Архив метки: IPO

Unity Software has strong opening, gaining 31% after pricing above its raised range

Whoever said you can’t make money playing video games clearly hasn’t taken a look at Unity Software’s stock price.
On its first official day of trading, the company rose more than 31%, opening at $75 per share before closing the day at $68.35. Unity’s share price gains came after last night’s pricing of the company’s stock at $52 per share, well above the range of $44 to $48 which was itself an upward revision of the company’s initial target.
Games like “Pokémon GO” and “Iron Man VR” rely on the company’s software, as do untold numbers of other mobile gaming applications that use the company’s toolkit for support. The company’s customers range from small gaming publishers to large gaming giants like Electronic Arts, Niantic, Ubisoft and Tencent.

Unity’s IPO comes on the heels of other well-received debuts, including Sumo Logic, Snowflake and JFrog .
TechCrunch caught up with Unity’s CFO, Kim Jabal, after-hours today to dig in a bit on the transaction.
According to Jabal, hosting her company’s roadshow over Zoom had some advantages, as her team didn’t have to focus on tackling a single geography per day, allowing Unity to “optimize” its time based on who the company wanted to meet, instead, of say, whomever was free in Boston or Chicago on a particular Tuesday morning.

Unity IPO aims to fuel growth across gaming and beyond

Jabal’s comments aren’t the first that TechCrunch has heard regarding roadshows going well in a digital format instead of as an in-person presentation. If the old-school roadshow survives, we’ll be surprised, though private jet companies will miss the business.
Talking about the transaction itself, Jabal stressed the connection between her company’s employees, value  and their access to that same value. Unity’s IPO was unique in that existing and former employees were able to trade 15% of their vested holdings in the company on day one, excluding “current executive officers and directors,” per SEC filings.
That act does not seemed to have dampened enthusiasm for the company’s shares, and could have helped boost early float, allowing for the two sides of the supply and demand curves to more quickly meet close to the company’s real value, instead of a scarcity-driven, more artificial figure.

Bear and bull cases for Unity’s IPO

Regarding Unity’s IPO pricing, Jabal discussed what she called a “very data-driven process.” The result of that process was an IPO price that came in above its raised range, and still rose during its first day’s trading, but less than 50%. That’s about as good an outcome as you can hope for in an IPO.
One final thing for the SaaS nerds out there. Unity’s “dollar-based net expansion rate” went from very good to outstanding in 2020, or in the words of the S-1/A:
Our dollar-based net expansion rate, which measures expansion in existing customers’ revenue over a trailing 12-month period, grew from 124% as of December 31, 2018 to 133% as of December 31, 2019, and from 129% as of June 30, 2019 to 142% as of June 30, 2020, demonstrating the power of this strategy.
We had to ask. And the answer, per Jabal, was a combination of the company’s platform strength and how customers tend to use more of Unity’s services over time, which she described as growing with their customers. And the second key element was 2020’s unique dynamics that gave Unity a “tailwind” thanks to “increased usage, particularly in gaming.”
Looking at our own gaming levels in 2020 compared to 2019, that checks out.
This post closes the book on this week’s IPO class. Tired yet? Don’t be. Palantir is up next, and then Asana .

Unity Software has strong opening, gaining 31% after pricing above its raised range

DoubleDown is going public: Why isn’t its IPO worth more?

Agora isn’t the only company headquartered outside the United States aiming to go public domestically this quarter. After catching up on Agora’s F-1 filing, the China-and-U.S.-based, API-powered tech company that went public last week, today we’re parsing DoubleDown Interactive’s IPO document.
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The mobile gaming company is targeting the NASDAQ and wants to trade under the ticker symbol “DDI.”
As with Agora, DoubleDown filed an F-1, instead of an S-1. That’s because it’s based in South Korea, but it’s slightly more complicated than that. DoubleDown was founded in Seattle, according to Crunchbase, before selling itself to DoubleU Games, which is based in South Korea. So, yes, the company is filing an F-1 and will remain majority-held by its South Korean parent company post-IPO, but this offering is more a local affair than it might at first seem.
Even more, with a $17 to $19 per-share IPO price range, the company could be worth up to nearly $1 billion when it debuts. Does that pricing make sense? We want to find out.
So let’s quickly explore the company this morning. We’ll see what this mobile, social gaming company looks like under the hood in an effort to understand why it is being sent to the public markets right now. Let’s go!
Fundamentals
Any gaming company has to have its fun-damentals in place so that it can have solid financial results, right? Right?
Anyway, DoubleDown is a nicely profitable company. In 2019 its revenue only grew a hair to $273.6 million from $266.9 million the year before (a mere 2.5% gain), but the company’s net income rose from $25.1 million to $36.3 million, and its adjusted EBITDA rose from $85.1 million to $101.7 million over the same period.

