Despite some market chop, the U.S. IPO market is still active, with fresh debut nCino pricing above its elevated price range, and Jamf moving to start its pricing process after filing to go public at the end of June. In addition to the pricing news, yesterday evening saw e-commerce software company BigCommerce commence its own IPO journey.
For the banking software company, its final IPO price of $31 per share means that it raised more capital than expected, filling its coffers and providing nCino with more operational flexibility. Pricing above a raised range is a strong result for any company in any market.
Let’s first examine the nCino news — TechCrunch is speaking to its CEO later today — and follow it with notes on the Jamf IPO price range to better understand where the Apple-focused IT shop is aiming to price its equity in its own public offering. Both data points should help us understand the current IPO climate of today, a key market to track as unicorns like Coinbase, Airbnb, DoorDash and others have either filed or are reported to be eyeing a public debut.
nCino’s strong pricing run
When nCino first set a price range for its IPO, the $22 to $24 per-share interval felt modest. TechCrunch wrote at the time that it would “not be a shock [if] nCino targets a higher price interval for its shares before it formally prices.” We did not expect that the company would be able to do even better than that, however.
After raising its IPO price range to $28 to $29 per share, boosting its expected valuation to $2.5 billion-$2.59 billion from $1.96 billion-$2.14 billion, nCino priced at $31 per share last night. It also appears that the offering was slightly upsized, with nCino’s release noting that it was selling 8,060,000 shares with a 1,209,000 share greenshoe option. Its preceding S-1/A filing noted a 7,625,000 offering and a 1,143,750 greenshoe option.
More shares at a higher price is nothing to sniff at.
Doing some loose math this morning, TechCrunch estimates that nCino is worth around $2.8 billion at its IPO price, about 43% more than the bottom of its initial IPO range. That’s a bullish result. Let’s see how it opens.
Jamf’s pricing
Jamf is targeting a $17 to $19 per-share IPO price range, per its new SEC filing. That works out to, excluding shares reserved for its underwriters, a valuation of $1.98 billion to $2.21 billion.
The company reported an ARR range for its Q2, a period for which it has yet to close the books: $238 million to $241 million, up 34.5% to 36.2%, respectively, on a year-over-year basis. Doing some relaxed maths, we can see that Jamf is targeting an ARR multiple from 8.2x at its lowest price point and highest ARR result, to 9.3x, using its highest price point and smallest ARR result.
Those feel, similar to nCino’s own first range, a little light.
Why it feels low is easy to explain. The company grew nicely from Q2 2019 to Q2 2020, seeing revenue rise from $48.3 million to $61.1 million to $62.3 million, while its gross margin improved from 72% to 78%. As you can expect, those results led to strong gross profit gains, boosting that result from $34.8 million in Q2 2019 to between $47.4 million and $48.6 million in the most recent quarter.
That gross profit growth allowed the company to swing from an operating loss in Q2 2019 of $4.4 million to operating profit in Q2 2020 of between $2.7 million to $3.9 million.
Reasonable growth tied to improving gross margins and improving operating profit is a nice combo heading into IPO pricing. It would not be a surprise if Jamf raised its range before formally pricing, provided that the broader markets hold together in the meantime.
Summing, nCino’s debut is flashing green today, and Jamf’s offering appears set to follow suit. So, it’s all systems go for the U.S. IPO market today, at least. Recent declines in the value of software shares could show that trouble is on the horizon.