Zynga, the venture-backed titan of social gaming, will almost certainly do well. Jive could as well. If it does, the issue might be a sign the IPO market for small cap tech companies has reopened.
Jive is a perfect test case. It is growing rapidly at the intersection of two hot investment trends: social networking and software as a service.
The company’s stock will likely appeal to tech savvy investors, but ones willing to grant a company leeway. Jive has no profits and none on the horizon. It has lots of potential to make money since SaaS companies can ultimately have high margins. But it faces substantial expenses transitioning to an internally managed data center to accommodate future growth.
As a result, the company warns in its S-1 on file with the Securities and Exchange Commission that it doesn’t expect to be profitable on a GAAP basis for the foreseeable future.
Jive laid out the terms of its IPO two weeks ago. It plans to raise $105 million by selling 11.7 million shares for $8 to $10 a piece. This should bring the Palo Alto, Calif., company a market capitalization of more than $600 million.
In this unusually busy week for IPOS – the busiest week for U.S. IPOs since November 2007 – venture investors will have a lot of new data to digest. They might be smart to pay attention to what Jive tells them.
In the following slideshow, peHUB looks at details of the Jive offering, including the positions held by backers Sequoia Capital and Kleiner Perkins Caufield & Byers:
[slide title=”Jive’s Customer Base Looks Solid”]
Current Product: Jive Engage Platform (introduced: 2007)
Engage Platform Customers: 657
Engage Platform Users: 17 million
Top Customers: Hewlett-Packard, Alcatel-Lucent, SAP, UBS
Company Founded: 2001
[slide title=”Major Shareholders Include Sequoia And Kleiner Perkins”]
[slide title=”Jive’s Revenue Is Growing Rapidly”]
[slide title=”And Its Quarterly Growth Rate Has Rebounded”]
[slide title=”But Operating Losses Are Rising”]
[slide title=”And The Company’s S-1 Warns Of More Expenses To Come”]
From its S-1: “As we continue to invest in infrastructure, development of our solutions and sales and marketing, our operating expenses will increase significantly. Additionally, to accommodate future growth, we are in the process of transitioning our customer data centers from a third-party service provider to a co-located facility managed by our internal network operations team. This transition will require significant up front capital expenditures and these costs and expenses will be incurred before we realize any associated incremental billings or revenues. As a result, our losses in future periods may be significantly greater than the losses we would incur if we developed our business more slowly.”