Seeking Alpha
Research analyst, IPOs, long/short equity
Profile| Send Message|
( followers)  

As Internet speeds accelerate and IT departments move offshore, businesses are transitioning to the cloud. Web-based applications have proven advantageous for both customers, who receive faster updates, and suppliers, who see steadier revenue through subscriptions. Not surprisingly, the IPO market has reflected the move, as new online solutions replace yesterday's installation disks. To date, a quarter of the year's deals have involved cloud-based products. Guidewire Software (NYSE:GWRE), which offers web-based insurance software, is this year's top IPO performer to date (up 67%) and the group has produced an average return of 26% (compared to 15% for all IPOs). This past week, one company hoping to continue that trend filed for a US IPO and two more announced terms, both of which are on the IPO calendar for this month.

Brightcove (NASDAQ:BCOV), which offers an online video publishing platform to enterprises and small businesses, hopes to raise $55 million by offering 5 million shares at a range of $10 to $12. It boasts a global customer base of 3,872, including big names like Bank of America (NYSE:BAC), Fox (NASDAQ:NWS) and Intel (NASDAQ:INTC). Premium customers (34% of total) grew 44% in 2011, helping to drive revenue up 45% to $64 million. Venture capital firms General Catalyst Partners and Accel Partners will each have a 21% stake after the offering, which is being managed by Morgan Stanley and Stifel Nicolaus Weisel. Brightcove is expected to price the week of February 13th.

The second on-demand software filer, Bazaarvoice (NASDAQ:BV), also presents an impressive client list and tantalizing growth figures. Procter & Gamble (NYSE:PG), Microsoft (NASDAQ:MSFT) and 735 other clients use its product to analyze what their customers are saying on Facebook and other online outlets. Bazaarvoice delivered nearly 40 billion pieces of feedback in the last quarter, as sales grew 60% to $28 million (3 months ended 1/31/12). As with Brightcove, venture capital firms currently own a majority of shares. Austin Ventures will have a 26% post-IPO stake, while Battery Ventures will own 14%. Bazaarvoice hopes to raise $85 million by offering 9.4 million shares at $8 to $10 during the week of February 20th. Morgan Stanley, Deutsche Bank Securities and Credit Suisse are the lead underwriters.

On the new filing front, our third cloud provider, Midas Medici Group Holdings (NASDAQ:WATT) made its initial filing on Wednesday. The Brazil-focused provider of data center and cloud computing solutions hopes to raise $29 million by offering 8.2 million shares at a range of $3 to $4. Midas Medici currently trades on the OTC Bulletin Board with minimal volume but is planning to list on the NYSE.

The remaining filing activity came from the recently active energy and biotech spaces as well as a familiar face. HomeStreet (NASDAQ:HMST), a Pacific Northwest community bank, priced Friday afternoon after filing terms for the third time earlier in the week. It raised $80 million by offering 1.8 million shares at $44. The previous attempts, at $180 million and $165 million, were postponed in August and December. Radius Health, a biotech developing bone growth injections for osteoporosis sufferers, filed for an $86 million IPO on Monday. Quicksilver Production Partners, a Texas oil and gas company formed by Quicksilver Resources Inc., filed for a $250 million IPO on Friday.

Source: Cloud-Based Solutions Drive Half Of IPO Filing Activity This Week