SAAS

Upcoming Indian Unicorns: E-Commerce Startups with a Potential for Billion Dollar Valuation

by Sandeep Kumar

In India, around 48 startups have already made it to the unicorn club, as per CB Insights data. Well over $38.4 Bn has been raised till December 4th this year, with several of the rounds producing Indian unicorns in 2021. India will manage to get more than 100 unicorns by 2022, much earlier than the previewed estimation of 2023 reports in the past. The pace with which these companies are gaining valuations is truly remarkable. India’s pace of unicorn growth has surpassed that of China. The Indian economy is capitalizing on a host of international and national factors that are expected to create many more such companies.

We aim to identify and bring out such companies at an early stage so that the secondary’s investors can churn out greater returns. In this edition of Indian Soonicorns, we bring out some companies in the E-Commerce space that have complete potential to reach the billion-dollar mark in the future.

The Indian e-commerce industry has been on an upward growth trajectory

Let us now have a look at potential soonicorns that are likely to give high returns to their investors in the longer run.

1. Pepperfry

Rationale: Pepperfry is an online furniture and home décor shopping store. Pepperfry’s platform has expanded into both online and offline business. The company expects to be in the unicorn club soon in terms of valuation before IPO hits the market for 12 months. The total revenue increased by 27% to $33 Mn in FY20 as the brand has reached close to profitability last year, company’s focus has shifted from achieving profitability to becoming a high-growth company. Despite the intense rivalry it has experienced among all the other platforms researching this area, the online e-commerce company has managed to create a key position in the future industry’s market.

2. Freshtohome

Rationale: Freshtohome is a leader in leveraging AI-based technology and business innovation to bring a superior value proposition to customers and suppliers in a large market. The start-up, which clocked an annual recurring revenue of $85 Mn in FY20, aimed to hit $200 Mn in FY21. Freshtohome manages to sell nearly 10K tones of produce per year and has close to selling 95% qualified cohort retention and doubling every year. It has 12 lakh registered users. The pandemic helped accelerate the online purchase of meat products as consumers took to branded packaged items.

3. Trell

Rationale: Trell is a social-commerce platform for discovering lifestyles through videos in Indian Languages. It enables people to create visual collections of their lifestyle experiences. The social commerce platform has more than 100 Mn downloads and over 50 Mn monthly active users on its app. The start-up is in talks to raise $100 Mn funding, which could value the company between $600 and $800 Mn. A huge majority of people are unable to discover relevant material in their native language. Trell enters the picture at this point.

4. Magicpin

Rationale: Magicpin drives discovery to local retailers across various industries such as fashion, food & beverage, and grocery establishments. The company had a decent financial performance as it recorded a 2.6X jump in its turnover with a revenue of $28 Mn in FY20. It claims to be making $1 Bn in annual sales for its clients of 15 lakh merchants. The company haS a user base of more than 5 Mn and has expanded its footprints to around 200 cities in India. Magicpin also runs a SaaS product Orderhere.io where it helps merchants to go online in a few minutes. The product also provides logistic support through third-party logistics companies.

5. DealShare

Rationale: DealShare is an inventory-led platform that manages the supply chain and logistics in bigger cities. The start-up is in talks with new and existing investors to raise a fresh round at over $1.7 Bn valuation, which will be a more than 2.5X jump in the company’s valuation. DealShare has recorded a seven times growth YoY as its current GMV run rate is $40 Mn per annum, and is expecting top to reach $928 Mn by the year 2024. Currently, it operates in 40 cities of five states and has 20 warehouses. It will increase its footprints to 100 cities and 10 states and also build 200 warehouses by end of this year.

6. Mamaearth

Rationale: Gurugram-based startup Mamaearth is one of the most valued new-age D2C personal care brands that began with a focus on baby-care products, but has pivoted to become a personal care brand. The startup has expanded its product line by introducing 12 products at the beginning of 2020, which led to a 3.7X jump in the company’s total sales of around $66 Mn in FY21 as compared to the previous year’s $14 Mn, and is planning to double the sales by 100% this year. Its current revenue rate is around $100 Mn and is expected to have clock revenue of $265 Mn over the next three years.

India’s Potential to be a Game Changer in the E-Commerce Sector

If you are an investor interested in getting access to these and similar opportunities. Please reach out to us for understanding the investment process better. If you are a shareholder or an ESOP holder of such a company and are looking for liquidity solutions, feel free to connect with us as well. Our platform will provide you with seamless financing and investment journey. Follow us for more such updates.

. . . 

This article has been co-authored Vivek Kumar who is in the Research and Insights team of Torre Capital.

For exclusive information about additional research and insights by our Analysts, kindly subscribe to Torre Capital’s Blog.

