Contact: Scott Denne
Aerohive Networks, a maker of Wi-Fi equipment and software, has made its IPO filing public, setting it up to be the fastest-growing publicly traded Wi-Fi vendor. The company posted $89.6m in trailing revenue and while it has yet to declare its full 2013 performance, we estimate Aerohive’s revenue was roughly $100m for the year, giving it 50% year-over-year growth.
Its revenue is tilting toward SaaS sales, rather than equipment revenue alone, as it grows sales of its network management software. SaaS makes up less than 10% of Aerohive’s overall revenue; however, sales of its software are causing a spike in its deferred revenue, indicating that future revenue will be less lumpy than a typical networking equipment provider – something that should play well on Wall Street.
Aerohive’s growth comes as enterprises are moving wireless networking projects to the top of the queue. In surveys of enterprise IT buyers by TheInfoPro, a service of 451 Research, 25% of respondents said a wireless rollout or expansion was their top networking project during the second half of 2013 and first half of this year.
The best comparables for Aerohive are two of the publicly traded Wi-Fi vendors, Ruckus Wireless and Aruba Networks. Both are bigger companies with slower growth (Ruckus posted 17% year over year in its most recent quarter, while Aruba posted 11%) and enterprise valuations of 3x trailing revenue for Aruba and 3.6x for Ruckus. Aerohive’s superior growth rate and increasing SaaS revenue should give it a significant valuation boost, and we expect the company to be valued at 6-8x trailing revenue, or about $700m, when it comes to market.
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