Carbonite Slashes IPO Price (CARB)

Carbonite, Inc. has filed its eighth amendment to its S-1 filing to come public.  It was just on August 1 that we had financial terms set at 5.4 million shares of common stock in a price range of $15.00 to $17.00 per share.  IPOs are usually not immune to the woes of the financial markets and it turns out that Carbonite is not immune either.

The IPO terms have now been adjusted due to market conditions: The offering is 6.25 million shares, broken down as being 5,366,473 shares being sold by the company and 883,527 shares offered by the selling stockholders.  The new price range has been slashed down to $10.00 to $11.00 per share.

Carbonite remains one of our Top 17 IPOs to Watch in 2011 and frankly this may just make Carbonite a better price entry for IPO buyers.  Our take is that a broader economic slowdown won’t leave Carbonite unscathed, but any customer delays are likely just delays rather than outright rejections even in an environment of fierce online storage and data back-up competition.

The company also noted, “Entities affiliated with Menlo Ventures (“Menlo Ventures”) and entities affiliated with Crosslink Capital (“Crosslink Capital”) have expressed an interest in purchasing up to 800,000 and 1,200,000 shares, respectively, of our common stock being offered in this offering for investment purposes. As of June 30, 2011, Menlo Ventures and Crosslink Capital beneficially owned 31.6% and 5.7%, respectively, of our common shares prior to this offering.”

BofA Merrill Lynch and J.P. Morgan are the book-runners of the IPO and co-managers are listed as follows: William Blair & Company; Canaccord Genuity; Oppenheimer & Co.; and Pacific Crest.

The company’s flagship consumer product is a $59 flat fee for one year of unlimited online backup.  It also introduced a small to mid-sized businesses in 2010.  As of June 30, 2011, Carbonite claims more than 1.1 million consumer and SMB subscribers in over 100 countries.

The company also generated revenue of $38.6 million and $27.2 million in 2010 and the six months ended June 30, 2011, respectively; but net losses were $25.8 million and $10.0 million in the same periods. Bookings have grown from $14.1 million in 2008 to $54.1 million in 2010.

Carbonite will have 24,000,105 shares outstanding after the offering, or 24,937,605 shares outstanding if the underwriters exercise their overallotment option in full.

At the top of the range, Carbonite’s implied market cap is nearly $275 million if the overallotment option is used.

JON C. OGG