Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

Founded in 2003 by the CEO Anthony Casalena, Squarespace is getting ready to complete its direct public listing on May 19 on the New York Stock Exchange. Squarespace raised $300 million ($68.42 per share) in March 2021 from investors including Tiger Global, D1 Capital Partners, and Fidelity Management &amp; Research Company, valuing the company at nearly<a href="https://www.reuters.com/article/us-squarespace-funding-idUSKBN2B832O" target="_blank" rel="noopener"> $10 billion. </a>Other major investors of the company include Accel, Index Ventures, and General Atlantic. Squarespace joins a list of numerous technology companies that have become public through the direct listing route, including <a href="https://www.smartkarma.com/entities/palantir-technologies-inc" target="_blank" data-smartkarma-citation="entities:27728:1" rel="noopener">Palantir Technologies Inc (PLTR US)</a>, <a href="https://www.smartkarma.com/entities/roblox-corp" target="_blank" data-smartkarma-citation="entities:29697:1" rel="noopener">ROBLOX Corp (RBLX US)</a>, and <a href="https://www.smartkarma.com/entities/coinbase-global-inc" target="_blank" data-smartkarma-citation="entities:32227:1" rel="noopener">Coinbase (COIN US)</a>. Squarespace's shareholders have registered to sell about 40.4 million common shares with the CEO Anthony Caslena holding a 68.2% stake. Squarespace is a one-stop-shop platform for websites creation, domains, e-commerce, and marketing tools for companies and organizations to manage their social media presence. The company generated sales of $621.2 million in 2020, up 28.1% YoY. Its sales growth accelerated by 31.3% YoY to $179.7 million in 1Q 2021. Although the company benefited from higher sales and gross margins, its operating margins declined from 12.7% in 2019 to 6.5% in 2020, which was caused by higher R&amp;D and sales &amp; marketing expenses.

Founded in 2003 by the CEO Anthony Casalena, Squarespace is getting ready to complete its direct public listing on May 19 on the New York Stock Exchange. Squarespace raised $300 million ($68.42 per share) in March 2021 from investors including Tiger Global, D1 Capital Partners, and Fidelity Management &amp; Research Company, valuing the company at nearly $10 billion. Other major investors of the company include Accel, Index Ventures, and General Atlantic. Squarespace joins a list of numerous technology companies that have become public through the direct listing route, including Palantir Technologies Inc (PLTR US), ROBLOX Corp (RBLX US), and Coinbase (COIN US). Squarespace's shareholders have registered to sell about 40.4 million common shares with the CEO Anthony Caslena holding a 68.2% stake. Squarespace is a one-stop-shop platform for websites creation, domains, e-commerce, and marketing tools for companies and organizations to manage their social media presence. The company generated sales of $621.2 million in 2020, up 28.1% YoY. Its sales growth accelerated by 31.3% YoY to $179.7 million in 1Q 2021. Although the company benefited from higher sales and gross margins, its operating margins declined from 12.7% in 2019 to 6.5% in 2020, which was caused by higher R&amp;D and sales &amp; marketing expenses.

<a href="https://www.smartkarma.com/entities/koreacenter-com-co-ltd" target="_blank" data-smartkarma-citation="entities:28329:1" rel="noopener">Koreacenter.com Co Ltd (290510 KS)</a> is getting ready to complete its IPO in the next few weeks. The IPO price range is 24,000 won to 27,200 won. The IPO base deal size is $51 million to $58 million. According to the bankers' valuation, the expected market cap after the IPO is 616 billion won to 698 billion won. The bookbuilding for the institutional investors starts on October 28th. 
The bankers used five companies including Cafe24, Naver, Kakao, Godaddy, and Amazon as comparable companies valuation analysis. Using the company's annualized sales in 1H19 and applying the P/S multiple of 3.7x (average of the comps), this results in an implied market cap of 898 billion won. After applying an additional IPO discount of 22.3% to 31.4%, this results in an implied market cap of 617 billion won to 653 billion won or implied IPO price range of 24,000 won to 27,200 won. 
The company has four main business units, including TailList, MakeShop, Enuri, and MallTail. In 1H19, TailList accounted for 58.9% of total sales, followed by MakeShop (17%), Enuri (8.6%), and MallTail (7.7%). TailList, which accounted for 39.4% of total sales in 2016, increased to 47.4% in 2017, and 55.3% in 2018. Koreacenter operates TailList which is one of the largest overseas direct e-commerce platforms where many Koreans purchase overseas goods online. Makeshop provides E-commerce shopping mall solutions. 
Many investors will question the fairness of the bankers valuing this company on only P/S basis relative to its peers. This is mainly because Koreacenter generates lower profit margins versus the Korean peers and the valuation of Koreacenter could be negatively impacted if the valuation is based on P/E or EV/EBITDA basis relative to its peers.

Koreacenter.com Co Ltd (290510 KS) is getting ready to complete its IPO in the next few weeks. The IPO price range is 24,000 won to 27,200 won. The IPO base deal size is $51 million to $58 million. According to the bankers' valuation, the expected market cap after the IPO is 616 billion won to 698 billion won. The bookbuilding for the institutional investors starts on October 28th. 
The bankers used five companies including Cafe24, Naver, Kakao, Godaddy, and Amazon as comparable companies valuation analysis. Using the company's annualized sales in 1H19 and applying the P/S multiple of 3.7x (average of the comps), this results in an implied market cap of 898 billion won. After applying an additional IPO discount of 22.3% to 31.4%, this results in an implied market cap of 617 billion won to 653 billion won or implied IPO price range of 24,000 won to 27,200 won. 
The company has four main business units, including TailList, MakeShop, Enuri, and MallTail. In 1H19, TailList accounted for 58.9% of total sales, followed by MakeShop (17%), Enuri (8.6%), and MallTail (7.7%). TailList, which accounted for 39.4% of total sales in 2016, increased to 47.4% in 2017, and 55.3% in 2018. Koreacenter operates TailList which is one of the largest overseas direct e-commerce platforms where many Koreans purchase overseas goods online. Makeshop provides E-commerce shopping mall solutions. 
Many investors will question the fairness of the bankers valuing this company on only P/S basis relative to its peers. This is mainly because Koreacenter generates lower profit margins versus the Korean peers and the valuation of Koreacenter could be negatively impacted if the valuation is based on P/E or EV/EBITDA basis relative to its peers. 

United States

GoDaddy, Inc. provides a cloud-based web platform for small businesses, web design professionals and individuals. The Company's platform provides applications that help them connect to their customers, manage their businesses and get found online.

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Godaddy Inc Class A (GDDY US)

Squarespace Direct Listing Preview

Squarespace is getting ready to complete its direct public listing on May 19 on the New York Stock Exchange. In this insight, we provide the key...

Douglas Kim

Koreacenter IPO Preview

Koreacenter.com Co Ltd (290510 KS) is getting ready to complete its IPO in the next few weeks. The IPO price range is 24,000 won to 27,200 won. The...

Douglas Kim

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