Dynatrace IPO: Understanding the Company and its Strategy
Massachusetts-based Dynatrace, a growing application performance management company, plans to go public. Analysts anticipate an August 1 IPO. The company plans to list its shares on the NYSE under the ticker symbol DT.
Dynatrace provides cloud infrastructure monitoring software, which the firm calls “software intelligence.” Essentially, the software detects and diagnoses issues in large business’ applications. This is a great market to be in as more companies use applications to do business.
Dynatrace is one of the biggest players in this industry. The company has 2,300 customers across 70 countries in all different industries. Dynatrace is established, but it has to compete with even bigger companies like Cisco and Broadcom.
The Dynatrace IPO is an effort to get a leg up on the competition. Capital from the public offering will be used to improve financial flexibility and pay off debts. This can help the company grow and become more valuable.
Dynatrace IPO
The Dynatrace IPO will consist of 35.6 million shares priced between $11 and $13. Investment firm Dragoneer Investment Group has announced plans to purchase $75 million worth of shares.
Early reports suggested the company wanted to raise $300 million from the IPO.
Now, it is expected to bring in up to $436.4 million if the underwriters exercise their options to purchase more shares. The offering is underwritten by Goldman Sachs, JP Morgan and Citi according to the Securities and Exchange Commission.
Dynatrace Financials
As with many tech companies looking to go public, Dynatrace is not yet profitable. It expects to lose $53 million in the second quarter of this year. Dynatrace is attempting to eliminate those losses by switching to a subscription-based model and by raising money through the IPO. 81% of the company’s revenue this fiscal year came from subscription-based recurring payments. The company hopes a profitable year is around the corner.
Investing in the Dynatrace IPO
It is important to keep in mind that a lot of the money is made pre-IPO. Institutions, like Dragoneer, can buy millions of shares at a reduced price. By the time the market open for the masses, the share price is often inflated.
Still, Dynatrace could be profitable post IPO. It has a unique business model and a growing customer base. The company could blossom, but it may be overvalued right now. Only time can tell. Do your research before investing in the Dynatrace IPO.
The 2019 IPO market has been hot and other companies are looking to go public. For example, the Airbnb IPO might be soon. Keep an eye out for other investing opportunities.