IPO Outlook: McAfee, Cloud Company Datto Lead The Week

Three companies are expected to go public via a traditional IPO the week of Oct. 19. Here's a look at the details. 

Datto Holding: Cloud based software company Datto Holding MSP plans on selling 22 million shares at a price point of $24 to $27.

The company is the leading global provider of cloud-based software and technology solution for managed service provider partners.

Datto Holdings has over 17,000 managed service providers, with more than 1,000 representing ARR of $100,000 or more. These customers represented 40% of revenue for the six months ending June 2020.

Revenue was $458.8 million in fiscal 2019 with ARR of $474.7 million. The majority of the revenue comes from recurring subscriptions.

The company believes it has an addressable market of $137 billion for managed service provider partners. This market is expected to grow at a compounded annual growth rate of 16.4% through 2023, four times the growth rate of the overall small business IT market.

Related Link: McAfee Targets $814M In IPO Funding

McAfee Corp.: One of the top names in cybersecurity will return to the public markets this week, with McAfee Corp MCFE expected to sell 37 million shares for $19 to $22.

Intel Corporation INTC bought McAfee for $7.7 billion in 2011. Intel sold the majority of the company in 2017 at a valuation of $4.2 billion. The IPO is expected to value McAfee at more than $9 billion.

McAfee is a pioneer and leader in protecting consumers, enterprises and governments from cyberattacks. The company has over 30 years experience in the industry, and its average contract length is more than 20 years with its customers.

McAfee protects more than 600 million device and is trusted by 86% of the Fortune 100, 78% of the Fortune 500 and 61% of the Global 2000.

Revenue has grown from $1.9 billion in 2011 to $2.6 billion in 2019. The company reported a net loss of $236 million in 2019. For the first six months of 2020, revenue was $1.4 billion and the net loss was $31 million.

Growth in the number of people online and using mobile devices, the growth of cyberattacks and the workplace shift to digital are reasons McAfee sees further growth ahead. The company believes it has a total addressable market of $30.4 billion in 2020.

Intel will own 1.8% of the company after the offering, with Thomas Bravo owning 12.6% and TPG owning 54.8%.

Guild Holdings: The $10.2-trillion mortgage industry is highly fragmented, with the top five companies holding 17.3% total market share. Guild Holdings GHLD is one of many companies trying to grow its market share in the space. 

The company has more than 60 years of experience in the market and has grown its market share from seven basis points in 2007 to 94 basis points in 2020.

Over the last 12 months, Guild Holdings has seen $27.8 billion in mortgage origination volume. This figure has grown at a compounded annual growth rate of 27% since 2007.

Revenue was $712.9 million in fiscal 2019, with net income of $5.6 million. The first six months of 2020 saw revenue of $604.3 million and net income of $110.8 million.

Guild Holdings plans on offering 8.5 million shares at a price point of $17 to $19 per share.