Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

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

Vertex IPO Preview - A Tax Service SaaS Solution Provider

Equity Capital Markets

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Vertex (VERX US), a provider of tax software solutions, set the terms for its upcoming IPO. The company plans to offer<a href="https://www.marketwatch.com/story/tax-software-company-vertex-to-offer-212-million-shares-in-planned-ipo-priced-at-14-to-16-each-2020-07-20" target="_blank" rel="noopener"> 21.2 million shares</a> priced at $14 to $16 per share. If the underwriters exercise their greenshoe option, there will be a total of 23.8 million shares that will be offered. At the high end of the IPO price range, the company would be able to raise $339 million. At the mid-point of the IPO price range, the company would have an implied market cap of $2.3 billion. 
Our valuation analysis of Vertex suggests an implied market cap of $4.8 billion or $31.6 per share, representing a 111% upside to the mid-point of the current IPO price range of $15 per share.
To value Vertex, we used a P/S multiple of 10.9x (2021), which is a 40% discount to Avalara's P/S multiple of 18.1x (2021E). This also represents a 52% discount to the comps' average P/S multiple of 22.5x in 2021.
The global investors have been pouring enormous amounts of capital into the U.S. software sector (SaaS) recently as evidenced by strong recent performances of nCino (NCINO US) and <a href="https://www.smartkarma.com/entities/zoominfo-technologies" target="_blank" data-smartkarma-citation="entities:28879:1" rel="noopener">Zoominfo Technologies (ZI US)</a> and it appears that Vertex could once again become a big winner in the U.S. software sector. 
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Vertex (VERX US), a provider of tax software solutions, set the terms for its upcoming IPO. The company plans to offer 21.2 million shares priced at $14 to $16 per share. If the underwriters exercise their greenshoe option, there will be a total of 23.8 million shares that will be offered. At the high end of the IPO price range, the company would be able to raise $339 million. At the mid-point of the IPO price range, the company would have an implied market cap of $2.3 billion. 
Our valuation analysis of Vertex suggests an implied market cap of $4.8 billion or $31.6 per share, representing a 111% upside to the mid-point of the current IPO price range of $15 per share.
To value Vertex, we used a P/S multiple of 10.9x (2021), which is a 40% discount to Avalara's P/S multiple of 18.1x (2021E). This also represents a 52% discount to the comps' average P/S multiple of 22.5x in 2021.
The global investors have been pouring enormous amounts of capital into the U.S. software sector (SaaS) recently as evidenced by strong recent performances of nCino (NCINO US) and Zoominfo Technologies (ZI US) and it appears that Vertex could once again become a big winner in the U.S. software sector. 


Vertex Inc

Vertex IPO Valuation Analysis