ServiceSource International (SREV), a provider of service revenue management solution to technology companies, priced its IPO on March 24th, 2011above the expected range at $10 per share and gave a first-day return of 22%.
Business Overview (from prospectus)
ServiceSource is a leader in service revenue management, providing solutions that drive increased renewals of maintenance, support and subscription agreements for technology companies. Our integrated solution consists of a suite of cloud applications, dedicated service sales teams working under our customers’ brands and a proprietary Service Revenue Intelligence Platform. By integrating software, managed services and data, we provide end-to-end management and optimization of the service contract renewals process, including data management, quoting, selling and service revenue business intelligence. Our business is built on our pay-for-performance model, whereby customers pay us based on renewal sales that we generate on their behalf. As of December 31, 2010, we managed over 100 engagements across more than 55 customers, representing over $5 billion in service revenue opportunity under management.
Offering: 11.9 million shares at $10 per share. Net proceeds of $22.4 million will be used for debt repayment.
Revenues increased 38% or $42.3 million to $153 million in 2010 as compared to 2009...Cost of revenues increased 53% or $31.2 million to $90 million in 2010 as compared to 2009...Sales and marketing expenses increased 51% or $11.9 million to $35 million in 2010 as compared to 2009...Research and development expenses increased $5.1 million to $7.2 million in 2010 as compared to 2009...Net income decreased to a loss of $2.6 million in 2010 as compared to an income of $10.4 million in 2009...
The market for service revenue management is evolving. Historically, technology companies have managed their service renewals through internal personnel and relied upon technology ranging from Excel spreadsheets to internally-developed software to customized versions of traditional business intelligence tools and CRM or ERP software from vendors such as Oracle (ORCL), SAP (SAP), salesforce.com (CRM) and NetSuite (N). Some companies have made further investments in this area using firms such as Accenture (ACN) and McKinsey for technology consulting and education services focused on service renewals. These internally-developed solutions represent the primary alternative to our integrated approach of combining software, managed services and data to provide end-to-end optimized service revenue performance.