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San Francisco, CA Marin Software (MRIN) scheduled an $84 million IPO with a market capitalization of $365 million at a price range mid-point of $12 for Friday, March 22, 2013.

Eight IPOs are scheduled for the week of March 18th. The full IPO calendar is available here.

S-1 filed March 11, 2013.

Manager, Joint Managers: Goldman, Sachs; Deutsche Bank Securities
Co Managers: UBS; Stifel; Wells Fargo

Summary

  • MRIN provides Internet ad serving services, just like the DoubleClick subsidiary of Google.
  • MRIN is 55% owned by VCs, pre-IPO. None are selling on the IPO.

Observations

  • MRIN has excellent revenue growth.
  • But MRIN has a difficult time making money.

Valuation
A price-to-sales ratio of six times sales seems on the high in this market for a business whose loss rate is 44% of revenue.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

yr ended Dec 2012

Cap (MM)

Sales

Earnings

BookValue

TangibleBV

in IPO

Marin Software

$365

6.1

-13.8

3.3

3.4

23%

Glossary

Conclusion
Because of MRIN's revenue growth and because its business is similar to a subscription-based business, buy MRIN on the IPO.

Business
MRIN has a Revenue Acquisition Management platform that, according to MRIN, enables advertisers to significantly improve their ability to acquire revenue through digital advertising campaigns.

MRIN markets and sells solutions to advertisers directly and through leading advertising agencies.

MRIN generates revenues from subscription contracts under which MRIN charges fees generally based upon the amount of advertising spend that customers manage through MRIN's platform.

In December 2012, MRIN's customers collectively managed $4.7 billion in annualized advertising spend on MRIN's platform and for the quarter ended December 31, 2012, MRIN had 531 active advertisers using its solution globally across a wide range of industries.

MRIN has achieved 15 consecutive quarters of revenue growth.

Market
Global spending on advertising is expected to grow from $480 billion in 2012 to $619 billion in 2017, according to Magna Global. Rapid growth in online activity and engagement is resulting in a significant and ongoing shift in advertising spend to digital channels with global spending on digital advertising expected to grow from $98 billion in 2012 to $174 billion in 2017, according to Magna Global.

Gartner, Inc. predicts that by 2017, the chief marketing officer will spend more on IT than the chief information officer.

History
MRIN was incorporated in 2006 and initially focused on building the core elements of its cloud-based platform. In September 2007, MRIN launched Marin Enterprise, which targets large advertisers and agencies.

MRIN released Marin Professional Edition in March 2011, which targets mid-market advertisers and agencies. MRIN typically releases new features every one to two months. Additionally, MRIN has continued to expand internationally, opening a London office in 2009, Paris, Hamburg, Singapore and Sydney offices in 2011 and Dublin and Tokyo offices in 2012.

Intellectual Property
As of December 31, 2012, MRIN had one issued patent and one patent application pending in the United States. Historically, despite substantial investment in research and development activities, MRIN has not focused on patents and patent applications.

Competition
MRIN currently competes with large, well-established companies, such as Adobe Systems Incorporated and Google Inc. (through its wholly-owned subsidiary DoubleClick), and privately-held companies, such as Acquisio Inc., which focuses solely on agencies, and Kenshoo Ltd.

Employees
As of December 31, 2012, MRIN had a total of 424 regular full-time employees, including 109 employees located outside the United States.

5% Stockholders Pre-IPO
Benchmark Capital Partners VI, L.P., 16%
DAG Ventures, 16%
Temasek Capital, 11%
Focus Ventures, 6%
Crosslink Ventures, 6%

Use Of Proceeds

MRIN expects to net $75 million from its IPO.

Proceeds are allocated to working capital and general corporate purposes.

Disclaimer: This MRIN IPO report is based on a reading and analysis of MRIN's S-11 filing which can be found here and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: Marin Software