In July, the U.S. IPO markets look set to continue the momentum from June. EverCommerce has priced its IPO and is listing on July 1. What’s the forecast for EverCommerce stock and should you buy the IPO?
EverCommerce provides SaaS services to small and medium-sized companies in the services industry. The company was founded in 2016 and is based out of Denver.
EverCommerce IPO data and price
EverCommerce has priced the IPO at $17 per share, which is at the midpoint of its previous range of $16–$18. SentinelOne, which went public on June 30, priced its IPO way above the initial range. However, Krispy Kreme has priced the IPO below the previously announced price range.
Companies change the IPO pricing based on the market’s response during roadshows. In 2020, when the U.S. IPO market was red hot, it wasn't uncommon for companies to revise the IPO pricing upwards multiple times before the final price. Goldman Sachs, KKR Capital Markets, JP Morgan Securities, and RBC Capital Markets are the lead book-running managers for the EverCommerce IPO.
EverCommerce would sell 19.1 million shares in the IPO and the underwriters have an option to purchase another almost 2.9 million shares. The company said that entities associated with its existing shareholder Silver Lake will purchase over 4.4 million shares at the IPO price.
EverCommerce wants to repay some debt
After the IPO, EverCommerce would have 192.48 outstanding shares and proforma cash of around $200 million at the end of the first quarter of 2021. The company has a total debt of $766 million. EverCommerce intends to use the proceeds from the IPO to repay some of the debt.
EverCommerce stock forecast
EverCommerce reported revenues of $337.5 million in 2020, which were almost 40 percent higher than what was reported in 2019. The company’s revenues increased by over 88 percent YoY in 2019 also. Subscription and transaction fees account for the bulk of the company’s revenues.
Like many other tech and software companies that have gone public, EverCommerce is also posting losses. The company posted a net loss of $59.9 million in 2020 compared to $93.7 million in 2019.
EverCommerce stock valuation
EverCommerce is seeking a valuation of around $3.3 billion in the IPO. This would mean a 2020 price-to-sales multiple of around 9.8x. Since the company is lossmaking, we can't value it based on profitability-based valuation metrics.
Should you buy EverCommerce IPO?
EverCommerce serves over half a million customers across Health Services, Home Services, and Fitness & Wellness Services. The company offers solutions to the small and medium business sector, which is an underpenetrated market.
In its IPO filings, EverCommerce said, "We estimate that only 9% of the service SMB (small and medium business) market has been penetrated with full end-to-end software solutions. However, we believe that small businesses now generally view digitization as critical to long-term success."
The company’s growth took a hit in 2020 as the COVID-19 pandemic impacted small and medium services businesses hard. However, the company’s growth should rebound as the economy reopens. Looking at the reasonable valuations and strong growth outlook, EverCommerce looks like a good IPO to buy.