by Urvaksh Karkaria – Atlanta Business Chronicle
The Sandy Springs-based company is in talks with investment banks to raise up to $150 million in an initial public offering as early as the first half of 2013, AirWatch Chairman Alan Dabbiere said. AirWatch is also considering Atlanta, among other cities, for a workforce expansion to keep pace with growing customer demand.
AirWatch helps businesses manage, monitor and secure employee cellphones, tablet computers and other mobile devices. The company’s software can remotely enable and disable applications, securely connect mobile devices to a company’s IT infrastructure, and wipe out data if a device is lost or stolen. This is important as companies allow employees to use their personal mobile phones for work purposes.
AirWatch, whose revenues are growing 40 percent quarter over quarter, is the largest independent provider of mobile device management (MDM) services, with twice as many employees as its nearest competitor, the company said. “We have all of the numbers, all of the interest to position us for a very successful IPO,” Dabbiere said.
In addition to an IPO, AirWatch is evaluating a private raise of capital from venture or private equity firms — or doing neither. “We have cash resources for the foreseeable future,” Dabbiere said. “We do not have any requirement to raise money.”
Going public is “more about us than the market,” Dabbiere said. “We see the advantages of being the first company in this space to go public. With first-mover advantage, we get to define the market and our position in the market.”
An IPO would give AirWatch additional capital for global expansion and increased marketing, said Phil Redman, research vice president at Gartner Research. “Certainly there is going to be consolidation,” the analyst said. “They would rather be one of the consolidators and that takes capital.”
While the MDM sector is fast-growing, the market opportunity is still being developed, Redman noted. “It’s a challenge for investors to understand how big the market is going to be and what [AirWatch’s] place is in that market,” he said. “So, there’s not a lot of security around that.”
Another potential challenge is that the majority of AirWatch’s revenue is from the United States. “Investors want to see more of a global opportunity,” Redman said.
The capital raised from an IPO would give AirWatch a “war chest for acquisitions” and give the company a strong balance sheet, Dabbiere said. The IPO cash infusion and access to capital markets would give AirWatch a stronger currency to do buyouts.
AirWatch has evaluated several potential acquisition targets and plans to do one to three buyouts each year. The strategy is focused on acquiring innovative mobile technologies for product diversification. While AirWatch could develop many of these technologies in-house, acquisition would be a faster approach, Dabbiere said.
AirWatch could also use the IPO-fueled capital to finance its breakneck speed of growth. The company, which employs nearly 1,000, plans to double its workforce by the end of this year. AirWatch’s customer base grew to 5,000 at the end of last year, from 1,200 the prior year.
Revenue in the worldwide mobile device management enterprise market doubled in 2011 and is on target to top $500 million in 2012, according to Gartner. Revenue growth is expected to continue at that rate over the next year or two.
“This is a space where there will be a $10 billion [in market cap] company,” Dabbiere said.
AirWatch’s software-as-a-service business model means the company gets predictable recurring revenue, but it also means those revenues are collected over time, straining cash flow. “We have to build data centers and pay salespeople in advance of receiving revenues over the course of a number of years,” Dabbiere said.
If AirWatch were to go public, it would not be Dabbiere’s first rodeo. He previously founded Manhattan Associates Inc., an Atlanta-based logistics software firm, and took it public in 1998. Doing it a second time, Dabbiere said, will be easier.
“I have a management team that’s been through this,” Dabbiere said. “We know exactly what the process looks like. We are not feeling our way in the dark anymore.”