting CNN.com. Before the page even loads, RUBI's platform identifies the user's characteristics (is this a good customer? how often does he/she click on ads? What are his interests? etc.), then using lots of data, the platform prices the ad impression at fair market value and/or runs a real time auction. The winning ad is placed on the CNN website faster than a blink of an eye.
RUBI's platform enables buyers and sellers to use a variety of options: real time bidding (RTB), static bidding and direct orders. RUBI's platform can complete the many steps required to execute a typical digital advertising transaction within an average of 80 milliseconds. RUBI's proprietary machine-learning algorithms analyze billions of data points to execute 3 trillion bid requests per month. Its platform is constantly self-optimizing based on its ability to analyze and learn from vast volumes of data.
Through the speed and big data analytics of RUBI's algorithm-based platform, the company has transformed the cumbersome, complex process of buying and selling digital advertising into a seamless automated process. RUBI's platform is able to analyze billions of data points in real time to enable it to make 300 data-driven decisions per transaction in milliseconds, and to execute up to 2.5 million peak queries per second.
RUBI helps increase the volume and effectiveness of advertising, increasing revenue for sellers and improving return on advertising investment for buyers. RUBI has direct relationships built on technical integration with over 700 sellers of digital advertising, including approximately 40% of the US comScore 100, which is a list of the top US digital sellers by reach. These direct relationships differentiate RUBI from others in the space. RUBI's integration of sellers into its platform gives sellers the ability to monetize a full variety of inventory. At the same time, buyers leverage the platform to manage their advertising spending, simplify order management, obtain actionable insights into audiences and access impression level purchasing from hundreds of sellers.
We looked into whether a company like Rocket Fuel (FUEL), which made its IPO debut in September 2013, might be a competitor. It seems that RUBI presented FUEL more as an example of a buyer than a competitor. Rocket Fuel delivers a programmatic media-buying platform using artificial intelligence and big data to optimize ad buying across display, mobile, social, and video channels. Rocket Fuel purchases large volumes of advertising inventory to fulfill advertisers' needs while finding cost-effective inventory sources. From 4Q12, when FUEL began buying via real time bidding (RTB) directly with RUBI, to 3Q13, RUBI's managed revenue from Rocket Fuel increased 1,200%. Another high profile name is Criteo (CRTO) but they are also more of a buyer than a competitor.
Of note, RUBI's platform is constantly self-optimizing based on analyzing vast volumes of data. This data makes its machine-learning algorithms more intelligent, leading to higher quality matching between buyers and sellers. As a result of that high quality matching, RUBI then attracts even more sellers which in turn attracts more buyers and vice versa. The data derived from the over 700 seller integrations, 25 billion transactions per week and three trillion bid requests per month inform RUBI's machine-learning algorithms to create a size, scale and capability that is difficult to replicate.
Industry Dynamics
RUBI believes it is positioned to take advantage of several trends in the advertising industry, including the shift in advertising spending from analog to digital advertising, the move towards automation and the convergence of media across multiple channels. The display, mobile and video digital advertising market is projected to grow to $90 billion by 2017, and the need for automation in this market is growing commensurately, with real time bidding alone projected to grow at a CAGR of 57% from $1.4 billion in 2011 to $20.8 billion in 2017.
In response to consumers spending more time online, the advertising industry is in the midst of a decades-long shift from advertising in analog and print media, like print newspapers, magazines, broadcast radio and television, to digital advertising. As a result of the vast amount of audience data available, digital advertising has the potential to drive return on advertising investment for advertisers many times higher than print, broadcast radio and television.
The current online advertising ecosystem is inefficient. RUBI believes that only approximately $0.40 of every dollar spent by an advertiser is ultimately realized by the seller. Despite technological advances, the process of planning and executing a digital advertising campaign remains cumbersome and highly manual. These manual and complicated workflows lead to inefficiencies, wasted dollars for sellers and lost opportunities for advertisers to reach users. It can cost an advertiser up to $40,000 and 480 man-hours to plan and execute a $500,000 advertising campaign. This has created a need to automate the digital advertising industry and to simplify the process of buying and selling advertising.
RUBI's Platform Differentiation
RUBI's platform optimizes the sale and purchase of advertising across a full spectrum of inventory for all types of buyers and sellers and across all devices. Management believes there are few market participants that are directly integrated with sellers in a way that allows sellers to make a wide range and volume of advertising inventory readily available in the marketplace.
A nice feature of RUBI's platform is that sellers integrate into its platform in a way that would cause them to experience high switching costs to move large volumes of their inventory to a new platform. At the same time, buyers need RUBI's platform to benefit from the company's direct relationships with some of the world's largest websites and applications.
Financials
Taking a quick look at the financials, they are a bit of a mixed bag. As you'll see in the table below, RUBI is not profitable but they do have strong top line growth. Revenue is generated by charging both buyers and sellers a small percentage of each transaction. With 54% growth in 2012 and 47% growth in 2013 to $83.8 million, RUBI is seeing very nice top line growth.
In terms of margins, as you can see in the table below, RUBI has a negative operating margin. However, it is getting closer to breakeven. While not saying when it will become profitable, RUBI has noted that it made substantial investments in its business during 2012 and 2013. RUBI expects expenses to continue to increase substantially in the foreseeable future as it continues to expand its business, including by hiring engineering, sales, and support employees. Also RUBI is spending on developing additional digital media platforms, such as mobile and video. On the positive side, RUBI said on its IPO roadshow that its costs have a high fixed component so there is a lot of operating leverage in the model.
