Justworks has an updated one IPO filing today, with fresh financial results and a look at what the company might be worth if it debuts.
For those of you looking for a single number, Justworks could be worth more than $ 2 billion on a simple stock count at the high end of its current range.
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But that’s barely enough information. This morning, The Exchange will be calculating the company’s various simple and fully watered down valuation marks, calculating multipliers based on its last quarter’s results, and comparing all of the data with the company’s final known private valuation.
I wanted to write a 2022 IPO primer this morning discussing the upcoming Reddit and Via IPOs, but that will have to wait a day. The Justworks S-1 / A filing is hereif you want to participate. Let’s talk about SME-focused HR software!
Justworks’ recent financial performance
If you missed our first look at the Justworks story, let’s catch up: The company has two core businesses. The first, called subscription, is what Justworks charges for access to its services – things like “HR expertise, services for compliance with labor and performance law and other HR-related services,” according to the application.
The other, larger component of sales is known as “benefits and insurance-related income”. The former has a fairly high margin, the latter less so.
Here’s how the company performed in the quarter ended November 31, 2021 on an aggregated basis:
As you can see, Justworks saw quite significant year-over-year growth and even better gross profit gains. If you are surprised that the company’s net income is so small compared to its revenues, remember that Justworks is not just a software company; its revenues include many of the lower-margin “benefits and insurance-related revenues” mentioned above.
In simpler terms, the company operates in the SMB HR department, so its software releases customer activity that doesn’t generate SaaS-like margins. Still, the company’s overall results describe growth and very limited losses. So, we can see that the company’s revenue mix is different from what we see from most software companies, while not treating this fact rudely.