Duck Creek seeks $3B valuation for its software IPO

American software company Duck Creek has upped the stakes in its impending IPO, raising its price target from a range of $19 to $21 per share to $23 to $25 per share.

The bump comes as software and cloud stocks have fallen more than 10% from recent highs, putting them in technical correction territory.

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The good news for the Boston-based startup focused on the insurance market, however, is that recent technology IPOs have seen strong performance at similar stock market levels. So, the recent market chop for its future cohort of public software companies may not prove too deleterious to its public offering hopes.

This morning let’s calculate an updated valuation range for Duck Creek, re-run our math on its implied revenue multiples and compare those figures to today’s public market averages.

Duck Creek’s products target the property and casualty insurance provider space, serving companies that sell coverage for automobile, rental and homeowners insurance.

When tinkering with Duck Creek’s first IPO price range ($2.44 billion to $2.70 billion), the company appeared to be reasonably priced. Let’s see what happens when it raises its share-price targets.

A new valuation

As before, Duck Creek is selling 15 million shares, a figure that rises to 17.25 million if its underwriters exercise their option to purchase more stock at the IPO price. So, at its new $23 to $25 per-share IPO price range, the company could raise between $396.75 million and $431.25 million.

For a company that had revenue of $153.35 million in the three quarters ending May 31, 2020, it’s a large sum.

Discounting the shares up for purchase by its underwriters, Duck Creek is worth between $2.95 billion and $3.21 billion. Including the extra equity, the figures rise to $3.00 billion and $3.26 billion.

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