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UPDATE: IPO could gain Aprimo an edge

September 10, 2007
If Aprimo Inc.'s $50 million initial public offering plan is successful, the local marketing software-maker should increase its ability to compete against its largest rival. But a longtime Aprimo analyst said going public also would intensify the firm's short-term pressure to perform.

The rival, Waltham, Mass.-based marketing software-maker Unica Corp., staged an IPO in August 2005. Its shares, which peaked at $17.82 in early May, now fetch $9.66 on NASDAQ.

Kimberly Collins, research vice president for Stamford, Conn.-based technology analysis firm Gartner Inc., has long been expecting Aprimo to attempt an IPO of its own.

Collins said the time is ripe for Aprimo, a rapidly-growing company in a budding market, to go public. She expects Aprimo to plow the proceeds of its stock sale into increased research and development in order to keep its software on the cutting edge.

In its research reports, Gartner has regularly lauded Aprimo as the most visionary company in the marketing resource management sector. At the same time, Gartner has given similarly high marks to Unica for its proven ability to execute.

Opening its books to the public should help show Aprimo's potential customers that the company is strong and in a position to support its software in the long-term, Collins said.

But public reporting will raise stakes for Aprimo. For the first time, she said, the firm will need to show growth on a quarterly basis to maintain investor confidence.

"Going public is a double-edged sword. If you do it well, continue momentum and invest in the company for growth, it's a success," Collins said. "If you don't plan for that growth, you probably won't be successful long term.

"[As a public company], it becomes real clear real quick," she continued. "And if things start going wrong, you become a ripe acquisition target."

Collins was one of several industry analysts today poring over Aprimo's IPO filing with the Securities and Exchange Commission. One IPO expert said the document raises more questions than it answers.

David Menlow, president of IPOfinancial.com, particularly wondered why Morgan Stanley & Co. is the sole Wall Street giant in on the deal. Thomas Weisel Partners LLC, William Blair & Co. and Canaccord Adams Inc. also are underwriters.

"Usually you hear a lot of first-tier names that go behind these offerings," Menlow said. "I'm not saying that's bad. It just begs the question, where are all the other big names out there?"

Potential investors also will want a great deal more detail about Aprimo's financial strength and future prospects, Menlow said.

Today's SEC filing does show the company turned profitable last year, reporting net income of $2.1 million on revenue of $51.5 million. That compares with a loss of $4.8 million on revenue of $30.5 million a year earlier.

According to the company's filing, it would be listed on NASDAQ under the ticker MKTG. Aprimo said the price and number of shares it would sell in an IPO has not been determined.

Aprimo investor Mark Koulogeorge, managing general partner of Chicago-based venture capital firm MK Capital, told IBJ this morning that the "IPO is just another natural evolution for a company that's maturing ... and wants to have its own currency."

Local technology leader Mark Hill, who manages the investment firm Collina Ventures, was one of the earliest investors in Aprimo, which was founded in 1998. Hill lauded Aprimo for its endurance.

"It's really exciting to see a company [succeed] that started in a tough time in the [Internet] bubble, when it was really tough sledding for tech companies. [Chairman and CEO] Bill Godfrey and [Chief Technology Officer] Rob McLaughlin have really built it up," Hill said. "It's great for the investment community and the [local] technology community."

Beefing up its financial resources should allow Aprimo to attract more large corporations as customers, Hill said. It already provides marketing software to major firms such as Bank of America, Cummins, Merrill Lynch and Honda.

"Big companies like to buy from other big companies," Hill said. "For them to be public is certainly going to help them grow their business."

The fast-growing company last year posted its seventh straight year of double-digit revenue growth and swelled to more than 300 workers at its headquarters east of College Avenue on 96th Street.

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