Daily BriefsIPOs and Placements

Equity Capital Markets: JFrog Ltd, Unity Software Inc, Palantir Technologies Inc and more

By September 12, 2020 No Comments

In today’s briefing:

  • JFrog IPO. Profitable Tech Unicorn With Substantial Post-IPO Upside
  • Unity IPO Valuation – Disappointingly Un-Epic
  • Major Highlights of the Palantir Investors Day Presentation

JFrog IPO. Profitable Tech Unicorn With Substantial Post-IPO Upside

By Andrei Zakharov

JFrog is one of the leaders in the software update industry. Tech unicorn helps developers and organizations to be more agile, faster, secure in the software release lifecycle and offers a universal set of DevOps tools that work with all major software technologies to accelerate the delivery of software packages or binaries through delivery pipeline. DevOps affects healthcare, politics, social interaction, food & water, transportation and energy. Just imagine, Facebook, LinkedIn and Netflix update software 7 times a day. That is why releasing and updating software is especially important in the era of digital transformation and the transition to cloud. Number of devices and applications is growing at unimagined rate as well as data – 175 ZB globally by 2025, mostly cloud.

JFrog is offering ~12 million shares at valuation range of $33-37 and we estimate net proceeds from the offering to reach $255 million at midpoint. Lead underwriters are Morgan Stanley, BofA Securities and J.P. Morgan


Unity IPO Valuation – Disappointingly Un-Epic

By Mio Kato

When we initially heard about Unity’s plans to IPO, we were quite excited and felt some anticipation. Given the positioning serving mobile game customers and emerging trends using game engines in movies and other 3D modelling software we felt that market prospects were good and on hearing that gross margins were about 80% we imagined that operating margins could be 40 or 50% and were starting to rub our hands in expectation. Thus, we were stunned to see that the company was loss-making and analysing its financials caused any optimism we had to evaporate. The company plays a nice role democratising game development but as an investment it totally underwhelms.


Major Highlights of the Palantir Investors Day Presentation

By Douglas Kim

Palantir is expected to complete its Direct Public Listing (DPL) on 23 September. Although the valuation pricing levels of Palantir’s DPL are yet to be announced, it appears that they will be lower than the implied valuation of $20 billion that the company received in the private round funding in 2015. The company’s updated prospectus, which includes the latest shares outstanding and average shares price, sets the company’s valuation at about $10.5 billion.

With the company’s financials now publicly available, there is a strong probability that the DPL will NOT price the company at close to $20 billion. This is a distinctly different case than Snowflake where its IPO valuation is much higher than the private market valuation Snowflake received in early 2020. Overall, there could be more interested investors in Palantir if the DPL valuation is set close to about $15 billion, in our view.

In this insight, we provide the key highlights of the Palantir Investor Day presentation which was held on 9 September. (Source: https://vimeo.com/palantir) It is always good to hear directly from the key members of the senior management team. We provide 13 key highlights from the presentation. 


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