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Ferrari IPO

Ferrari IPOFerrari (NYSE: RACE), a luxury sports car manufacturer, is the newest addition to our Consumer sector coverage. The company, which was recently spun out of Fiat Chrysler Automobiles (NYSE: FCAU) in an IPO, was founded by Enzo Ferrari in Maranello, Italy in 1929. Ferrari is one of four storied Italian race car manufacturers, which along with Alfa Romeo, Masserati, and Lamborghini, have been testing the limits of automotive performance for decades.  Until Ferrari started producing street legal cars in 1947, it manufactured race cars and sponsored race car drivers.  Ferrari is still headquartered in Maranello, Italy today, and led by CEO Amedeo Felisa.  Consensus estimates call for revenue of $2.85 billion in 2015 followed by $2.9 billion in 2016. EPS is projected to rise from $1.56 in 2015 to $1.69 in the coming year.

Ferrari debuted on the New York Stock Exchange on October 21, 2015 at a price of $52.00 per share.  The offering contained 18.9 million shares. UBS Securities acted as the global coordinator of the offering, with Bank of America-Merrill Lynch, Pierce, Fenner & Smith, Allen & Company, Banco Santander, BNP Paribas, J.P. Morgan and Mediobanca—Banca di Credito Finanziario acting as joint book-running managers. At a recent share price of $49, Ferrari’s market cap is roughly $9.3 billion.  Post-IPO, Fiat Chrysler owns about 80 percent of the company, and Piero Lardi Ferrari, the second son of founder Enzo Ferrari, owns 10 percent of the company.

Ferrari is focused exclusively on the design, engineering, production, and sales of its top of the line, high performance luxury sports cars, and over the years the company has helped to transform the car business, through its emphasis on style, performance and luxury. Through its avid and frequent participation in Formula One racing, which is considered to be the premier class of single-seat auto racing, the company continues its heritage in automotive racing. Fiat first acquired 50 percent of the company in 1969, and expanded its stake to 90 percent in 1988. Fiat also owns Maserati and Alfa Romeo.

Ferrari currently offers nine vehicle models, seven of which are sports cars.  Ferrari boasts extremely high performance vehicles, with cars consistently going 0-60 miles per hour in approximately 3 seconds, with reported times as low as 2.6 seconds.  All of Ferrari’s automobiles have either high powered V8 or V12 engines.  The top reported speed of a Ferrari is 217 miles per hour, belonging to the limited edition LeFerrari model.  Ferrari prices range anywhere from approximately $200,000 to about $1.4 million, with the most expensive being the LeFerrari model.  With the motto: offer only the best engines, design and customization, Ferrari aims to tailor its high performance and quality vehicles to each individual customer.

Ferrari is in the process of phasing out its “458 model” cars, and replacing them with “488 model” vehicles, and will complete the process within the next several years.  In 2014, Ferrari shipped 7,255 cars.  This low volume production strategy is utilized to continue Ferrari’s reputation of being exclusive and rare.  Ferrari carefully monitors and maintains production volumes as well as delivery times to continue this reputation.

As well as producing high quality vehicles, Ferrari’s brand stretches well beyond this.  Ferrari’s cars symbolize speed, wealth and nobility, and are notoriously expensive, suggesting a high ranking in society for drivers.  Aside from its symbolism, the Ferrari brand extends beyond just cars, offering sportswear, watches, theme parks, electronics, and other accessories.

Rapid7 (NASDAQ: RPD)
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Rapid7 (NASDAQ: RPD)

Rapid7 (NASDAQ: RPD)Rapid7 (NASDAQ: RPD), based in Boston, Massachusetts, is a recent addition to our Battle Road IPO Review Software sector coverage. The company was founded 15 years ago in New York City, where its founders took the city’s rapid transit train to work in mid-town Manhattan. RPD focuses on IT security software and services, with an emphasis on vulnerability and threat detection. The company recorded revenue of $77 million and a net loss of $33 million in 2014. For 2015 Consensus estimates call for revenue of $104 million and a Loss per Share of $1.53, followed by revenue of $131 million and a Loss per Share of $0.85.

Rapid7 priced its 6.45 million share IPO at $16 per share –above an expected range of $13-15—on the NASDAQ on June 16, 2015 for first trade the following day. All shares were offered by the company. Subsequently the underwriters exercised their over-allotment, enabling the company to raise about $110 million in its IPO. The deal was led by Morgan Stanley, Barclays Capital, KeyBanc Capital Markets/Pacific Crest, William Blair, Raymond James, and Cowen.

Rapid7 is led by Corey Johnson, President and CEO, who has risen through the ranks of the company in the last seven years, and served as Chief Operating officer, prior to his current position. His experience includes five years at Microsoft, where he was a Group Project Manager, with responsibility for the world-wide launch of SQL Server in 2005. Steve Gatloff, CFO, formerly CFO of iPass, held financial roles at United Online, Sterling Commerce, and VeriSign.

Rapid7 provides a portfolio of cloud-based software and managed services to detect and analyze cybersecurity threats for over 4,100 customers across a broad range of industries, including 34 percent of the Fortune 1000. In the last year, RPD added BJ’s Wholesale Club, Boyd Gaming, Dollar Tree, Fastenal, Iowa State University, Johnson Controls, Parker Hannifin, Samsung Electronics, and the Smithsonian to its growing list of business and government customers.

Roughly two-thirds of sales in each of the last three years comes from its Nexpose vulnerability and threat assessment software, which among other things, identifies weak points in a company’s data network, and helps to prevent cyber attacks across computer networks. About 88 percent of sales comes from the US, and the company utilizes a direct salesforce as well as channel partners that account for 41 percent of sales. RPD boasts an 87 percent renewal rate for existing products. The company recognizes about 80 percent of sales each quarter from backlog. At the end of the September 30, 2015 quarter, the company’s DSOs stood at 103, up from 95 in the previous quarter, a level that we consider to be high relative to other software companies that we research.

The market for security threat detection and assessment is a large and competitive one, with IBM, HP, and Intel, through its acquisition of McAfee, quite active in the market. In addition, RPD faces competition from several dedicated security software and services vendors, such as FireEye (NASDAQ: FEYE), Qualys (NASDAQ: QLYS), and others.