IPO News: What awaits Informatica when it returns to public markets

With the strong activity seen in the early part of the year contining in the second half, the IPO market is probably headed for a record year. Despite the recent stock market volatility, tech startups and healthcare firms keep flocking to stock markets. Informatica Inc., a market leader in intelligent data management cloud, is preparing to return to the stock market six years after it was taken private by a consortium of investors.

$9-bln Valuation

In its second term, the Silicon Valley-based software firm looks to take advantage of the boom technology stocks are currently experiening. Informatica will be offering around 29 million shares at a price between $29 and $32 per share. At the top end of the price range, the offering would generate proceeds of $928 million, valuing the company at around $9 billion. The amount will be used mainly for strategic acquisitions and repaying debt.

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Read management/analysts’ comments on quarterly reports

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Regulators have given the green signal to list the stock on the New York Stock Exchange under the ticker symbol INFA, which is tentatively scheduled for next week. The lead underwriters in the offering are Goldman Sachs, JP Morgan, BofA Securities and Citigroup.

Growing Client-base

The company, which was founded in 1993, had around 5,700 customers at the end of June 2021. In fiscal 2020, it generated $1.32 billion in revenues, which is up 1.2% from the prior year. Net loss narrowed to $168 million from $183 million in fiscal 2019. In the most recent quarter, annual recurring revenues grew by 34% to $686 million even as the total addressable market grew steadily.

The company expects overall performance to improve in the coming months, supported by the its pioneering intelligent data management cloud, an AI-powered platform that allows customers to modernize their data strategies. The advanced system is designed to address the vaious issues faced by enterprises, incudig complexities associated with high data volumes, transition of on-premise work load to cloud, data governance and integration of fragmented data.

The Road Ahead

While Informatica’s top-line benefits significantly from the subscription–based model, it also calls for measures to retain existing customers and to expand the client base. Having an effective strategy in place is very important considering the uncertainties caused by the pandemic.

The company’s growth prospects will also depend on technology upgradation, with focus on areas like product innovation and data security. It needs to be noted that Informatica is operating in a market segment that is ruled by tech giants like Microsoft Corp. (NASDAQ: MSFT) and International Business Machines Corp. (NYSE: IBM).

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Recently, the company entered into a partnership with Google Cloud to speed up customers’ migration from on-premises enterprise data warehouses to Google BigQuery. Under the deal, an array of Informatica services will be made available on the Google Cloud Marketplace.