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Based in San Mateo, CA, Marketo (NASDAQ:MKTO) scheduled a $73 million IPO with a market capitalization of $429 at a price range mid-point of $12, for Friday, May 17, 2013.

Four other new IPOs are scheduled for this week. The full IPO calendar is here.

  • S-1 filed May 6, 2013
  • Manager, Joint Managers : Goldman, Sachs; Credit Suisse
  • Co Managers: UBS; Canaccord Genuity; Raymond James; JMP Securities

SUMMARY

MKTO provides a cloud-based marketing software platform, similar to Eloqua, which was recently acquired by Oracle for $871 million. MKTO's subscription dollar retention rate was 100% for each of 2011 and 2012. VC firms own 83% pre-IPO and are not sellers on the IPO.

VALUATION

Notice that MKTO's price-to-earnings is the same as what Oracle paid for Eloqua. Relative to that transaction, MKTO is priced at a price-sales and price-to-book value discount.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing March qtr

Cap (NYSE:MM)

Sales

Earnings

BkValue

TangibleBV

in IPO

Marketo (MKTO)

$430

5.4

-11.3

4.2

4.8

17%

Eloqua*

$871

9.1

-11.2

11.6

11.6

*Bought by Oracle for $871mm

Glossary

BUSINESS

MKTO believes it is "the provider of a leading cloud-based marketing software platform that enables organizations to engage in modern relationship marketing."

Software Platform

MKTO software platform is designed to enable the effective execution, management and analytical measurement of marketing activities, helping organizations to acquire new customers more efficiently, build stronger relationships with existing customers, improve sales effectiveness and drive faster revenue growth.

MKTO's platform enables Marketing Automation, Social Marketing, Sales Insight and Revenue Analytics. To enable customers to obtain maximum value from the platform, MKTO have created an ecosystem of third-party applications, as well as a network of resources to foster marketing thought leadership, sharing and collaboration among users.

TARGET MARKET

MKTO designed its platform to be valuable across large enterprises and small-to-medium sized businesses that sell to both businesses and consumers in virtually any industry.

MARKETING

MKTO markets and sells its products directly and through a growing network of distribution partners. The client base is diverse, with over 2,300 customers across a wide range of industries including business services, consumer, financial services, healthcare, manufacturing, media, technology and telecommunications.

CUSTOMERS & CONCENTRATION

Representative customers include one or more divisions of the following companies: Capgemini, CenturyLink (NYSE:CTL), Citrix (NASDAQ:CTXS), Gannett (NYSE:GCI), General Electric (NYSE:GE), Medtronic (NYSE:MDT), Moody's (NYSE:MCO), Panasonic (OTCPK:PCRFF), Symantec (NASDAQ:SYMC) and Universal Music Group.

Except for a single customer in 2011 who was slightly over 1%, no single customer represented more than 1% of subscription and support revenue in 2010, 2011, 2012 and for the three months ended March 31, 2012 and 2013. For each of 2011 and 2012, MKTO's 20 largest customers accounted for less than 10% of total revenue.

Subscription dollar retention rate was 100% for each of 2011 and 2012.

MILESTONES

Since founding in 2006, MKTO has achieved the following significant milestones:

•In 2008, launched the first product to address marketing automation and lead management, which we called Marketing Lead Management.

•In 2009, released Marketo Sales Insight to enable sales professionals to easily prioritize their best opportunities and understand the actions and behaviors of their prospects and customers.

•By the end of 2009, had over 200 customers.

• 2010, introduced Revenue Cycle Analytics, designed to provide marketers with a comprehensive analytics solution to capture, analyze and better understand every stage of the revenue process, from lead generation to new business to customer lifetime value.

•In 2011, as part of a commitment to expand sales in Europe, the Middle East and Africa (EMEA), opened the first international office in Dublin, Ireland.

•By the end of 2011, had over 1,000 customers.

•In April 2012, completed the first acquisition by acquiring Crowd Factory, which enabled us to integrate a rich set of social media marketing capabilities into our application suite.

•In the third quarter of 2012, opened a Sydney, Australia office, to address increasing customer demand for our solution in the Asia Pacific region.

•By the end of 2012, had over 2,000 customers.

INTELLECTUAL PROPERTY

As of March 31, 2013, MKTO had three pending U.S. patent applications.

COMPETITION

MKTO faces intense competition from other software companies that develop marketing software. Some of the competitors include:

•Cloud-based marketing automation providers such as Act-On, Eloqua [which was recently acquired by Oracle(NYSE:ORCL)] and HubSpot;

•Traditional database marketing software vendors such as Aprimo [a division of Teradata (NYSE:TDC)], SAS Institute and Unica [a division of IBM (NYSE:IBM)];

•Email marketing software vendors, such as ExactTarget (NYSE:ET), Responsys (NASDAQ:MKTG) and Silverpop; and

•Large scale enterprise suites such as Oracle Corporation and SAP AG (NYSE:SAP).

5% STOCKHOLDERS PRE-IPO

InterWest Partners, 33%

Storm Ventures, 17%

Mayfield XIII, a Cayman Islands Exempted Limited Partnership, 14.2%

Institutional Venture Partners, 13%

Battery Ventures, 7%

Phillip M. Fernandez, 8%

The VC firms aren't selling on the IPO. Fernandez is selling 90,000 shares.

USE OF PROCEEDS

Common stock offered by MKTO, 5.75 million shares. Common stock offered by the selling stockholders: 309,509 shares

MKTO expects to net $67 million from its IPO. Proceeds are allocated to general corporate purposes.

Disclaimer: This MKTO IPO report is based on a reading and analysis of MKTO's S-1A 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: Marketo