IPO Report: YuMe (YUME)

Francis Gaskins |

Ten IPOs were scheduled for the week of August 5. The full IPO calendar can be found at IPOpremium

The first to IPO is YuMe (YUME), based in Redwood City, CA.  YUME scheduled an $65 million IPO with a market capitalization of $412 million at a price range mid-point of $13, for Wednesday, August 7, 2013.

.The S-1 with a price range was filed July 26, 2013.  The manager & joint managers are Citigroup; Deutsche; Barclays.  The co-managers are Needham; Piper Jaffray

Summary

YUME is a leading independent provider of digital video brand advertising solutions, and facilitates targeted digital video advertising.

YUME can be compared to Tremor Video (TRMR) June 27, 2013 at $10 (down 17% from the price range mid-point). TRMR is now down 16% from its IPO price.

Valuation

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Q2 '13

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

YuMe

$412

3.0

-79.3

3.6

3.8

16%

Tremor Video

$406

4.1

-20.3

2.5

3.9

 

Glossary: http://gaskinsco.com/glossary.htm

Conclusion

Today the market today seems to be selling off a little and Tremor Video is also sliding down.

YULE's price-to-sales ratio is less than TRMR's (3 vs 4.1) but the rating is neutral for YUME.

Business

YUME is a leading independent provider of digital video brand advertising solutions.

YULE's software is used by global digital media properties to monetize professionally-produced content and applications. YULE generates revenue by delivering digital video advertisements on Internet-connected devices

YULE has a wide audience reach, with over 257 million monthly unique viewers worldwide during May 2013, and with large customer base that includes 64 of the top 100 U.S. advertisers.

Note: if YULE can't make money now with that kind of wide audience perhaps there is something wrong with pricing and their business model.

Intellectual property

In the United States, YULE has five patents issued, 17 non-provisional patent applications pending and one provisional patent application pending. YULE also has 11 foreign patent applications pending. The issued patents expire between the years 2026 and 2029. YULE expects to apply for additional patents to protect its intellectual property both in the United States and internationally.

Competition

YULE competes with Hulu and Google (YouTube and DoubleClick) as well as many privately-owned ad exchanges, demand side advertiser platforms and ad networks.

YULE also faces competition from direct response advertisers who also seek to target brands. Some large advertising agencies, which may represent current customers, build their own relationships with digital media properties and can directly connect advertisers with digital media properties.

Other companies that offer analytics, mediation, exchange or other third party solutions may also become intermediaries between advertisers and digital media properties and thereby compete with YULE.

5% stockholders pre-IPO

Entities affiliated with Khosla Ventures, 19.5%
Entities affiliated with Accel Partners, 18.7%
Entities affiliated with DAG Ventures, 12%
Entities affiliated with Menlo Ventures, 9.3%
Entities affiliated with BV Capital, 7.2%

Use of proceeds

YUME expects to net $58 million from its IPO. Proceeds are allocated for working capital and 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
FXCNY FIH Mobile Ltd ADR 6.86 0.01 0.15 147
YUME YuMe Inc. 4.18 -0.04 -0.95 81,307

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