7 Upcoming IPOs for the Second Half of 2020
Initial public offerings — or IPOs — are continuing their winning ways. No doubt, a big factor is that the equities markets have been bullish. But it also has helped that investors have been seeking out growth plays. So as for the upcoming IPOs, we should expect more tech companies to offer their shares.
For example, last week we saw the launch of the Jamf Holding (NASDAQ:JAMF) deal. The company operates a system that helps companies remotely deploy Apple (NASDAQ:AAPL) devices. In its IPO, the company upped its price range to $21-$23, up from $17-$19 — and the deal was priced at $26. During its debut, shares soared by 50% — putting the market capitalization at $4.6 billion.
OK then, so what about some of the upcoming IPOs to keep an eye on? Well, let’s take a look at seven:
- Rocket Companies (NYSE:RKT)
- BigCommerce (NASDAQ:BIGC)
- Acutus Medical (NASDAQ:AFIB)
- Rackspace Technology (NASDAQ:RXT)
- Oak Street Health (NYSE:OSH)
- Ibex (NASDAQ:IBEX)
- Vertex (NASDAQ:VERX)
Upcoming IPOs: Rocket Companies (RKT)
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Rocket Companies, which is a large mortgage operator that owns the Quicken Loans and Rocket Mortgage brands, is expected to be one of the year’s biggest IPOs. The buzz is the amount raised could be over $3 billion.
Even with its large scale, Rocket Companies has continued to grow at a nice pace. Last year, the revenues increased by 22% to $5.1 billion and the earnings jumped by 46% to $893.8 million. But with interest rates at rock-bottom levels, the growth is likely to accelerate. The company currently has about 9.2% of the share of mortgages in the U.S. market, compared to 1.3% in 2009.
A key part of the business is the loan servicing. By providing this, the company has been in a better position to build long-term relationships with customers.
The lead underwriters for the IPO include Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), Credit Suisse (NYSE:CS), JPMorgan Chase (NYSE:JPM) and RBC Capital Markets. What’s more, RKT stock is expected to trade on the New York Stock Exchange.
Source: William Potter/Shutterstock.com
BigCommerce operates a software-as-a-service platform that allows for the creation of e-commerce websites. There are about 60,000 stores across 120 countries.
While ecommerce is a secular trend, it has been bolstered by the impact of the novel coronavirus. A study from eMarketer predicts that spending will increase by 18% in the U.S. At the same time, sales for brick-and-mortar retailers are expected to plunge by 14%. In other words, there is a great urgency for merchants to go digital.
Last year, BigCommerce’s revenues grew by 22% to $112.1 million. But they increased by 30% in the first quarter. The gross margin also was 77.5%, which is a good level for a software-as-a-service company.
Rival Shopify (NYSE:SHOP) has been one of the best-performing IPOs during the past five years, as the shares have zoomed from $17 to $966. This is likely to be a catalyst for BIGC stock, which is expected to trade on the Nasdaq Exchange.
Upcoming IPOs: Acutus Medical (AFIB)
Acutus Medical is a medical device company that is focused on the diagnosis and treatment of cardiac arrhythmias — when the heart beats too fast, too slow or irregularly. While there are various treatments available, they are generally burdensome for patients, medical professionals and insurance companies.
To deal with this, Acutus Medical has developed a system that relies on a catheter-based approach. A key for this is AcQMap, which is a sophisticated mapping system.
More than 50 million people across the world suffer from arrhythmias and the market for treatments is roughly $5.7 billion. Less than 5% of the market is penetrated.
During the first quarter, revenues came to $1.6 million and the net loss was $18.1 million. The install base included 31 units at 27 customer sites.
As for the upcoming IPO, AFIB stock is expected to be listed on the Nasdaq Exchange and the lead underwriters are JPMorgan, Bank of America (NYSE:BAC) and William Blair.
