EverCommerce, a leading SaaS platform, has launched a $325 million IPO with the intention of paving the way to a valuation of up to $3.5 billion. The company’s multi-billion dollar ambitions are a significant reminder of how the Covid-19 pandemic has not only been a time of great challenges for the SaaS industry as a whole, but it’s also presented some excellent opportunities for strategic growth. 

In line with its IPO, EverCommerce has offered 19.1 million shares set to price between $16 and $18 per share. The company has anticipated 192.5 million shares to be outstanding following the IPO, with its Nasdaq ticker symbol set to be represented as ‘EVCM.’

The company itself offers vertically-tailored, integrated SaaS solutions to a client-base of over 500,000 businesses as a means of accelerating their growth, streamlining their operations, and increasing their retention. 

EverCommerce’s digital and mobile applications have the ability to create predictable, informed and convenient experiences between service professionals and their consumers. With specialties extending to home services, healthcare, fitness and wellness industries, EverCommerce enables businesses to use end-to-end management software, integrated payment acceptance, marketing technology and consumer engagement applications. 

At a time when digital transformation has been more vital than ever in safeguarding the future of businesses that have been affected by the pandemic, SaaS service providers like EverCommerce highlight the importance of such software. 

Newfound SaaS Dominance

The emergence of the Covid-19 pandemic and the economic hardships that have come with it have served as timely reminders that companies must be as adaptable and resilient as can be in uncertain business landscapes. According to a recent PwC report regarding tech adoption, “COVID-19 has acted as a catalyst for trends we expected to see later in the future. As a result, many companies are shifting to remote work for the longer term and need to pivot to SaaS-based offerings.”

Covid-19 has brought to light many advantages offered by SaaS. Companies need to come up with intelligent solutions that can allow employees to operate in a consistent manner while mitigating upfront and ongoing costs. Companies also need to be capable of adapting to a different provider at a moment’s notice, and SaaS enables them to avoid inflexible contracts and other manner of red tape when flexibility is essential. 

Although the widespread transition towards SaaS adoption was already taking place prior to the pandemic, there’s certainly clear evidence that the process has been accelerated as lockdowns have forced more consumers and employees alike to operate online. Back in 2018, Gartner anticipated that by 2020, 80% of historical vendors would “offer subscription-based business models, regardless of where the software resides.” 

Furthermore, Gartner also claimed that “many traditional enterprise software providers have been forced to make the shift to SaaS.” 

(Image: BMC)

As we can see from the table above, SaaS adoption has grown to the point where larger companies are habitually utilising over 100 apps to support their operations. 

It’s these growing levels of adoption that have encouraged companies like EverCommerce to IPO against the backdrop of favourable market conditions - and with hype surrounding tech-based initial public offerings reaching fever-pitch, there’s no shortage of interest in EverCommerce’s filing. 

Brokerages Queue Up For Tech IPOs

Interest in tech IPOs is growing towards levels that haven’t been seen since the height of the dotcom boom back around the turn of the 21st Century. Driven by the necessity of digital transformation, tech-based companies are increasingly being looked to as high-potential stocks for retail investors to buy into. Although IPOs are generally ‘reserved’ for hedge funds, some platforms begin to offer IPO access.

Maxim Manturov, Head of Investment Research at Freedom Finance Europe, says that: “Historically, institutional investors get around 90% of all shares, with only around 10% left for retail trades. This is where allocation comes from: when the demand is high, the broker will have to reduce order amounts so as to at least partially fill all of them. The allocation ratio, meanwhile, depends on the investor trading activity and volume.”

(Image: Wall Street Journal)

Above, we can see that tech IPO values relative to the revenue they’re recording is accelerating rapidly. This indicates that investor enthusiasm for tech offerings is far outpacing the performance of the company itself. Although this may represent more risk for investors, it points to a prosperous market for companies that intend to go public. 

As a leading SaaS company, EverCommerce represents the perfect example of a tech IPO that online brokerages have been eager to rely on retail investors.

Nasdaq-listed online brokerages like Freedom Holding Corp. (FRHC), readily created a dedicated investment portal on its website as a means of enabling investor participation in EverCommerce’s initial public offering. However, the brokerage’s investment criteria is subject to a lengthy registration process alongside a financial threshold of $2,000 that would need to be met. 

Freedom isn’t the only brokerage that’s been eager to accommodate leading tech IPOs like that of EverCommerce. Other, more traditional platforms like Fidelity offer participation to many SaaS initial public offerings, however, the associated threshold of either $100,000 or $500,000 depending on the individual terms of the IPO can be a much more significant hurdle for retail investors to overcome. 

Likewise, TD Ameritrade is another example of a leading platform that works to open IPOs up for retail investor participation, however, the financial threshold is around $250,000 - making participation difficult for many. 

The Covid-19 pandemic has created a favourable environment for tech companies like those closely involved in SaaS products to prosper and build up the momentum that they need to launch a successful IPO. In the case of EverCommerce, we’ve seen widespread interest in what’s set to be a lucrative flotation for the company. 

It’s unclear just how long the post-pandemic IPO boom will last, but as more startups rush to go public at a time of high opportunity, it’s clear to see that it won’t be slowing down any time soon.