A Crack in the IPO Window: Rosetta Stone IPO
In the third IPO in April, language education provider Rosetta Stone went public this week, raising $112.5M. The IPO priced at $18, and the stock ended its first day of trading at $25.12, a 40% rise.
As one banker said to me: "this shows that investors are getting back into the business of investing." I think that's a good thing, not only because I run a private venture-backed company but, more importantly, because a closed IPO window (1) locks out John Q. Public from buying the shares of early- and mid-stage companies, (2) forces some companies to be sold "before their time," potentially snubbing the lives of would-be, great independent companies, and (3) indirectly reduces the attractiveness of the venture capital machine that I've long argued is a highly effective engine for driving innovation in the economy.
Numbers-wise, Rosetta Stone is quite a bit above what I'd been calling the 50/50/0 IPO window that I've seen in the Software Equity Group's IPO pipeline data ($50M+ in TTM revenues, 50%+ growth, 0%+ EBITDA.)
Rosetta Stone's key numbers are:
- 2008 revenue: $209M
- 2008 growth: 52%
- Adjusted EBITDA: 17% (see the S-1 for definition)
The company's market cap was $385M and the end of the first day of trading. Their investor relations page is here. The S-1 is here.
