Israeli automatic software updating company JFrog today set terms for its Wall Street Initial Public Offering (IPO). In a revised prospectus the company reveals that the offering will reflect a company valuation of between $3 billion and $3.3 billion with shares priced in the $33-37 range.
DevOps company JFrog allows companies to regularly update all their software without interrupting ongoing work. Lead underwriters for the Nasdaq IPO are Morgan Stanley, J.P. Morgan, and Bank of America Securities while co-book-running managers are Piper Sandler, KeyBanc Capital Market, Stifel, Nicolaus & Co., William Blair, Oppenheimer, and Needham. JFrog will trade under the FROG ticker.
JFrog will raise $255 million, if the share price is in the middle of the proposed range with the net raise with options possibly amounting to $312 million. The company said it is offering 11.6 million shares to the public in the IPO, including 8 million shares from the company and 3.6 million shares from selling shareholders. The company's three founders CEO Shlomi Ben Haim, CTO Yoav Landman and chief data scientist Fred Simon, who set up the company in 2008, will be selling shares for about $50 million, while investment funds with stakes in JFrog will sell shares for about $37-38 million.
JFrog plans using the capital raised for general business purposes, working capital and possible acquisitions and investments in technologies and businesses.
Ben Haim is expected to sell 638,000 shares, which at $35 per share would amount to $22.3 million, and still leave him with a 5.8% stake in the company after the IPO. Landman will sell 500,000 shares for $17.5 million, and remain with an 8.3% stake, while Simon plans selling 300,000 shares for $10.5 million, leaving him with a 6.4% stake. Scale Ventures, which holds 10.7% before the IPO, will sell some of its stake for $38 million and Qumra Capital will reduce its stake from 5.2% to 3.5% for $36.6 million.
Other shareholders who are preferring not to sale in the IPO are Gemini (14.3%), Sapphire (9%), Insight Partners (8.9%) and Dell's investment fund (8.5%).
According to JFrog's prospectus, revenue grew 65% to $105 million in 2019, and revenue in the first half of 2020 was $69 million, up 50% from the corresponding period of 2019.
JFrog is still not profitable but its losses have been narrowing - from $26 million in 2018 to $5.4 million in 2019 and just $400,000 in the first half of 2020. This despite a sharp increase in expenditure, which rose 15% in 2019 and 40% in the first half of 2020. Marketing and sales expenditure rose 26% in 2019 and 41% in the first half of 2020, and R&D expenditure rose 15% in 2019 and 45% in the first half of 2020. There was a more moderate increase in management and general expenditure.
Published by Globes, Israel business news - en.globes.co.il - on September 8, 2020 © Copyright of Globes Publisher Itonut (1983) Ltd. 2020