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During the IPO season Francis Gaskins, editor of IPOdesktop.com & director of research for Equities.com, regularly appears on CNBC TV, Bloomberg, thestreet.com & other financial cable channels. On the day of the Visa IPO he appeared on four cable TV financial shows including Bloomberg... More
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  • RealPage (RP) IPO -- 29x EBITDA, 3% operating margin 0 comments
    Aug 10, 2010 7:44 PM | about stocks: RP
    RealPage (NASDAQ:RP) $882mm market cap at price range mid-point, $189mm IPO
    Scheduled for Thursday, August 12

    See IPOreport for financials & valuation metrics

    SUMMARY
    . At price range-midpoint, RP may be fully valued at 29x EBIDTA, annualizing six months ended June 30, 2010, see financials below
    . Only 23% of IPO proceeds going the company’s cash account, the balance to shareholders & to repay debt & accrued dividends
    . On demand property management software apparently in the early stages of adoption
    . Erratic income statement affected by the recession

    BUSINESS
    . On demand property management software
    . As of June 30, 2010, over 6,100 customers used one or more of RP’s on demand software solutions to help manage the operations of approximately 5.2 million rental housing units.
    . RP customers include 9 of the 10 largest multi-family property management companies in the United States, ranked as of January 1, 2010 by the National Multi Housing Council, based on number of units managed.

    MACRO TRENDS
    Macroeconomic conditions negatively impacted RP’s business in 2009 and in the six months ended June 30, 2010 and may continue to negatively impact RP’s business

    ON DEMAND MARKET
    . While the adoption of on demand software solutions in the rental housing industry is growing rapidly, it remains at a relatively early stage of development.
    . Additionally, there is a low level of penetration of RP’s on demand software solutions in its existing customer base.

    GROWTH PLAN
    . RP believes these factors present RP with significant opportunities to generate revenue through sales of additional on demand software solutions.
    . RP’s existing and potential customers base their decisions to invest in RP’s solutions on a number of factors, including general economic conditions.

    GROWTH BY ACQUISITION
    . Since July 2002, RP completed 14 acquisitions of complementary technologies and businesses (including recent February 2010 and July 2010 acquisitions) to supplement internal product development and sales and marketing efforts, enabling RP to expand the scope of its solutions, the types of rental housing properties served by RP’s solutions and RP’s customer base.

    COMPETITION
    A major competitor is privately-held Yardi Systems
    •   in the multi-family ERP market, AMSI Property Management (owned by Infor Global Solutions, Inc.), MRI Software LLC and Yardi Systems, Inc. and, in the single-family ERP market, AppFolio, Inc. and DIY Real Estate Solutions (recently acquired by Yardi Systems, Inc.);
    •  in the applicant screening market, ChoicePoint Inc. (a subsidiary of Reed Elsevier Group plc), CoreLogic, Inc (formerly First Advantage Corporation, an affiliate of the First American Corporation), TransUnion Rental Screening Solutions, Inc. (a subsidiary of TransUnion LLC) and Yardi Systems, Inc. (following its recent acquisition of RentGrow Inc., an applicant screening provider), On-Site.com and many other smaller regional and local screening companies;
    •  in the insurance market, Assurant, Inc., Bader Company, CoreLogic, Inc. and a number of national insurance underwriters (including GEICO Corporation) that market renters insurance;
    •  in the CRM market, contact center and call tracking service providers Call Source Inc., Level One, Inc., Yardi Systems, Inc. (which recently announced its intention to build a call center) and numerous regional and local call centers, lead tracking solution providers Call Source, Inc. Lead Tracking Solutions (a division of O.C. Concepts, Inc.) and Who’s Calling, Inc., content syndication providers Realty DataTrust Corporation, RentSentinel.com (owned by Yield Technologies, Inc.), RentEngine (owned by MyNewPlace.com), rentbits.com, Inc. and companies providing web portal services, including Apartments24-7.com, Inc., Ellipse Communications, Inc., Property Solutions International, Inc., Spherexx.com, Yardi Systems, Inc., Internet listing sources and many other smaller web portal designers;
    •  in the utility billing market, American Utility Management, Inc., Conservice, LLC, ista North America, Inc., NWP Services Corporation, Yardi Systems, Inc. (following its recent acquisition of Energy Billing Systems, Inc.) and many other smaller regional or local utilities;
    •  in the revenue management market, PROS Holdings, Inc., The Rainmaker Group, Inc. and Yardi Systems, Inc.;
    •  in the spend management market, SiteStuff, Inc. (owned by Yardi Systems, Inc., AvidXchange, Inc., Nexus Systems, Inc., Oracle Corporation; and
    •  in the payment processing space, Chase Paymentech Solutions, LLC (a subsidiary of JPMorgan Chase & Co.), First Data Corporation, Fiserv, Inc., MoneyGram International, Inc., NWP Services Corporation, Property Solutions International, Inc., RentPayment.com (a subsidiary of Yapstone, Inc.), Yardi Systems, Inc. and a number of national banking institutions.

    USE OF IPO PROCEEDS
    $75mm from sale of 6mm shares.  Shareholders intend to sell 7.5mm shares
    . $35mm to repay debt & accrued preferred stock dividends
    . Balance for working capital & perhaps for acquisitions

    See IPOreport for financials & valuation metrics

    Themes: IPO Stocks: RP
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