Veriton files for IPO way behind competitors, raising concerns

Save for October 2016, April 2017 has a record for the highest number of US IPO listings. The IPOs span many fields including the tech, oil and pharmaceutical industries. In some cases, companies have dazzled the publicin the IPOS. What else would you about IPOs that raised millions after the first day on the market? Others, like Friday’s Select Energy issuance launch, have not done as well. Veriton (NASDAQ: VERI) announced the terms for its IPO on Friday. But it’s not the news of the IPO that’s making headlines though. Investors are coming up with theories to explain why Veriton filed way below its competition instead.

Veriton is a tech company specializing in data analytics for its customers. Most people know it for its Acer computer brand. This is how Veriton works. A company hires Veriton to do say, an advertisement. Using self-developed software, Veriton looks through third-party data in audio and video and client-provided structured data. Computing the relationships between the three types of information enables Veriton to come up with a satisfactory output for its clients. Veriton obtains third-party details from cloud storage companies such as Google (NASDAQ: GOOG). The output the firm generates is used in helping clients to plan and strategize on media buying and placement. The output also helps Veriton offer campaign advertising, security clearance verification and customized analytics services to its clients.

According to Veriton, providing data analysis services to other firms brings in the primary revenue. However, the firm also operates an AI-service. The AI service isn’t full-blown for now. Company leaders say that the income from the IPO Veriton will go towards further exploration the company’s cloud-based open AI platform.

The offering for Veriton’s initial issuance has raised concerns about the company’s future in the business. The firm will be selling off 1.3 million shares within the $14 to $16 per share spectrum. At the midpoint, the company will raise an approximate $19 million, up from the previously announced $15 million tag. The market share Veriton will hold with that amount is still under speculation. Wunderlich Securities, Craig-Hallum Capital Group, and Northland Securities will be joint underwriters for the deal.

That Veriton IPO deal is not a weak one by any. but it is weker when compared to IPOs from Veriton’s competition. You can’t operate on less than your competitors and expect to make the same profits after all. Examples of firms that threaten Veriton is Alteryx Inc. (NASDAQ: AYX) and CISCO (NASDAQ: CSCO). Alteryx and CISCO both have proprietary rights over their data-gathering analytic software, unlike Veriton which utilizes third parties in gathering information. This in effect renders Veriton somewhat obsolete. Additionally, Alteryx filed its IPO in a bid to raise between $106 and $122 million. That would give Veriton a market capital share of $600 million. If the Veriton issuance succeeds, the Alteryx IPO will have brought in Veriton’s expected revenue several times over. How will Veriton compete with that?

Another question, will Veriton advance its AI program with the cash coming in or will it first refurbish its falling revenue?