Overall, it does not sound like profitability is right around the corner. However, the good news is that RUBI has reported positive adjusted EBITDA in each of the past two years. Adjusted EBIDTA margin in 2012 came in at 16.1% and 2013 came in at 13.4%. They have a long term goal of 31-35%. On a final note, the balance sheet is in good shape with very little long term debt. Pro forma long term debt is under $4 million while pro forma cash will be in the $30 million range following this offering.
Risks
While RUBI does have an enviable market position, there are risks here. The biggest is that the online advertising market is evolving. In particular, if the use of "third party cookies" is restricted or subject to unfavorable regulation, that would be a negative fort RUBI. The company uses "cookies," or small text files, to gather data to enable its platform to be more effective. Cookies record non-personal information, such as when an Internet user views an advertisement, clicks on an advertisement, where a user is located, how many advertisements the user has seen etc. RUBI uses data from cookies to help buyers decide whether to bid on and how to price a digital ad. Without cookie data, transactions would be executed with less insight and therefore less valuable to customers.
Another concern is that prominent sellers have announced plans to replace cookies with proprietary tracking mechanisms. Google and Microsoft have announced intentions to discontinue the use of cookies and to develop alternative methods to track web users. There are also reports that other prominent web sellers, such as Amazon, Facebook, and Apple, are also developing alternative web tracking technologies to displace the use of cookies. If cookies are replaced by proprietary alternatives, that would be bad for RUBI. RUBI would likely need to develop alternative proprietary tracking methodologies.
Aside from the cookie problem, RUBI operates in an intensely competitive market. RUBI competes for advertising spending against competitors, including Google, who, in some cases, are also buyers on its platform. RUBI also competes for supply of advertising inventory against competitors like Google. These competing conflicts can be tough to navigate.
Conclusion and Briefing.com Grade: B+
In simple terms, Rubicon Project sees itself as changing the way advertising is bought and sold forever. They have an enviable position in the market as sort of a "stock exchange" for digital ads. The are one of the largest independent "exchanges" in the US. It would not be easy for a competitor to replicate the enormous amount of data RUBI has accumulated over the past several years. They are showing very nice top line growth and they do have a lot of operating leverage in their model.
An example would be a user visiting CNN.com. Before the page even loads, RUBI's platform identifies the user's characteristics (is this a good customer? how often does he/she click on ads? What are his interests? etc.), then using lots of data, the platform prices the ad impression at fair market value and/or runs a real time auction. The winning ad is placed on the CNN website faster than a blink of an eye.
In terms of bigger picture market potential, RUBI draws a parallel to other industries, all of which have become highly automated: finance (Nasdaq stock market), travel, retail (eBay). These other markets are similar to digital ads in that they have lots of buyers and sellers but few exchanges. It turns out that digital advertising is much earlier in its maturation stage than these other industries so RUBI sees an opportunity here. RUBI is in a good position to capitalize as it's one of the largest independent ad exchanges in the US.
It's not an entirely clean story. They are not yet profitable and their ecosystem is always evolving. From consumers turning off cookies to giants like Google, Microsoft and others developing proprietary methods to track user behavior, this can all have a negative effect on RUBI. It's not clear how the market will evolve over the coming years.
Overall, our sense is that RUBI will generate a good amount of interest when it makes its IPO debut next week. It has its flaws but it has a great position in a potentially lucrative industry. Also, the deal has good underwriters (Morgan Stanley, Goldman, RBC, Needham, OpCo) and the deal size is very small at just 6.77 million shares. Also, at 6.6x sales (assuming mid-point of range), the valuation is high but not as crazy as some other recent IPOs.
| Opower (OPWR) |
Fundamental Grade: B- |
|
Lead Underwriters |
Shares Offered |
Expected Price Range |
Expected Deal Size |
Expected Trade Date |
| Morgan Stanley, Goldman Sachs |
6.1 M |
$17-$19 |
$109.8 M |
April 4 |
Co-Managers: Allen & Company, Pacific Crest, Canaccord Genuity, Cowen & Company
OPWR provides cloud-based software to utilities, allowing them to more effectively market to and communicate with consumers. Essentially, OPWR's software pulls a utility's energy usage data (often found in decades-old legacy systems), runs it through their data analytics and marketing automation engines, and then allows utilities to personalize their communications with consumers via OPWR’s “white label” apps, primarily in order to motivate consumers to reduce their energy usage.
While companies that sell to the utility vertical often fail to generate much interest, OPWR is another cloud deal that has top-tier underwriters, a small float, and very fast revenue growth. However, the company is still generating substantial red ink and looks set to begin trading with a rich valuation.
The Business
OPWR's software platform is designed to allow its utility customers to accomplish two main goals:
1. Improve overall efficiency and help reduce power consumption during peak hours (the latter is referred to as "demand response"). Traditionally, utilities have reduced consumption by installing low-tech switches that turn off air-conditioning units during peak hours, or by encouraging consumers to cut back on usage via mass advertising. 2. Increase customer satisfaction. In regulated markets like much of the US, regulators reward utilities for improving customer satisfaction. In unregulated markets, low rates and customer satisfaction are key differentiators.
To get an idea of the size of the market that OPWR is targeting, utilities committed an estimated $11 billion to energy efficiency, demand response, and customer engagement programs in 2013 in an effort to address these two goals. Of that $11 billion, 49% was due to Energy Efficiency initiatives, 29% for customer engagement, and 22% for Demand Response.
