IPO Report: Mimecast Ltd. (MIME)

Francis Gaskins |

Mimecast Ltd. (MIME) is a leading provider of next generation cloud security and risk management services for corporate information and email. The company is based in London, United Kingdom.

Seven other companies are scheduled for the week of Nov 16. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Goldman Sachs, Barclays, Jefferies, RBC Capital Markets
Co-managers: Oppenheimer & Co.

End of lockup (180 days): Tuesday, May 17, 2016
End of 25-day quiet period: Monday, December 14, 2015

MIME scheduled an $85 million IPO with a market capitalization of $594 million at a price range midpoint of $11 for Thursday, Nov. 19, 2015 on Nasdaq.

Summary

MIME is a leading provider of next generation cloud security and risk management services for corporate information and email.

MIME’s fully-integrated suite of proprietary cloud services protects customers of all sizes from the significant business and data security risks to which their email system exposes them.

Valuation

Glossary

Accumulated deficit (mm)

.

.

-$87

     

Per share dilution

.

.

-$9.42

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Mimecast Ltd. (MIME)

$594

4.4

-366.7

7.0

7.0

14%

annualizing Sept 6  mos

       
             

Conclusion

Neutral plus

Growth rate decline:  32% for '14; 31% for '15; 22% for 1st 6 mos

70% gross profit for Sept 6 mos

Net income -1% of rev for Sept 6 mos, almost breakeven

15,200 customers

Adj EBITDA 16% of rev

Price to sales of 4.4

Price to book of 7

Business

MIME is a leading provider of next generation cloud security and risk management services for corporate information and email.

MIME’s fully-integrated suite of proprietary cloud services protects customers of all sizes from the significant business and data security risks to which their email system exposes them.

Market Opportunity

The growing need of organizations to mitigate the risks of email and data security, continuity and archiving has already established a significant industry beyond the mail server.

Based on recent Gartner reports, combined spending in markets catering to enterprise information and email security, continuity and archiving, which include Secure Email Gateway, Backup and Recovery Software, E-Discovery Software and Data Loss Prevention, was $9.4 billion in 2014 and will grow to $11.6 billion in 2017.

MIME believes there is a considerable need for a comprehensive integrated cloud solution that can address the needs of customers in these markets.

Protects & Manages Email

MIME protects customers from today’s rapidly changing threat landscape where email has become a powerful attack vector and data leak concern.

MIME also mitigates the significant business disruption that email failure or downtime causes. In addition, MIME’s archiving services secure, store and manage critical corporate communications and information to address growing compliance and e-discovery requirements and enable customers to use this increasing archive of information to improve employee productivity.

Email is a critical tool for organizations of all sizes.

Protecting and managing email has become more complicated due to expanding security and compliance requirements and the rapid increase in both the volume and the importance of the information transmitted via email.

Organizations are increasingly at risk from security breaches of sensitive data as sophisticated email-based attacks or data leaks have become more common.

Additionally, organizations are not just using email for communication, they are also increasing their use of email archives as an active repository of vital corporate information needed to meet compliance requirements and support employee productivity. As a result, email represents one of the highest concentrations of business risk that organizations may face.

Traditional approaches to addressing these risks have left customers managing disparate point products from multiple vendors that are often hard to use, costly to manage, difficult to scale, can fail to fully address today’s increasing and rapidly changing threats, and limit the use of corporate information to enhance productivity.

These approaches also suffer from inefficient over-provisioning because of the need to resource for occasional peak demand.

The resulting infrastructure complexity caused by disparate products and legacy architectures also makes it difficult to move more IT workloads to the cloud, which continues to be an increasing priority of organizations of all sizes.

Proprietary Cloud Architecture

MIME developed its proprietary cloud architecture to offer customers comprehensive email security, continuity and archiving capabilities in a single service that makes it easier for them to protect themselves effectively in a worsening and rapidly changing security and risk environment.

Providing a fully-integrated service also simplifies ongoing management and service deployment.

Customers can then decommission the often costly and complex point products and on-premises technology they have traditionally used to tackle these risks. MIME also makes it easier for customers to move more of their IT workloads to the cloud.

Intellectual Property

As of September 30, 2015, MIME had one patent and 13 patent applications in the United States.

MIME also has one patent issued and five applications pending for examination in non-U.S. jurisdictions, and four pending Patent Cooperation Treaty patent applications, all of which are counterparts of MIME’s U.S. applications.

MIME intends to pursue additional patent protection to the extent that MIME believes it would be beneficial and cost effective.

MIME has registered “Mimecast” and certain other marks as trademarks in the United States and several other jurisdictions.

MIME also has a number of registered and unregistered trademarks in the United States and certain other jurisdictions, and will pursue additional trademark registrations to the extent MIME believes it would be beneficial and cost effective.

MIME is the registered holder of a variety of domestic and international domain names that include “mimecast.com,” “mimecast.co.uk,” “mimecast.co.za,” and similar variations.

Competition

MIME’s current and potential future competitors include: Barracuda Networks, Inc., Google Postini, Microsoft Exchange Server, Exchange Online Protection, Proofpoint, Inc. and Symantec Corporation, in security, MessageOne, in continuity, and Barracuda, HP Autonomy, Microsoft Office 365, Proofpoint and Symantec in archiving.

5% Shareholders Pre-IPO

Rock Trustees as nominees of the Butterworth Trust       5.4%

Entities affiliated with Insight Venture Partners    19.7%

Entities affiliated with Index Ventures     17%

Entities affiliated with Dawn Capital        14.5%  

Peter Bauer       11.3%

Neil Murray        8.8%

Bernard Dallé    17.0%

Norman Fiore    14.5%

Jeffrey Lieberman         19.7%

Dividends

No dividends are planned.

Use of Proceeds

MIME expects to receive $75 million from its IPO and use has:

no specific plans for the use of the net proceeds of this offering and is unable to identify the amount of proceeds that will be applied to any particular purpose. MIME anticipates that it will use the net proceeds it receives from this offering, including any net proceeds MIME receives from the exercise of the underwriters’ option to acquire additional ordinary shares in the offering, for working capital and other general corporate purposes.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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