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Yahoo
3 days ago
- Business
- Yahoo
The IPO market may be back, but only for prepared CFOs
This story was originally published on To receive daily news and insights, subscribe to our free daily newsletter. After three sluggish years in the IPO market, the rising cost of capital paired with recent stock market performance has resulted in a resurgence of IPOs. But for finance chiefs hoping to join that wave, the path forward likely isn't about perfect timing. Rather, it's about precision and performance. 'This is all about, do you have great numbers? If you have the metrics… the market is open,' said Dean Quiambao, chief relationship builder, partner and Northern California Market leader at accounting, consulting and technology firm Armanino, and a trusted adviser to pre-IPO CFOs. After predicting the IPO market would have the upturn it's seeing now, Quiambao still says metrics alone aren't enough. 'A Taylor Swift-style 'Love Story' is not good enough anymore,' he said. 'These companies better have a growth story.' Turning metrics into action According to Quiambao, headline metrics are only the start to a successful offering. He affirmed investors want proof of revenue quality, customer retention and legitimate product or offering expansion capabilities. 'To use Sigma Computing as an example, [more than half] of customers use two or more products,' he noted. 'That feels good.' He also cited Sigma's Rule of 40 score, saying it's at 63, as the kind of performance that catches institutional investor attention. '[I believe] that one's gonna go,' he said. 'Watch out.' Once metrics like these are achieved, Quiambao said it's the CFO's job to not only present them, but to strategically embed them across the organization. 'The best companies control the KPIs that matter most to them,' he said. 'They go to market saying, 'These are the 10 or 11 [KPIs] we track. Take a look [at] how we track them quarter after quarter.'' Quiambao said the most effective CFOs can turn those KPIs into shared accountability. 'They've built a sense of responsibility across the company,' he said. 'People feel like that's our metric. Those team members know how they can personally take ownership of the data.' With this in mind, there's an important distinction to be made that confidence in current performance is less important than the ability to forecast. 'I've personally met CFOs and finance teams who've told me, 'The only thing stopping us from going public is our forecastability of [quarter over quarter] revenue and sales,'' he said. 'They say, 'We know the deal is going to come in, but we just don't know what quarter it's going to come in.'' That kind of variability in forecasting, he explained, can disqualify otherwise strong companies. 'If you're going to go public right now, you better hit your first couple of quarters,' he said. 'That's imperative.' Balancing growth aspirations with IPO pricing While investors want growth, they also expect to see scalable operations and profit leverage. Quiambao said the ability to show how automation improves margins is now also a must. He explained how Chime, the mobile banking fintech that had its IPO early last month, is a good example of this. 'Chime has become known for implementing technology to the point where a large majority of their customer interactions don't [involve] people,' he said. 'They build systems, processes and technology, and that's driving down cost and increasing efficiency.' But even when the fundamentals, forecasting and execution are all there, pricing the IPO appropriately remains critical. 'Don't be greedy,' Quiambao said. 'There have been companies recently that went out a little greedy, and they were just flat.' He cited CoreWeave's recent IPO as a case study in smart valuation. 'They went out at a decreased valuation than what was reported in the past, and then they had some results, and then they had some quarter by quarter. And now? Look at them. They're on a solid trajectory.' Quoting a conversation he had with a leader at NASDAQ Capital Markets in New York, Quiambao said pricing strategy is critical to earning investor dollars on the onset. '[The NASDAQ leader] said, 'I got $20 trillion within eight blocks up here, and they all want to buy tech,'' Quiambao explained. 'But he made an important distinction: they've got to go out at the right price.' For some companies, that means going public at a reduced valuation. 'Are you willing to go out at a price that might be less than your last stated valuation, and then go earn it back?' Quiambao said. 'Well-prepared finance teams will earn that valuation back if they do it right.' Private equity's influence For the growing number of CFOs who are working at private equity-backed companies, preparing to go public comes with added layers of complexity. Quiambao said those deals often require navigating capital structures that weren't designed with public markets in mind. 'Private equity wants to move fast, but the CFO needs to be sure that the process is done correctly. A flat IPO is never good, but one under private equity or after a private equity exit can result in additional challenges for leadership across the organization.' Dean Quiambao Partner, Northern California market leader, Armanino 'You've got time constraints, carry structures, rollover equity, maybe some debt limitations,' he said. 'And sometimes the CFO's job becomes, how do we untangle all that and still tell a clean, compelling story to public investors?' In these scenarios, finance leaders are balancing the expectations of their PE sponsors with the type of rigor demanded by public markets. That includes aligning short-term performance with long-term investor confidence, while also making sure legacy deal structures don't create any extra friction between leaders during the IPO process. Quiambao said successful PE-backed CFOs tend to treat readiness as a full-time discipline, not a transactional push. 