Looking at the components of OPWR’s software platform, it has both back-end and front-end components. When a utility signs on as a customer of OPWR, they provide all of their consumer energy usage data to OPWR. The software aggregates and analyzes this data, and provides insights into patterns. Interestingly, OPWR currently manages data representing 37% of all U.S. households -- a huge database that not only allows the company to continually improve their pattern-matching algorithms, but also builds a network effect as the consumer data that OPWR shares with utilities becomes more valuable the larger the database gets.
On the front-end, OPWR offers four products that can be integrated into their utility customers’ websites, mobile apps, and other customer service communications:
• Opower Energy Efficiency (launched in 2007) – OPWR’s flagship product. Generates reports and alerts, using both monthly mail and email, that compare consumers’ energy use to their neighbors’ and provide targeted energy saving recommendations. Management claims that their EE product saves on average 1.5-2.5% reduction in energy use; which may not sound like much, but at scale this adds up to a significant amount of savings for utilities. • Opower Customer Engagement (2010) – Web, mobile, digital alerts and customer service applications that improve the customer experience and streamline operations. • Opower Thermostat Management (2012) – Mobile and web applications that connect to third-party thermostats in order to control and optimize peak and overall HVAC utilization. • Opower Demand Response (2013) – A zero-hardware product consisting of near real-time text messages, email, and automated phone alerts that encourages reductions in energy consumption during peak hours.
The company claims that their software platform is superior to traditional methods because it offers measurable results and a better return on investment to utilities when scaled. For example, OPWR says their software has improved customer sentiment metrics by a median of 6% and up to 10% in some cases, and they helped utilities and their customers save over 1,900 gigawatt hours of energy in 2013.
As of year-end 2013, OPWR had 93 utility customers in eight countries, including 27 of the 50 largest electric utilities in the US. The company believes they still have quite a bit of room for expansion, both on the “land” and the “expand” sides. For new customers, the company believes their addressable market includes 1,300 electric and gas utilities worldwide. Within the existing customer base, the company says for example that the average penetration of their Energy Efficiency product is only about 10%.
Competition includes a wide range of software providers, including Aclara, C3 Energy, Nest Labs (acquired by Google), Oracle, SAP, and Tendril, as well as many other smaller providers.
Financials
Revenue growth has been exceptionally strong, with a 3-year CAGR of +101%, from sales of $29 million in 2011 to $52 million in 2012 to $89 million in 2013. For the most recent year, 2013 sales rose +71%. In addition, the company historically has generated 90+% of sales from annual recurring subscription fees, giving OPWR excellent visibility. Over the past three years, new customers accounted for 41% of incremental bookings, while expansions have accounted for 59%. Geographically, 90% of sales came from the US and 10% internationally.
Gross margin has been increasing, from 54% in 2011 to 64% to 65% in 2013. Management sees moderate room for further expansion to their long-term target of 68-72%.
Like many young software companies that have recently gone public, OPWR is in "investment mode," spending heavily on sales & marketing and R&D to drive revenue. While this has led to substantial operating losses, the company's Adjusted EBITDA margin has been moving in the right direction, from (69%) in 2011 to (18%) in 2012 to (7%) in 2013. Assuming this continues to improve, margin expansion should eventually become a longer-term, ongoing catalyst as the company moves towards its long-term target of 20-24% Adjusted EBITDA margin.
One key, but often overlooked, aspect of evaluating SaaS companies is that many of them go public while still reporting losses on the net income line, but the same companies are often generating substantial amounts of operating cashflow. With OPWR specifically, the picture is a bit mixed in this regard. The company reported net losses for the years spanning 2011-13, with GAAP net margins of -74% in 2011, -24% in 2012, and -16% in 2013.
After reporting negative cashflows of -$9.8 million in 2011 and -$22k in 2012, the company reported positive operating cashflow of $6.7 million in 2013. However, the company states in their prospectus that they expect to revert to negative operating cash flow in 2014 due to increased investments in sales & marketing and R&D.
So in this regard, the generalized criticism that OPWR is “unprofitable” will be a valid one.
Finally, looking at the balance sheet, the company has negligible debt and expects to have $129 million in cash following the IPO.
Conclusion & Briefing.com Grade: B-
Despite the perception of the utility industry as being a largely stagnant end market, OPWR is nonetheless an intriguing deal – although it may be ill-timed.
Based on the sharp sell-offs in Cloud names recently, it’s fair to say the group has fallen out of favor. Yet OPWR does sport exceptionally fast revenue growth, the company has excellent visibility, and the TAM is quite large. In addition, from more of a trading perspective, OPWR also has elements of a Big Data play and even of a “Thermostat management” play (think Google’s acquisition of Nest).
However, the continued net losses, combined with management’s forecast that the company will revert back to negative operating cashflow in 2014, makes OPWR a much more speculative IPO. Further, using the current price range, OPWR will go public with a Price/Sales (TTM) ratio of roughly 9.5x; if you assume +60% sales growth in 2014, that would give you a back-of-the-envelope forward Price/Sales multiple of roughly 6.0x, which is more palatable. However, that doesn’t take into account the inevitable opening pop, which could value the company closer to a 10x multiple.
Looking at OPWR’s peers, while richly-valued Cloud/SaaS/Big Data stocks had been standout performers in 2013, they have come under heavy distribution recently, which certainly injects a further note of caution for OPWR’s prospects once it begins trading.
| IPO Grading Category |
Negative | Neutral | Positive
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Deal Specifics
(Underwriters, Float) |
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| X |
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Current Growth Rates/Growth Outlook |
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| X |
| Profitability | X |
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| Valuation | X |
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| Balance Sheet |
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| X | | Peer Performance | X |
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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.
