Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>nCino, an advanced cloud-based software for financial institutions, has reported its first quarter fiscal year 2025 financial results, showing a year-over-year increase in total revenues to $128.1 million, which signifies a 13% rise from the previous year.</li><li>Subscription revenues, forming 86% of total revenues, grew similarly by 13% to $110.4 million.</li><li>Growth across various sectors of the business, especially in the U.S. enterprise and community and regional markets, contributed to these improved financial metrics.</li></ul>

nCino, an advanced cloud-based software for financial institutions, has reported its first quarter fiscal year 2025 financial results, showing a year-over-year increase in total revenues to $128.1 million, which signifies a 13% rise from the previous year.Subscription revenues, forming 86% of total revenues, grew similarly by 13% to $110.4 million.Growth across various sectors of the business, especially in the U.S. enterprise and community and regional markets, contributed to these improved financial metrics.

nCino Inc.: Expansion into Consumer Lending Solutions Is A Key Growth Catalyst! - Major Drivers

<ul><li>This is our first report on SaaS player, nCino Inc.</li><li>The company's third quarter fiscal 2024 performance presented both opportunities and challenges in the midst of a complex economic environment.</li><li>The company announced a significant product win in relation to a consumer lending deal with an enterprise bank in the United States of over $200 billion.</li></ul>

This is our first report on SaaS player, nCino Inc.The company's third quarter fiscal 2024 performance presented both opportunities and challenges in the midst of a complex economic environment.The company announced a significant product win in relation to a consumer lending deal with an enterprise bank in the United States of over $200 billion.

nCino Inc: Initiation of Coverage – How nCino's Digital Solutions are Capturing the Financial Market! - Major Drivers

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

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<a href="https://www.smartkarma.com/entities/root-inc" target="_blank" data-smartkarma-citation="entities:29692:1" rel="noopener">Root Inc (ROOT US)</a><a href="https://www.businesswire.com/news/home/20201020005703/en/Root-Inc.-Announces-Launch-of-Initial-Public-Offering" target="_blank" rel="noopener">announced</a> its IPO terms and it will offer 24.16 million shares of common shares in the IPO (22 million shares offered by Root and 2.16 million shares sold by a major shareholder). The IPO price is currently expected to be between $22 and $25 per share. However, we expect this IPO to receive a very high demand, and the IPO price range is likely to be raised prior to final pricing. 
We are including Root Inc in our model portfolio.
</div>We forecast the company to generate revenue of $616.1 million in 2020 (up 112.3% YoY) and $1,070.2 million in 2021 (up 73.7% YoY). From 2019 to 2022, we have assumed the company's revenue to increase by 78.9% CAGR. The combination of the company's exploding revenue growth and improvement in the reduction of net losses as a percentage of revenue is very impressive indeed.Our base case valuation for Root is an implied market cap of $13.2 billion, or $52.1 per share, which is 108% higher than the high end of the IPO price range of $25 per share. Given the very high upside, we have a positive view of the Root IPO and we include this stock in our model portfolio.


Root Inc (ROOT US)announced its IPO terms and it will offer 24.16 million shares of common shares in the IPO (22 million shares offered by Root and 2.16 million shares sold by a major shareholder). The IPO price is currently expected to be between $22 and $25 per share. However, we expect this IPO to receive a very high demand, and the IPO price range is likely to be raised prior to final pricing. 
We are including Root Inc in our model portfolio.
We forecast the company to generate revenue of $616.1 million in 2020 (up 112.3% YoY) and $1,070.2 million in 2021 (up 73.7% YoY). From 2019 to 2022, we have assumed the company's revenue to increase by 78.9% CAGR. The combination of the company's exploding revenue growth and improvement in the reduction of net losses as a percentage of revenue is very impressive indeed.Our base case valuation for Root is an implied market cap of $13.2 billion, or $52.1 per share, which is 108% higher than the high end of the IPO price range of $25 per share. Given the very high upside, we have a positive view of the Root IPO and we include this stock in our model portfolio. 

Root Inc IPO Valuation Analysis (Insurtech SaaS)

BigCommerce Holdings / Equity Capital Markets

BigCommerce Holdings (BIGC US) is a company with a SaaS platform that helps thousands of small and medium businesses to build online stores and it is preparing to complete an IPO on the NASDAQ exchange in the next few weeks.Similar to Shopify, BigCommerce's e-commerce platform helps customers to launch and expand their e-commerce stores and connect to popular online marketplaces and social networks. As of June 1, 2020, BuiltWith.com ranked BigCommerce the world’s second most-used SaaS ecommerce platform and top five overall among the top one million sites globally by traffic.Major investors of BigCommerce include SoftBank, Goldman Sachs, Revolution, General Catalyst, and GGV Capital.The company had sales of $112.1 million (up 22% YoY) in 2019 and $33.2 million (up 29.7% YoY) in 1Q 2020. The COVID-19 has helped the company's business to pick up in 1Q 2020 as more people spend more time at home and many of them try to start new e-commerce businesses using BigCommerce's platform. Operating losses increased slightly from $38 million in 2018 to $41 million in 2019. Operating loss as a percentage of revenue declined from -41.3% in 2018 to -36.6% in 2019. Operating loss as a percentage of revenue improved materially from -40.3% in 1Q 2019 to -22.5% in 1Q 2020.

