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Based in Vienna, VA, Eloqua Limited (ELOQ) scheduled an $84 million IPO with a market capitalization of $336 at a price range mid-point of $10.50 for Thursday, August 2, 2012.

Three other IPOs are scheduled for the week of July 30. Full IPO calendar available here.

ELOQ filed an updated [S-1] July 23, 2012.

UNDERWRITERS
Manager, Joint Managers: J.P. Morgan; Deutsche Bank Securities.
Co Managers: JMP Securities; Needham; Pacific Crest Securities.

SUMMARY
ELOQ is a 'cloud' company that provides on-demand Revenue Performance Management, or RPM, software solutions that are designed to enable businesses to accelerate revenue growth and improve revenue predictability

ELOQ shows moderate sequential quarterly revenue growth, but has consistently generated operating losses. Subscription revenue fluctuates between 84%and 93% on a quarterly basis, see below.

For the six months ended June 2012 revenue increased 42% to $45 million from $32 million. On a comparable basis, ELOQ's loss dropped to -$6 million from -$4 million.

SHAREHOLDER DEFICIT
Pre-IPO ELOQ has a shareholder deficit of $-9 million on a pro-forma basis.

As of June 30, 2012, ELOQ had an accumulated deficit of approximately $190.5 million, which means VC firms & others have pumped $181 million of capita into ELOQ. E2open (EOPN), down 10% the day of its IPO July 26, 2012, had $300 million of VC money pumped in.

OBSERVATIONS
IPO buyers are becoming less tolerant of paying up for companies which can't yet generate consistent profits. Cloud company E2open which IPO'd Thursday July 26, 2012 is an example.

EOPN priced at the lower end of its price range and promptly traded down 10%. That's the first time a 'cloud company' traded down on its IPO.

CONCLUSION & RECOMMENDATION
Because ELOQ is showing consistent quarterly losses and had an EBITDA of only 4% of revenue in the March 2012 quarter, it seems prudent to pass on the ELOQ - if the market is in a downtrend in the few days before the IPO - at the price range mid-point of $10.50 and a market capitalization of $336 million.

In a different, earlier stock market, however, ELOQ would have been a buy on the IPO in the price-range.

On the other hand, perhaps EOPN's IPO performance on July 26 was an aberration, in which case ELOQ may pop on its IPO.

Also, see 'COMPARE" below and notice that it is difficult for segment competitors to show profits.

COMPARE
Notice it is also difficult for segment competitors to show profits.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

Most recent qtr

Cap (MM)

Sales

Earnings

BookValue

TangibleBV

Profit %

Eloqua Limited

$336

3.7

-168

6.0

6.0

-2%

Responsys (MKTG)

$562

3.7

70

3.9

4.4

5%

Constant Contact (CTCT)

$547

2.3

622

3.1

3.6

0%

ExactTarget (ET)

$1,610

6.3

-86

4.7

5.0

-7%

BUSINESS
ELOQ provides on-demand Revenue Performance Management, or RPM, software solutions that are designed to enable businesses to accelerate revenue growth and improve revenue predictability by automating, monitoring and measuring complex marketing and sales initiatives.

CUSTOMERS
ELOQ has over 1,100 customers, encompassing a wide spectrum of industries, including technology, financial services, entertainment, manufacturing, business services and telecommunications.

Representative customers include Adobe Systems (ADBE), American Express (AXP), Cummins Power Generation (CI), Dell (DELL), The McGraw-Hill Companies (MHP), the Miami Heat, National Instruments (NATI), Nestlé S.A. (OTCPK:NSRGY), Siemens AG (SI), Standard & Poor's and VMware (VMW), each of which were in the top half of customers, by revenue, in 2011.

INTELLECTUAL PROPERTY
To date, ELOQ has two U.S. patent applications and one international patent application pending.

COMPETITION
ELOQ's competitors include

  • Plan and spend management software vendors, such as Oracle (ORCL) and SAP AG (SAP);

  • Workflow, project management and brand management vendors, such as marketing agencies who develop custom systems for their clients;

  • Email marketing software vendors, including Responsys, Inc., ExactTarget, Inc., Constant Contact, Inc. and numerous other email marketing companies;

  • Campaign management software vendors, such as Oracle, SAS Institute Inc., Aprimo, Inc. a division of Teradata (TDC), and Unica Corporation a division of IBM (IBM); and

  • Management software vendors, such as Oracle, Genius.com, Incorporated, Marketo, Inc., Neolane Inc., Pardot LLC, SilverPop Systems, Inc., and smartFOCUS Group plc.

In addition, sales force automation and customer relationship management system vendors, such as Microsoft (MSFT), NetSuite (N), Oracle, Sage Software, Inc., Salesforce.com (CRM), and SAP AG, could acquire or develop solutions that compete with ELOQ's offerings.

ELOQ also expects competition to increase as a result of software industry consolidation, including through possible mergers or partnerships of two or more of competitors or the acquisition of competitors by larger and better-funded companies. For instance, in December 2010, Teradata completed its acquisition of Aprimo and in October 2010, IBM completed its acquisition of Unica.

VENTURE CAPITAL

  • Pre-IPO, ELOQ is 80% owned by venture capital firms.

  • Entities affiliated with JMI Equity, 33.8%

  • Entities affiliated with Bay Partners, 25.5%

  • Entities affiliated with Bessemer Venture Partners, 21%

EMPLOYEES
As of March 31, 2012, ELOQ had 355 employees worldwide,

USE OF PROCEEDS
$2 million for the repayment of debt

Balance to fund working capital and other general corporate purposes.

Disclaimer:This ELOQ IPO report is based on a reading and analysis of [ticker]'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: Eloqua Limited