Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 25 years of experience in analyzing hundreds of companies, especially in Asia. Deep expertise in the following sectors:
- Technology (E-commerce, SaaS, Internet)
- Consumer 
- Special Situations/Deep Value Plays
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

SK Telecom Plans to Spin Off Mobility Business & Partner with Uber

Root Inc IPO Valuation Analysis (Insurtech SaaS)

Major Highlights of SK Telecom's 3Q 2020 Earnings Conference Call

Lemonade. Disruptive Insurtech Unicorn Worth Paying Attention To

Lemonade IPO Preview: A Public Benefit Loss Making Start-Up In a Competitive Environment

Lemonade (Financial Outlook and Valuation) - Expensive @ 12.4 EV/​​Sales

Equity Capital Markets

Root Inc is getting ready to complete its IPO in the NASDAQ exchange in the next few weeks. Root Inc is an insurtech company that operates through a mobile app that uses smartphone technology, telematics, and data science to provide auto and home insurance. Since the founding of the company, Root has raised a total of<a href="https://www.insurancejournal.com/news/national/2020/10/06/585407.htm" target="_blank" rel="noopener"> $523 million</a> in funding. It was last valued at $3.65 billion in September 2019 in a round led by ST Global and Coatue. Root is targeting about <a href="https://www.businessinsider.com/root-insurance-us-based-insurtech-filed-for-ipo-2020-10#:~:text=The%20US%2Dbased%20insurtech%20has,currently%20available%20in%2029%20states." target="_blank" rel="noopener">$6 billion</a> valuation in this IPO. You can read Root Inc's S-1 <a href="https://www.sec.gov/Archives/edgar/data/1788882/000162828020014305/roots-1.htm" target="_blank" rel="noopener">here.</a> 
Surging revenue &amp; rapid improvement in net margins - The company's revenues have exploded higher in the past three years. In 2019, the company generated revenue of $290.2 million (up 570% YoY) while its total operating expenses increased by 393% YoY. A combination of a much higher revenue growth rate than operating expenses has resulted in a rapid improvement in net margins, which improved from -159.6% in 2018, -97.3% in 2019, and -58.9% in 1H 2020.
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Root Inc's exploding revenue growth and improvement in the reduction of net losses is very impressive, in the ranks of <a href="https://www.smartkarma.com/entities/snowflake-inc" target="_blank" data-smartkarma-citation="entities:29254:1" rel="noopener">Snowflake Inc (SNOW US)</a>. 
Although Snowflake and Root compete in different industry segments, both are SaaS companies with exceptional sales growth and significant operating leverage going forward. Similar to Snowflake, the word "WOW" came to my mind in reading through Root's IPO prospectus. Root Inc could be one of those exceptional, highly disruptive SaaS companies that even the great value investors such as Warren Buffett could inject significant amounts of capital (similar to Snowflake).
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Root Inc is getting ready to complete its IPO in the NASDAQ exchange in the next few weeks. Root Inc is an insurtech company that operates through a mobile app that uses smartphone technology, telematics, and data science to provide auto and home insurance. Since the founding of the company, Root has raised a total of $523 million in funding. It was last valued at $3.65 billion in September 2019 in a round led by ST Global and Coatue. Root is targeting about $6 billion valuation in this IPO. You can read Root Inc's S-1 here. 
Surging revenue &amp; rapid improvement in net margins - The company's revenues have exploded higher in the past three years. In 2019, the company generated revenue of $290.2 million (up 570% YoY) while its total operating expenses increased by 393% YoY. A combination of a much higher revenue growth rate than operating expenses has resulted in a rapid improvement in net margins, which improved from -159.6% in 2018, -97.3% in 2019, and -58.9% in 1H 2020.

Root Inc's exploding revenue growth and improvement in the reduction of net losses is very impressive, in the ranks of Snowflake Inc (SNOW US). 
Although Snowflake and Root compete in different industry segments, both are SaaS companies with exceptional sales growth and significant operating leverage going forward. Similar to Snowflake, the word "WOW" came to my mind in reading through Root's IPO prospectus. Root Inc could be one of those exceptional, highly disruptive SaaS companies that even the great value investors such as Warren Buffett could inject significant amounts of capital (similar to Snowflake).


Root Inc IPO Preview - The Next Snowflake?

Root /OH

Root Inc IPO Preview - The Next Snowflake?