When BigCommerce, the Texas-based Shopify competitor, first announced an IPO price range, the numbers looked a little light.
With a range of just $18 to $20 per share, it appeared that the firm was targeting a valuation of around $1.18 billion to $1.31 billion. Given that BigCommerce had revenue of “between $35.5 million and $35.8 million” in Q2 2020, up a little over 30% from the year-ago period (and better margins than Shopify) its implied revenue multiple that its IPO price range indicated felt low.
At the time, TechCrunch wrote that “BigCommerce feels cheap at its current multiple,” and that if you added “recent market exuberance for cloud shares that we’ve see in other IPOs … it feels even more underpriced.”
Those feelings have been borne out. Today, BigCommerce announced a new, higher IPO price range. The firm now intends to price its IPO between $21 and $23 per share. Let’s calculate its new valuation, compare that to its preliminary Q2 results to get new multiples for the impending e-commerce software IPO, and figure how its most recent investors are set to fare in its impending debut.
Pricing
By moving its pricing up from $18 to $20 to $21 to $23, BigCommerce boosted its IPO range by 16.7% at its lower end and 15% at the upper end. At its new prices BigCommerce is worth between $1.38 billion and $1.51 billion.
Recalling the company’s Q2 revenue range, we can work out two run rates for the firm: $142 million on the more conservative side and $143.2 million on the more optimistic end.
Those figures allow us to calculate the revenue multiple of BigCommerce at its various price points, and Q2 2020 growth rates:
- BigCommerce run rate multiple at $142 million run rate and $1.38 billion valuation: 9.71x.
- BigCommerce run rate multiple at $143.2 million run rate and $1.38 billion valuation: 9.64x.
- BigCommerce run rate multiple at $142 million run rate and $1.51 billion valuation: 10.63x.
- BigCommerce run rate multiple at $143.2 million run rate and $1.51 billion valuation: 10.54x.
Those results are notably better than what the company priced at using its first IPO range (8.3x and 9.2x at the midpoint of its Q2 revenue range). Seeing BigCommerce in the double-digit run-rate multiple category given where software and cloud norms are today makes sense.
Of course, BigCommerce is still looking to go public for a fraction of Shopify’s prices/sales ratio, which according to YCharts data is around 60x today. But Shopify is growing around three-times as quickly as BigCommerce, so the gap makes some sense.
We asked a while back why aren’t Rackspace and BigCommerce worth more? At least in the case of BigCommerce that question has been partially answered by a new price range. Now can the company raise the range again, or price above its new interval? On the heels of Shopify’s huge quarter, perhaps.
According to PitchBook data, BigCommerce was worth just $514 million after its 2018 Series F. That’s a slim figure compared to $1.51 billion. For GGV Capital, General Catalyst, American Express Ventures and SoftBank Capital, even this new range is a great result. Anything more is gravy.