Category: Independent coverage of IPOs
Momentive Global (NASDAQ: MNTV)
Momentive Global (NASDAQ: MNTV), formerly SurveyMonkey, is a leading provider of cloud-based survey software products that enable companies to better engage with customers and employees. Founded as SurveyMonkey in 1999, and based in San Mateo, California, the company is best known for its flagship SurveyMonkey customer feed-back software. An out-of-favor stock, Momentive Global has had a storied history since its IPO five years ago.
The company, then known as SurveyMonkey, priced its 15 million share IPO at $12 per share on the NASDAQ on September 25th 2018. The underwriters subsequently exercised their option to purchase an additional 2.25 million shares. The IPO was led by J.P. Morgan Securities, Allen & Company and BofA Merrill Lynch. Credit Suisse, UBS, Wells Fargo, SunTrust Robinson Humphrey, Code Advisors, Foros, JMP Securities and LionTree Advisors.
Momentive Global is best known for its namesake SurveyMonkey cloud-based questionnaire software that is primarily used for customer feed-back, TechValidate, a marketing content automation software solution, and SurveyMonkey Engage, which is focused on internal employee surveys and feed-back.
In June of 2021, the company changed its name to Momentive Global, reflecting its wider range of customer and employee experience management offerings, which include the addition of market research services. In October of 2021, the company announced that it would be acquired by Zendesk in an all-stock transaction for roughly $4.1 billion. With the intent to expand from customer service to a broader market of global customer intelligence, Zendesk, at the time, appeared to be particularly interested in the SurveyMonkey portion of the business. However, the deal was ultimately rejected by Zendesk shareholders, and Zendesk was forced to terminate the transaction. Zendesk was ultimately taken private in June of last year in a $10 billion acquisition by an investor group led by Permira and Hellman and Friedman.
Today, more than 345,000 organizations around the world use one or more of MNTV’s products, and the company notes that it has over 17 million active users that draw on market insights, brand insights, as well as employee, customer, and product experiences. Over 95 percent of the Fortune 500 use a Momentive product.
In a measure to return cash to shareholders, the company initiated a share repurchase plan in February of 2022 with the intent to repurchase up to $200 million of its common stock. Through the first three quarters of last year, Momentive had repurchased $84 million. At the end of Q3, MNTV held $193 million in cash along with $183 million in debt, for a net cash position of $183 million. The company’s DSOs are 23 days, a reasonable level, attesting to the short-term nature of most of its customer contracts, which are said to be of a duration of one year or less. The company announced an 11 percent workforce reduction, coinciding with its Q3 2022 earnings results. Last month, the company appointed a new CFO, Rich Sullivan, whose experience includes stints at Dreamworks, Twitter, and AT&T.
ZoomInfo Technologies: Zeroing in on Sales Leads
ZoomInfo Technologies (NASDAQ: ZI), not to be confused with Zoom Video Communications (NASDAQ: ZM), is the first software IPO in many months. Based in Vancouver, Washington, ZoomInfo provides a database utilized by sales and recruitment professionals to identify key decision makers, and accelerate the sales process. Company revenue in 2019 was $293 million, up from $144 million in the prior year. In 2019, the company generated operating income of $36 million.
ZoomInfo priced its 44.5 million share Class A common stock IPO on June 4, 2020 at $21, with the stock closing at $34. Net proceeds of roughly $887 million will be used to redeem the outstanding Series A preferred units of ZoomInfo Holdings for roughly $274, repay $370 million aggregate principal of its outstanding second lien term loans, repay $35 million of debt under its first lien revolving credit facility, and buy ZoomInfo OpCo equity interests from certain equity holders for roughly $43 million. It also intends to pay expenses relating to the offering. This would leave it with roughly $140 million for general corporate purposes.
The deal was led by sizable number of investment banks, all of which will also provide research on the company to investors, after receiving compensation for their participation in the IPO. These include J.P. Morgan, Morgan Stanley, Credit Suisse, and Barclays, along with BofA Securities, Deutsche Bank Securities, RBC Capital Markets, UBS Investment Bank, Wells Fargo, Canaccord Genuity, JMP Securities, Mizuho Securities, Piper Sandler, Raymond James, Stifel, SunTrust Robinson Humphrey, and Roberts & Ryan.
At a recent share price of $51, ZoomInfo has a market cap of roughly $21 billion, based on 56 million Class A, 239 million Class B, and 98 million Class C shares. We note that public shareholders will own about 12 percent of the company’s outstanding common stock, and hold less than 1.5 percent of the voting rights.
ZoomInfo serves roughly 15,000 companies with a cloud database platform that collects company-specific information relating to personnel, location of facilities, news and events, products and services sold, as well as technologies utilized—among other attributes—on roughly 14 million companies. The information is utilized by sales, marketing, and recruiting professionals to target key decision-makers, in order to sell their products and services. ZoomInfo’s database is updated frequently, and draws upon artificial intelligence to help determine the accuracy of the information that it collects.
ZoomInfo is the combination of two companies: Zoom Info (originally Eliyon Technologies), and DiscoverOrg. Eliyon Technologies was established in 2000. After having been acquired private equity firm Great Hill Partners in August of 2017 for an estimated $240 million, the company acquired RainKing in 2017, and NeverBounce in 2018.
Separately, Henry Schuck and Kirk Brown created DiscoverOrg in 2007. In November of 2019 DiscoverOrg acquired Zoom Information in 2019 for an estimated $500 million, and renamed the combined company ZoomInfo Technologies. As a result of the merger, the company serves a wide range of customers across multiple sectors, including software, business services, manufacturing, telecom, financial services including insurance, and retail.
Nearly all of ZoomInfo’s revenue comes from software subscriptions. Six hundred thirty, or less than five percent of the company’s 15,000 customers generate subscription revenue exceeding $100,000 per year. In 2019, the combined companies generated $293 million, up from $144 million. Income from operations on a pro forma basis grew from $27 million to $36 million. As a result of multiple rounds of private equity and venture capital funding, ZoomInfo, prior to its IPO, had just $63 million in cash, along with $1.2 billion in long term debt. Based on the company’s stated post-IPO plans, it will still have over $800 million in long term debt on a pro-forma basis following the offering.