'They're modeling out scenarios early, managing tax exposure and thinking about how to structure equity in a way that holds up under public scrutiny,' he said. 'And they're doing it all on a compressed timeline.' He said a flat IPO in this scenario can be detrimental. 'Private equity wants to move fast, but the CFO needs to be sure that the process is done correctly. A flat IPO is never good, but one under private equity or after a private equity exit can result in additional challenges for leadership across the organization.' A Bay Area bounce back? While other cities have drawn headlines for innovation and tech talent, Quiambao said the Bay Area is quietly regaining its position as a hub for AI and IPO-stage companies. Other areas, like Texas and Miami, have claimed their cities as the next technology and finance hubs too, but Quiambao says San Francisco's role in that is growing rapidly right now. 'People might not want to believe it, but the Bay Area is coming back,' he said. 'We are becoming the home of AI.' He described a new concentration of venture firms, founders and startups around the Mission Bay neighborhood, where OpenAI's headquarters sit across from the Golden State Warriors' arena. 'There are always important people walking around, there's always security everywhere,' he said. 'It's like the AI corner right there. You want to meet an AI person? Just hang out there for a bit. The buzz around here is real.' He also said he sees founders reversing course on the trend of a mass exodus of business, finance and technology professionals from California that has occurred in recent years. 'I met a CEO during New York Tech Week, and he told me he is moving from New York to San Francisco,' Quiambao said. 'His competitor is here. His VCs are here. The AI scene is here. He said, 'I have to move where the action is happening.'' Recommended Reading The IPO market is ready for a comeback, says Armanino's Dean Quiambao Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Time of India
22-07-2025
- Business
- Time of India
India's SaaS sector tops $15 billion in revenue as IPO pipeline builds
Academy Empower your mind, elevate your skills India's software-as-a-service (SaaS) sector crossed $15 billion in annual revenue in FY24, boosted by more than 36 companies topping $100 million in annualised recurring revenue ( ARR ), according to a report by financial services firm JM Financial The report titled 'India's SaaS: Taking Wings,' which analysed 250 SaaS companies across industries with an ARR of at least $10 million, noted that the space grew at a compound annual growth rate (CAGR) of 24% between FY19 and a group, these SaaS companies are already profitable and set the stage for a wave of potential initial public offerings (IPOs), even as public market valuations undergo a reset, the report said.'If we look at it collectively, the larger ones (SaaS firms) will be much more profitable, and the smaller ones, some of them might be loss-making. As companies grow, they become very profitable because this is a very high gross margin business,' Abhishek Kumar , equity research analyst at JM Financial, who is also the co-author of this report, told firms typically have high gross margins of 70-85%, and their fixed costs, such as investments in technology, don't rise in proportion to revenue. As a result, they become more profitable as they scale, he report also highlighted a sharp correction in the valuations of the listed SaaS firms, particularly smaller horizontal players that build solutions meant to be used across multiple industries, with market capitalisations under $10 billion. This, it said, is due to a shift in investor focus from 'growth at all costs' to free cash flow and shift has also made traditional valuation methods like the Rule of 40 less relevant. The Rule of 40 is a benchmark used to evaluate SaaS companies by combining their revenue growth rate and profit margin, where if the total is 40% or more, the company is considered financially the report noted that investors are leaning into more granular metrics, focussing on how well companies retain customers, how quickly they recover customer acquisition costs, and the long-term value each customer the correction has been broad-based, larger SaaS firms have been more resilient than smaller ones, as investors prioritise revenue visibility, he said.A part of the correction also stems from the slowdown in growth post-Covid-19, Kumar of JM Financial noted, adding that unless there is a sharp bounce back, he does not see trading multiples going horizontal SaaS companies, which offer broader, industry-agnostic solutions, still make up over half the market, vertical SaaS players are growing at a faster pace, the report said. It found that vertical SaaS firms grew at a CAGR of 26.3% between FY19 and FY24, compared to 22.3% for horizontal vertical SaaS segment is led by companies in banking and financial services, such as Perfios and TransUnion Cibil; retail firms like Ayekart and Jumbotail; and logistics and ecommerce players like Shiprocket and Quest2Travel, among to Kumar, the sector is expected to maintain its growth momentum. 'I don't see them (growth) accelerating immediately. But, I think they are still at a very early stage; barring a few, they are still small. So, they can very easily sustain this kind of 20-25% CAGR over the next few Indian SaaS companies have already entered public markets. Freshworks listed on the Nasdaq in 2021, while ecommerce software firm Unicommerce debuted on the Indian stock exchanges in August 2024. Customer engagement platform Capillary Technologies has also filed draft papers for an IPO , signalling further activity ahead in the public markets.
