Specifically, on Tuesday, the expected price range for the IPO was lifted from $19-$21 to $21-$23, supporting that demand was indeed going to be solid. This morning, the IPO priced at the high end of the upwardly revised range, coming in at $23. In all, the 10.0 mln share deal generated $230 mln in proceeds, about 15% more than anticipated.
The lead underwriters on the IPO were Goldman Sachs, JP Morgan, Allen & Co, and RBC Capital Markets. Shares are set to open for trading later this morning on the NYSE.
Founded in 2006, EB is an operator of an online platform that allows subscribers to create, manage, and sell tickets for a variety of events. These events include fundraisers, seminars, music festivals, and wellness activities. Its platform can be reached through its website, its mobile apps, and through third party websites. Further, its platform allows developers to integrate services from partners such as Salesforce, Hubspot, and Facebook.
Regarding its business model, the company charges event creators on a per-ticket basis when someone purchases a ticket for an event. To offer some context on its size and scope, in 2017 it had more than 700,000 creators on its platform, issuing about 203 mln tickets across 170 countries.
EB attracts event creators and users to its platform by offering the ability to try it for free events, in addition to relying on word of mouth from other creators, and the prominence of its site in search engine results.
EB's platform offers a streamlined designs and also provides real-time analytics that bring insights to event creators, helping them to make decisions that impact attendance, revenue, and profitability. Also, since its platform supports social sharing and is integrated with prominent technology partners, creators have the capability of reaching a large audience.
Taking a closer look at its results for the six months ended June 30, 2018, revenue jumped by 61% to $142.1 mln. The increase in revenue is mainly attributable to growth in paid ticket volume, which was up 54% year/year. It's worth noting that some of this growth was due to its Ticketfly acquisition last September, and its Ticketea acquisition from this past April.
For the period, gross margin slipped a little to 59.2% compared to 60.0% in the year ago period. The main reason for the dip is gross margin is that cost of net revenue climbed by 64% due to increases in payment processing costs, as well as an increase in amortization of acquired developed technology of $5.1 mln.
Moving down the income statement, total operating expenses were up 64%, outpacing its revenue growth. Like many up-and-coming tech companies, Sales & Marketing expense increased sharply by 54% to $35.6 mln. The good news is, as a percentage of revenue, Sales & Marketing costs were actually down to 25.1% versus 26.3% for the same period in 2017.
Still, its operating loss did move in the wrong direction, coming in at ($16.3) mln versus ($8.3) mln for the six months ended July 30, 2017.