FirePond Ready to Fire Up IPO
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There's little doubt that the business-to-business e-commerce sector is now the hottest Internet space among investors. Not only have most of the IPO moonshots of the past six months carried some kind of B2B payload, but some of the highest-flying stocks on the ticker have belonged to sector stars such as Commerce One (CMRC) and Ariba (ARBA).
Yet it's equally clear that business-to-consumer, or B2C, is a multibillion-dollar market holding vast revenue potential for any number of e-commerce players.
One of several Massachusetts companies expected to go public this week has its sights set on both markets. FirePond, based in Waltham, is offering 5 million shares between $11 and $15 each. Lead underwriter is Robertson, Stephens & Co., while the stock will trade under the Nasdaq ticker FIRE.
FirePond sells integrated e-commerce sales and marketing software for companies running either B2B or B2C Web-based channels offering personalized products and services. It targets Global 2000 firms; among its customers are Sprint, Renault, ADP and Empire Blue Cross Blue Shield. Sales in fiscal year 1999, ended Oct. 31, were $34.3 million, while net loss was $28.9 million.
Which is why FirePond's revenue is slightly misleading. Nearly half of fiscal 1999's revenue (46%) came from custom development contracts, instead of the company's new core business. If you look at it the other way, however, that's a plus, for the numbers show that annual revenue from e-commerce software sales nearly tripled, going from $6.9 million in 1998 to $18.4 million last year. This is exactly the kind of growth that investors want to see in Internet companies.
Still, FirePond faces strong competition in several overlapping markets from companies such as Calico Commerce (CLIC), Trilogy Software, BroadVision (BVSN), Oracle and numerous others. Indeed, it's almost surprising FirePond isn't trying to raise more than $60 million in the offering, for staying in the thick of the e-commerce software race isn't cheap.
Don't let the IPO rocket blasts fool you; for all the excitement and spectacle, there ultimately will be many losers in the B2B and B2C e-commerce spaces. While FirePond has a chance to be a winner, it's simply too early in the race to make a call. Nonetheless, expect a strong ticker debut.
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