Business Insider
16-07-2025
- Business
- Business Insider
Baird Upgrades nCino (NCNO) to Outperform, Sees 29%
Shares of nCino (NCNO), a global provider of cloud-based software solutions in the financial services industry, are gaining momentum after an upgrade from Baird. Five-star analyst Joseph Vruwink raised the firm's rating from Neutral to Outperform and lifted the price target to $38 from $30. That implies a potential upside of about 29% from the stock's recent price of $29. Vruwink cited improved macro conditions, new product traction, and go-to-market execution as reasons for a more constructive view. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with , delivered to your inbox every week. Confidence Returns as nCino Resets and Rebounds According to Baird, management appears increasingly confident, following a financial reset earlier this year that reset investor expectations. The analyst believes nCino could deliver earnings beats in the coming quarters and sees the current setup as one of the best in years. Management meetings also highlighted stronger internal execution and increased enthusiasm around product updates. Vruwink's bullish sentiment comes as a respite for nCino, which has had a tough year, down 12% year-to-date. Most of the decline occurred in March, following the company's reset of its financial outlook for fiscal 2026. Since then, the stock has bounced back and now trades within 5% to 10% of its pre-reset levels. Vruwink believes nCino is in the early stages of regaining investor confidence. The firm expects subscription growth to return to double digits and management to reach its goal of achieving the Rule of 40, which combines profit margin and revenue growth. While the stock still faces hurdles, including cautious sentiment across small-cap software names, Baird sees a favorable risk-reward at current levels. For now, the market will be watching for signs that nCino can deliver consistent execution and meet its growth targets. Is nCino a Good Stock to Buy? On the Street, analysts are split over nCino, as it is rated Moderate Buy based on 17 analyst reviews, with 7 Buy and 10 Hold ratings. The average Wall Street price target is $31.38, indicating a 5% upside. No analysts currently rate the stock a Sell.
CNBC
14-07-2025
- Business
- CNBC
Baird upgrades this fintech stock, calls for more than 30% upside
There's a rosy outlook ahead for nCino , according to Baird. The bank upgraded the financial technology stock to outperform rating from neutral. Analyst Joe Vruwink new price target of $38, up from $30, implies potential upside of 32%. Vruwink pointed out that the backdrop looks extremely favorable for nCino. Moreover, the company's management appears to be more positive about reaching its goals. "Current setup has many parallels to our favorite stock calls: macro/spend conditions likely turning higher, 'mechanical' growth accelerants, GTM catalysts, new product momentum…all with expectations having reset lower, yielding (we believe) the best estimate upside argument in years," Vruwink wrote. "Recent travel with management underscored execution is key; many details shared are consistent with prior messaging, though confidence/enthusiasm around changes adds conviction." The company appears to be "well underway" on many initiatives that should reaccelerate its subscription growth into double digits on a year-over-year basis. Meanwhile, nCino's management is also confident it can achieve the so-called "Rule of 40" — or have a combined revenue growth rate and profit margin that exceeds 40%. Baird added that now presents an opportune time to buy into nCino, given that the company has reached an important crux in its thesis. "nCino undertook material reset in financial communications entering FY26 (Jan), and while short-term negative for the stock, we view this as a turning point in the investment case (stock now back to within 5-10% of late-March levels on relative basis)," he wrote. "In analyzing comparable episodes in small-cap vertical software, those that come back from the abyss (i.e., inflect growth rates closer to pre-reset levels) are able to fully recapture valuation (at pre-reset level)." The stock rose more than 2% following the upgrade. Shares of nCino have slipped 14% this year. NCNO YTD mountain NCNO YTD chart Analysts are mostly on the sidelines when it comes to nCino. LSEG data shows that 11 of 17 analysts covering the stock rate it a hold. Another six have a buy rating.
Business Insider
09-07-2025
- Business
- Business Insider
Scotiabank Says Buy AppLovin Stock (APP) as it ‘Reshapes the Landscape of Performance Advertising'
Scotiabank initiated a Buy rating on AppLovin (APP) stock, as the ad tech company 'fundamentally reshapes the landscape of performance advertising.' AppLovin provides AI-enhanced solutions that enable businesses to reach, monetize, and grow their audiences. Scotiabank analyst Nathaniel Schindler assigned APP stock a price target of $430, reflecting an upside potential of 24.6% from current levels. Don't Miss TipRanks' Half-Year Sale Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. AppLovin stock has rallied by more than 297% over the past year, driven by optimism about the demand for the company's artificial intelligence (AI)-powered solutions, such as the AXON advertising software. The stock has declined more than 17% due to its non-inclusion in the S&P 500 Index (SPX) and accusations by short-seller Casper Research. Scotiabank Is Bullish on APP Stock Schindler is bullish on AppLovin, as 'not only has it blown through the Rule of 40 into the triple digits (EBITDA margin plus revenue growth), but the number keeps growing as the company gets more efficient.' The Rule of 40 is a benchmark for the financial health of SaaS (Software as a Service) companies and suggests that the sum of a company's revenue growth rate and its profit margin should be 40% or higher. The 4-star analyst stated that AppLovin has established a leading position in mobile app marketing, especially within gaming, by operating one of the largest in-app ad networks and mediation platforms globally. Schindler highlighted several catalysts, including the AXON software's wide moat, which is difficult for new entrants to cross. He also believes that APP's dependence on its premium first-party data and broad on-device footprint, achieved through its software development kit (SDK) network, protects it from regulatory changes. While AppLovin stock looks expensive based on sales, Schindler contends that there is plenty of further upside to APP's stock price based on EBITDA (earnings before interest, tax, depreciation, and amortization), especially as the company 'fundamentally reshapes the landscape of performance advertising.' Is AppLovin Stock a Buy? Turning to Wall Street, AppLovin stock scores a Strong Buy consensus rating based on 16 Buys and three Hold recommendations. The average APP stock price forecast of $510.65 indicates 48% upside potential from current levels.
