IPO Report: Xactly (XTLY)

Francis Gaskins |

Xactly (XTLY) is a leading provider of enterprise-class, cloud-based, incentive compensation solutions for employee and sales performance management. It is based in San Jose, CA.

Twelve other companies are scheduled for the week of June 22.  The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: J.P. Morgan, Deutsche Bank, UBS Investment Bank
Co-managers: Needham & Co., Oppenheimer & Co.

End of lockup (180 days): Wednesday, December 23, 2015
End of 25-day quiet period: Tuesday, July 21, 2015

XTLY scheduled a $77 million IPO with a market capitalization of $304 million at a price range midpoint of $11 for Friday, June 26, 2015 on NYSE.

XTLY IPO Summary

XTLY is a leading provider of enterprise-class, cloud-based, incentive compensation solutions for employee and sales performance management.

XTLY address a critical business need: to incentivize employees and align their behaviors with company goals. XTLY’s solutions allow organizations to make better strategic decisions, optimize behaviors, increase sales and employee performance, improve margins, increase operational efficiencies, mitigate risk, design better incentive compensation plans and reduce error rates in incentive compensation calculations.

XTLY Valuation

Glossary

Accumulated deficit (mm)

.

.

-$121

     

Per share dilution

.

.

-$9.72

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Xactly (XTLY)

$308

4.3

-15.4

7.3

8.6

25%

             

XTLY Conclusion

Neutral

Q1 rev +17% to $17mm

59% gross profit

103% rev retention rate

Q1:  P/E/-15% indicating fairly heavy cash burn rate

Lost $5mm, -28% of rev in Q1

203,000 subscribers

XTLY Business

XTLY is a leading provider of enterprise-class, cloud-based, incentive compensation solutions for employee and sales performance management.

XTLY address a critical business need: to incentivize employees and align their behaviors with company goals. XTLY’s solutions allow organizations to make better strategic decisions, optimize behaviors, increase sales and employee performance, improve margins, increase operational efficiencies, mitigate risk, design better incentive compensation plans and reduce error rates in incentive compensation calculations.

 XTLY was the first 100% cloud-based, multi-tenant provider focusing solely on the incentive compensation and employee and sales performance management market and XTLY achieved its leadership position through domain expertise and innovative technology.

XTLY deliver its solutions through a SaaS business model.

XTLY believes that its solutions are strategic for its customers.

XTLY goes beyond automation by providing its customers with commercially actionable insights so that they can optimize their employees’ behaviors. XTLY believes that it is the first and only company to make commercially available insights derived from an empirical set of aggregated and anonymized data which helps customers make fact-based decisions to motivate employees and drive business performance. XTLY’s solutions help executives design, manage and analyze incentive programs and provide visibility into employee and incentive program performance.

At the same time, employees use XTLY’s solutions to monitor, estimate and track their own and their team’s performance in real-time, and modify their behaviors to maximize their payout consistent with company goals.

The design and management of incentive compensation is often highly complex.

Traditional systems such as spreadsheets, manual processes and homegrown solutions are inadequate to deal with the complexity associated with variable forms of pay, such as commissions, bonuses and non-cash rewards.

According to an August 2014 research study by Aon Hewitt, 91% of organizations currently offer a variable pay program for their broad based employee populations and expect to spend 13% of payroll on variable pay.

Further, according to Aon Hewitt, variable pay budgets and spending have nearly doubled in the last 20 years.

Intellectual property

As of June 15, 2015, XTLY had three pending U.S. patent applications.

XTLY intends to pursue additional patent protection. XTLY has registered trademarks for “Xactly,” the Xactly logo, “Inspire Performance,” and certain other marks in the U.S. and several other jurisdictions.

Competition

XTLY competes primarily with companies offering incentive compensation and employee and sales performance management applications via hybrid cloud-based and on-premise solutions.

XTLY also competes with spreadsheets, homegrown systems, and toolsets and products developed by software providers that allow customers to build new applications that run on the customers’ current infrastructure or as hosted services.

XTLY’s competitors include Callidus, Cognos and Oracle.

5% shareholders pre-IPO

Entities affiliated with Rembrandt Venture Partners          15.2%    

Entities affiliated with Bay Partners        11.7%    

Entities affiliated with Alloy Ventures      11.5%    

Entities affiliated with Key Venture Partners        11.2%    

Entities affiliated with Bridgescale Partners         9.4%      

Entities affiliated with Outlook Ventures 8.4%

Christopher W. Cabrera              6.6%      

Gerald S. Casilli            16.0%    

Neal Dempsey 11.7%

John P. Ward, Jr.          11.2%                                      

Dividends

No dividends are planned.

Use of proceeds

XTLY expects to receive $77 million from its IPO and use it for 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

Companies

Symbol Name Price Change % Volume
XTLY Xactly Corporation 13.70 -0.10 -0.72 293,827

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