Demandware, which provides on-demand software to help
businesses design and maintain e-commerce sites, announced terms
for its IPO on Thursday. The Burlington, MA-based company plans
to raise $74 million by offering 5.5 million shares at a price
range of $12.50 to $14.50. At the midpoint of the proposed range,
Demandware would command a market value of $425 million.
Demandware sells its on-demand software on a subscription model,
with an average three-year contract, and shares in the revenue
processed on the platform. As of December 31, 2011, 101 customers
were operating 361 sites, which include websites, mobile apps and
other digital storefronts. Prominent customers include Columbia
Sportswear, Proctor & Gamble, L'Oreal, Panasonic and Callaway
Sales increased 54% to $57 million in 2011, as the number of
customers increased 46%. The gross margin increased 5% to 65% and
reached 72% in the fourth quarter. Operating income swung
negative, however, and the company posted a net loss of $1
million for the year. The apparel industry provided half the
total revenue and general merchandiser neckerman.de accounted for
Venture capital firms North Bridge Venture Partners and General
Catalyst Partners are not selling on the offering and will each
have a 26% post-IPO stake. North Bridge Venture Partners was
recently involved in the IPO of Proto Labs (
), which is trading up 83% since its February 23rd offering.
Founder and Chairman Stephan Schambach will own approximately 16%
of shares after the offering.
Demandware, which was founded in 2004, plans to list on the NYSE
under the symbol DWRE. Goldman Sachs and Deutsche Bank Securities
are the lead underwriters on the deal.
Enterprise focused on-demand software companies have had been on
a remarkable run in the past few months. The last four to
complete IPOs are all trading at least 40% above their offer
prices and, despite
pricing pressure for other recent IPOs
, not one has priced below the midpoint. Jive Software (
) leads the pack with a 95% return, followed by Guidewire (
) at 88%, Brightcove (
) at 50% and Bazaarvoice (
) at 41%.