Contact: Scott Denne
A10 Networks sets a price range of $13-15 per share, which would give it a market cap of $767-885m. At the midpoint of that range, A10 would be valued at 5.9x trailing revenue, a bit higher than the 5.5x granted to F5 Networks, its main competitor and leader in the application delivery controller market. A10’s revenue growth rate, most notably that of its product sales, has outpaced F5’s. While A10’s product sales grew 18% year over year in the most recent quarter, F5 expanded by 7%, the first quarter it has topped the 5% mark in more than a year.
The top line at the application delivery controller upstart grew a respectable 18% to $141m in 2013. Its net loss was $27m as it invested a larger portion of its revenue back into sales and marketing. The net loss was lower than the $90m it chalked up in 2012, but that year’s expenses were driven by a legal settlement, without which it would have had three straight profitable years starting with 2010.
At the current price range, the IPO will generate a solid return for Summit Partners. The private equity firm invested $80m in A10 last summer for stock that will be worth $132m at the midpoint of the proposed range.
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