IPO Update: Beamr Imaging Aims For $15 Million U.S. IPO (Pending:BMR)

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A Quick Take On Beamr Imaging Ltd.

Beamr Imaging Ltd. (BMR) has filed to boost $15 million in gross proceeds from the sale of its frequent stock in an IPO, in line with an amended registration statement.

The firm offers video and picture compression applied sciences by way of a licensing mannequin.

Given the corporate’s altering technique and ultra-high valuation expectation, I’m on Hold for the IPO.

Beamr Overview

Herzeliya, Israel-based Beamr was based to develop superior video and picture optimization software program applied sciences that ‘maximize[s] high quality and take away[s] visible redundancies leading to a smaller file measurement.’

Management is headed by founder, Chairman and CEO Sharon Carmel, who has been with the agency since inception in 2009 and was beforehand co-founder of BeInSync and Emblaze.

The firm’s main choices embrace:

  • Beamr HW-Accelerated Content Adaptive Encoding

  • Beamr 4 H.264 encoder and associated

  • Beamr 5 HEVC encoder and associated

  • Beamr JPEGmini picture optimization software program

  • Beamr Silicon IP block

Beamr has booked honest market worth funding of $30.2 million as of December 31, 2021 from traders together with Marker, Innovation Endeavors, Disruptive Technologies and Verizon Ventures.

The agency has disclosed no company-level ESG initiatives.

Beamr – Customer Acquisition

The firm seeks to license its applied sciences to massive media prospects.

Customers to-date embrace: Netflix (NFLX), Snapfish, ViacomCBS (PARA), Microsoft (MSFT), VMware (VMW), Vimeo (VMEO), Citrix (CTXS), Walmart (WMT) and others.

Sales & Marketing bills as a share of whole income have dropped as revenues have elevated, because the figures beneath point out:

Sales & Marketing

Expenses vs. Revenue

Period

Percentage

2021

29.1%

2020

43.2%

(Source: Beamr Amended Registration Statement)

The Sales & Marketing effectivity price, outlined as what number of {dollars} of extra new income are generated by every greenback of Sales & Marketing spend, was 0.1x in the latest reporting interval. (Source: Amended Registration Statement)

Beamr’s Market & Competition

According to a 2022 market research report by Datamation, the worldwide market for information compression was an estimated $3 billion in 2020 and is forecast to achieve $4.5 billion by 2026.

This represents a forecast CAGR of 5.2% from 2020 to 2026.

The fundamental drivers for this anticipated progress are a continued excessive progress within the quantity of knowledge utilized by companies and shoppers and growing use of video streaming providers.

Also, community service suppliers search to grasp compression parameters for his or her storage planning and useful resource allocation selections.

Major aggressive or different trade contributors embrace:

  • MainConcept

  • Ateme

  • Ittiam

  • EMC

  • Elemental

  • Seagate (STX)

  • SSIMWave

  • Apple (AAPL)

  • Google (GOOG) (GOOGL)

Beamr Imaging Ltd. Financial Performance

The firm’s latest monetary outcomes might be summarized as follows:

  • Slightly rising topline income

  • Increased gross revenue and gross margin

  • Reduced working loss

  • A swing to optimistic money stream from operations

Below are related monetary outcomes derived from the agency’s registration assertion:

Total Revenue

Period

Total Revenue

% Variance vs. Prior

2021

$ 3,300,000

3.9%

2020

$ 3,176,000

Gross Profit (Loss)

Period

Gross Profit (Loss)

% Variance vs. Prior

2021

$ 3,210,000

4.2%

2020

$ 3,082,000

Gross Margin

Period

Gross Margin

2021

97.27%

2020

97.04%

Operating Profit (Loss)

Period

Operating Profit (Loss)

Operating Margin

2021

$ (425,000)

-12.9%

2020

$ (1,667,000)

-52.5%

Net Income (Loss)

Period

Net Income (Loss)

Net Margin

2021

$ (952,000)

-28.8%

2020

$ (2,459,000)

-74.5%

Cash Flow From Operations

Period

Cash Flow From Operations

2021

$ 569,000

2020

$ (1,020,000)

(Glossary Of Terms)

(Source: Registration Statement)

As of December 31, 2021, Beamr had $1.0 million in money and $6.2 million in whole liabilities.

