Boston-based payment processor Flywire announced its IPO pricing last night. The company sold 10.44 million shares at $24 per share, the upper limit of its $22 to $24 per share price range. At that share count and price, Flywire’s gross IPO proceeds stood at $250.6 million.
Renaissance Capital pegs the company’s fully diluted valuation at $2.8 billion. Using a simple share count, the company is worth $2.4 billion at its IPO price.
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The Flywire IPO is neat from a financial perspective and notable in that it’s a Boston exit as opposed to yet another New York or San Francisco-based flotation. It’s nice to see some other cities put points on the board.
But more than that, this IPO is a useful measuring stick for keeping tabs on the IPO market as a whole. This year and the last are shaping up to be key exit periods for startups and unicorns of all shapes and sizes; many a venture capital fund return rests on these public debuts.
Keeping tabs on how well companies perform when they file, price and list is our way of tracking the investing classes and, to a scary degree, the money propping up your parents’ pension funds and your kids’ college endowments. What comes out of the other end of the machine is not always pretty, but in this case, the results are pretty good.
What does Flywire tell us about the IPO market?
When we last dug into Flywire, we took a look around the world and, using Dutch payments platform Adyen as a comp, noted that it was easy to argue that Flywire could be worth $2.3 billion or more.
As always, we were a bit conservative when it comes to the public markets, and while our rough guesstimate-for-scale got us in the ballpark of the company’s market cap using a basic share count, we undershot the diluted figure by a half-billion or so.
That’s a lot. Our bad.
But what our attempt at calculating a reasonable valuation range for Flywire and our missing the mark tells us is that there’s plenty of optimism left in the market for tech offerings; fintech may be especially hot. It could be that the public-market demand for fintech shares is higher than for other software firms in the wake of Square’s epic run in recent quarters.
Who knows? But what we can quickly tell is that Flywire is worth the following:
- 21.2x its 2020 revenue.
- 15.6x its Q1 2021 run rate.
For a company with gross margins stuck in the 61% range and decelerating growth of around 37%!
For reference, the median company on the Bessemer Cloud Index is growing at 32% and is worth around 15x its run rate; given Flywire’s somewhat lackluster gross margins, its IPO valuation places it in the correct valuation climatic zone, albeit one we would rate as modestly more temperate than average; any upside to its value after it starts to trade will only raise the temperature.
None of that is a diss of Flywire, which we’re sure is a fine company, but the multiples possible for more mature unicorns going public is super notable to your humble servant. This brings us back to the IPO market writ large: It seems attractive again, making that temporary slowdown feel all the more ephemeral, like cash at Snap back in 2017.
Don’t forget that Robinhood is expected to drop an S-1 filing this week. It’s Wednesday, so time is ticking on a little bit. But if you were the trading platform and wanted a warm market to jump into, Flywire’s IPO is indicative of at least a temperate environment in which to list.
We’ll update this post when it starts to trade, but because that could be a few hours from now, we’re not going to wait around to publish. Chat soon!