Companies Poised for a Possible Run at Going Public in 2023
Companies who had ambitions of going public in late 2021 and early last year had little choice but to shelve their plans.
But the new year may bring about a renewed appetite for going public. A steady decline in the inflation rate could cause the Fed to stop raising rates in the coming months. Should the frozen market for IPOs begin to thaw, companies such as grocery-delivery firm Instacart, data-focused software company DataBricks, and business-travel management firm TripActions appear ready to be among the first out of the gate.
These companies and a few others possess some of the telltale signs of private companies seeking to go public. The most obvious signal, of course, are public statements from top executives along with public filings stating an intention to launch an IPO. These public-bound companies often bring on new top executives, including ones who have experience taking other companies public. And they will often take steps to tidy their businesses, from selling off non-core assets to taking write-downs or write-offs on poor-performing businesses so their income statements going forward will look stronger under the spotlight of public scrutiny.
Ideally, these companies will seek to reduce losses or become profitable, either on an operating or net-profit basis.
Case in point is Instacart, which offers same-day delivery and pickup services of fresh groceries and every-day products. The San Francisco-based company, which has a valuation of $39 billion, has plans to announce a public offering this year, markets permitting. The company, which is on pace to generate more than $2 billion in revenues in 2022, generated about $30 million in earnings before interest, depreciation and amortization (EBITDA) in the second quarter, people familiar with the firm’s finances told The Information, a news website that covers the technology industry. Instacart has reportedly generated operating profits over the past two years.
In July 2021, as part of its preparations for an IPO, Instacart hired Fidji Simo, a former Facebook executive, as its new CEO. Simo has said the company would amass a growing portion of revenue from more-profitable business lines like advertising and analytics tools it sells to food brands and grocery chains.
Databricks & TripActions
Meanwhile, Databricks, a provider of unified data analytics for companies, has recently told investors the firm intends to go public by summer 2023, according to sources contacted by The Information. But unlike Instacart, San Francisco-based Databricks isn’t profitable, according to The Information. In August, the company, whose last-known valuation was almost $38 billion, reported $1 billion of annualized recurring revenue.
Finally, TripActions is also poised to execute a long-awaited IPO of its own. The Palo Alto, Calif.-based company helps businesses manage travel and company credit cards for employees of a variety of companies including Shopify, Lyft, Netflix, Adobe, Thomas Reuters, and even Databricks. In October, the company announced it was increasing its valuation to $9.2 billion. And in December, the company secured $400 million in credit facilities from Goldman Sachs and Silicon Valley Bank.
In September, Insider reported that TripActions had filed confidential paperwork to go public, targeting the second quarter of 2023. With business travel rebounding, the company would seem to be in a good position to finally take the plunge into the public marketplace.