Valuation of Public Hosting Companies - February 21, 2014

Summarized below are estimates of the relative valuations of some public companies that have significant hosting operations. Please be aware that a number of these companies have other businesses that may also affect their valuations. (All data was taken from publicly available financial statements and please see this post for how we calculate Enterprise Value.)

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As always, please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

WIX IPO Valuation - Final

Congratulations to the folks at WIX on the completion of their IPO.  It was priced Wednesday at $16.50/share and closed yesterday at $16.56/share.  Our estimated valuation (assuming no exercise of the underwriters overallotment option) is an Enterprise Value of approximately $680 million, approximately 8x annualized revenues (based on the Q3 2013.) Their EBITDA is too low to produce a meaningful EBITDA multiple.

Wix is in the category of new shared hosters that have emerged over the last few years that feature an easy to use but advanced website design tool much like Weebly, SquareSpace, etc. These hosters offer use of their design tool for free and while some offer free basic hosting, all offer paid shared hosting services.  These services have been growing rapidly and represent one of the few strong growth sectors in shared hosting.

Please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Endurance IPO Valuation - Final

A final note on the valuation of Endurance (EIGI) on its IPO.  Based on its trading price this morning of $11.20/share, it looks like their IPO valuation came out at approximtely $2.3bn, or 10.5x trailing, annualized EBITDA and 4.5x trailing, annualized revenues. 

Please note that this calculation does not include any impact from (1) their pending $100-$100 million DirectI acquisition; or (2) any exercise of the underwriters overallotment (Greenshoe) option.

Please feel free to contact us if you have any comments, or questions.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Endurance IPO priced at $12/share - EIGI

The Endurance IPO was priced last night at $12/share (below the $14.00-$16.00 range estimated in their SEC filings) and the deal size was lowered to 21.05M shares from 23.39M shares.  This reduces my earlier estimate of their valuation to roughly $2.4bn or 11x EBITDA.  I will update this with a more precise figure once the final SEC docs are released.

Trading will likely start mid-morning today under the ticker EIGI.

Please treat this as a preliminary estimate as there are a number of assumptions in this calculation that can have a meaningful impact on the final valuation. (In particular, the valuation does not include exercise of the underwriters 15% overallotment option, the Directi acquisition or the impact of outstanding Employee options.)  

Please feel free to contact us if you have any comments, or questions.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Wix - Estimated IPO Valuation - REVISED

REVISED: The values below have been adjusted to include the impact of outstanding in-the-money options and warrants.

The offering is expected during the week of 11/4/13.

Wix, an Israeli company that offers a free website design tool together with shared hosting, updated its IPO documents to include an estimated offering price range.  At the midpoint of this range, their Enterprise Value would be approximately $630 million or more than 7x annualized revenues (based on the Q3 2013.) (Their EBITDA is too low to produce a meaningful valuation.)

Wix is in the category of new shared hosters that have emerged over the last few years that feature an easy to use but advanced website design tool much like Weebly, SquareSpace, etc. These hosters offer use of their design tool for free and while some offer free basic hosting, all offer paid shared hosting services.  These services have been growing rapidly and represent one of the few strong growth sectors in shared hosting.

Please treat this as a very preliminary estimate as there are a number of assumptions in this calculation that can have a meaningful impact on the final valuation. (In particular, the valuation does not include exercise of the underwriters 15% overallotment option or the impact of outstanding Employee options.)  As we get more information we will update our estimates.

Please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Endurance International Group - Estimated IPO Valuation

Endurance updated its SEC filings last week to include an estimated offering range for their upcoming IPO.  At the midpoint of this range ($15/share) and their estimated Q3 EBITDA ($47-$48 million), the valuation of Endurance would be approximately 14.4x annualized EBITDA. 

Please treat this as a very preliminary estimate as there are a number of assumptions in this calculation that can have a meaningful impact on the final valuation. (In particular, the valuation does not include exercise of the underwriters 15% overallotment option, the Directi acquisition or the impact of outstanding Employee options.)  As we get more information we will update our estimates.

Please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Endurance International Group - Acquisition Valuations

    A few weeks ago, the Endurance International Group released an S-1 filing for a planned IPO of its Common Stock.  The S-1 has a lot of great information on Endurance, its operations and the many acquisitions it has completed.  I'd like to highlight two of their acquisitions here.

        The first was the purchase of Endurance itself on December 22, 2011 (referred to in the S1 as the Sponsor Acquisition.)  An investor group purchased Endurance by paying approximately $683 million in cash, securities and other consideration, and assuming liabilites of approximately $459 million resulting in a total value of approximately $1.14 billion.  Based on calendar 2011 results, this works out to roughly 6.0x revenue and 12.2x EBITDA.   (One note of caution: Using trailing twelve-month revenues/EBITDA may produce higher multiples than the actual multiples the transaction was completed at as Endurance is a rapidly growing company and the purchasers would have based the valuation on the revenues and EBITDA of the company at the time of the purchase.)

        The second transaction was Endurance's purchase of Hostgator on July 13, 2012. Endurance paid approximately $300 million in cash and assumed liabilites of approximately $21.8 million resulting in a total value of approximately $321.6 million.  Annualizing Hostgators results for the first 6.5 months of 2012, results in multiples of roughly 2.4x revenue and 7.5x EBITDA. 

Please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Valuation of Public Hosting Companies - January 31, 2013

Summarized below are estimates of the relative valuations of some public companies that have significant hosting operations. Please be aware that a number of these companies have other businesses that may also affect their valuations. (All data was taken from publicly available financial statements and please see this post for how we calculate Enterprise Value.)

As always, please feel free to contact us if you have any comments, or questions.

Cheval Capital, Inc.

Disclaimer: This post is for general information purposes and is not meant to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above, a comprehensive discussion of valuation or how to do the calculations discussed. Please be sure to consult your financial advisors when valuing your company, considering the sale of your business or making other financial decisions.

Internet Infrastructure Coalition (i2C)

Cheval Capital is pleased to be a charter member of the Internet Infrastructure Coalition.  

The I2 coalition supports those who build the nuts and bolts of the Internet.  The coalition believes the continued growth of the Internet is vital for growing an environment of innovation in America and it seeks to engage in ways to foster success of the Internet and Internet infrastructure industry.

Please check out their website at http://i2coalition.com/ and lend your support!

Hillary Stiff & Frank Stiff

Hillary Stiff - PingZine 2012 Article

The folks at PingZine were kind enough to send over a reprint of a Q&A they did with Hillary Stiff on valuations and acquisitions for their 2012 CPanel Special Edition.  

Data Center Knowledge Article

Data Center Knowledge with a summary of Hillary Stiff's HostingCon panel.