3 Tech IPOs This Week: What Investors Should to Know
Zacks Investment Research | Jun 25, 2015 12:32AM ET
June has been a jam-packed month thus far with companies from many different industries filing for IPOs and becoming public traded. This week it is the technology sector that will be seeing a few new additions to the NYSE and the NASDAQ.
Alarm.com, AppFolio, and Xactly are three tech stocks that are all scheduled to become available for public trade this Friday, June 26th. Alarm.com and AppFolio will be listed on the NASDAQ, and Xactly will be listed on the NYSE. As the three are set to enter the markets, the following will provide some information and insight into what exactly each company is all about, and what their IPO plan is.
Alarm.com
Alarm.com is a cloud-based provider of connected home technology that has started to draw interest from investors as the company’s IPO date nears. It is planning to offer 7 million shares priced between $13 and $15 under the ticker ALRM. The company hopes to raise $98 million with the offering.
Alarm.com’s main business is selling a monthly monitoring and security service that lets homeowners remotely control their lights, thermostats and appliances. What sets it apart from other home security systems is that it does not rely on an expensive network of monitoring gear and communications equipment, but instead is cloud-based, as previously mentioned, which cuts the company’s costs significantly.
With their use of the cloud-based system, Alarm.com reported a gross profit margin of 60% for 2014, and removing hardware sales that have a lower margin, the gross margin on their service revenue is an astounding 80%. The company also does not sell directly to consumers, with its sales being done by a large amount of dealers and security companies acting as third-party resellers.
Aside from its strong profit margins, the company is also drawing interest from investors because of several strong signs of company growth. Alarm.com was able to increase its revenue by 28% last year up $167 million, with net income increasing almost 3 fold from the previous year to $13.5 million. The company also saw a 21% increase in subscribers in 2014, adding in to a total of 2.3 million users. It also boasts a positive cash flow from operations in the last three years, something many recent tech IPOs have not had.
With strong margins and solid signs of growth, it is clear why the stock is creating a buzz. The company’s industry also holds a great amount of growth potential. With the smart home security and automation market projected to grow 21% by 2018, and only 1 in 12 currently having installed smart home gear, there is potential for a large amount of growth in the industry. If Alarm.com can take advantage of it, there could be a great deal of success in its future.
AppFolio
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This California based tech company will also begin trading this Friday on the NASDAQ, using the ticker APPF. AppFolio is hoping to raise between $71.4 and $82.6 million by offering 6.2 million shares, with a price target of $12 to $14 per share. It plans to use the money raised from the offering to increase its financial flexibility and workforce. AppFolio also seeks to use the funds to expand its departments of research and development.
AppFolio offers online management software applications to small and medium-sized property management and legal companies. Original post
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