IPO Preview: Rocket Fuel

| About: Rocket Fuel (FUEL)

Based in Redwood City, CA, Rocket Fuel (NASDAQ:FUEL) scheduled a $102 million IPO with a market capitalization of $829 million at a price range mid-point of $25.5, for Friday, September 20, 2013.

Nine IPOs are scheduled for this week, 12 for next week. The full IPO calendar can be found at IPOpremium.

S-1 filed September 9, 2013.

Manager; Joint Managers: Credit Suisse; Citigroup
Co-Managers: Needham; Oppenheimer; Piper Jaffray; BMO Capital; LUMA

Summary
FUEL is a technology company that has developed an Artificial Intelligence and Big Data-driven predictive modeling and automated decision-making platform.

The compound increase in top line revenue is one of the best we've seen.

2010 yr

2011 yr

2012 yr

June 6 mos '12

June 6 mos '13

Revenue % chg vs prior period

173%

138%

133%

Click to enlarge

Valuation

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing june 6 mos

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Rocket Fuel

$829

4.5

-46.0

6.5

6.5

12%

Click to enlarge

Accumulated deficit of -$35 million.

4.5 times annualized sales is low for a company with FUEL's top line revenue growth.

Glossary

Conclusion
Buy FUEL on the IPO.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above:

Business
FUEL is a technology company that has developed an Artificial Intelligence and Big Data-driven predictive modeling and automated decision-making platform.

There are tens of billions of daily trades across all digital advertising exchanges, thousands of times more than the number of daily trades executed by Nasdaq and the NYSE combined.

FUEL's Artificial Intelligence, or AI, system autonomously purchases ad spots, or impressions, one at a time, on these exchanges to create portfolios of impressions designed to optimize the goals of advertisers, such as increased sales, heightened brand awareness and decreased cost per customer acquisition

Competition
FUEL competes with large, well-established companies such as Google, Facebook and Yahoo, digital advertising networks, companies that offer demand-side platforms that allow advertisers to purchase inventory directly and manage their own customer data, divisions of certain advertising agencies, including agency trading desks, that place digital advertising on behalf of the agencies' clients, and other companies, many of which claim to use advanced technologies to optimize advertising campaigns.

Intellectual property
As of June 30, 2013, FUEL had filed five non-provisional patent applications in the United States and three Patent Cooperation Treaty applications.

Use of Proceeds
FUEL expects to net $90 million from its IPO. Proceeds are allocated to working capital and general corporate purposes.

Disclaimer: This FUEL IPO report is based on a reading and analysis of FUEL's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.