If you are an investor or shareholder and want more advice about the Pre-IPO secondary markets, please feel free to reach out at [email protected] for investment advice, or register for an account at Torre Capital.

Upcoming Indian Unicorns: Logistics Startups Driving Towards Growth

by Sandeep Kumar

In India, over 72 startups have gained unicorn status as of November 2021. The count of these billion-dollar companies is expected to reach a total of 76, by the end of the year 2021. Unicorns in the country are currently valued at $168 Bn approximately. The pace with which these companies are gaining valuations is truly remarkable. India’s pace of unicorn growth has surpassed that of China. The Indian economy is capitalizing on a host of international and national factors that are expected to create many more such companies.

We aim to identify and bring out such companies at an early stage so that the secondary’s investors can churn out greater returns. In this edition of Indian Soonicorns, we bring out some companies in the logistics space that have complete potential to reach the billion-dollar mark in the future.

A Hope for Growth in a Highly Fragmented Logistics Market

The size of the Indian logistics industry is estimated to be about $215 Bn, growing at a CAGR of 10.5%. Even though the market is highly fragmented with a large number of organized players, companies are working to make a mark in the industry through the adoption of technology such as Artificial Intelligence, Internet of Things, automation, cloud computing, blockchain, etc. In 2020, the Indian logistics tech market secured over $460 Mn investments, despite the pandemic. Delhivery is one of the successful logistics startups that is looking forward to go public through an IPO this year.

Let us have a look at potential soonicorns that are likely to give high returns to their investors in the longer run.

1. FarEye

Rationale: FarEye, an Indian SaaS start-up that helps firms globally optimize their supply chain and logistics operations and process over 100 Mn transactions each month. The start-up works with over 150 e-commerce and delivery companies globally, including popular names such as Walmart, UPS, DHL, Domino’s, and Amway. The company clocked 280% growth for the FY21 compared to the previous year and 78% of the revenue comes from the market outside India. FarEye has raised a new financing round, it’s third since the pandemic broke last year. The new capital will be used to expand its software platform capabilities, drive expansion in Europe and North America, and explore inorganic growth opportunities.

2. Locus.sh

Rationale: Locus is an intelligent decision-making and automation platform for logistics. It uses deep ML and proprietary algorithms to offer supply-chain solutions. The start-up operates in North America, South Asia, Europe, and the Indian subcontinent, says it has helped its customers save over $150 Mn in logistics costs. The platform is popular among GMGC, retail, and e-commerce firms as well as distribution partners. The company is aiming for a revenue potential of $3–5 Bn between 2023 to 2025 and will be focusing to improve its geographic reach and build its R&D team to expand its product line.

3. Xpressbees

Rationale: They are the fastest-growing express logistics service provider in India catering to end-to-end supply chain solutions. Their logistic solutions across B2B, BTC, Cross-border, and the third party comes with an edge of speed, accuracy, and scalability. It has grown 4X in the last three financial years, from FY18 to FY21. Xpressbees presently has over 100 hubs across India, a storage capacity of 10 lakh sqft, and 52 cargo airports. Fully automated, technology-driven workflows and material movement procedures are used in 75% of Xpressbees’ operations. The team is now working on AI/ML technologies to develop the next generation of smart and intelligent systems.

4. ElasticRun

Rationale: The Pune-based ElasticRun develops an online system that improves the reception of orders from customers and the dispatch of delivery drivers. According to The Economic Times, its current revenue rate is around $350 Mn and is expected to cross $1 Bn over the next 6 months. The company’s focus on using deep technology to address the need for commerce marketplaces has helped them scale rapidly, delivery much broader distribution for consumer product brands, while also creating a level playing field for Kirana stores, given them parity with competing e-commerce players in terms of reach and product selection.

5. Porter

Rationale: Porter offers an end-to-end logistics platform that helps businesses with last mile and first mile deliveries. It helps its customers save on logistics costs and provides support services such as on-demand transportation, real-time visibility, supply chain management. It is said to be one of the only logistics models that is 100% asset-light. The intra-city logistics company that saw a 5x valuation growth in its last funding round, is looking forward to expand its operation to enter the top 35 cities of India by 2023.

6. LEAP India

Rationale: LEAP India provides integrated, end-to-end customized pooling solutions to its customers. The company’s consolidated revenue in FY20 was marked at about $23 Mn and has been estimated to be grown at a CAGR of 47% during FY17 — FY20. According to India Ratings and Research, the company has a fairly stable investment outlook with a rating of ‘IND BBB+’. With only a few players in the palletisation sector, LEAP India is already a leader in the country, having a market share of over 70%.

