Maryland-based BroadSoft has filed an S-1 with the SEC in preparation for a long awaited IPO. While the price and number of shares are obviously undetermined at this stage, they hope to raise some $103M in all. Goldman Sachs and Jefferies will be handling the book running for the offering. BroadSoft has long been near the top of my personal list of companies that ought to be public, I suspect they would have a couple years ago when the IPO market went cold. The company’s software underlies many of the next generation voice products out in the market right now.
This of course gives us our first real chance to look at the company’s financials. Here’s a quick peek at their 2009 quarterly results:
| $ in millions | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| Revenues | 13.7 | 17.7 | 18.2 | 19.3 |
| COS | 4.2 | 5.0 | 4.3 | 3.9 |
| SG&A | 14.1 | 14.7 | 13.6 | 14.2 |
| Earnings | -5.2 | -2.6 | -0.4 | 0.4 |
SG&A includes non-cash stock compensation. At the end of 2009, BroadSoft had $22.9M in cash & equivalents, and about $14M in long term debt. Verizon and Ericsson accounted for 10% and 11% of the company’s revenues in 2009. The company’s licensing revenue is rather lumpy, which is probably going to make their revenue growth rather difficult to predict on a quarterly basis.
My overall impression is: Wow, I thought they were bigger than that based on the prevalence of their products. But we can also see a steady trend throughout 2009 toward profitability, which they in fact attained in the fourth quarter. Given that along with improving sentiment in the market toward the sector, it does seem like a good time for an IPO.
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Categories: Financials · Software · VoIP
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One quarter of profitability does not make for a strong case for IPO. Good luck with any investment here
Indeed, at the moment any investment ideas are moot until pricing is known anyway.
I take it the results in 09 reflect consolidated #s? If so I will take the optimistic view and point out that the recent turn to profitability in ’09, only 1 year after the Sylantro Systems acquisition (who I believe was their top competitor of like size at the time) is a good trick. Platform integration is a drain on resources. If it is clear to investors that the executed to Sylantro merger well, they may also have an appetitite for other smallish players like Metaswitch once the IPO launches.