Maybe it was intentional or due to SEC regulations, but every media source I checked out drastically understated Endurance International Group’s (EIG) real revenues when reporting the firm’s $400 million IPO. I am not a public relations firm, but I will help EIG out. EIG’s annual revenue is not $292.2 million, start by adding over $100 million. You heard it here first, annual revenues are really $502 million and growing.
IPOs open the door to secrets and after reading the EIG’s filing this held true.
EIG’s PR problem over at Wall Street is that it generally yawns at $400 million IPOs. Then there are companies that have less than $300 million in revenues, guess where they stand?
The EIG revenue problem starts out on page 2 of the S1. It reads: “During the past three years, our revenue grew from $87.8 million to $292.2 million…”
Go on, type in this search; “$292.2 million Reuters.” Dozens of articles.
That sentence should have should have eventually included the words; “…ended December 31, 2012.”
As soon as I read the reported revenue number I knew it had to be wrong. My enigma was resolved on a spreadsheet tucked away on page 12 of the IPO under the column Six Months Ended June 30, 2013. The top Revenue line reads ‘$250,963 (000).” The logical conclusion, at least to me, is that $251 x 2 = $502
Somewhere, someplace, I would have tried my darnedest to write; “Running (or annualized) revenues based on six months revenues ending June 30, 2013 are $502 million.”
The SEC prohibits EIG from commenting on the IPO, and probably stating that internally it believes 2013 revenues will exceed 2 x 251. I need to state that I have no knowledge of any of EIG’s internal expectations or even if they did that calculation.
Let me go out on a limb and without the benefit of any EIG input or comment. I believe that given a reasonable IPO closing date the running rate for EIG revenues, exclusive of interim acquisitions, will be somewhere between $550 to $600 million.
That $400 million IPO is just the initial shares being sold. It has nothing to do with the overall value of the company which last year was reported at $2 billion. It will be higher and I will take a stab in a later writing.
Now since that is straightened out we can get back to business.