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AppDynamics Initiates IPO Process, Files S-1 with the SEC
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AppDynamics recently commenced its Initial Public Offering (IPO) process by filing regulatory S-1 form with the Securities and Exchange Commission (SEC). The San Francisco, CA-based company offers Application Performance Management (APM) software and had 1,975 customers as of Oct 31, 2016.
According to the S-1 filing, AppDynamics has applied to be listed on Nasdaq stock exchange under the symbol “APPD”. Per VentureBeat, AppDynamics plans to raise $100 million from the IPO. However, the S-1 filing did not specify the number of shares the company intends to offer as well as the price range.
Notably, as an emerging growth company AppDynamics falls under the purview of the U.S. Jumpstart Our Business Startups (JOBS) Act. Notably, the Act allows some regulatory filing exemptions to companies with less than $1 billion in revenues.
AppDynamics: A Tech Unicorn
Tech unicorns refer to those emerging technology companies that have a valuation of more than $1 billion. Reportedly AppDynamics is valued at $2 billion primarily due to its strong growth prospects in the APM market.
Per the S-1 filing that cited Gartner data “the IT operations market in 2016 is expected to be $23.0 billion and the business intelligence and analytics market is expected to be $17.1 billion, resulting in a total addressable market (TAM) of $40.1 billion in 2016, and is expected to grow at 7.6% annually to $53.8 billion in 2020.”
We note that the company has grown rapidly in the last couple of years. In fiscal 2015 and 2016 (ending Jan 31), revenues surged a massive 247% and 84%, respectively. In the nine months of fiscal 2017 (ending Oct 31) revenues soared 54% on a year-over-year basis, while billings surged 44%.
Despite soaring revenues, AppDynamics is not a profitable company. It has posted net losses of $94.2 million and $134.1 million in fiscal 2015 and 2016, respectively. In the nine months ended Oct 31, AppDynamics reported net loss of $95.1 million, which was wider than loss of $92.4 million posted in the year-ago period.
AppDynamics believes that its product portfolio is well-positioned to leverage this growth potential going ahead. The company’s strong clientele that includes the likes of International Business Machines (IBM - Free Report) and Expedia (EXPE - Free Report) will boost its competitive position against the likes of Microsoft (MSFT - Free Report) and CA Inc.
Rebounding IPO Market to Boost AppDynamics
The U.S. IPO market remained sluggish for most of 2016, with only 125 companies filing compared with 234 in 2015, per data from Renaissance Capital. Moreover, IPO proceeds declined more than 37% to $18.8 billion impacted by the volatility from the U.S. presidential elections and Brexit.
As these headwinds fade away, the technology IPO market is anticipated to rebound in 2017, which will aid AppDynamics IPO to gain momentum, in our view.
We note that Exa has gained 33.33% on a year-to-date basis, which has comfortably beaten the Zacks Computer-Software Industry’s gain of 11.11% over the same period.
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AppDynamics Initiates IPO Process, Files S-1 with the SEC
AppDynamics recently commenced its Initial Public Offering (IPO) process by filing regulatory S-1 form with the Securities and Exchange Commission (SEC). The San Francisco, CA-based company offers Application Performance Management (APM) software and had 1,975 customers as of Oct 31, 2016.
According to the S-1 filing, AppDynamics has applied to be listed on Nasdaq stock exchange under the symbol “APPD”. Per VentureBeat, AppDynamics plans to raise $100 million from the IPO. However, the S-1 filing did not specify the number of shares the company intends to offer as well as the price range.
Notably, as an emerging growth company AppDynamics falls under the purview of the U.S. Jumpstart Our Business Startups (JOBS) Act. Notably, the Act allows some regulatory filing exemptions to companies with less than $1 billion in revenues.
AppDynamics: A Tech Unicorn
Tech unicorns refer to those emerging technology companies that have a valuation of more than $1 billion. Reportedly AppDynamics is valued at $2 billion primarily due to its strong growth prospects in the APM market.
Per the S-1 filing that cited Gartner data “the IT operations market in 2016 is expected to be $23.0 billion and the business intelligence and analytics market is expected to be $17.1 billion, resulting in a total addressable market (TAM) of $40.1 billion in 2016, and is expected to grow at 7.6% annually to $53.8 billion in 2020.”
Computer - Software Industry 5YR % Return
Computer - Software Industry 5YR % Return
We note that the company has grown rapidly in the last couple of years. In fiscal 2015 and 2016 (ending Jan 31), revenues surged a massive 247% and 84%, respectively. In the nine months of fiscal 2017 (ending Oct 31) revenues soared 54% on a year-over-year basis, while billings surged 44%.
Despite soaring revenues, AppDynamics is not a profitable company. It has posted net losses of $94.2 million and $134.1 million in fiscal 2015 and 2016, respectively. In the nine months ended Oct 31, AppDynamics reported net loss of $95.1 million, which was wider than loss of $92.4 million posted in the year-ago period.
AppDynamics believes that its product portfolio is well-positioned to leverage this growth potential going ahead. The company’s strong clientele that includes the likes of International Business Machines (IBM - Free Report) and Expedia (EXPE - Free Report) will boost its competitive position against the likes of Microsoft (MSFT - Free Report) and CA Inc.
Rebounding IPO Market to Boost AppDynamics
The U.S. IPO market remained sluggish for most of 2016, with only 125 companies filing compared with 234 in 2015, per data from Renaissance Capital. Moreover, IPO proceeds declined more than 37% to $18.8 billion impacted by the volatility from the U.S. presidential elections and Brexit.
As these headwinds fade away, the technology IPO market is anticipated to rebound in 2017, which will aid AppDynamics IPO to gain momentum, in our view.
Key Pick
Exa Corp sporting a Zacks Rank #1 (Strong Buy) is a stock worth noting in the Zacks Computer-Software industry to which AppDynamics belongs to. You can see the complete list of today’s Zacks #1 Rank stocks here.
We note that Exa has gained 33.33% on a year-to-date basis, which has comfortably beaten the Zacks Computer-Software Industry’s gain of 11.11% over the same period.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>