What IPOs Should be on Your Radar for June?
2020 was a monumental, record-breaking year for IPOs, with 480 IPOs being listed on the US stock market. Six months into 2021, this record has already been flattened – as of 20th May, 481 IPOs have listed on the US stock market, including the likes of Deliveroo, Bumble, DigitalOcean and AppLovin. With another six months left of the year, this number will continue to grow and do so at an exponential rate but what are some of the key upcoming IPOs to watch out for over the next month?
Couchbase is a database software firm that helps corporate customers like eBay, Cisco Systems, Intuit, and PayPal Holdings manage databases on web and mobile application through its NoSQL cloud-based service. Founded in 2011, the company has registered for a stock market debut that is expected to come in June 2021.
Couchbase has seen strong growth over the past year, specifically since the start of the pandemic as demand for data storage and processing soared due to the adoption of remote working. Its growth has also meant it has had to enhance its portfolio. In June 2020, Couchbase debuted a managed version of its database that runs on Amazon Web Service. More recently, it is added support for Microsoft Azure.
Since its inception, the company has raised $251million in venture investments, with backers including GPI Capital, North Bridge Venture Partners and Accel. Its popularity among investors comes as no surprise with around a third of the Fortune 100 using its database to power their business applications.
Snowflake, a rival cloud-based data-warehousing company, went public last September, reaching a valuation of $33 billion, making it the largest software IPO in history. This means Couchbase’s IPO will be a pivotal moment in the company’s history and for the industry in general.
Founded in 2013, Robinhood offers commission-free trading through its website and mobile app, while also allowing users to buy and sell cryptocurrencies. The rise of the trading platform has been extraordinary. Between 2013 – 2020, the platform gained 13 million users, averaging a total of one million new users per year. However, in 2021, its user base skyrocketed with an additional 6 million users joining the trading platform in the first two months of the year.
The company’s recent growth in popularity has been down to young retail investors, predominantly millennials, who have taken a liking to the app’s slick user and customer experience. Its popularity isn’t just with young investors; a plethora of companies have also invested in the platform. In February 2021, Robinhood announced that it had raised a further $3.4 billion in an investment round featuring Ribbit Capital, ICONIQ Capital, Andreessen Horowitz, Sequoia, Index Ventures, and NEA.
However, while Robinhood has expanded rapidly over the last year, it hasn’t come without some public backlash and regulatory scrutiny. Regulators in Massachusetts are looking to ban its citizens from trading on the app, claiming that Robinhood’s gamified investing platform caused its customers to take on too much risk, thereby failing the state’s fiduciary rules.
Despite this, Robinhood generated $682 million in payment-for-order-flow revenue in 2020, which represents a 514% increase year-on-year. It’s reported that the company’s IPO valuation could be around $50 billion.
The Fresh Market
The Fresh Market is a retail chain that supplies high-quality food products. The grocer operates in many competitive South-eastern markets, with conventional grocers as well as speciality chains and discounters upgrading their assortment of natural and organic products. In March 2016, Fresh Market was acquired from Apollo Global, a private investment company, at $1.36 billion.
The company’s performance has improved in the years since Apollo Global Management took it private, and the pandemic has accelerated the chain’s rejuvenation and growth. As of late October 2020, Fresh Market had around $187 million in unrestricted cash and it recorded sales of $1.7 billion over the 12 months ending 25th October. The company also saw sales rise by an estimated 20% in 2020, which was for a range of factors including a change in pricing, investment in perishables, expansion of home deliveries, a pickup service, and a rise in pantry loading - as consumers increased transaction sizes while lowering the number of trips to the store during the COVID-19 pandemic.
The number of shares to be offered and the price range for the proposed offering have not yet been determined. However, Fresh Market expects to use the proceeds of the offering for general corporate purposes, which may include the repayment of indebtedness.
Databricks is a startup company that provides software for fast data processing and analysis preparation and was founded in 2013 by the creators of Apache Spark, MLflow and Delta Lake.
2020 was a spectacular year for tech companies across the globe as many transitioned and migrated online – with Databricks also benefitting. The company claims to have passed $425 million in annual recurring revenue, a year-over-year growth of more than 75%. This is no surprise given that over 5,000 companies including CVS Health, Comcast, Condé Nast, Nationwide, and 40% of the Fortune 500 companies, currently rely on Databricks’ unified data platform for analytics, machine learning and data engineering.
Databricks’ future potential and expansion has not gone unnoticed with many prestigious and successful money managers and venture capitalists having already invested heavily in the company. Databricks has had seven major rounds of funding since its founding and has raised a total of $1.9 billion from a total of 28 investors. The company’s latest round of Series G late-stage venture financing raised a total of $1 billion from 23 investors. These investments are for good reason; powered on the cloud by Delta Lake, the Databricks Lakehouse platform allows companies of any size to efficiently consolidate all of their data in one place.
Databricks’ value during the IPO is not confirmed but it is speculated to reach $35 - $50 billion according to the Business Times.
Couchbase, Robinhood, The Fresh Market and Databricks are all key players within their respected sectors. While it’s important for an organisation to have the backing of investors and have a strong customer base, this doesn’t always mean their IPO will skyrocket, as we saw with the Deliveroo IPO. All four companies provide a unique offering that sets them apart from the competition and that’s why it’s worth keeping them on your radar for June.