Logistics Gaining Investors Interest to Seek Higher Valuation

The initial months of the pandemic did slow down the sector, however, it has started to gain momentum. The large but fragmented logistics sector is emerging as a trustable opportunity for investors. The digital transformation that has come up recently is reviving the $200 Bn logistics industry in India, and more so as these startups are keen on using technology to bring down the logistics costs in the country. With greater government support on infrastructure and an expected rise in the B2C and B2B trade in the coming years, logistics companies are set to grow. The third-party logistics segment alone is expected to experience growth by $10.74 Bn during 2021–2024. With investors’ money, the logistics space will become more robust in the near future. We try to spot some startups in this space that are soon expected to join the likes of Delhivery, Rivigo, and Blackbuck.

If you are an investor interested in getting access to these and similar opportunities, please reach out to us for understanding the investment process better. If you are a shareholder or an ESOP holder of any such company and are looking for liquidity solutions, feel free to connect with us as well. Our platform will provide you with seamless financing and investment journey. Follow us for more such updates.

– — –

This article has been co-authored Tamanna Kapur and Vivek Kumar who is in the Research and Insights team of Torre Capital.

Upcoming Indian Unicorns: Healthcare Startups that are Showing Potential to Achieve Greater Valuation

by Sandeep Kumar

Keep up to date with the latest research

India has been emerging as the startup hub all across the world. From a time when India produced one unicorn per year during the period 2011–2014, the country has produced 34 unicorns in 2021 alone! The count is highest ever for the country and shows no sign of stopping. The growing trend of unicorns is indicative of growing interest and faith of global VCs and investors in the Indian startups. The most recent startup to gain the unicorn status is the insurtech company, Acko, which witnessed its valuation increasing from $400 Mn to $1.1 Bn in its recent funding round.

Early identification of such unicorns can increase the investors’ returns manifold. Through this article we fetch out the potential soonicorns in the healthcare sector that are expected to soon enter the unicorn club and provide great returns as their valuations would soar high in the future.

Growth of Healthcare Sector Post Pandemic

The Covid-19 pandemic has caused a havoc across the world. In times like these people have realised the importance of health. As a result of the pandemic, the healthcare sector in India has witnessed a boost, especially in its digital transformation. Indian healthcare startups have attracted more funding than ever, over the last year. Compared to total of $316 Mn raised by the sector in the year 2020, this year healthcare startups have raised $1.3 Bn over 69 deals as of 6 August 2021. It is estimated that the HealthTech market in India will reach $5 Bn by 2023, growing at a CAGR of 39%. Digital shift, use of better technology, and favourable government policies are facilitating the growth of the market.

Earlier this year, Pharmeasy became a unicorn, bagging a valuation close to$1.5 Bn. Now the online pharmacy is planning to go public soon, eyeing a valuation of about $7 Bn through its IPO. We analyse more such healthcare startups that have the potential to achieve unicorn status in the future, and can earn high valuations in the long run.

1. Pristyn Care

Rationale: Pristyn differentiates itself from hospital chains by offering end-to-end services including diagnostic assistance, health insurance claim processing, hospital paperwork, cab pick-up and drop-off for surgery, prescription delivery at home, and a free post-surgery consultation. After the pandemic and subsequent lockdowns wreaked havoc on the healthcare industry, Pristyn turned to telemedicine and online consultations to restore its surgery division. The startup is in talks to raise $90-$110 million from investors such as Sequoia Capital US and others, valuing the company at $1.2-$1.4 Bn. They wanted to make an ecosystem that can organise the world of daycare procedures by utilising technology and a set of basic yet powerful processes and activities.

2. Cure.fit

Rationale: Cure.fit is a health and fitness company offering digital and offline experiences across fitness, nutrition, and mental well-being. The start-up which has made 6 acquisitions so far, has spun off its health food vertical — Eat.fit, as an independent entity to cater to growing consumer demand from the cloud kitchen delivery sector. Cure.fit is targeting to have 10 lakhs subscribers on its platform by Dec 2021. Partnership with Tata Digital will significantly accelerate CureFit’s growth as a fitness & wellness leader and will open up access to a large set of new consumers.

3. HealthifyMe

Rationale: HealthifyMe was developed and launched by a team of doctors, nutritionists, and fitness trainers in 2012. HealthifyMe uses a combination of software, wearable devices, and fitness trainer to help people reach their fitness goals. It claims to be used by over 25 Mn users and has 1,500 coaches across India and Southeast Asia. They are slated to cross $50 Mn in their annualized run rate revenue by this coming January and are on track to touch the $400 Mn revenue run rate by the end of 2025. The COVID-19 pandemic has helped people realise the importance of staying fit and maintaining a healthy lifestyle.

