Category: IPO Research
BigCommerce Holdings: Powering Online Sales
BigCommerce Holdings (NASDAQ: BIGC), an ecommerce software company, is a recent addition to our Battle Road IPO Review & Stock Screen coverage. Founded in 2009, the company is headquartered in Austin, Texas, where it is led by Chairman, President, and CEO, Brent Bellm. For 2020, Consensus estimates call for $142 million in revenue, along with a loss of $1.01. The outlook improves in 2021, as analysts foresee the company producing $170 million in revenue, with a loss per share of $0.41.
BigCommerce debuted on the NASDAQ on August 5th, 2020, at an opening price of $24, in a 10.4 million Series 1 common stock offering, of which 7.9 million were sold by the company, with the remainder sold by shareholders. Following the transaction, the company has about $215 million in cash, with a net cash position of $144 million. At a recent share price of $83, the company spent little time as a small cap stock, and now possesses the remarkable market cap of $5.5 billion. Morgan Stanley and Barclays were lead book-running managers for the offering, with assistance from six other firms.
BigCommerce aims to provide the best SaaS ecommerce platform in the world for all steps of customer growth, with a focus on building online store fronts, and the infrastructure to manage them. In addition to developing the customer’s ecommerce site, BigCommerce develops cross-channel connections to other online marketplaces, social networks, and offline point-of-sale systems. The company provides free direct integrations with online marketplaces such as Amazon and eBay, search engines like Google, social networks including Facebook and Instagram, and point-of-sale platforms, such as Square, Clover, and Vend.
The company’s solution includes modules for checkout, order management, store design, catalog management, reporting, and hosting, with pre-integration into third-party services, such as payments, accounting, and shipping. The company claims that its customers’ stores are run on a single cloud base with a global, multi-tenant architecture developed for high levels of security, performance, and innovation.
When first founded, BigCommerce focused on targeting small businesses, but under new leadership, beginning in 2015, expanded its target market to include the mid-market, or companies with annual online sales between $1 million and $50 million, as well as large enterprises. In total, BigCommerce supplies solutions to roughly 60,000 online stores in 120 countries. About 75 percent of the sites BigCommerce serves are in the United State, and notable customers include Sony, Ben & Jerry’s, SkullCandy, and SC Johnson.
According to eMarketer, retail ecommerce accounted for roughly 10 percent of all retail spending in 2017. eMarketer projects that this number will balloon to 21 percent of global retail spending by 2023. The International Data Corporation (IDC) estimates that the worldwide market for digital commerce applications, or ecommerce platforms, was $4.7 billion in 2019, and is expected to jump to $7.8 billion in 2024. BuiltWith.com ranks BigCommerce as the second most utilized ecommerce platform in the world.
BigCommerce sells its platform through a monthly subscription model, with prices starting at $29.95 per month and increasing with business size and functionality requirements. In its fiscal year ending December 31st, 2018, BigCommerce recorded $92 million in revenue, with a net loss of $39 million. While revenue increased to $112 million in its fiscal year ending December 31st, 2019, its net loss grew to $43 million. The stock screens near the bottom of our Battle Road IPO Review Software sector coverage, carrying an EV/sales ratio of 31x projected 2021 Consensus revenue estimates.
Peloton Interactive: Riding High on Consumer Spending
Peloton Interactive (NASDAQ: PTON), a high-end fitness products company, is a relatively recent addition to our Battle Road IPO Review Consumer sector coverage. Founded in 2012 and based in New York City, Peloton is expected to record revenue of $1.48 billion in its fiscal year ending June 30th 2020, along with a loss per share of $1.29. This compares to revenue of $915 million in fiscal year 2019, during which the company recorded an operating loss of $113 million, excluding depreciation expense.
Peloton announced the pricing of its 40 million Class A share IPO on September 25th. The deal was priced at $29 per share, and was led by a remarkably large number of underwriters—21 in total—reflecting in part the recent IPO drought. Peloton also announced the concurrent sale of 3.5 million additional shares of its Class A common stock in a private placement to entities affiliated with TCV, an existing shareholder. Following the IPO, roughly 45 million Class A and 236 million Class B common shares outstanding for a total of 281 million shares outstanding, with Class B shares holding 99 percent of the voting power. At a recent share price of $28, Peloton Interactive possesses a market cap of roughly $7.9 billion.
Peloton Interactive positions itself as an interactive fitness platform at the “nexus of fitness, technology and media,” which creates, in its own words, “engaging to the point of addictive” programming for customers. PTON is primarily a high-end exercise bike and treadmill company, with approximately 69 percent of sales coming from connected products, with most of the remaining 31 percent from subscriptions associated with its product sales. Over the last five years, the company has sold over 580,000 exercise bike and treadmills, with about 97 percent of the total sold in the U.S. Roughly 50 percent of revenue comes from sales from its website onepeloton.com. Other channels include showrooms. The company claims over 1.4 million member subscribers, who completed over 58 million workouts in fiscal 2019.
To peruse Peloton’s product offerings on its company website is to realize just how strong today’s consumer economy has become. Pricing for Peloton’s exercise bike begins at $2,245, with a one year limited warranty, and pricing for its tread machine begins at $4,245, with a one year limited warranty. In the most recent quarter ended September 30th, Peloton reported revenue of $228 million, a 104 percent increase over the prior year, along with a gross margin of 46 percent, flat with the prior year. The company’s operating loss was $51 million, as compared to an operating loss of $56 million in the prior year. Post-IPO Peloton has a strong balance sheet, with roughly $1.5 billion in cash, or $5.25 in cash per share, and no debt, though we do note that the company is currently not profitable.
Tags: IPO Research, independent research on IPOs, independent stock research; independent research on Peloton Interactive, independent research on Consumer stocks; independent research on Consumer IPOs.