Specifically, its 6.7 mln share IPO priced at $13, the high end of the $11-$13 expected price range, raising $87.1 mln in total gross proceeds. The lead underwriters on the deal were Cowen, Raymond James, and KeyBanc. Shares opened minutes ago on the Nasdaq at $18 and have climbed to more than 40% above the $13 pricing point.
Founded in 2012, IIIV is a cloud software company that provides a seamless, integrated payment platform to small and medium sized businesses. Its primary vertical markets include education, non-profit, public sector, property management, and healthcare. IIIV says it targets these markets because they are large, growing, and likely to see increasing levels of electronic payments compared to other markets.
Its platform features embedded payment capabilities and technology that integrates into its clients’ third-party business management systems while providing security that complies with Payment Card Industry Data Standards. Its software also includes extensive reporting tools. In addition to integrations with third party software, the company delivers its own proprietary software through the "Payment Facilitator" model, where it maintains a master account, enabling clients to accept electronic payments through a sub-merchant contract. Before PayFacs were an option, any business looking to accept credit cards was required to establish an individual merchant account, which is often costly and time-consuming for small merchants.
The company generates revenue primarily by providing payment processing services, which mainly include volume-based fees, to its U.S. client base. These payment processing services enable clients to accept electronic payments, which facilitates the exchange of transaction data and funds between clients, financial institutions, and payment networks. Provided services include merchant onboarding, risk and underwriting, authorization, settlement, chargeback processing, and additional merchant support.
An important part of its long-term strategy is acquisition-driven growth. To date, it has completed nine “platform” acquisitions as well as twelve “tuck-in” acquisitions. Its platform acquisitions have opened up new strategic vertical markets, broadened the offerings within its technology and solutions suite, and added new clients, while its tuck-in acquisitions have augmented its existing payment and software solutions and further grown the company’s client base.
Turning to the financials, for the six months ended March 31, 2018, revenue was up 24% year/year to $154.9 mln, primarily driven by acquisitions. More specifically, acquisitions completed after March 31, 2017 contributed 86% of its growth. The remainder of its growth came about due to an increase in payment volume.
Income from operations surged by 111% to $5.9 mln, but Adj Net Income fell 17% to $6.8 mln. Cash flow from operations also significantly improved to $19.9 mln from ($1.5) mln in the year ago period.
Lastly, IIIV does not expect to pay a dividend for the foreseeable future.