4. La Renon

Rationale: Ahmedabad-based La Renon is a global healthcare company. It is founded and managed by a group of professionals of varied domains of the healthcare industry itself who have got vast experience with unmatched expertise. The new-age pharma company has been attracting private equity interest. La Renon become one of the top 40 pharmaceutical companies in India. It has been ranked 34th in the market with a promising growth rate with a CAGR of 70%. The company is planning to expand the business into other chronic segments and in the manufacturing of critical Active Pharmaceutical Ingredients. Despite the presence of global peers, the opportunity in the segment is huge.

5. Practo

Rationale: Practo has evolved from a SaaS website to one that charts a patient’s whole path, from scheduling an appointment to locating a lab, having a second opinion, prescription reminders, and finally bringing medicine to the patient’s door. It is now available in 20 countries. Every year, 18 Cr patients use the app, which has over one lakh doctors on board and 70 K clinics and hospitals as partners. Practo plans to introduce surgery support to diversify its revenue and create new moats. Though telemedicine usage has been small thus far, India has seen some recent development due to the pandemic, Practo being a lead in the field.

6. Stelis Biopharma

Rationale: Stelis Biopharma is a fully integrated biopharmaceutical contract development and manufacturing company. Given the health crisis around the world due to the pandemic, the company is experiencing strong customer traction and is working to ramp up its CDMO business and enhance its process development and other capabilities. Stelis Biopharma is looking forward to produce upto 800 million doses of vaccines annually, including Covid-19 vaccines. With some really important contract, like the one for Sputnik V, Stelis Biopharma has entered into its growth stage.

7. MFine

Rationale: MFine provides an AI-powered healthtech platform for on-demand, virtual consultations with doctor. It also offers services such as booking routine lab tests, medicine delivery, and comprehensive wealth packages. The company has served over 3 million users since its inception, and monthly transactions crossing over 300,000. Apart from individual users, MFine also partners with over 500 corporates. Despite significant growth in revenue in the recent years, the company’s expenses have increased which shall be used to enhance its technology and services. With its plan to introduce insurance service, MFine is working to all health related needs under one platform.

Growing Market and High Future Returns

Since the pandemic and series of lockdown, a large number of people have been dependent on some of these healthcare platforms. Its growing market very well explains the growing valuations of such healthcare startups. An early identification, can help investors to reap great returns as these companies reach the later stage of its operations.

The growth of the unicorns in India has just started, and it is heartening to see such growth as it creates an environment for others to innovate and perform better. We will continue to bring forward such potential startups to your notice. If you are a shareholder or an ESOP holder of any such company, looking for liquidity solutions, feel free to connect with Torre Capital. Our platform will provide you with seamless financing and investment journey. Follow us for more such updates.

         . . . . 

This article has been co-authored Tamanna Kapur and Vivek Kumar who is in the Research and Insights team of Torre Capital.

Keep up to date with the latest research

Upcoming Indian Unicorns: E-Commerce Startups with a Potential for Billion Dollar Valuation

by Sandeep Kumar

In India, around 48 startups have already made it to the unicorn club, as per CB Insights data. Well over $38.4 Bn has been raised till December 4th this year, with several of the rounds producing Indian unicorns in 2021. India will manage to get more than 100 unicorns by 2022, much earlier than the previewed estimation of 2023 reports in the past. The pace with which these companies are gaining valuations is truly remarkable. India’s pace of unicorn growth has surpassed that of China. The Indian economy is capitalizing on a host of international and national factors that are expected to create many more such companies.

We aim to identify and bring out such companies at an early stage so that the secondary’s investors can churn out greater returns. In this edition of Indian Soonicorns, we bring out some companies in the E-Commerce space that have complete potential to reach the billion-dollar mark in the future.

The Indian e-commerce industry has been on an upward growth trajectory

Let us now have a look at potential soonicorns that are likely to give high returns to their investors in the longer run.

1. Pepperfry

Rationale: Pepperfry is an online furniture and home décor shopping store. Pepperfry’s platform has expanded into both online and offline business. The company expects to be in the unicorn club soon in terms of valuation before IPO hits the market for 12 months. The total revenue increased by 27% to $33 Mn in FY20 as the brand has reached close to profitability last year, company’s focus has shifted from achieving profitability to becoming a high-growth company. Despite the intense rivalry it has experienced among all the other platforms researching this area, the online e-commerce company has managed to create a key position in the future industry’s market.

2. Freshtohome

Rationale: Freshtohome is a leader in leveraging AI-based technology and business innovation to bring a superior value proposition to customers and suppliers in a large market. The start-up, which clocked an annual recurring revenue of $85 Mn in FY20, aimed to hit $200 Mn in FY21. Freshtohome manages to sell nearly 10K tones of produce per year and has close to selling 95% qualified cohort retention and doubling every year. It has 12 lakh registered users. The pandemic helped accelerate the online purchase of meat products as consumers took to branded packaged items.

