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Summary

  • A leading provider of cloud-based software to the $2.2 trillion utility industry.
  • Sales were up 71% in 2013 vs. 2012.
  • Still losing money.

Based in Arlington, VA, Opower (NYSE:OPWR) scheduled a $110 million IPO on the NYSE with a market capitalization of $855 million at a price range midpoint of $18 for Friday, April 4, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: Morgan Stanley, Goldman Sachs
Co-Managers: Allen & Company, Pacific Crest Securities, Canaccord Genuity, Cowen and Company

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

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

Summary
OPWR is a leading provider of cloud-based software to the $2.2 trillion utility industry.

Valuation
Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Annualizing Dec qtr

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Opower

$855

8.2

-33.9

8.9

9.8

13%

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Conclusion
The rating on OPWR is positive, because sales were up 71% in 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
OPWR is a leading provider of cloud-based software to the $2.2 trillion utility industry.

Utilities use OPWR's software platform to deliver key customer-facing applications that reduce energy demand and improve customer perception of the utility.

Four major product solutions
OPWR offers a growing set of integrated software solutions, Opower Energy Efficiency, Opower Customer Engagement, Opower Demand Response and Opower Thermostat Management.

In 2007, OPWR launched its first solution, Energy Efficiency. This solution focuses on reducing energy consumption through a data analytics-driven, behavioral science-informed program.

In 2010, OPWR started offering Customer Engagement solutions, which provide utilities with a web application that delivers user-friendly energy consumption and billing information. This solution helps households and businesses make informed decisions, and thereby save money and energy. It offers utilities a better way to engage their customers, and thereby strengthen their brand.

In 2012, OPWR started offering Thermostat Management, which is designed to interact with third-party hardware and to deliver engaging user experiences while also creating energy efficiency and demand response opportunities for its utility customers.

In 2013, OPWR launched Demand Response, aimed at reducing peak demand for energy while not requiring any hardware installations to function.

OPWR believes both of these newest solutions, Thermostat Management and Demand Response, offer significant growth potential, but both are still in a nascent stage with an immaterial impact on revenue to date.

Benefits
OPWR's software analyzes energy data and presents personalized insights to consumers in order to motivate reductions in energy consumption.

These reductions are valued as a source of energy much like a conventional power plant. OPWR believes it is poised to transform the way the utility industry meets energy demand.

OPWR's software platform helps redefine the relationship between utilities and their customers, and it has a track record of motivating consumers to take action.

OPWR's growth has been fueled by its focus on big data software architecture, user experience and, above all, scalable results.

Customers
As of December 31, 2013, OPWR had 93 customers in eight countries. OPWR's customers include 27 of the 50 largest electric utilities in the United States, including Commonwealth Edison, Duke Energy, First Energy, National Grid, Pacific Gas & Electric, Southern California Edison and Xcel Energy, as well as E.ON, Electricitie de France and Energy Australia internationally.

OPWR's leadership position has enabled it to build one of the largest energy datasets in the world: OPWR has energy data from 37% of U.S. households on its platform, as well as data from millions of international households.

There are approximately 1,300 utilities worldwide with the scale and customer base that could successfully deploy OPWR's solutions.

Revenue
OPWR generates revenue primarily from subscription fees from utilities for use on its platform, generally based upon the number of households and businesses served and the solutions selected.

Although the number of households and businesses has some impact on OPWR's revenue, the number of households or businesses served is not directly correlated with revenue.

The price OPWR receives per household or business varies for each customer.

For this reason, OPWR does not treat the number of households or businesses served as one of its key performance indicators for its business. However, OPWR does monitor this metric to understand the general adoption of OPWR's solutions by its customers

Dividend Policy
No dividends are planned.

Intellectual Property
OPWR registered "Opower" as a trademark in the United States, Australia, Canada, the European Community, Japan and New Zealand. OPWR also has filed other trademark applications in the United States and certain other jurisdictions, and will pursue additional trademark registrations to the extent it believes it would be beneficial and cost effective.

As of February 28, 2014, OPWR had one issued patent and seven patent applications pending in the United States, which seek to cover proprietary techniques relevant to its products. OPWR intends to pursue additional patent protection to the extent it believes it would be beneficial and cost effective.

OPWR is the registered holder of a variety of domestic and international domain names that include "Opower" and similar variations.

Competition
OPWR believes its primary competitors are other energy efficiency and demand response programs that utilities may choose to implement.

OPWR often competes to capture a share of the utility's budget that is set aside for energy efficiency or demand response.

To a lesser extent, OPWR also competes with other technology providers such as point solution companies and horizontal software vendors.

5% stockholders
Entities affiliated with New Enterprise Associates 21.8%
Entities affiliated with MHS 8.3%
Entities affiliated with Accel 5.4%
Entities affiliated with Kleiner Perkins Caufield & Byers 5.4%
Daniel Yates 22.4%
Jeremy Kirsch 2.6%
Alex Laskey 17.4%

Use of proceeds
OPWR expects to net $100 million from its IPO. Proceeds are allocated as follows:

  • for working capital and other general corporate purposes, including investing further in its sales and marketing and research and development efforts. OPWR intends to use proceeds from this offering to further grow its business and to fund its growth strategies.

Disclaimer: This OPWR IPO report is based on a reading and analysis of OPWR'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: Opower