Envivio's Initial Public Offering
Envivio (ENVI) is a San Francisco based software company planning to go public on 4/25/12. The company is pricing 7.8 million shares at a price range of $10-$12 per share and after the offering the company will have a market cap of $293.3 million. Envivio's IPO has actually been on the shelf for just over a year, the original S1 was filed on April 15th, 2011. The managers are Goldman Sachs, Deutsche Bank Securities, Stifel Nicolaus Weisel and William Blair.
Envivio sells a proprietary software solution used to deliver video to multiple types of devices over an internet protocol. Its products have been self titled "TV without Boundaries" and the company's goal is to make video content universally available regardless of the device used. Its has several video encoding and processing products including the 4Caster C4 encoding platform, Halo Network Media Processor and 4Manager Management System. All of which use a combination of software and hardware to encode, process and deliver video to mobile devices, personal computers, and television.
The market for Envivio's products is highly competitive and technological advancements change rapidly. Envivio competes with companies which produce traditional broadcast delivery solutions like Harmonic Inc. (HLIT). It also competes with companies that make products that utilize multi-screen encoding like Inlet Technologies, which was acquired by Cisco Systems (CSCO) and RGB Networks, Inc. after its acquisition of RipCode, Inc.
In the near future Envivio expects large network infrastructure providers to begin packaging encoding solutions with the products they already sell to service providers. Some of these companies also have substantially more resources like Google Inc. (GOOG), which bought network infrastructure through its acquisition of Motorola Mobility, and mobile infrastructure company Ericsson AB (ERIC).
Comparisons to other initial public offerings in the same business are difficult to make because not a lot of video processing and encoding companies have gone public the traditional way in the past couple years. Companies like KIT Direct (KITD), which also provides IP video encoding solutions, was traded over-the-counter for years. Several years ago it was approved to be re-listed on Nasdaq. BigBand Networks is also in the IP video processing business and it was acquired in November of last year by Arris Group, Inc. (ARRS). Overall, this sector is one of the fastest growing areas of technology, there should be more consolidation as companies try to find the next hot product.
Both Motorola Mobility and Ericsson AB have Envivio's products integrated into some of their systems. These are among the companies Envivio fears will begin to develop video encoding solutions in house. Envivio's customers consist mainly of large mobile carriers and cable and satellite providers. Recently, the company has stated it has over 320 customers in over 50 countries.
Envivio's Financial Results
Envivio's fiscal year ended on January 31st of this year and the company reported revenue of $50,646,000. That was a 69% increase over the previous year and it managed to collect $138,000 of net income. The increase is revenue is due to a significant increase in sales of its IP video processing and distribution solution. The company also saw an increase in consumer demand for its multi-screen video services.
How To Trade Envivio
Technology IPOs have done very well in the past couple months. Companies like Infoblox (BLOX), Splunk (SPLK) and Vocera (VCRA) enjoyed nice run-ups after going public. Envivio has managed a small profit on revenue that has risen due to higher consumer demand for its products. There is also a decent amount of interest in this IPO and the increase in revenue and demand for Envivio's video solutions may help fuel another hot tech offering. All that being said, Envivio is still a speculative play and is for investors willing to take a medium amount of risk.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.