3. Trell

Rationale: Trell is a social-commerce platform for discovering lifestyles through videos in Indian Languages. It enables people to create visual collections of their lifestyle experiences. The social commerce platform has more than 100 Mn downloads and over 50 Mn monthly active users on its app. The start-up is in talks to raise $100 Mn funding, which could value the company between $600 and $800 Mn. A huge majority of people are unable to discover relevant material in their native language. Trell enters the picture at this point.

4. Magicpin

Rationale: Magicpin drives discovery to local retailers across various industries such as fashion, food & beverage, and grocery establishments. The company had a decent financial performance as it recorded a 2.6X jump in its turnover with a revenue of $28 Mn in FY20. It claims to be making $1 Bn in annual sales for its clients of 15 lakh merchants. The company haS a user base of more than 5 Mn and has expanded its footprints to around 200 cities in India. Magicpin also runs a SaaS product Orderhere.io where it helps merchants to go online in a few minutes. The product also provides logistic support through third-party logistics companies.

5. DealShare

Rationale: DealShare is an inventory-led platform that manages the supply chain and logistics in bigger cities. The start-up is in talks with new and existing investors to raise a fresh round at over $1.7 Bn valuation, which will be a more than 2.5X jump in the company’s valuation. DealShare has recorded a seven times growth YoY as its current GMV run rate is $40 Mn per annum, and is expecting top to reach $928 Mn by the year 2024. Currently, it operates in 40 cities of five states and has 20 warehouses. It will increase its footprints to 100 cities and 10 states and also build 200 warehouses by end of this year.

6. Mamaearth

Rationale: Gurugram-based startup Mamaearth is one of the most valued new-age D2C personal care brands that began with a focus on baby-care products, but has pivoted to become a personal care brand. The startup has expanded its product line by introducing 12 products at the beginning of 2020, which led to a 3.7X jump in the company’s total sales of around $66 Mn in FY21 as compared to the previous year’s $14 Mn, and is planning to double the sales by 100% this year. Its current revenue rate is around $100 Mn and is expected to have clock revenue of $265 Mn over the next three years.

India’s Potential to be a Game Changer in the E-Commerce Sector

If you are an investor interested in getting access to these and similar opportunities. Please reach out to us for understanding the investment process better. If you are a shareholder or an ESOP holder of such a company and are looking for liquidity solutions, feel free to connect with us as well. Our platform will provide you with seamless financing and investment journey. Follow us for more such updates.

. . . 

This article has been co-authored Vivek Kumar who is in the Research and Insights team of Torre Capital.

For exclusive information about additional research and insights by our Analysts, kindly subscribe to Torre Capital’s Blog.

If you are an investor or shareholder and want more advice about the Pre-IPO secondary markets, please feel free to reach out at [email protected] for investment advice, or register for an account at Torre Capital.

UiPath: On the Path to a Blockbuster IPO?

by Sandeep Kumar

Keep up to date with the latest research

UiPath is a pioneer of the Robotic Process Automation industry. The company filed its first S-1/A this week, setting an initial price range for its shares. Shares are going to be listed in the price range of $52 — $54 bringing the valuation to $26.90 Bn — $27.90 Bn. It is all set to launch the IPO under the ticker ‘PATH’ on the New York Stock Exchange.

Incorporated in 2015 and headquartered in New York, UiPath develops computerized workflows to build, manage, measure, and engage with processes. Customers benefit from the platform’s innovative capabilities by eliminating work spent on time-consuming, repetitive, and tedious tasks.

The company’s products have become increasingly attractive for companies looking to boost productivity. This is especially true amid the global pandemic that has enforced technology and automation adoptions. The demand is much higher than initially expected. This has been driving the demand for IPO and the investors are bullish on the ‘PATH’ stock.

Company Snapshot 

  • Annualised Renewal Rate (ARR): $580 Mn
  • Annualised Renewal Rate growth Yoy: 65%
  • Total Customers: 7,968
  • Customers ≥ $100k
  • ARR: 1002
  • Dollar based net retention rate: 145%
  • Net Loss: $92 Mn

So how does UiPath make money?

Product Offering: The end-to-end platform provides a whole range of robotic process automation via a suite of interrelated software offerings. The flagship product offering, the UiPath Studio is an easy to use, drag-and-drop development platform designed for RPA developers engineering complex process automation. Other offerings include the UiPath Robot which emulates human behavior to execute the processes built-in Studio and the UiPath Orchestrator that tracks and logs Robot activity.

Market Model: UiPath has an efficient go-to-market model, which consists primarily of an enterprise field sales force supplemented by a high velocity inside sales team focused on small and mid-sized customers, as well as a global strategic sales team focused on the largest global customers.

