Amber Road IPO Could Have Potholes

| About: Amber Road, (AMBR)
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Summary

AMBR, a provider of global trade management solutions, plans to raise $75.0 million in its upcoming IPO.

AMBR will offer 6.5 million shares at an expected price range of $11-$13 per share.

AMBR's stiff competition from Oracle and SAP AG, along with 2013 losses, leads us to be neutral-to-negative on this IPO.

Amber Road Inc. (NYSE:AMBR), a provider of global trade management solutions, with principal offices in East Rutherford, New Jersey, plans to raise $75.0 million in its upcoming IPO today.

The firm will offer 6.5 million shares at an expected price range of $11-$13 per share. If the IPO can reach the midpoint of that range at $12 per share, AMBR will command a market value of $314 million.

AMBR filed on February 10, 2014.
Lead Underwriter: Stifel Nicolaus & Company Inc
Underwriters: Canaccord Genuity Inc, Needham & Company LLC, Pacific Crest Securities LLC, Raymond James and Associates Inc.

Summary
AMBR provides cloud-based global trade management (GTM) solutions, automating import and export processes to allow for the efficient and compliant movement of goods across international borders.

The firm's solution fuses enterprise-class software with a global supply chain network that includes suppliers, freight forwarders, customs brokers and transportation carriers. It also integrates Global Knowledge, a library of GTM information that AMBR uses to create a knowledge-base to automate GTM functions. The solution is offered through a SaaS model. AMBR processed over 600 million transactions and supply chain messages in 2013. In September 2013, the firm acquired the Chinese SaaS GTM solution provider EasyCargo to facilitate transactions and increase its presence in what has become the world's largest trading economy.

Valuation
AMBR offers the following figures in its S-1 balance sheet for the year ended December 31, 2013:

Revenue: $52,526,989.00
Net Loss: ($14,397,870.00)
Total Assets: $70,097,121.00
Total Liabilities: $56,457,245.00
Stockholders' Equity: ($63,281,483.00)

AMBR's revenue has grown steadily in recent years; the firm posted revenues of $37.6 million, $43.4 million, and $52.5 million in 2011, 2012, and 2013, respectively. The firm has seen fluctuating losses over the same period, posting net losses of $4.6 million, $2.1 million, and $14.4 million in 2011, 2012, and 2013, respectively.

Business
AMBR must compete with other providers of GTM solutions, some of which have access to superior technical, financial, and marketing resources. Of particular concern are SAP AG (NYSE:SAP) and Oracle Corporation (NYSE:ORCL), both of which are leaders in the GTM solutions field and are an order of magnitude larger than AMBR. Both of those firms also offer diverse products outside of GTM solutions, making them far less vulnerable to shifts in that market than AMBR.

Management
Co-founder James W. Preuninger has served as AMBR's CEO and a board member since 2002; he previously held several positions in sales and marketing with IBM. He received a Bachelor's degree in Computer Science from Drexel University. His brother, co-founder John W. Preuninger, serves as the firm's President and COO. He previously worked as a consultant with Monitor Company, and holds a Bachelor's degree in Business Administration from Drexel University and a Master's degree in Business Administration from Harvard Business School.

Conclusion
We're neutral to negative on this IPO.

AMBR has seen growing revenues in recent years, and the firm's recent acquisition of EasyCargo to establish a greater foothold in China is to be commended. However, the firm saw a greater increase in losses than in revenues in 2013, and we don't see a clear path to profitability in the near term.

We're also very concerned by the much larger and better-equipped competitors facing AMBR - the firm will likely have difficulty keeping up with the likes of SAP and Oracle in the constantly changing environment of GTM.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.