Coupons.com Inc (NASDAQ:COUP), a digital promotion platform that offers coupons and coupon codes, plans to raise $130 million in its upcoming IPO On Friday.
The Mountain View, California-based firm will offer 10 million shares at an expected price range of $12-$14 per share. If the IPO can find the midpoint of that range at $13 per share, COUP will command a market value of $1.1 billion.
COUP filed on January 31, 2014.
Lead Underwriters: Allen & Company LLC, BofA Merrill Lynch, Goldman Sachs & Co, RBC Capital Markets LLC
Coupons.com is a digital promotion platform that offers free printable coupons and coupon codes to consumers, along with display advertising for retailers. Over 700 consumer packaged goods firms and many grocery and mass merchandise retailers use COUP's platform to attract customers. A depiction of what COUP offers is shown below:
COUP generates revenue primarily through fees charged each time a consumer selects a digital coupon by printing it or saving it to a retailer online account, regardless of whether a transaction actually results from the selection. The firm also receives fees for the use of coupon codes, in which case a transaction must actually occur.
COUP offers the following figures in its S-1 balance sheet for the year ending December 31, 2013:
Net Loss: ($11,249,000.00)
Total Assets: $134,236,000.00
Total Liabilities: $66,220,000.00
Stockholders' Equity: ($202,246,000.00)
In 2012, COUP's revenues of $112.1 million exceeded its 2011 revenues by 23%, while its net loss of $59.2 million represented an increase of 158% over its 2011 loss. In 2013, the firm's revenues grew to $167.9 million, while net losses decreased to $11.2 million-representing a decrease of 81% over 2012. COUP has seen significant growth in transactions involving its coupons and coupon codes over the past year; during 2013, the firm generated revenue from over 1.3 billion transactions, a 43% increase over 2012.
COUP faces competition from other sources of digital coupons. Of particular concern are large competitors that control highly trafficked platforms, which could be leveraged to deliver coupons in a way that could easily bypass COUP, such as Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), Yahoo (YHOO) and Facebook (NASDAQ:FB). These firms have access to far greater financial resources than COUP.
Founder Steven R. Boal has served as COUP's President and CEO since the firm's inception in 1998. Mr. Boal previously served as Vice President of Business Development for Integral Development Corporation. He holds a B.A. from the State University of New York at Albany. He is joined by CFO and COO Mir Aamir,, who has served in his current positions since October 2013. Mr. Aamir previously served as President of Customer Loyalty and Digital Technologies and as Senior Vice President of Marketing Strategy at Safeway, Inc. He holds a B.B.A. and an M.B.A. from the Institute of Business Administration, University of Karachi and an M.B.A. from the University of Chicago Booth School of Business.
We rate this IPO a strong buy in the proposed price range of $12 to $14. We expect the underwriters to set the price below where the stock will open when trading begins on Friday thus providing a windfall to institutional clients who will be getting large allocations.
COUP is rapidly approaching profitability, and increasing demand for its particular brand of digital promotion is much in evidence from the rapid growth in fee-earning transactions that the firm has seen over the past year. We suspect that COUP will see a boost in its IPO on the basis of name recognition, as well. The firm has built a strong reputation and a well-connected network of retailers, consumers, and third-party advertisers that it should be able to continue to take advantage of.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in COUP over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.