Five9 (FIVN) Expected IPO Date: April 4 Industry: Software  | Lead Underwriters
JP Morgan, Barclays
BofA Merrill Lynch |
Shares Offered
10.0 M |
Expected Price Range
$9-$11 |
Expected Deal Size
$100.0 M |
|
Y/Y Rev Growth*
| Net Inc/Loss*
|
Y/Y Net Inc. Growth*
|
| |
*FYE13
Corium International (CORI) Expected IPO Date: April 3 Industry: Biopharmaceuticals  |
Lead Underwriters
Jefferies, Leerink Swann |
Shares Offered
5.5 M |
Expected Price Range
$10-$12 |
Expected Deal Size
$60.5 M |
$50.3 M |
Y/Y Rev Growth*
+17% | Net Inc/Loss*
$1.2 M |
Y/Y Net Inc. Growth*
NMF |
CORI is a commercial stage biopharmaceutical company focused on developing and manufacturing specialty pharmaceutical products leveraging its experience in transdermal and transmucusal delivery systems. Transdermal drug delivery is the transport of drugs through the skin for absorption into the body. The company has developed two proprietary technology platforms - Corplex and MicroCor -- that it believes offer significant advantages over existing transdermal approaches.
It uses its Corplex technology to create advanced transdermal and transmucosal systems for small molecules that utilize less of the active ingredient while achieving the same or better therapeutic effect, that can adhere well to either wet or dry surfaces, and that can hold additional ingredients required to aid the diffusion of low-solubility molecules through the skin without losing adhesion.
Together with its partners, CORI has developed and marketed six products in the prescription drug and consumer markets. The marketed products are Clonidine Transdermal Delivery System (TDS), Fentanyl TDS, and four Crest Advanced Seal Whitestrips products. Its partners include Proctor & Gamble (PG), Par Pharmaceutical, Teva Pharmaceuticals, and Agile Therapeutics.
Its pipeline includes three partnered products that are the subject of pending drug marketing applications to the FDA. Additionally, CORI has 12 partner or self-funded programs at earlier stages. The most advanced clinical stage product in its pipeline is AG200-15, which is in Phase 3 development by our exclusive marketing partner, Agile. AG200-15 is a combined hormonal contraceptive patch designed to deliver two hormones, ethinyl estradiol and levonorgestrel, through the skin at levels comparable to low-dose oral contraceptives, in an easy-to-use format over seven days.
|
*FYE13
| Tarena International (TEDU) Expected IPO Date: April 3 Industry: Educational Services | Lead Underwriters
Goldman Sachs, Credit Suisse |
Shares Offered
15.3 M |
Expected Price Range
$8-$10 |
Expected Deal Size
$137.7 M |
$92.8 M |
Y/Y Rev Growth*
+63% | Operating Profit*
$13.5 M |
Y/Y Op. Inc Growth*
+30% |
TEDU is a provider of professional education services in China and its core strength is in IT professional education services where it is the largest provider in China with a market share of 8.3% according to IDC. Its education platform combines live distance instruction, classroom-based tutoring, and online learning modules. For each class, instructors deliver lectures from one classroom in Beijing to students in the same classroom as well as to students at its learning centers across China via simultaneous webcast.
It complements the live instruction and tutoring with its proprietary learning management system, named the Tarena Teaching System, or TTS. TTS has five core functions, featuring course content, self-assessment exams, student and teaching staff interaction tools, student management tools and an online student community.
Since its inception in 2002, it has trained over 130,000 students, cooperated with more than 500 universities and colleges and placed students with approximately 35,000 corporate employers in a variety of industries. Its six-month post-course job placement rates for students enrolled in 2011 and 2012 have averaged over 90%. According to IDC, the market size of professional education services in China grew from $8.1 billion in 2010 to $11.1 billion in 2013, representing a CAGR of 11.4% and is projected to grow to $14.7 billion in 2017, representing a CAGR of 7.2% from 2013 to 2017.
|
*FYE13
| SCYNEXIS (SCYX) Expected IPO Date: April 3 Industry: Pharmaceuticals | Lead Underwriters
RBC Capital Markets, Canaccord Genuity |
Shares Offered
4.2 M |
Expected Price Range
$12-$14 |
Expected Deal Size
$55.0 M |
$16.9 M |
Y/Y Rev Growth*
Flat | Loss From Operations*
($7.2) M |
Y/Y Op. Inc. Growth*
NMF |
SCYNEXIS is a pharmaceutical company focused on discovering and developing novel anti-infectives to address significant unmet therapeutic needs. It is developing its lead product candidate, SCY-078, as an oral and intravenous drug for the treatment of serious and life threatening infections in humans. SCY-078 was shown to be sufficiently well-tolerated and safe in multiple Phase 1 studies to support progression to Phase 2 studies.
The company anticipates that the first patient will be enrolled in 2H14 in a Phase 2 study with an oral formulation of SCY-078 for the treatment of invasive Candida infection, a common and often fatal invasive fungal infection. It expects beginning studies with an IV formulation ion 2015.
If approved, SCYX intends to market SCY-078 to hospitals and major medical centers where physicians specializing in critical care, infectious disease specialists, and physicians treating immune-compromised patients, such as oncologists and those performing solid organ transplants and stem cell transplants are likely to be found and where invasive fungal infections are more prevalent.
SCYX estimates that the worldwide market for systemic anti-fungal therapies, where it will target SCY-078, is approximately $3.6 billion. Each year there are estimated to be over 600,000 confirmed cases of invasive fungal infections caused by variouis species of Candida and Aspergillus, two of the most serious fungal pathogens in the US and Europe.
