TubeMogul IPO: A Mid-Range Start Up Enters the Public Financial Domain
IPO investment firm Renaissance Capital announced Monday July 7 that TubeMogul, a platform and digital ad campaign management services provider, is planning to raise $75 million in its new public shares offering. Some 6.3 million shares are on the block with prices ranging from $11 to $13. The conservative projection for the $12 median price per share would garner a traded market value of $390 million or so. The range also means that the planned intent to raise $75 million by going public was a soft estimate – TubeMogul can sell a minimum of $93 million in floating stock alone.
The deal is managed by the joint team of BofA Merrill Lynch, Citi and RBC Capital Markets, with pricing coming out the week of July 14, filed in NASDAQ with the logo TUBE. The market is sanguine on mid-range offerings from companies with good development potential or those who seem to be on the verge of busting out of their base capitalization or both. TubeMogul will want to follow Arista Networks, MobileIron, and GoPro, companies who have done decently on recent IPOs. However, other companies that share space with TubeMogul in the field of interactive tech are suffering significant losses after their recent respective IPOs – these companies are YuMe and Tremor Video. The other option would have been a merger deal with any one of the current interactive technology leaders, like the case of Facebook buying out LiveRail for $500 million.
Be that as it may, there is a modest but well-pronounced window for success in TubeMogul’s IPO gamble. The predictor key is the company’s recent combination of speeded up growth in revenue aided and abetted by rapid cuts in losses – over 60% from the previous year. This is a highly compelling menu for current market trends. It is sudden good news for the Emeryville, CA-based enterprise which has doggedly struggled like many private start ups in a hard field full of competitors with all sorts of sharp teeth – all competing to get a bite out of a very large, amorphous potential customer base whose tastes run from fickle to facetious to French (there’s no telling what they consider in good taste).
Founded in 2006, TubeMogul took in $64 million in sales for its fiscal year ending March 31, 2014. It has initially filed gross revenues before that has marked it as quick-growth start up. It would have looked even better if the losses didn’t follow suit. In 2013, it suffered the biggest loss (over $7 million) of its three annual revenue statements. The breakthrough came in this fiscal year’s first quarter, with revenues coming to $22 million, up from $9.5 million in the same period the previous year. And it came with minimum loss attached, a mere $700 thousand, as compared to the $1.9 million of the preceding quarter.
Was this a predicted upturn? In January 24, 2014, several long months before the breakthrough was announced, TubeMogul filed for confidentiality, which is often seen as an important preparatory step to a public stock offering. How the IPO will be seen in an uneasy market with a lot of players suddenly becoming canny and cagey (read: conservative) remains the question for the company. It might be of merit to follow its progress, if only to learn how it will go and see through the parlance and psychobabble to see the wheeling and dealing behind the scenes (Tech Crunch’s Alex Wilhelm likens TubeMoul’s gross profit margins to gross-on-demand, for example). For anyone wishing for a case with a lot of potential for lessons learned, TubeMogul is it – a lot of things are still about to come up and out, probably full of twists and turns, another well-appointed financial drama with minimal fall-out potential offered by our nation’s stock exchanges for our edification. In any case it seems that it will be a go on all cylinders, or tubes, if you prefer. We await the crossing of the Rubicon with some fingers crossed.