Dynatrace, a software intelligence company backed by Thoma Bravo, has filed for an initial public offering, with plans to list on the NYSE under the symbol "DT" and a placeholder target of raising $300 million. As part of the listing, the PE firm is expected to retain a majority stake in the company. Funds from the IPO are expected to go toward paying down part of Dynatrace's debt load, which totals more than $1 billion.
The news comes more than a year after Bloomberg reported that Thoma Bravo was considering a sale or IPO that would value the Massachusetts-based company at up to $4 billion. And it's a positive sign for PE-backed public debuts after a painfully slow start to the year.
It's been a long road on the public and private markets for Dynatrace. Founded in 2005 in Austria, the company moved to the Boston area the following year after an investment from Bain Capital Ventures. Fellow software company Compuware, which at the time was trading on the NASDAQ, acquired it in 2011 for $256 million. Then Thoma Bravo acquired Dynatrace in 2014 through its $2.4 billion purchase of Compuware, ultimately spinning the former off into a standalone business.
Five years later, Dynatrace has emerged as a major player in the subscription SaaS market, with more than 2,300 customers in 70 countries, across a range of sectors including banking, insurance, manufacturing, software and more. Clients reportedly include Amazon Web Services, Microsoft Azure and the Google Cloud Platform. In the year ended March 31, the company produced around $431 million in revenue, with 81% of that coming via its subscription model. The latest revenue figure is an increase of 8.3% YoY.
However, despite its revenue gains, Dynatrace posted a net loss of $116 million in the most recent fiscal year after earning a $9 million profit in the year prior. That was due in part to a $70 million increase in operating costs and a steep drop in its income tax benefit, among other unspecified expenses on the balance sheet.
Regardless of how Dynatrace ultimately prices its IPO, the listing will still provide a boost to what's been a relatively quiet year for PE-backed initial public offerings in the US. With the government shutdown keeping companies filing with the SEC for most of January, the year got off to an abysmal start. Ultimately, just one PE-backed company went public in 1Q, with Forrest Investment's New Fortress Energy raising $280 million in late January before seeing its stock dip 7% on its trading debut. The pace subsequently picked up in 2Q:
Even if private equity firms aren't able to keep up 2Q's IPO pace, the coming quarter is all but certain to show a marked increase relative to 1Q. Although another impending PE-backed IPO stalled, with Dermavant Sciences postponing its listing, others remain in the pipeline for 2H 2019, including that of Silver Lake-backed Endeavor. The talent agency filed to go public in May.
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