In addition to pursuing the development of SCY-078, the company is planning to use its platform to expand its anti-fungal portfolio. It also has clinical and pre-clinical programs based on the use of cyclophilin inhibitors to treat viral diseases, and provide contract research and development services, primarily in the field of animal health. |
*FYE13
King Digital Entertainment (KING): Initial Thoughts on KING's IPO Pricing ... Published on March 26.
For a much-hyped IPO like KING, its pricing was a bit disappointing, coming in at the mid-point of the $$21-$24 expected price range. The deal size also wasn't increased, staying firm at 22.2 million shares. However, this could be a result of KING's underwriters taking a page out of Twitter's (TWTR) playbook, when its underwriters (Goldman Sachs, Morgan Stanley, BofA, Deutsche Bank) kept a lid on the pricing and share count in order to keep valuation down, and, to not flood the market with more shares.
Given the buzz and popularity of its core game - Candy Crush Saga - its phenomenal growth rates, and fairly attractive valuation, we would expect there to be plenty of demand when KING opens for trading. Another factor at play is the smaller float of 22.2 million shares. Zynga's (ZNGA) deal was much larger, as some may recall, with 100.0 million shares involved. Therefore, KING won't be bogged down like ZNGA was, and it could move quickly.
With that said, we are rather negative on KING from an investment perspective, assigning it a grade of "C-" in our preview (Click here to access). There are a few main reasons for this. First, almost 80% of its bookings come from Candy Crush. One of the concerns with ZNGA's IPO at that time was the lack of diversification as its top three games accounted for about 60% of revenue. KING's lack of diversification is far worse, posing an even greater risk, should Candy Crush slow down. Which brings us to concern number two. Its core gaming metrics are slowing down -- quickly. Its sequential Daily Average User growth has gone from +111% in 2Q13, to +43% in 3Q13, and then just +14% in 4Q13. Worse yet, its bookings in 4Q13 actually declined by 2%, the first time it had gone negative in at least the past two years. The next concern we have is more general in nature. KING's strategy is mainly to take its "Saga" format and branch it out to new games -- similar to what ZNGA has done with its "Ville" franchise. The game play across the Saga franchise is very similar, so, if users'grow tired of the Saga franchise, their attention span can easily wander to the next hot game. Put another way, the mobile gaming industry is extremely fickle and unpredictable in terms of what will catch on next.
To conclude, we would fully expect a strong open for KING today and it may make for an attractive short term trade if it catches some upward momentum. Its lower valuation may also be supportive of the stock for some time. But, looking a bit further out -- perhaps a quarter or two -- we have serious concerns that its financials will start showing some cracks as Candy Crush continues to lose steam, and as it laps incredibly difficult numbers, which were at the height of the games popularity. With that said, we wouldn't recommend KING as a longer-term investment, even though it may perform very well today.
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 |
| Energous | WATT | 3/28/14 | $6/$6 | No Change | $9.50/+58% | -- | -- | -- | | 2U, Inc. | TWOU | 3/28/14 | $13/$11-$13 | No Change | $13/Flat | -- | -- | B- | | Aerohive Networks | HIVE | 3/28/14 | $10/$9-$11 | No Change | $9/-10% | -- | -- | B- | | Everyday Health | EVDY | 3/28/14 | $14/$13-$15 | No Change | $14.50/+4% | -- | -- | C+ | | CBS Outdoor Americas | CBSO | 3/28/14 | $28/$26-$28 | No Change | $30.10/+8% | -- | -- | -- | | TriNet Group | TNET | 3/27/14 | $16/$15-$17 | No Change | $18.50/+16% | +4% | +19% | -- | | Square 1 Financial | SQBK | 3/27/14 | $18/$15-$17 | No Change | $20/+11% | +3% | +14% | -- | | Applied Genetic Technologies | AGTC | 3/27/14 | $12/$13-$15 | Increase | $12.75/+6% | +16% | +23% | -- | | King Digital Entertainment | KING | 3/26/14 | $22.50/$21-$24 | No Change | $20.50/-9% | -9% | -18% | C- | | Nord Anglia Education | NORD | 3/26/14 | $16/$15-$17 | No Change | $17.50/+9% | +13% | +23% | -- | | A10 Networks | ATEN | 3/21/14 | $15/$13-$15 | No Change | $13.75/-8% | +3% | -5% | B | | Amber Road | AMBR | 3/21/14 | $13/$10.50-$12.50 | Increase | $17.50/+35% | -13% | +16% | -- | | Versartis | VSAR | 3/21/14 | $21/$19-$21 | Increase | $28/+33% | +7% | +43% | -- | | Borderfree | BRDR | 3/21/14 | $16/$14-$16 | No Change | $21/+31% | -16% | +10% | -- | | Q2 Holdings | QTWO | 3/20/14 | $13/$11-$13 | No Change | $16.25/+25% | -8% | +16% | B | | Akebia Therapeutics | AKBA | 3/20/14 | $17/$14-$17 | Increase | $22.90/+35% | -15% | +14% | -- | | MediWound | MDWD | 3/20/14 | $14/$14-$16 | No Change | $16/+14% | -10% | +3% | -- | | Paylocity | PCTY | 3/19/14 | $17/$14-$16 | Increase | $31/+82% | -27% | +34% | A- | | Castlight Health | CSLT | 3/15/14 | $16/$13-$15 | Increase | $37..50/+134% | -36% | +47% | B- | | Dipexium Pharmaceuticals | DPRX | 3/13/14 | $12/$12-$14 | Increase | $14.60/+22% | -31% | -17% | -- | | Galmed Pharma | GLMD | 3/13/14 | $13.50/$12-$14 | Increase | $17/+26% | -36% | -19% | -- | | Achaogen | AKAO | 3/12/14 | $12/$12-$14 | Increase | $12.85/+7% | +40% | +50% | -- | | Coupons.com | COUP | 3/7/14 | $16/$12-$14 | Increase | $27.15/+70% | -6% | +60% | B- | | Aquinox | AQXP | 3/7/14 | $11/$10-$12 | Increase | $11.80/+7% | +11% | +19% | -- | | Recro Pharma | REPH | 3/7/14 | $8/$10-$12 | Increase | $8.53/+7% | -16% | -11% | -- | | Varonis Systems | VRNS | 2/28/14 | $22/$19-$21 | Increase | $39/+77% | -6% | +66% | B | | Lumenis | LMNS | 2/27/14 | $12/$15-$17 | No Change | $12.50/+4% | -19% | -15% | B | | Semler Scientific | SMLR | 2/20/14 | $7/$7.50-$9.50 | Increase | $6.00/-14% | -13% | -25% | -- | | Inogen | INGN | 2/14/14 | $16/$16-$18 | No Change | $16/Flat | +5% | +5% | -- | | Concert Pharm | CNCE | 2/13/14 | $14/$12-$14 | Increase | $15.75/+13% | -19% | -9% | B+ | | Amedica | AMDA | 2/13/14 | $5.75/$8-$10 | Decrease | $6.16/+7% | +26% | +35% | -- | | Installed Building Products | IBP | 2/13/14 | $11/$14-$16 | Decrease | $12.30/+12% | +3% | +16% | B+ | | Eagle Pharmaceuticals | EGRX | 2/12/14 | $15/$14-$16 | No Change | $15.50/+3% | -19% | -16% | B+ | | Talmer Bancorp | TLMR | 2/12/14 | $13/$12.50-$14.50 | No Change | $13.75/+6% | +2% | +8% | -- | | Flexion Therapeutics | FLXN | 2/11/14 | $12/$12-$14 | No Change | $16/+33% | -2% | +21% | -- | | NephroGenex | NRX | 2/11/14 | $12/$12-$14 | No Change | $12.12/+1% | -35% | -35% | -- | | Argos Therapeutics | ARGS | 2/7/14 | $8/$13-$15 | Increase | $8.90/+11% | +15% | +28% | -- | | GeoPark | GPRK | 2/7/14 | $7/$7-$8 | Decrease | $6.74/-4% | +8% | +4% | B | | Revance Therapeutics | RVNC | 2/6/14 | $16/$14-$16 | Increase | $21.00/+31% | +42% | +86% | B | | Eleven Biotherapeutics | EBIO | 2/6/14 | $10/$13-$15 | Increase | $10.35/+4% | +59% | +64% | -- | | Egalet | EGLT | 2/6/14 | $12/$11-$13 | Increase | $12.50/+4% | +4% | +8% | -- | | Ladder Capital | LADR | 2/6/14 | $17/$16-$18 | No Change | $16.60/-2% | +11% | +9% | -- | | CM Finance | CMFN | 2/6/14 | $15/$15 | No Change | $15.30/+2% | -1% | +1% | -- | | Genocea Biosciences | GNCA | 2/5/14 | $12/$12-$14 | No Change | $11.70/-3% | +49% | +45% | -- | | Auspex Pharma | ASPX | 2/5/14 | $12/$10-$12 | Increase | $15/+25% | +103% | +153% | -- | | uniQure | QURE | 2/5/14 | $17/$13-$15 | Increase | $17/Flat | -8% | -8% | -- | | Biocept | BIOC | 2/5/14 | $10/$10-$12 | Increase | $10/Flat | -28% | -28% | -- | | Continental Building Products | CBPX | 2/5/14 | $14/$16-$18 | Decrease | $14.66/+5% | +23% | +29% | B- | | Intrawest Resorts | SNOW | 1/31/14 | $12/$15-$17 | No Change | $11.11/-7% | +21% | +12% | C | | Malibu Boats | MBUU | 1/31/14 | $14/$13-$15 | No Change | $17.30/+24% | +16% | +43% | B+ | | Trevana | TRVN | 1/31/14 | $7/$12-$14 | Decrease | $7.11/+2% | -6% | -4% | -- | | Ultragenyx Pharma | RARE | 1/31/14 | $21/$19-$20 | Increase | $45.80/+118% | +9% | +137% | -- | | New