Morning Markets: Two quick IPO updates this morning to kick off your week.
Last week we saw the public debuts of Phreesia (results), Medallia (results), and DouYu (results). If you hoped for an IPO after all of that action, we’re sorry. There’s another IPO this week, and one the week after if the current calendar holds.
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We covered Livongo when it first filed to go public, noting its rapid revenue growth (the company employs a SaaS model to sell its healtech products) and expanding losses. Those results were accompanied by rising cash burn from the firm’s operations.
In a way, Livongo’s rapid revenue expansion and expanding costs relating to growth make it a fun candidate for a public offering; the company needs the cash that it is going to raise in its public debut.
Now, to the news. This morning Livongo filed a new S-1/A filing with the SEC noting that it intends to sell 10.7 million shares in its public offering at a price of $24 to $26 per share. At midpoint pricing, that works out to a $267.5 million raise, a raft of capital for a firm with $55 million at the end of its most recent reporting period.
Livongo is worth about $2.2 billion at the midpoint of its new range, not counting extra shares made available to its underwriting banks.
The price range is a bump from a prior estimate of $20 to $23 per share, meaning that Livongo is seeing market demand that it finds encouraging. Livongo is expected to price Thursday, and trade Friday.
We first sunk our teeth into the Dynatrace offering in early July. At that time, we discovered that the software company was in the process of moving from a license-based company to a SaaS-modeled firm. It can take time to make the switch, as companies swap out old revenue for new, subscription-based top line while trying to grow in aggregate at the same time.
The numbers that Dynatrace is putting up are a lesson by themselves, but what we care more about is the news. And in this case, we have a price range. Dynatrace is shooting for an $11 to $13 price range in its IPO. Given that the company is selling 34 million shares itself (extant shareholders are selling stock as well, and there are a few more million more shares set aside for underwriting entities), it could raise up to $442 million in the transaction.
And, at the midpoint of its range, could be worth around $3.47 billion, not counting shares set aside for underwriting entities should they choose to purchase them.
So, this is an even larger offering for a more valuable company than the Livongo deal, but in the case of Dynatrace, we aren’t sure yet when it will price and trade.
Dynatrace, based in Massachusetts, didn’t raise much before selling to Compuware in 2011. The firm’s only three known funding rounds barely top $20 million. The firm raised from Bain Capital Ventures and Bay Partners.
And that’s that! You’re all set until later in the week when we’ll watch Livongo go live.
Illustration: Li-Anne Dias.