The decision to go public is a huge one for any company, but many tech companies eventually do so in order to raise cash.
The Digital 100 features a number of large ventures headed for IPO.
From Facebook and Groupon to Twitter and Tumblr, we know the huge companies who are schedule to IPO and those who will soon.
Despite a report to the contrary, our sources tell us Facebook is still planning a spring IPO in 2012.
Our analysis: Even though revenue numbers leaked earlier this year were lower than expected, Facebook is still growing very rapidly. An anonymous source told Reuters that Facebook earned $500 million on $1.6 billion in revenue during the first half of 2011. That's about twice as much as it earned and booked during the first half of 2010.
Shares are trading as high as $80 billion on Sharespost, at approximately the same level where they've been trading for the past 6 months. This is about ~60X this year's projected earnings and 20X revenue. These are high multiples, and for this valuation to be sustained, the company will have to continue to grow extremely rapidly.
Zynga filed its S1 in July, and has been pretty quiet since. It should be hitting the markets soon.
Our analysis: Zynga has established itself as the standout leader in social gaming. CityVille alone has more than 100 million daily active users. Empires and Allies, which was release this summer, gained 10 million users in 9 days.
The company is on track to generate about $1.5 billion of revenue this year (extrapolating from its S-1 filing), from a combination of ads and virtual goods. This is up from $597 million last year. The company's operating profit on this revenue is still low--about 10% of revenue--but this margin will presumably expand as the company gains scale. We use a multiple of 7X revenue and arrive at a valuation of about $11 billion.
Zynga lives primarily on social networks like Facebook where people are spending incredible amounts of time. Finally the virtual goods model is a high-margin business. Shares are trading as high as $11 billion on Sharespost.
Groupon has seen its fair share of controversy since filing its S1 to go public. Its losses are shocking, and if it doesn't raise money through the public markets, it will be in serious trouble. But, the company is on pace to do just that in the next few weeks.
Our analysis: Groupon began the year strong when it turned down a $6 billion buyout offer from Google in December. Since then its road to an IPO has been bumpy. The SEC was investigating the company after a detailed memo about its business was leaked to the press during the 'quiet period,' but now the IPO roadshow is said to be back on.
Given the company's market lead and continued user growth, we give Groupon a 3-4X multiple on revenue for a valuation of $10 billion. Shares have sold at a valuation as high as $14.9 billion on Sharespost.
Kayak is not growing as fast as some of the other companies on this list, but it has a proven business model and steady increases in revenue.
Our analysis: Kayak's business model, which charges travel providers per click referral, is a high-margin business and the company is gearing up for an IPO.
According to its S-1 filing, Kayak is on track to generate revenue of about $200 million this year, up from $170 million last year.
Twitter just raised $800 million, but the company is growing so fast it should be ready to IPO soon enough, especially if market conditions improve.
Our analysis: Back in 2009, Morgan Stanley contributed $10 million to a $100 million round, giving the investment bank an in when Twitter decided to go public (and Twitter's executives a way to land free advice). The company boasts an $8 billion valuation and is reportedly generating $150 million in revenue this year.
They raised two massive rounds this summer, but a lot of that cash went toward paying employees. There is still plenty in the bank but an IPO can't be that far off.
The free Internet sharing service exploded over the past 12 months and saw its valuation skyrocket.
Our analysis: Before Dropbox raised a round this summer, rumours pegged the value at $8 billion. The company closed the Index Ventures-led round at a $4 billion valuation. Tough market conditions lowered the figure (although there are rumours Dropbox wanted to pick and choose its investors and settled to do so).
The world is only going to need more storage as online video grows. Dropbox's costs are always going to go down, because cloud computing costs are always getting cheaper. On the revenue side, Dropbox's revenues are always going to go up. It's a freemium business model, and freemiums works best when the value of the services go up over time. Most people won't pay to back up a few files on Dropbox. They'll pay to store them all.
Living Social is the second-biggest player in the daily deals market.
Our analysis: LivingSocial is a group buying platform that invites users to local attractions in major cities at deeply discounted rates (usually between 50-80% off). LivingSocial is on track to generate revenue of $1 billion in 2011, which is still significantly less than market-leader Groupon. Using the same 3X revenue multiple we gave Groupon, we give LivingSocial a $3 billion valuation.
Roughly $200 million of the $400 million the company raised in April 2011 went into the company's coffers. They will learn a lot about the market conditions from Groupon's IPO experience.
David Karp's vision became a massive cultural phenomenon in 2010 with over 13 billion pageviews per month.
Our analysis: Tumblr raised $85 million at an $800 million valuation. They won't need cash for a a while - and aren't likely to file an S-1 soon, especially if they don't figure out how to increase revenue - but the surging growth makes them a business to watch.
Jack Dorsey's newest company made a huge valuation leap in 2010 and is now worth around $1.6 billion.
Our analysis: Square is getting used by more and more small businesses, but it is still largely unprofitable. The New York Times reports, 'Square is on track to notch gross revenue of about $40 million. But its adjusted operating income is expected to be in the red, at negative $20 million. The hope is for Square to reach profitability in 2012 with gross revenue of at least $200 million.'
An IPO is not coming in the near future, but it's certainly a target down the road. If Dorsey can gain scale, Square's potential is enormous.
This time last year, almost no one had heard of the short-term apartment rental service. Today, it's worth more than $1 billion.
Our analysis: Airbnb is a short-term apartment rental service. The company raised $112 million in July, but Airbnb is not without its issues. Users have publicly complained about their apartments being destroyed by other Airbnb users. Reports suggest that Airbnb will do north of $500 million of gross merchandise sales in 2011, and book net revenue of about 5% of that.
Airbnb has plenty of work to do before (if) it goes public, but the structure is there. They have a real business model and a huge leg up on any competition.
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