- Cyngn has filed proposed terms for a $30 million IPO.
- The firm is developing mobile robot automation software for industrial use cases.
- CYN is still in development stage, has no revenue and the IPO is unusual for a company of its type.
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The company is developing industrial mobile robot automation software.
The IPO is unusual given the firm’s lack of revenue for a non-life science company seeking public investment, so I'll watch the IPO from the sidelines.
Company & Technology
Menlo Park, California-based Cyngn was founded to help automate industrial vehicle fleet operations across a range of environments via its software.
Management is headed by Chairman and CEO Lior Tal, who has been with the firm since 2016 and was previously director of international growth and partnerships at Facebook.
Below is a brief overview video of the firm's DriveMod software in action:
The company’s primary offerings include:
DriveMod - autonomous driving software
Cyngn Insight - Tool suite for managing AV fleets
Cyngn Evolve - AI training
Cyngn has received at least $114 million in equity investment from investors including Benchmark Capital, Andreessen Horowitz, Redpoint Ventures and PI International Holdings.
The firm seeks relationships with OEM vehicle companies that can integrate its DriveMod software into manufactured vehicles during assembly; also the firm can retrofit its software to already-built vehicles.
The company has generated only a small amount of revenue, back in calendar year 2019.
Market & Competition
According to a 2021 market research report by Grand View Research, the global market for autonomous mobile robots was an estimated $1.9 billion in 2019 and is forecast to reach $8 billion by 2027.
This represents a forecast CAGR of 19.6% from 2020 to 2027.
The main drivers for this expected growth are a demand for increased operating efficiencies and reduced employee safety problems.
Also, below is a chart showing the historical and projected future growth trajectory of autonomous mobile robots in Asia:
Major competitive or other industry participants include:
Cyngn’s recent financial results can be summarized as no recent revenue and significant R&D and G&A expenses:
Below are relevant recent financial results derived from the firm’s registration statement:
As of June 30, 2021, Cyngn had $3.4 million in cash and $2 million in total liabilities.
Free cash flow during the six months ended June 30, 2021, was negative ($3.6 million).
CYN intends to sell 3.5 million shares of common stock at a proposed midpoint price of $8.50 per share for gross proceeds of approximately $30 million, not including the sale of customary underwriter options.
No existing or potentially new shareholders have indicated an interest to purchase shares at the IPO price.
Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO (ex- underwriter options) would approximate $196 million.
Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 13.34%. A figure under 10% is generally considered a ‘low float’ stock which can be subject to significant price volatility.
Per the firm’s most recent regulatory filing, it plans to use the net proceeds as follows:
We currently intend to use the net proceeds we receive from this offering for working capital and other general corporate purposes, including funding our operating needs. However, we do not currently have specific planned uses for the proceeds.
Management’s presentation of the company roadshow is not available.
Regarding outstanding legal proceedings, management said the firm is not a party to any claim or proceeding that would have a material effect on its business.
The sole listed bookrunner of the IPO is Aegis Capital Corp.
Below is a table of the firm’s relevant capitalization and valuation metrics at IPO, excluding the effects of underwriter options:
Market Capitalization at IPO
EV / EBITDA
Earnings Per Share
Float To Outstanding Shares Ratio
Proposed IPO Midpoint Price per Share
Net Free Cash Flow
Free Cash Flow Yield Per Share
As a reference, a potential partial public comparable would be Kuka AG (OTCPK:KUKAF), which has a current enterprise value of $2.57 billion.
CYN is seeking public market investment to continue its software development efforts.
The firm’s financials show no revenue since booking a small amount of revenue in 2019.
Free cash flow for the six months ended June 30, 2021 was negative ($3.6 million).
The market opportunity for autonomous mobile robots in an industrial setting is large and expected to grow at a significant rate, so the firm will benefit from strong industry growth dynamics in the years ahead.
Aegis Capital is the sole underwriter and the IPO led by the firm over the last 12-month period has generated a return of negative (12.1%) since its IPO. This is a bottom-tier performance for all major underwriters during the period.
The primary risk to the company’s outlook is its development stage of operation as the firm currently has no revenue generation.
This IPO is a curious one, as there are several top tier venture capital firms as investors who would be expected to continue to invest in the firm privately so that it could achieve significant revenue production before going to public markets.
Also, the choice of Aegis Capital, a bottom tier underwriter with little activity, is uncommon for a firm backed by top tier VCs.
I can only assume that the existing investors don’t wish to continue their investment or management wants to diversify its investor base to public investors.
At any rate, the IPO is an odd one and given the firm’s lack of revenue which is unusual for a non-life science company seeking public investment, so I'll watch it from the sidelines.
Expected IPO Pricing Date: Month of October, 2021.
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