IPO Outlook: ServiceSource... Sales in the Cloud (SREV)

ServiceSource International, LLC appears to be one step closer to its initial public offering.  The company has set terms for its IPO of 11,940,133 shares in a price range of $7.50 to $9.00 per share.  The company will be selling 8 million shares and the rest will be coming from existing holders.  Shares will trade under the “SREV” ticker on NASDAQ after the initial public offering.

When we looked into ServiceSource, it is in service revenue management by providing solutions that drive increased renewals of maintenance, support and subscription agreements for technology companies.

The company offers a suite of cloud applications and has a dedicated service sales team working under its customers’ brands and a proprietary service revenue intelligence platform.

As of December 31, 2010, the company managed over 100 engagements with more than 55 customers, which the company claims as representing more than $5 billion in service revenue opportunity under management.  During the years ended December 31, 2008, 2009 and 2010, the actual value of qualified end customer contracts delivered to it were $1.9 billion, $2.8 billion and $3.7 billion, respectively.  Revenues in those years for the company were listed as follows:

• $100.3 million in 2008,
• $110.7 million in 2009,
• and $152.9 million in 2010.

The underwriting syndicates is rather large when you consider the size of the company’s IPO.  Joint book-runners are Morgan Stanley and Deutsche Bank; other underwriters listed in the offering are William Blair, Lazard, Piper Jaffray, and JMP Securities.

At the mid-pint of its range, the company is set to sell slightly more in proceeds than the $75 million it first indicated in its late-2010 filing.

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JON C. OGG