Home Co | NWHM | 1/31/14 | $11/$15-$17 | No Change | $11.50/+5% | +24% | +30% | B- | | Cara Therapeutics | CARA | 1/31/14 | $11/$11-$13 | No Change | $11.62/+6% | +49% | +57% | -- | | Dicerna Pharmaceuticals | DRNA | 1/30/14 | $15/$14 | Increase | $30/+100% | +2% | +104% | -- | | Celladon | CLDN | 1/30/14 | $8/$14-$16 | Increase Shares/Decrease Price Range | $9.90/+24% | +24% | +53% | -- | | North Atlantic Drilling | NADL | 1/29/14 | $9.25/$8.50-$10.00 | No Change | $8.50/-8% | +3% | -6% | -- | | Care.com | CRCM | 1/24/14 | $17/$14-$16 | No Change | $21.21/+25% | -26% | -8% | B+ | | Rice Energy | RICE | 1/24/14 | $21/$19-$21 | Increase | $21.90/+4% | +23% | +28% | -- | | Santander Consumer USA | SC | 1/23/14 | $24/$24-$25 | Increase | $25.75/+7% | -10% | -4% | -- | | EP Energy | EPE | 1/17/14 | $20/$23-$27 | Decrease | $19.90/-1% | -3% | -3% | -- | | CHC Group | HELI | 1/17/14 | $10/$12-$14 | Increase | $9.30/-7% | -20% | -26% | -- | | RSP Permian | RSPP | 1/17/14 | $19.50/$19-$21 | No Change | $20.50/+5% | +40% | +47% | -- | | Cypress Energy Partners | CELP | 1/16/14 | $20/$19-$21 | No Change | $20/Flat | +9% | +9% | -- | | AMC Entertainment | AMC | 12/18/13 | $18/$18-$20 | No Change | $19.18/+7% | +22% | +30% | B- | | Nimble Storage | NMBL | 12/13/13 | $21/$18-$20 | Increase | $31.10/+48% | +15% | +72% | 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% | +17% | +31% | -- | | Hilton Hotels | HLT | 12/12/13 | $20/$18-$21 | Increase | $21.30/+7% | +4% | +11% | B | | TetraLogic | TLOG | 12/12/13 | $7/$7 | Decrease | $7/Flat | -13% | -13% | -- | | Scorpio Bulkers | SALT | 12/12/13 | $9.75/$9.75 | Increase | $9.75/Flat | +1% | +1% | -- | | Kindred Bio | KIN | 12/12/13 | $7/$6-$8 | Increase | $8.75/+25% | +126% | +183% | -- | | CatchMark Timber Trust | CTT | 12/12/13 | $13.50/$13-$15 | No Change | $13.50/Flat | Flat | Flat | -- | | Aramark Holdings | ARMK | 12/12/13 | $20/$20-$23 | No Change | $20.26/+1% | +41% | +43% | -- | | Autohome | ATHM | 12/11/13 | $17/$12-$14 | No Change | $30.23/+78% | +21% | +115% | B+ | | Valero Energy Partners | VLP | 12/11/13 | $23/$19-$21 | No Change | $28.25/+23% | +39% | +72% | B+ | | Kofax | KFX | 12/5/13 | $5.85/$5.25-$6.25 | No Change | $8/+37% | +1% | +39% | B- | | Xencor | XNCR | 12/4/13 | $5.50/$7 | Decrease | $5.95/+8% | +89% | +104% | -- | | Vince Holding | VNCE | 11/22/13 | $20/$17-$19 | No Change | $29.60/+48% | -20% | +19% | A- | | Oxford Immunotec | OXFD | 11/22/13 | $12/$13-$15 | No Change | $14.00/+17% | +34% | +57% | -- | | 500.com | WBAI | 11/22/13 | $13/$11-$13 | Increase | $20.03/+54% | +73% | +167% | C | | Sungy Mobile | GOMO | 11/22/13 | $11.22/$9.50-$11.50 | No Change | $14.11/+26% | +42% | +78% | -- | | Ideal Power | IPWR | 11/21/13 | $5/$5 | Increase | $5.25/+5% | +79% | +88% | -- | | Evogene | EVGN | 11/21/13 | $14.75/$17.16 | No Change | $15.75/+7% | +23% | +31% | -- | | Navigator Holdings | NVGS | 11/20/13 | $19/$17-$19 | Increase | $20.27/+7% | +26% | +35% | -- | | zulily | ZU | 11/15/13 | $22/$18-$20 | Increase | $39/+77% | +25% | +122% | B+ | | Relypsa | RLYP | 11/15/13 | $11/$16-$19 | No Change | $12.59/+14% | +159% | +197% | -- | | Tandem Diabetes Care | TNDM | 11/14/13 | $15/$13-$15 | Increase | $19.50/+30% | +16% | +51% | -- | | Houghton Mifflin Harcourt | HMHC | 11/14/13 | $12/$14-$16 | No Change | $14/+17% | +43% | +67% | -- | | Eros Intl | EROS | 11/13/ 13 | $11/$12-$13 | Decrease | $11.22/+2% | +25% | +28% | -- | | Chegg | CHGG | 11/13/13 | $12.50/$9.50-$11.50 | No Change | $10.96/-12% | -37% | -44% | B- | | Dynagas LNG Partners | DLNG | 11/13/13 | $18/$19-$21 | No Change | $17/-6% | +30% | +23% | -- | | Extended Stay America | STAY | 11/13/13 | $20/$18-$21 | No Change | $21.01/+5% | +8% | +14% | B+ | | JGWPT Holdings | JGW | 11/8/13 | $14/$15-$16 | Decrease | $13.38/-4% | +34% | +28% | -- | | NMI Holdings | NMIH | 11/8/13 | $13/$11-$13 | No Change | $14/+8% | -17% | -11% | -- | | Twitter | TWTR | 11/7/13 | $26/$23-$25 | Increase | $45.10/+73% | +2% | +78% | B+ | | StoneCastle Financial | BANX | 11/7/13 | $25/$25 | Decrease | $25.05/Flat | -1% | -1% | -- | | LGI Homes | LGIH | 11/7/13 | $11/$13-$15 | No Change | $12.26/+11% | +40% | +56% | B | | Mavenir Systems | MVNR | 11/7/13 | $10/$15-$17 | Increase | $11.71/+17% | +52% | +78% | B+ | | Norcraft Companies | NCFT | 11/7/13 | $16/$16-$18 | Increase | $15.80/-1% | +1% | -1% | A- | | Midcoast Energy Partners | MEP | 11/7/13 | $18/$19-$21 | No Change | $17.08/-5% | +18% | +12% | -- | | Barracuda Networks | CUDA | 11/6/13 | $18/$18-$21 | No Change | $22.48/+25% | +44% | +80% | B | | Wix.com | WIX | 11/6/13 | $16.50/$14.50-$16.50 | No Change | $18.50/+12% | +13% | +22% | -- | | Karypharm Therapeutics | KPTI | 11/6/13 | $16/$14-$16 | Increase | $17.86/+12% | +76% | +97% | -- | | Avianca Holdings | AVH | 11/6/13 | $15/$17-$20 | No Change | $13.95/-7% | +20% | +12% | -- | | Blue Capital Reinsurance | BCRH | 11/6/13 | $20/$20 | No Change | $19.42/-3% | -13% | -16% | -- | | Arc Logistics | ARCX | 11/6/13 | $19/$19-$21 | No Change | $19.16/+1% | +12% | +12% | -- | | Container Store | TCS | 11/1/13 | $18/$17-$18 | Increase | $30/+67% | +7% | +78% | B- | | Qunar | QUNR | 11/1/13 | $15/$12-$14 | Increase | $33/+120% | -19% | +79% | -- | | Marcus & Millichap | MMI | 10/31/13 | $12/$14-$16 | No Change | $13.24/+10% | +30% | +43% | -- | | 58.com | WUBA | 10/31/13 | $17/$15-$16 | Increase | $21/+24% | +86% | +130% | B+ | | Essent Group | ESNT | 10/31/13 | $17/$13.50-$15.50
| No Change | $22.06/+30% | +1% | +31% | -- | | Criteo | CRTO | 10/30/13 | $31/$27-$29 | Increase | $42/+35% | -5% | +29% | B+ | | Brixmor Property | BRX | 10/30/13 | $20/$19-$21 | Increase | $20.68/+3% | +2% | +6% | -- | | Surgical Care Affiliates | SCAI | 10/30/13 | $24/$21-$24 | No Change | $28/+16% | +12% | +30% | B+ | | Veracyte | VCYT | 10/30/13 | $13/$13-$15 | Increase | $13/Flat | +26% | +26% | B+ | | Endurance Intl Group | EIGI | 10/25/13 | $12/$14-$16 | Decrease | $11/-8% | +15% | +5% | B- | | Commscope | COMM | 10/25/13 | $15/$18-$21 | No Change | $15/Flat | +54% | +54% | C+ | | Sprague Resources | SRLP | 10/25/13 | $18/$19-$21 | No Change | $17.37/-4% | +14% | +10% | -- | | Aerie Pharma | AERI | 10/25/13 | $10/$12-$14 | Increase | $10.55/+6% | +94% | +105% | -- | | voxeljet | VJET | 10/18/13 | $13/$13-$15 | No Change | $20/+54% | +28% | +97% | B | | Abengoa | ABGB | 10/17/13 | $12.18/$12.18 | No Change | $12.33/+1% | +79% | +81% | -- | | Veeva Systems | VEEV | 10/16/13 | $20/$16-$18 | Increase | $38/+90% | -32% | +30% | A | | Plains GP Holding | PAGP | 10/16/13 | $22/$22-$25 | No Change | $22.81/+4% | +22% | +26% | -- | | Springleaf Holdings | LEAF | 10/16/13 | $17/$15-$17 | Increase | $19.10/+12% | +29% | +45% | C | | Antero Resources | AR | 10/10/13 | $44/$38-$42 | Increase | $55.02/+25% | +16% | +45% | B- | | MacroGenics | MGNX | 10/10/13 | $16/$14-$16 | Increase | $24/+50% | +32% | +97% | -- | | Stonegate Mortgage | SGM | 10/10/13 | $16/$20-$22 | Decrease | $17.19/+7% | -17% | -11% | -- | | Western Refining Logistics | WNRL | 10/10/13 | $22/$19-$21 | Increase | $24.10/+10% | +29% | +43% | -- | | LDR Holding | LDRH | 10/9/13 | $15/$14-$16 | No Change | $18.50/+23% | +73% | +114% | B- | | SFX Entertainment | SFXE | 10/9/13 | $13/$11-$13 | Increase | $13/Flat | -48% | -48% | -- | | QTS Realty Trust | QTS | 10/9/13 | $21/$27-$30 | No Change | $22.44/+7% | +11% | +18% | -- | | Potbelly | PBPB | 10/4/13 | $14/$12-$13 | Increase | $28.66/+105% | -37% | +28% | B+ | | OCI Partners | OCIP | 10/4/13 | $18/$19-$20 | No Change | $ 17.26/-4% | +29% | +24% | -- | | Cherry Hill Mortgage | CHMI | 10/4/13 | $20/$20 | No Change | $18.51/-7% | +3% | -5% | -- | | RE/MAX | RMAX | 10/2/13 | $22/$19-$21 | No Change | $26.26/+19% | +16% | +38% | B- | | Burlington Stores | BURL | 10/2/13 | $17/$14-$16 | No Change | $23.04/+36% | +30% | +76% | B | | Empire State Realty Trust | ESRT | 10/2/13 | $13/$13-$15 | No Change | $13.06/Flat | +15% | +15% | -- |
The Next Big Thing team:
- Lead Analyst: Dennis Hobein
- Contributing Analysts: Jim Busch; Robert Reid; and Jeff Eckmann
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