DoubleDown is going public: Why isn’t its IPO worth more?

Snapchat hits 218M users but big Q4 losses sink share price

Snapchat still isn’t profitable nearly two years after its IPO. In Q4 2019, Snap lost $241 million on 560.8 million in revenue that’s up 44% year-over-year and an EPS of $0.03. That comes from adding 8 million daily users to reach a total of 218, up 3.8% this quarter from 210 million and 17% year-over-year.
The big problem was a one-time $100 million legal settlement that pushed it to lose $49 million more in Q4 2019 than Q4 2018. That comes from a shareholders lawsuit claiming Snap didn’t adequately disclose the impact of competition from Facebook on its business. The IPO was soured by weak user growth as people shifted from Snapchat Stories to Instagram Stories.

A rough Q4
Snapchat had a mixed quarter compared to estimates, exceeding the EPS predicitions but falling short on revenue. FactSet’s consensus predicted $563 million in revenue and a loss of $0.12 EPS. Estimize’s consensus came in at $568 million in revenue and an EPS gain of $0.02.
Snapchat shares plunged over 10% in after-hours trading following the announcement. Shares had closed up 4.17% at $18.99 today. That’s up from a low of $4.99 in December 2018 when its user count was shrinking under competition from Instagram Stories. It’s now hovering around its $17 IPO price but it’s still under its post-IPO pop to $27.09.
Snap gave stronger than expected revenue guidance for Q1 2020 of $450 million to $470 million, and 224 million to 225 million users. The company’s CFO Derek Anderson says that “Q4 marked our first quarter of Adjusted EBITDA profitability at $42 million for the quarter, an improvement of $93 million over the prior year.” Still, he predicts an Adjusted EBITDA in Q1 of negative $90 million to negative $70 million. That’s manageable for Snap without raising more money, since it now has $2.1 billion in cash and marketable securities, down $148 million quarter-after-quarter.

Snapchat 2020
“Throughout the course of 2019, we added 31 million daily active users, largely driven by investments in our core product and improvements to our Android application “said Snapchat CEO Evan Spiegel . “We’ve recently completed our 2020 strategic planning process and have aligned our teams and resources around our goals of supporting real friendships on Snapchat, expanding our service to a broader global community, investing in our AR and content platforms, and scaling revenue while achieving profitability in order to self-fund our investments in the future.”
Some other highlights:
1.3 trillion Snaps were created in 2019
The average Snapchat user engages for 30 minutes per day,
Snapchat reaches 90% of US 13 to 24 year-olds and over 75% of 13 to 34 year-olds
Total daily time spent by Snapchatters watching Discover increased by 35% year-over-year, and its up 60% for users over the age of 25
Over 50 Snapchat shows reached a monthly audience of 10 million viewers or more
75% of users engage with augmented reality per day
20% of Snaps sent with an AR lens were made with commununity-developed lenses
5X more users open the Lens Explorer now versus a year ago, and 10% of users open it every day
Snapchat’s user growth has been on tear thanks to international penetration, especially in India, after it re-engineered its Android app for developing markets. It gained users in all markets. Crucially, it raised its average revenue per user 23% from $2.09 in Q4 2018 to $2.58, though only from $1.24 to $1.35 in the Rest Of World region where it’s growing user count the fastest. Snap will need to figure out how to squeeze more cash out of the international market to offset the costs of streaming tons of video to these users.

Q4 saw Snapchat readying several new products that could help boost engagement and therefore ad views. Cameos, first reported by TechCrunch, lets users graft their face onto an actor in an animated GIF like a lightweight Deepfake. Bitmoji TV, which won’t run ads initially but could drive attention to Snapchat Discover, offers zany four-minute cartoons that star your Bitmoji avatar. We could see a bump to engagement from these starting in Q1 2020.
To retain its augmented reality filter creators, Snapchat has pledged $750,000 in payouts in 2020. It’s also expanded the use of product catalog ads, and now lets advertisers buy longer skippable ads.
Outside of the legal settlement, Snapchat is inching closer to profitability but still has a ways to go. It’s managed to develop a strong synergy between its popular chat feature that’s tougher to monetize, and the Stories and Discover content where it can inject ads. The big question is whether Facebook Messenger, Instagram, and WhatsApp will get more serious about ephemeral messaging that’s at the core of Snapchat. If it can hold onto the market and maintain its place as where teens talk, it could ride out its costs and build revenue until it’s sustainable for the long-term.

Snapchat launches Bitmoji TV: zany 4-min cartoons of your avatar

Snapchat hits 218M users but big Q4 losses sink share price