Revenue Model: UiPath generates revenue from the sale of licenses for its proprietary software, its maintenance and support, and professional services. The license fees are based primarily on the number of users who access the software and the number of automation running on their platform. The license agreements have annual terms, and/or multi-year terms. Additionally, UiPath provides maintenance and support for its software as well as non-recurring professional services such as training and implementation services.

 

 

License (57% of revenue): UiPath’s primary business model is selling licenses through annual and multi-year subscription contracts. Being 57% of its business it shows a vibrant business model and the right product mix which is well received by the market.

Maintenance and Support (38% of revenue): The relatively large amount of maintenance and support revenue suggests that the customer base is being retained.

Services (<5% of revenue): A small part of its business is customer education and technical services likely around their UiPath academy.

UiPath’s Road to Dominance

UiPath is at the forefront of technology innovation and thought leadership in automation.

Companies such as UiPath have two ways to grow: either blasting through the market and acquiring more and more customers or be more docile and focus more on retention than expansion. UiPath chose the former. The company expanded internationally very early on, acquiring more and more customers from different nations. The growth was absolutely out of control.

Surprisingly, this does not mean that UiPath compromised on customer retention, the killer of all SaaS companies. UiPath managed to find the middle ground between blatant expansion and customer retention. The S-1 reveals an extremely high 96% “gross retention rate” and a dollar-based net retention rate of 145%. So, this says UiPath’s existing customers are spending more with the company and also sticking with it.

The Robotic Process Automation Landscape

According to an estimate by Bain & Company the size of the market for automation software will grow to approximately $65 Bn.

The market for automation is super-hot right now with the COVID pandemic making automation a dire necessity. UiPath is the clear market leader in this category. The S-1 puts their Total Addressable Market (TAM) at $60 Bn. Pre pandemic this figure stood at $30 Bn. Double the market size, in just under a year. That’s some serious growth.

It is clear that UiPath wishes to tap into the red-hot IPO market and rightly so. It needs to pad its balance sheet with as much cash as it can muster for the massive opportunity and the competitor risk it faces ranging from its peers such as Automation Anywhere to the giants like Microsoft. The principal purposes of this offering are to increase its capitalization and financial flexibility.

This is data from the Brookings Institution and the Organization for Economic Co-Development that depicts productivity statistics for the U.S. The smaller charts on the right are for Germany and Japan.

                                  Source: Brookings Institution and the Organization for Economic Co-Development 

The US showed productivity growth in ’95-’04, but that slacked off later. Similar is the case with Germany and Japan where the productivity levels have been falling continuously.

Humans are slowly reaching the very limit of what they can do alone to solve the most pressing challenges around the globe. Automation is what can free up labor and divert human intelligence and creativity into more engaging and worthwhile problems. The market is ready for automation and the post-pandemic world will witness never seen before levels of automation. 

Key Industry Risks

  • Barriers to Entry: Robotic process automation is very difficult to implement and therefore many organizations will not able to implement it thereby affecting the industry growth.
  • Sustainability: Any automation, no matter how advanced is not capable of perfectly emulating human behavior.
  • Affordability: The entire automation process is a costly proposition and affordability is an issue.

Key Company Risks

  • Growth Opportunity: The revenue growth rate of above 80% YoY may not be sustainable in the future due to the maturation of the business, increased competition, and changes to technology.
  • Limitations to Scalability: While the UiPath platform is intuitive and beginner-friendly, intra-organizational scalability poses an issue. Also, many features offered by UiPath are offered for free by other productivity platforms.
  • Pitfalls of Constant Innovation: Automation and Productivity Software is a fast-changing landscape. UiPath will need to disrupt itself to stay relevant.

Financial Highlights

Revenue: Total Revenue of $336 Mn in 2020 grew to $607 Mn in 2021, a YoY growth of more than 80%. Most of the increase was fuelled by the maintenance fees and other incomes. A 71% increase in license fees indicates a very fast-growing customer base.

UiPath has gone from making $169 Mn in the last quarter of FY 2019 to $580 Mn in the last quarter of FY 2021.

Gross-profit Margin: The gross profit margin stands at 90% and has increased from 72% in 2019 to 90% in 2021. This comes on the back of reduced travel costs due to the COVID pandemic and rapid international expansion which generated 66% and 61% of the revenue in 2019 and 2020 respectively.

Net-profit Margin: The Net Loss has also been improving over time, in spite of the break neck speed that UiPath seems to be growing at. This is explained by the Operating Expenses Line Item where all the three viz. licensing costs, maintenance costs, and other costs should have gone up, keeping in line with the revenue growth. On the contrary, all the three went down, while as the revenues shot up.