BigCommerce Holdings (BIGC US) is a company with a SaaS platform that helps thousands of small and medium businesses to build online stores and it is preparing to complete an IPO on the NASDAQ exchange in the next few weeks.Similar to Shopify, BigCommerce's e-commerce platform helps customers to launch and expand their e-commerce stores and connect to popular online marketplaces and social networks. As of June 1, 2020, BuiltWith.com ranked BigCommerce the world’s second most-used SaaS ecommerce platform and top five overall among the top one million sites globally by traffic.Major investors of BigCommerce include SoftBank, Goldman Sachs, Revolution, General Catalyst, and GGV Capital.The company had sales of $112.1 million (up 22% YoY) in 2019 and $33.2 million (up 29.7% YoY) in 1Q 2020. The COVID-19 has helped the company's business to pick up in 1Q 2020 as more people spend more time at home and many of them try to start new e-commerce businesses using BigCommerce's platform. Operating losses increased slightly from $38 million in 2018 to $41 million in 2019. Operating loss as a percentage of revenue declined from -41.3% in 2018 to -36.6% in 2019. Operating loss as a percentage of revenue improved materially from -40.3% in 1Q 2019 to -22.5% in 1Q 2020. 

BigCommerce IPO Preview (A SaaS Competitor to Shopify)

nCino announced terms of its IPO including the price range of $22 to $24 per share. The company plans to offer 7.62 million shares and at the top end of the price range, the company would raise $182.4 million. nCino is expected to start trading on July 15th.<div class="content-highlight">
Our valuation analysis of nCino Tech suggests an implied market cap of $4.6 billion or $50.70 per share, representing a 111% upside to the high end of the IPO price range of $24 per share. Given the big upside, we rate this IPO as very attractive and we include this stock in our model portfolio. 
To value nCino Tech, we used a 20% discount P/S multiple of the peers in 2021 (16.2x). We then applied this 16.2x P/S multiple against our sales estimate of $282.8 million in 2021 (fiscal year ending Jan 2022) to derive a market cap of $4.6 billion. We then applied shares outstanding of 90.3 million (including greenshoe option) to derive implied price per share of $50.70.
Two major reasons why we applied a 20% lower valuation multiple than the peers is because the comps improved their operating margins slightly better than nCino in the past two years. We also took into consideration liquidity since, among the six comps, only one other company (Zuora) has lower market cap than nCino. We did not use an even lower valuation multiple since we like the fact that the company's organic sales growth remains solid. 
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nCino announced terms of its IPO including the price range of $22 to $24 per share. The company plans to offer 7.62 million shares and at the top end of the price range, the company would raise $182.4 million. nCino is expected to start trading on July 15th.
Our valuation analysis of nCino Tech suggests an implied market cap of $4.6 billion or $50.70 per share, representing a 111% upside to the high end of the IPO price range of $24 per share. Given the big upside, we rate this IPO as very attractive and we include this stock in our model portfolio. 
To value nCino Tech, we used a 20% discount P/S multiple of the peers in 2021 (16.2x). We then applied this 16.2x P/S multiple against our sales estimate of $282.8 million in 2021 (fiscal year ending Jan 2022) to derive a market cap of $4.6 billion. We then applied shares outstanding of 90.3 million (including greenshoe option) to derive implied price per share of $50.70.
Two major reasons why we applied a 20% lower valuation multiple than the peers is because the comps improved their operating margins slightly better than nCino in the past two years. We also took into consideration liquidity since, among the six comps, only one other company (Zuora) has lower market cap than nCino. We did not use an even lower valuation multiple since we like the fact that the company's organic sales growth remains solid. 


NCino IPO Valuation Analysis - A SaaS Company for Banks & Financial Institutions

United States

Blackbaud, Inc. provides software and related services designed specifically for non-profit organizations. The Company's products and services enable non-profit organizations to increase donations, reduce fundraising costs, improve communication with constituents, manage their finances, and optimize internal operations.

RingCentral, Inc. is a provider of software-as-a-service, or SaaS, solutions for business communications. The Company offers a multi-user, enterprise-grade communications solution that enables customers and their employees to communicate via voice, text, HD video and web conferencing and fax, on multiple devices, including smartphones, tablets, PCs and desk phones.

Rapid7, Inc. provides security data and analytic software solutions. The Company offers services to collect, contextualize, and analyze security data to reduce threat exposure and detect compromise in real-time.

