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Summary

  • Global e-commerce platform for online retailers.
  • Top-line revenue was up 34% for 2013 vs 2012.
  • Gross profit is 32% and BRDR was almost breakeven in 2013.

Based in New York, NY, Borderfree (NASDAQ:BRDR) scheduled a $75 million IPO on the Nasdaq with a market capitalization of $457 million at a price range midpoint of $15 for Friday, March 21, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: Credit Suisse, RBC Capital Markets

Co-Managers: Pacific Crest, Canaccord Genuity, William Blair, Needham & Co.

Summary
BRDR is a global ecommerce platform for online retailers.

Today, BRDR enables the online international expansion initiatives of some of the largest U.S. retailers and brands, including Aeropostale, J.Crew, Lands' End, Macy's, Neiman Marcus, Under Armour, Warby Parker and Williams-Sonoma.

Top-line revenue was up 34% for 2013 vs 2012, and was up 121% for 2012 vs 2011.

Gross profit is 32% and BRDR was almost breakeven in 2013.

Valuation

Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Annualizing June 6 mos

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Borderfree

$450

4.1

-692.3

4.6

4.7

17%

Conclusion

The rating on the BRDR IPO is positive+.

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

Business

BRDR is a global ecommerce platform for online retailers.

BRDR is a market leader in international cross-border ecommerce, operating a proprietary technology and services platform, to enable U.S. retailers to transact with consumers in more than 100 countries and territories worldwide.

Market opportunity

The market opportunity for international cross-border ecommerce is large, with cross-border consumers expected to spend $24 billion on physical goods from U.S. online retailers in 2014, based on a study conducted on BRDR's behalf by Forrester Research.

International Data Corporation expects Internet penetration to rise, with the number of Internet consumers (outside the United States) purchasing online to grow at a 17% compound annual growth rate, or CAGR, from 2012 to 2017.

Based on a study conducted on BRDR's behalf, Forrester also projects that BRDR's market will grow at a 17% CAGR from $20 billion in 2013 to $44 billion in 2018, significantly outpacing the growth of the overall ecommerce market for physical goods in the United States, which IDC projects will grow at a 6% CAGR through 2017.

Based on the database of web merchants ranked in Internet Retailer's 2013 Top 500 Guide, less than 60% currently sell internationally. BRDR believes this is due to the significant challenges associated with selling to global consumers.

Customers
Today, BRDR enables the online international expansion initiatives of some of the largest U.S. retailers and brands, including Aeropostale, J.Crew, Lands' End, Macy's, Neiman Marcus, Under Armour, Warby Parker and Williams-Sonoma.

As of December 31, 2013, BRDR's platform was powering the global expansion of 158 ecommerce sites for 91 customers.

Revenue sources

BRDR derives revenue from fees paid to by customers based on a percentage of their sales generated through BRDR's platform.

Customer contracts typically have multi-year initial terms ranging from one to four years, followed by one-year renewal periods.

BRDR generates additional revenue from fulfillment services, foreign exchange and other transaction related fees.

The business is operated through an asset-light model, requiring minimal capital investment, which allows BRDR to scale the business in a cost effective and efficient manner.

Services

Borderfree manages all aspects of the international shopping experience, including site localization, multi-currency pricing, payment processing, fraud management, landed cost calculation, customs clearance and brokerage, and global logistics services while maintaining the integrity of BRDR's customers' brands and the consumer experience.

BRDR's integrated cross-border solution enables retailers to begin selling internationally typically within 90 days without the need to invest in expensive infrastructure, software, in-house compliance expertise or international vendor relationships.

In addition, as a result of its scale and experience in international ecommerce, BRDR has amassed a substantial amount of data that enables BRDR to provide actionable marketing and merchandising insights to its customers to help grow their global sales.

Dividend Policy

No dividends are planned.

Competition

The market for international ecommerce software and fulfillment services is highly fragmented and contains well-funded competitors.

The market includes companies of various sizes, as well as large companies, that specialize in third-party point solutions or freight forwarding services, full-service ecommerce business process outsourcers and online marketplaces with international logistics support.

-- Third-party Point Solutions or Freight Forwarding Services.
BRDR's competitors in this category are typically not integrated with U.S. retailer websites, but instead offer international customers freight forwarding, consolidation, repackaging and temporary storage services as well as give member consumers the ability to purchase products from many U.S. websites, consolidate or repackage resulting parcels and have the service export the products to them at a later date.

BRDR competes with this category of competitors by focusing on an integrated and elevated consumer experience, providing visibility into consumer buying activity and BRDR's comprehensive set of merchandising and pricing capabilities that allows its customers to provide the international consumer with a localized experience and the ability to ship direct.

-- Full-service Ecommerce Business Process Outsourcers.
BRDR's competitors in this category are integrated with U.S. retailer websites as BRDR is, with landed cost calculation, payment management and logistics orchestration being core elements of the service, but with the international consumer generally having to leave the retailer's website to complete the transaction.

BRDR competes primarily with this category of competitors by focusing on letting the retailer control the entire order life cycle without disintermediation, the protection of the prominence of the retailer's brand at all times, the reliability and scalability of BRDR's platform, its comprehensive set of merchandising and pricing capabilities and reduced shipping and other transactional costs that BRDR is able to take advantage of as a result of its scale, volume and customer relationships.

-- Large Online Marketplaces Which Provide Retailers with International Logistics Support.
BRDR's competitors in this category offer expansive marketplaces for retailers to create storefronts within certain markets with access to consumers that have previously frequented or purchased through that marketplace.

These marketplaces are generally localized and tailored to the respective markets. BRDR competes with these competitors by maintaining its customer's brand and logo throughout the international order lifecycle and allows its customers to control the consumer's experience.

5% stockholders

Entities affiliated with Pitango Venture Capital Group 32.81%

Entities affiliated with Adams Street Partners 21.69%

Entities affiliated with Delta Ventures 12.38%

Entities affiliated with Venture Strategy Partners 5.85%

Use of proceeds

BRDR expects to net $67 million from its IPO. Proceeds are allocated as follows:

general corporate purposes

for the acquisition of businesses, technologies or other assets that we believe are complementary to BRDR's own, although we have no agreements, commitments or understandings with respect to any such transaction.

Disclaimer: This BRDR IPO report is based on a reading and analysis of BRDR'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.

Source: IPO Preview: Borderfree