Cash Flow: Unlike a lot of other growth startups going public, UiPath has a positive free cash flow, saving cash on the operational front. This is rare for a rapidly growing company. Other growth stage companies to go public such as Snowflake and CrowdStrike had negative free cash flows. Quite a few haven’t made money, even months after listing.

This may pose a concern for investors who view UiPath to be a rapidly growing, disruptive startup. Generating cash may be interpreted as a sign of UiPath transitioning into its mature stage.

Alternatively, the plan may be, to slow down the growth, settle down, consolidate the customer base and the product offering, and then continue explosive growth. Daniel Dines, the founder of UiPath has been an unconventional CEO on many fronts, this may as well be a part of the bigger picture.

Other Interesting Tid-bits

Annualized Renewal Rate (ARR) is the key metric UiPath uses to gauge its business. It illustrates the ability to acquire new subscription customers and to maintaining the existing subscription customers. The ARR may fluctuate as a result of a number of factors, including customers’ satisfaction, pricing, competitive offerings, economic conditions, or overall changes in customers’ spending levels.

 

UiPath’s “ARR” rose by 65% over the last year, indicating a massive jump in the number of new consumers using UiPath. This again highlights UiPath’s ‘expanding, yet retaining’ value proposition.

  • Number of Customers: 6,300
  • Number of Enterprise Customers: 1,500. As of January 31, 2021, UiPath had 7,968 customers, including 80% of the Fortune 10 and 63% of the Fortune Global 500.
  • Number of Developers on the UiPath platform: 200,000
  • Number of People enrolled in UiPath Courses: 100,000

Is UiPath prepared to handle the competition?

The platform addresses the market for Intelligent Process Automation, which International Data Corporation, estimated would have a value of $17 billion by the end of 2020 and is expected to grow at a four-year compound annual growth rate of approximately 16% to $30 billion by the end of 2024. According to an estimate by Bain & Company the size of the market for automation software will grow to approximately $65 billion.

 

UiPath is a market leader in the Automation industry commanding a whopping 44% of the entire market.

Nearly every company’s a winner that gets to feature in the RPA Magic Quadrant from Gartner, and even just getting on the chart is a win for some companies. UiPath ranks very high, at the very top right of the matrix, strongly positioned as an industry leader as well as a visionary, with only Automation Anywhere coming close.

 

Source: Gartner’s RPA Magic Quadrant

The UiPath IPO will be a decisive moment for not just UiPath itself, but also Automation Anywhere. A tie-breaker between the two, the UiPath IPO will either force Automation Anywhere to respond with an IPO or simply perish.

Are the Valuations on the Right Path?

The NASDAQ 100 Technology Index is up by 62%, this year alone. This coupled with the high demand for the RPA products worldwide, and you get a red-hot market for the UiPath IPO. This is likely to benefit UiPath massively but is the valuation justified or the financials go for a toss?
UiPath was valued at $35 Bn following its last financing round in February. Based on a recently released statement by the management UiPath is likely to launch IPO with shares in the price range of $52-$54 bringing the valuation in the range of $26.90 — $27.90 Bn. This brings the EV/Revenue multiple to 45.88x.

 

 

How well do the Peers Fare?

Being the market leader with a 44% market share and its colossal size relative to the peers it is difficult comparing the company to its peers. However, we have compared it to its direct competitors Automation Anywhere (Private Company) and Blue Prism (London Stock Exchange: PRSM).

Taking the Taking EV/Revenue multiple into account and weighted average calculation of the comparable companies, we arrive at an NTM multiple of 12.33x which gives us an intrinsic valuation of $8.96 Billion.

Investment Recommendation

The UiPath IPO in any case is highly anticipated, being a market leader in the red-hot Robotic Process Automation market. The company has a strong reputation and a substantial client base. Despite that, it was a bit of shock that the IPO price range failed to reach the valuation company garnered in private funding. This might be caused by the general cooling of IPOs over the past few months.

Going public in a dynamic market like RPA is tricky. However, UiPath has demonstrated strong performance and growth potential and this should be an extremely successful IPO only cementing its leadership position. We forecast a strong performance and growth for the share and recommend a long-term positive outlook. 

– – – – – 

This article has been co-authored by Khubaib Abdullah and Ayush Dugar, who are in the Research and Insights team of Torre Capital.

