As expected, fintech nCino has increased its IPO price range. The North Carolina-based banking software company now plans to sell its shares for between $ 28 and $ 29 per share, far more than its original price range of $ 22 to $ 24 per share.
At its price range of $ 28 to $ 29 per share, nCino is worth $ 2.50 billion to $ 2.59 billion, well above its previous range of 1.96 billion to $ 2.14 billion.
Valuation makes more sense for the company, given its growth rate, its revenue scale and the way the market currently values similar companies. As TipsClear wrote earlier this week, about the scale and value of the SaaS business (focus on ours):
Annualize the company’s income results in Q1 (period of April 30, 2020), NCino’s $ 178.9 million execution rate would give it a revenue multiple of 11x to 12x at expected introductory prices, a somewhat modest result according to current standards.
Indeed, as nCino increased by around 50% from Q1 2019 to Q1 2020, it seems slight. The company’s GAAP losses are also minimal compared to the revenues of a SaaS business, although the company’s operating cash consumption increased from $ 4.6 million in its fiscal year ending 31 January 2019 to $ 9 million in its next fiscal year. His numbers are generally good, with less than perfect results. However, given its growth rate, an 11x-12x income multiple seems modest; this figure increases, of course, if we use a vanishing income figure instead of our annualized figure.
It would therefore not be a shock if nCino aimed at a higher price range for its shares before proceeding to an official price.
With its new IPO price range, nCino’s implicit income multiple is now 14x to 14.5x, figures that seem much closer to current standards.
Now the question for nCino, which is expected to trade and trade next week, is whether it can set a price above its increased range. Given a recent historical precedent, a price of $ 1 per share above its high range would not be a shock.
nCino is one of two companies we are currently following on its way to public markets. The other is GoHealth, which is expected to be released around the same time. Expect next week to be packed with new IPOs. En route to the profit season, nothing less!