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Hints of a hot market abound like Freshworks and Toast IPOs – TechCrunch
News that Klarna expects more favorable market conditions before going public, which was a bit strange yesterday. Today, the reluctance to go public seems downright odd. New pricing information for American Tech Unicorn Toast and Indian Tech Unicorn Freshworks indicates that the IPO market is more than welcoming.
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Toast has increased its IPO range and its price is above this increased range. Freshworks also raised its IPO price expectations and then was set abovethis set of price targets.
If you are looking for an indication that now is a good time to go public, this is what you need. Of course, the two companies have yet to start trading, but even a stable start would represent strong fundraising numbers and strong upward mobility in terms of valuation.
This morning we’re going to run the final numbers, figure out how much companies are worth and what those numbers say about start-up prices, especially in the payments space. And then we’ll end with one of the most humorous responses I’ve ever received from a startup executive. It sounds good ? Let’s talk about money.
Freshworks, Toast priced well
Toast initially targeted an IPO range of between $ 30 and $ 33 per share. The company then turned to an IPO price of $ 34 to $ 36 per share. He eventually sold 21,739,131 shares at $ 40 each, with its underwriters having the option of purchasing an additional 3,260,869 shares at its IPO price if they so wish. The company’s IPO fundraiser could be worth as much as $ 1.0 billion in its early days.
Freshworks has set its IPO price range between $ 28 and $ 32 per share. That didn’t last, with the customer support software company increasing its range to between $ 32 and $ 34 per share. Freshworks for $ 36 per share, by selling 28,500,000 shares with a bought deal option of 2,850,000 additional shares. The company’s IPO fundraiser could be worth as much as $ 1.1 billion.
Remind that Renaissance Capital Toast at $ 17.9 billion at $ 31.50 per share (the midpoint of its first IPO range) and Freshworks at $ 9.6 billion at $ 30 per share (again, the point median of its first IPO price interval), both calculated with fully number of diluted shares. Simple math says Toast is worth around $ 22.7 billion at its IPO price, and Freshworks at $ 11.5 billion, again using the fully diluted number of shares.
You will see lower numbers, probably calculated using a simple – more conservative – number of actions. These are also valid.
In terms of multiple revenues, the final IPO prices of Toast and Freshworks are good news for companies. With $ 424.7 million in revenue in the second quarter, Toast is worth 13.4 times its annual run rate. Freshworks is worth 32.5 times its own execution rate. The differential we see there is the difference between the business models of the two companies. Toast is a majority payments / fintech company, while Freshworks is a more pure SaaS company. SaaS has higher gross margins than payments revenue – and is stickier (i.e. recurring) than transaction revenue. Thus, he obtains a higher multiple.
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