Project Management Simplified?

by Sandeep Kumar

“The stock might be valued at around 45x forward revenue at the mean of this valuation, which would be among the highest multiple for valuations in the entire tech industry”

Imagine we told you that in the coming week you could invest in a company which has carved out a new space in the category of software? Hold on to that thought. Let’s say the company has recurring revenues, experiencing consistent growth in the recent past – capturing clients from government offices to professional cosmetics including a third of the Fortune 500 names. What if we say that the Co-Founders have already had a proven track record working with Facebook and that 98% of its employees would recommend it to a friend as a great place to work? If all of this interests you, read on…

We are talking about Asana – a work management software-as-a-service platform that helps teams orchestrate their work, from daily tasks to cross-functional strategic initiatives. Asana’s distinguishing factor is its integration capabilities including over 100+ popular applications that combine Dropbox, G Suite, Salesforce, Mail Chimp, and Slack. The company will shortly be traded on NYSE under the ticker symbol “ASAN”

 

Company Highlights

Asana has over 82,000 paying customers as of July 31, 2020 and over 3.2 Million free activated accounts since inception, representing a large opportunity to convert these accounts into paying customers.

The dollar-based net retention rate of Asana was over by 120% as compared to 2019. They don’t have a lot of meaningful product releases to date but the core features are worth the buck, as their biggest customers are spending more than they did a year ago. For customers with an ACV greater than $50,000, Asana’s NRR expands to over 140%, indicating that its biggest customers are spending significantly more than they did a year ago.

The company’s focus on user experience underscored by sleek and intuitive design is not easily imitable. This indicates the extra productivity and admin features, Asana brings to its premium subscribers including advanced admin controls, specialized support and custom branding.

With already 41% of its business com­ing from outside North America, there is a huge potential to expand internationally by tapping enterprise-wide deployments with optimized budgets and its workflow-automation capabilities.

Asana has experienced a strong business growth in recent years, and trends seem to remain robust, although growth has been slowing modestly. Revenues were up by 86% year-to-year growth at $142.6 Million. In its most recent quarter ending July 2020, Asana recorded 57% year-to-year growth.

However, the market for work management solutions is increasingly competitive, fragmented, and subject to rapidly changing technology. The situation would only become more complicated for Asana, given the low barriers to entry in the industry and highly differentiated SaaS products.

With the current hype for anything SaaS, Asana’s IPO could open trading at a minimum of $9 – $10 Billion valuation just double the last reported secondary market valuation of $5 Billion, replicating the reactions in the lines of SaaS companies like Zoom, Tesla, Snowflake and Unity. The stock might be valued at around 45x forward revenue at the mean of this valuation, which would be among the highest multiple for valuations in the entire tech industry. Read the full report to find out how?

3D gaming comes of age

by tradmin

“Since 93 out of the 100 largest gaming studios are Unity’s clients, more than half of all mobile computing, PC and console games on the market are made using Unity’s platform.”

Unity IPO lists on 17th Sep 2020, one of the many in an avalanche of US tech IPOs to hit the market in the next 6 months.
Unity Technologies is the creator of an end-to-end development platform that is used to build immersive and multi-platform applications such as mobile devices, home entertainment systems, laptops and computers, and augmented and virtual reality devices. In 2004, Unity was founded by Nicholas Francis, Joachim Ante and David Helgason. The company will shortly be traded on NYSE under the single-letter “U”.Digital channels, if used efficiently, could transform the customer experience by offering better products at a much lower price point by eliminating useless intermediaries.
Company Highlights
Growth in Revenues and Expenses: The company has seen increase in sales in the market and innovative solutions divisions. From $380.8 Million in December 2018 to $541.8 Million in December 2019, reflecting an annual rise of 42%. The key costs of Unity are to investments in R&D and recruiting skilled workers to retain the innovative technological niche in the market. The company’s costs rose dramatically by 33.5%, from $429.8 Million in 2018 to $573.9 Million in 2019.
No Debt: Unity is a zero-debt company with its valuation soaring from $6.28 Billion since its last round of financing in May 2019 to $10.01 Billion while it filed for an IPO in a short span of 1 year.
Acquisitions: Unity’s new acquisitions include Applifier, deltaDNA, Finger Food, Multiplay and Vivox, which have improved the platform ‘s versatility, added the main creative talent to the staff, and further strengthened Unity’s one-stop integrated platform to meet developer demand.
Market Share: Since 93 out of the 100 largest gaming studios are Unity’s clients, more than half of all mobile computing, PC and console games on the market are made using Unity’s platform.
Business Verticals: Unity’s SaaS operates with a remarkable net expansion rate; and it can also assert exposure to domains such as mobile ads, 3D animation and AR / VR content. It also enabled Unity expand globally by growing the number of customers producing yearly revenue of more than $100,000 by 39% to 716 in the reporting period of June 2020.
Key Players: Unity’s strategic partners in the gaming market are Sony Corporation, Microsoft, Nintendo are big tech giants who try to keep innovating and releasing next-generation gaming consoles provide….download the complete report here
 

Right Menu Icon
Cancle

Login to your Account

Sed ut perspiciatis unde omnis iste natus error sit voluptatem

Forgot Password?
cross

Select Country