ACI Worldwide, Inc. develops, markets, and supports software products for the global electronics funds transfer market.  The Company's products are used to process transactions involving credit cards, debit cards, smartcards, home banking services, checks, and automated clearing and settlement.

Workiva Inc. provides cloud-based and mobile-enabled platforms for enterprises. The Company offers software to collect, manage, report and analyze business data in real time.

BlackLine, Inc. develops and markets enterprise software. The Company offers cloud-based software that automates and manages complex, manual, and repetitive accounting processes. BlackLine serves customers in the United States.

Instructure Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, provides learning management system dedicated to elevating student success, amplifying the power of teaching, and inspiring everyone to learn together.

Appian Corporation develops enterprise software solutions. The Company offers business process and cash management software. Appian serves customers worldwide.

Varonis Systems, Inc. designs and develops data security software solutions. The Company offers data management systems to organize, manage, and protect unstructured and semi-structured data such as documents, spreadsheets, presentations, media files, and other business data. Varonis Systems operates worldwide.

Progress Software Corporation develops, markets, and distributes application development, deployment, and integration software to business, industry, and government worldwide.  The Company's products include databases, application servers, messaging servers, and development tools for Internet/Web, extranet, and intranet applications as well as for client/server and host applications.

Kingdee International Software Group Company Limited, through its subsidiaries, develops and sells enterprise management software, e-commerce application software and middleware software.  The Company also provides internet-based services and setting up e-commerce platforms for enterprises. In addition, Kingdee provides solution consulting and technical support services.

Kingsoft Corporation Ltd. develops and markets computer software.  The Company develops role-playing computer games and security, word processing, and spreadsheet software.

Technology One Limited is an Australian-based company that is engaged in the development, marketing, sales, implementation, support, and distribution of financial management and enterprise software solutions. The Company has operations in New Zealand, the United Kingdom, the South Pacific, and Malaysia.

Hundsun Technologies Inc develops application software for security firms, commercial banks, fund management firms, and other industries.  The Company also sells computer hardware and provides system integration services.

Beijing Venustech Inc. provides a variety of information security products, information security services and information security solutions.  The Company's products and services are intrusion detection systems, intrusion prevention systems, firewalls, real-time monitoring and security management certification training services.

NCSOFT Corporation develops and markets on-line games that enable users to play over the Internet and computer software, such as web editing software.  The Company also designs and constructs databases, Intranet, and commercial Internet access systems.

SQUARE ENIX HOLDINGS CO., LTD. develops and sells entertainment software for home video game consoles including Dragon Quest and Final Fantasy series. The Company also publishes books such as informational guide books for its game software, and comic magazines and books.  Additionally, Square Enix sells character goods and stationery items from its software products.

China National Software & Service Co., Ltd designs, develops, and integrates application software used for the taxation, railway telecommunication, military, commercial aviation, and financial industries.  The Company also designs Chinasoft Linux operating system and develops language conversion software to support Chinese, English, and Japanese

OBIC Business Consultants Co.,Ltd. develops and markets business solution packaged software. The Company's products include software for accounting, banking, wage calculation, sales management, inventory control, and tax calculation. OBIC Business Consultants Co Ltd. also provides support and training services.

FUJI SOFT INCORPORATED is an independent software developer, specializing in communications and machine control software, business application software for bank and insurance companies, and operating system software.  Fuji Soft also installs, manages, and maintains computer systems.  The Company develops and sells word processing packaged software and also provides internet service.

nCino, Inc. provides cloud banking solutions. The Company offers solutions to improves employee efficiency while enhancing the customer experience for onboarding, loans, and deposits across all lines of business. nCino serves customers worldwide.

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nCino (NCNO US)

nCino Inc.: Expansion into Consumer Lending Solutions Is A Key Growth Catalyst! - Major Drivers

nCino, an advanced cloud-based software for financial institutions, has reported its first quarter fiscal year 2025 financial results, showing a...

Baptista Research

nCino Inc: Initiation of Coverage – How nCino's Digital Solutions are Capturing the Financial Market! - Major Drivers

This is our first report on SaaS player, nCino Inc. The company's third quarter fiscal 2024 performance presented both opportunities and...

Baptista Research

Root Inc IPO Valuation Analysis (Insurtech SaaS)

Our base case valuation for Root is an implied market cap of $13.2 billion, or $52.1 per share, which is 108% higher than the high end of the IPO...

Douglas Kim

BigCommerce IPO Preview (A SaaS Competitor to Shopify)

BigCommerce Holdings (BIGC US) is a company with a SaaS platform that helps thousands of small and medium businesses to build online stores and it...

Douglas Kim

NCino IPO Valuation Analysis - A SaaS Company for Banks & Financial Institutions

nCino announced terms of its IPO including the price range of $22 to $24 per share. The company plans to offer 7.62 million shares and at the top...

Douglas Kim

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