Seeking Alpha
, IPOpremium (1,446 clicks)
Value, IPOs, long only
Profile| Send Message|
( followers)

Summary

  • A pioneer and leading provider of cloud software for contact centers.
  • Sales were up ‘only’ 32% for 2013 vs. 2012.
  • Still losing money.

Based in San Ramon, CA, Five9 (NASDAQ:FIVN) scheduled a $100 million IPO on the Nasdaq with a market capitalization of $460 million at a price range midpoint of $10 for Friday, April 4, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: J.P. Morgan, Barclays, BofA Merrill Lynch
Co-Managers: Pacific Crest Securities, Canaccord Genuity, Needham & Company

End of lockup (180 days): Wednesday, October 1, 2014

End of 25-day quiet period: Tuesday, April 29, 2014

Summary
Five9 is a pioneer and leading provider of cloud software for contact centers.

Valuation
Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Dec qtr

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Five9

$460

4.9

-13.4

5.0

6.0

22%

Conclusion
The rating on FIVN is positive. Sales were up 'only' 32% for 2013 vs. 2012.

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

Business
Five9 is a pioneer and leading provider of cloud software for contact centers.

Since inception, FIVN has exclusively focused on delivering its platform in the cloud and is disrupting a significantly large market by replacing legacy on-premise contact center systems.

FIVN believes it achieved this leadership position through its expertise and technology, which has empowered it to help organizations of all sizes transition from legacy on-premise contact center systems to its cloud solution.

Virtual Contact Center (VCC) cloud platform
FIVN believes it achieved this leadership position through its expertise and technology, which has empowered it to help organizations of all sizes transition from legacy on-premise contact center systems to its cloud solution.

FIVN's solution, which is comprised of its VCC cloud platform and applications, allows simultaneous management and optimization of customer interactions across voice, chat, email, web, social media and mobile channels, either directly or through FIVN's application programming interfaces.

FIVN's VCC cloud platform routes each customer interaction to an appropriate agent resource, and delivers relevant customer data to the agent in real-time to optimize the customer experience.

Unlike legacy on-premise contact center systems, FIVN's solution requires minimal up-front investment and can be rapidly deployed and adjusted depending on FIVN's client requirements.

History
Since founding its business in 2001, FIVN has focused exclusively on delivering cloud contact center software.

FIVN initially targeted smaller contact center opportunities with its telesales team and, over time, invested in expanding the breadth and depth of the functionality of its cloud platform to meet the evolving requirements of its clients.

In 2009, FIVN made a strategic decision to expand its market opportunity to include larger contact centers.

This decision drove further investments in research and development and the establishment of FIVN's field sales team to meet the requirements of these larger contact centers.

FIVN believes this shift has helped it diversify its client base while significantly enhancing its opportunity for future revenue growth.

To complement these efforts, FIVN also has focused on building client awareness and driving adoption of its solution through marketing activities, which include internet advertising, digital marketing campaigns, social marketing, trade shows, industry events and telemarketing.

Dividend Policy
No dividends are planned.

Intellectual Property
FIVN's intellectual property portfolio includes twenty registered and seven pending trademarks, four issued U.S. patents and seventeen pending patent applications and one registered copyright.

FIVN has pending patent applications and limited trademark registrations outside the U.S. In general, FIVN's patents and patent applications apply to aspects of its VCC cloud platform.

Competition
FIVN currently competes with large legacy on-premise contact center system vendors that offer on-premise enterprise telephony and contact center systems, such as Avaya and Cisco; and legacy on-premise software companies with a historical focus on CTI, such as Aspect, Genesys and Interactive Intelligence.

These companies are expanding their traditional on-premise contact center systems with cloud-based offerings, either through acquisition or in-house development.

Additionally, FIVN competes with vendors that historically provided other contact center services and technologies and expanded to offer cloud contact center software. These companies include inContact and LiveOps.

5% stockholders
Michael Burkland 6.0%
Jayendra Das 6.7%
Mitchell Kertzman 23.1%
David S. Welsh 19.7%
Hummer Winblad Venture Partners V, L.P. 23.1%
Entities affiliated with Adams Street Partners 19.7%
Entities affiliated with Partech International 17.3%
Mosaic Venture Partners 17.3%
SAP Ventures Fund I, L.P. 6.7%

Use of proceeds
FIVN expects to net $90 million from its IPO. Proceeds are allocated as follows:

  • for general corporate purposes, which FIVN expects to include growing its business by expanding its direct sales force and investing to grow its international client base, as well as other working capital, operating expenses and capital expenditures.

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

Source: IPO Preview: Five9