Will patience pay off for RGB Networks?

Contact:  Thejeswi Venkatesh

On its way to an IPO, Envivio tripled its top line in just two years, reflecting increased demand for high-quality video content on a range of platforms and devices. Yet with just $50m in sales in its last fiscal year, we’re not sure if the video-processing and distribution provider was quite big enough to be a public company. That was evident in Wall Street’s chilly reception of Envivio as it made its way to the Nasdaq. Unlike many other recent tech IPOs, the company had to price its offering below the target range. Then, for most of its first few days as a public company, it traded below the reduced offer price. With a market cap of less than $250m, Envivio won’t quite make the list of hot stocks on Wall Street, which tends to favor larger companies and higher liquidity.

Meanwhile, Envivio’s primary competitor RGB Networks continues to grow its business steadily. We understand that RGB generated $56m in revenue for 2011, which is slightly higher than Envivio’s top line during the same period. Perhaps learning from its rival’s travails, RGB wants to wait before putting in its papers to go public. If all goes according to plan, the company is likely to be much larger at the time of its public debut, which seems to be what Wall Street is buying these days.