IPO Report: Yodlee (YDLE)

Francis Gaskins |

Yodlee (YDLE) is a leading technology and applications platform powering dynamic innovation for digital financial services in the cloud. It is based in Redwood City, CA,

Ten other companies are scheduled for the week of Sept. 29, 2014. The full IPO calendar is available at IPOpremium.

Manager, Joint-managers:  Goldman Sachs/ Credit Suisse/ BofA Merrill Lynch
Co-managers: UBS; Pacific Crest Securities

YDLE scheduled a $75 million IPO with a market capitalization of $340 million at a price range midpoint of $12 for Friday, October 3, 2014 on Nasdaq.  SEC filings

YDLE IPO Overview

Yodlee is a leading technology and applications platform powering dynamic innovation for digital financial services in the cloud.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Annualizing June 6 mos

         

Yodlee (YDLE)

$340

4.1

-188.7

4.7

4.9

22%

             

Conclusion

Buy
85% recurring rev
6 mos rev +29%; paid users +17%
Almost breakeven
Price-to-sales of 4.1

Business

Yodlee is a leading technology and applications platform powering dynamic innovation for digital financial services in the cloud.

YDLE refers to its platform as the Yodlee Financial Cloud. Customers include financial institutions, Internet service companies providing innovative financial solutions and third-party developers of financial applications.

More than 750 organizations in over 10 countries use the Yodlee platform to power their consumer-facing digital offerings.

Financial Cloud

The Yodlee Financial Cloud delivers a wide variety of financial applications, or FinApps, targeted at the retail financial, wealth management, small business, card and other financial solutions sectors.

These FinApps help consumers and small businesses simplify and manage their finances, review their financial accounts, track their spending, calculate their net worth, and perform a variety of other activities.

YDLE's platform also enables customers to develop their own applications through open application programming interfaces, or APIs, that deliver trusted and secure data, money movement solutions, and other feature functionality.

Recurring revenue

Subscription and support revenue accounted for approximately 81% and 85% of revenue during the year ended December 31, 2013, and the six months ended June 30, 2014, respectively.

History & growth

YDLE introduced its financial account aggregation product to the digital financial services industry in 1999.

In 2006, YDLE introduced online personal financial management tools.

With the introduction of an open platform for digital financial services in 2010, YDLE created an ecosystem that enables YDLE, customers and third-party developers to create new financial applications which can be made available across a broad base of end users.

In 2013, YDLE expanded its platform to offer these financial applications, to customers, individually or in combinations.

In addition, in 2012, YDLE began to broadly market and sell end user-permissioned anonymized data analytics and market research services.

Customer concentration

A substantial proportion of YDLE's revenue has been derived from a limited number of large FI customers.

For example, revenue from the three largest customers for each of the years ended December 31, 2011, 2012 and 2013, and the six months ended June 30, 2014, aggregated approximately 35%, 31%, 32%, and 26% of total revenue, respectively, during those periods.

Eight of the ten largest customers for the year ended December 31, 2013 have been customers for more than six years.

US & International
The substantial majority of revenue is derived from customers in the United States.

YDLE believes the markets outside of the United States offer an opportunity for growth, and intends to continue to pursue expansion in international markets.

Revenues outside of the United States represented approximately 11%, 14%, 14%, and 13% of total revenues in the years ended December 31, 2011, 2012 and 2013, and the six months ended June 30, 2014, respectively

Intellectual property

As of June 30, 2014, YDLE has been granted 64 U.S. patents and had 23 U.S. patent applications pending. Patents expire between 2018 and 2032.

YDLE also had 8 issued patents and 13 patent applications pending in foreign jurisdictions such as the European Patent Office, Canada, Australia and India.

As a pioneer in data aggregation, YDLE has patents relating to its core aggregation engine.

In addition, the patent portfolio includes patents relating to the supporting infrastructure of error reporting, error correction and auto configuration functionalities.

YDLE also has patents relating to applications of aggregation, including reporting, financial analysis, bill presentment and identity verification. We also seek patents on new and emerging technologies, such as FinApps.

Competition

While YDLE does not believe any single company in the digital financial services market offers a comprehensive platform with features such as YDLE's, the following companies offer products that compete with one or more of YDLE's solutions:

•  for data aggregation: Intuit, Inc. and Fiserv, Inc. (CashEdge);

•  for personal financial management: Intuit (direct to consumer service) and internal IT departments of FIs, as well as early-stage companies;

•  for online bill pay: Fiserv and FIS Global Corporation;

•  for data products and services: global payment networks, credit bureaus and other institutions that have access to large pools of data; and

•  for account verification: MicroBilt Corporation and Early Warning Systems, LLC

5% shareholders pre-IPO

Funds affiliated with Warburg Pincus, 37% 

Entities affiliated with Bank of America Corporation, 12.7%

Funds affiliated with Institutional Venture Partners, 12.6%            

ACI Worldwide Corp., 12.6% 

Funds affiliated with Accel Partners, 9.2%

Dividends

No dividends planned

Use of proceeds

YDLE expects to net $66.4million from its IPO.

The principal purposes of the IPO are to obtain additional capital and increase capitalization and financial flexibility.

 

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
YDLE Yodlee Inc n/a n/a n/a 0

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