Envivio Shares Deflate In IPO - Multichannel

Envivio Shares Deflate In IPO

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Shares of IP-video encoding vendor Envivio, after opening up 4% in early trading in its initial public offering Wednesday, declined later in the day to close down 5.7% at $8.49 per share.

Envivio began trading Wednesday on the NASDAQ under the symbol "ENVI." The company offered 7,755,000 shares of stock at $9 per share in its IPO; it previously estimated a price range of $10 to $12 per share. Of those shares, Envivio sold 6.5 million shares for proceeds of $58.5 million. The company had filed for the IPO in April 2011, hoping to raise up to $69 million.

For the year ended Jan. 31, 2012, Envivio reported revenue of $50.6 million -- up 69% from the year-earlier period -- and net income of $138,000 versus a net loss of $4.8 million the year prior, according to its amended S-1 filing.

Envivio has more than 300 customers in more than 50 countries, including three of the four biggest U.S. cable service providers as well as eight of largest 10 global mobile service providers.

Among its risk factors, Envivio said it has a concentrated customers base. In fiscal 2012, sales to Time Warner Cable accounted for 18% of total revenue, while sales to its 10 largest customers together accounted for approximately 58% of total revenue for the period.

The company, based in South San Francisco, Calif., cited as its primary competitors Harmonic, Cisco Systems (through its acquisition of Inlet Technologies) and RGB Networks (which acquired RipCode in 2010). In addition, other direct competition in the future may come from Motorola Mobility and Ericsson, the company said.

Envivio was founded in January 2000 by a group of engineers from France Telecom, including current president and CEO Julien Signès, who is 42. As of Jan. 31, its total head count was 146 full-time employees, including 47 in R&D, 72 in sales and marketing and 27 in general administrative and HR functions.

Goldman, Sachs & Co. was the lead book-running manager for the offering. Deutsche Bank Securities and Stifel Nicolaus Weisel were acting as joint book-running managers and William Blair & Company acted as co-manager for the offering.