Free money stream in the course of the twelve months ended December 31, 2021, was $565,000.

Beamr’s IPO Details

BMR intends to promote 1.36 million shares of frequent stock at a proposed midpoint worth of $11.00 per share for gross proceeds of roughly $15.0 million, not together with the sale of customary underwriter choices.

No current or probably new shareholders have indicated an curiosity to buy shares on the IPO worth.

Assuming a profitable IPO on the midpoint of the proposed worth vary, the corporate’s enterprise worth at IPO (excluding underwriter choices) would approximate $115.4 million.

The float to excellent shares ratio (excluding underwriter choices) can be roughly 11.56%. A determine below 10% is usually thought of a ‘low float’ stock which might be topic to important worth volatility.

Per the agency’s most up-to-date regulatory submitting, it plans to make use of the web proceeds as follows:

roughly $4.7 million for our analysis and growth efforts;

roughly $2.7 million for gross sales and advertising actions;

roughly $2.7 million for cloud working prices;

roughly $3 million for common and administrative company functions, together with working capital and capital expenditures.

(Source – SEC)

Management’s presentation of the corporate roadshow is just not obtainable.

Regarding excellent authorized proceedings, administration says the agency is just not topic to any pending materials authorized proceedings.

The sole listed bookrunner of the IPO is ThinkEquity.

Valuation Metrics For Beamr

Below is a desk of the agency’s related capitalization and valuation metrics at IPO, excluding the results of underwriter choices:

Measure [TTM]

Amount

Market Capitalization at IPO

$129,794,599

Enterprise Value

$115,411,599

Price / Sales

39.33

EV / Revenue

34.97

EV / EBITDA

-271.56

Earnings Per Share

-$0.08

Operating Margin

-12.88%

Net Margin

-28.85%

Float To Outstanding Shares Ratio

11.56%

Proposed IPO Midpoint Price per Share

$11.00

Net Free Cash Flow

$565,000

Free Cash Flow Yield Per Share

0.44%

Revenue Growth Rate

3.90%

(Glossary Of Terms)

(Source – SEC)

Commentary About Beamr

Beamr is looking for U.S. public market funding to fund its common company R&D and progress initiatives.

The agency’s financials have produced slowly rising topline income, greater gross revenue and gross margin, decrease working loss and a swing to optimistic money stream from operations.

Free money stream for the twelve months ended December 31, 2021 was $565,000.

Sales & Marketing bills as a share of whole income have dropped as income has elevated and its Sales & Marketing effectivity a number of was 0.1x for 2021.

The agency at the moment plans to pay no dividends on its capital stock and anticipates that it’ll use future earnings to reinvest again into the corporate. Also, the Companies Law imposes extra restrictions on the agency’s capability to declare and pay dividends, and Israeli legislation could topic dividends to withholding taxes.

The market alternative for information compression applied sciences is reasonably massive and anticipated to develop at a mid-single-digit price of progress within the coming years.

ThinkEquity is the only real underwriter and IPOs led by the agency over the past 12-month interval have generated a mean return of detrimental (66.8%) since their IPO. This is a bottom-tier efficiency for all main underwriters in the course of the interval.

The main danger to the corporate’s outlook is the agency’s change in technique towards a SaaS providing aimed on the center and decrease finish markets, which can or will not be successfully commercialized.

As for valuation, administration is asking IPO traders to worth the agency at an EV/Revenue a number of of round 35x, so the IPO is priced to perfection.

The SaaS Capital Index of publicly held SaaS software program firms confirmed a mean ahead EV/Revenue a number of of round 8.3x at May 31, 2022, because the chart exhibits right here:

SaaS Capital Index

SaaS Capital Index (SaaS Capital)

So, by comparability, BMR is looking for a valuation at a big premium to the SaaS Capital Index, a minimum of as of May 31, 2022.

Given the corporate’s altering technique and ultra-high valuation expectation, I’m on Hold for the IPO.

Expected IPO Pricing Date: Week of July 18 – 22, 2022.



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