Rackspace Technology (RXT)
Rackspace Technology, which is a top web hosting company, pulled off a going-private transaction in 2016 for $4.3 billion. But now the company is making a return to the public markets.
It certainly has lots of scale. Note that the customer base totals over 120,000 cross 120 countries and this includes more than half of the Fortune 100. Gartner has also recognized Rackspace as a leader for its report — Magic Quadrant for Public Cloud Infrastructure Professional and Managed Services, Worldwide – for four consecutive years.
One of the advantages of the company is its multi-cloud option. This helps to provide lower-cost alternatives for customers.
In 2019, the revenues were $2.4 billion and the adjusted EBITDA was $742.8 million. However, because of the going-private transaction and heavy capital costs, the company has nearly $4 billion in debt on its balance sheet.
As for the upcoming IPO, RXT will be listed on the Nasdaq and the lead underwriters include Goldman Sachs, Citi (NYSE:C), JPMorgan, RBC Capital Markets, Evercore ISI, Barclays (NYSE:BCS), BMO Capital Markets, Credit Suisse, Deutsche Bank (NYSE:DB) and HSBC (NYSE:HSBC).
Upcoming IPOs: Oak Street Health (OSH)
Oak Street Health operates healthcare centers that focus on primary care for Medicare patients. A major part of the strategy is to leverage technology, which analyzes patient data to provide personalized actionable insights. The company’s systems are also built to lessen the friction of a typical healthcare environment.
With this model, Oak Street has been able to achieve 51% reductions in hospital admissions, 42% reductions in 30-day readmission rates and 51% reductions in emergency department visits. The Net Promoter Score is 90, which is particularly high.
Oak Street is certainly targeting a large market opportunity. Consider that the company’s solution is for the 27 million Medicare eligible population and the spending is about $325 billion.
For the first quarter, revenues soared by 72% to $201.8 million and the net loss was $15.4 million, up from $9.8 million in the same period a year ago. The company has 54 centers across eight states and has provided care for about 85,000 patients.
With the upcoming IPO, OSH stock is expected to trade on the New York Stock Exchange and the lead underwriters include JPMorgan, Goldman Sachs, Morgan Stanley, William Blair and Piper Sandler (NYSE:PIPR).
Ibex, which is a provider of outsourced customer support services, attempted an IPO a couple years ago but had to abandon the effort. But as of now, the company thinks its chances are much better. Ibex stock will actually be spun-out from its parent company, The Resource Group International.
IBEX has a system that spans the customer life-cycle, such as digital marketing, feedback analysis, lead generation, multi-channel digital surveys, online sales, technical support and sentiment analysis.
From 2018 to 2019, revenues climbed from $342.2 million to $368.4 million and the net income swung from a loss of $15.9 million to a profit of $11 million. The company manages about 138 million interactions for voice, web, chat and email.
The ticker is IBEX and the lead underwriters include Citi, RBC Capital Markets, Baird, SunTrust Robinson Humphrey and Piper Sandler.
Upcoming IPOs: Vertex (VERX)
Vertex is a provider of comprehensive tax solutions for global businesses. The technology helps to automate the indirect tax, which is the largest for corporations. This includes sales tax, seller’s use tax, consumer use tax and the value added tax, or VAT.
Founded over 40 years ago, Vertex has built a system with a myriad of pre-built integrations and has more than 300 million data-driven effective tax rules that cover over 19,000 jurisdictions across the globe. The platform is available for on-premise environments and the cloud.
From 2018 to 2019, revenues jumped from $272.4 million to $321.5 million and net income went from a loss of $6.1 million to a profit of $31.1 million. The company has more than 4,000 customers, which include over half of the Fortune 500.
As for the IPO, the plan is to issue 21.2 million shares of VERX stock at a range of $14-$16. The lead underwriters include Goldman Sachs, Morgan Stanley, BofA Securities, Citi and Jefferies (NYSE:JEF).
Tom Taulli (@ttaulli) is an advisor and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.