RetailMeNot is showing there is big money in coupons.
The ‘world’s largest digital coupon marketplace’ priced its Initial Public Offering last night at $21 per share and raised $191 million. Share price has since surged by 34% and is currently being traded at $28.21 per share.
Austin-based RetailMeNot, which is listed on the Nasdaq as SALE, features digital coupons cross a range of product categories. Consumers can easily find and redeem discounts through the web and mobile applications, and brands can use this channel to reach and engage with customers. The business is built on a pay-for-performance model, where it makes commissions from retailers after a purchase.
RetailMeNot filed for its IPO in June, with a proposed maximum aggregate offering of $230 million. It revealed on its S-1 filing that the site has surpassed 1 billion visits since launching in 2006 and attracted 24.2 million monthly unique visitors to the site in 2012. It features coupons from over 60,000 retailers and companies and brought in $40.6 million in revenue in the first quarter of 2013 alone. By going public, RetailMeNot intends to increase traffic and monetization, growth depth of paid relationships with retailers, invest in technology and innovation, expand internationally, and pursue strategic acquisitions.
“We believe our marketplace benefits from network effects. As more consumers use our marketplace, we are better able to obtain high quality digital coupons from retailers and brands, which in turn attracts a larger consumer audience,” the company said in its S-1 filing. “We seek to reinforce our position as the leading digital coupon destination by continuing to increase consumer traffic and growing the breadth and depth of our digital coupons, as well as our retailer and brand relationships.”
Coupons are a big business. A January article by eMarketer estimated that 48 percent of U.S. adult Internet users redeemed a digital coupon for online or offline shopping in the past year. E-commerce and brick-and-mortar retail alike are competitive, and businesses invest heavily in finding and keeping consumers. Digital marketing agency 360i conducted a study of digital coupons which found that “couponing is here to stay.” Smartphones, and advancements in e-commerce, data-driven marketing, and payments technology have made the issuing and and redemption of coupons a smoother process. Value is added on both sides of the marketplace — for people who save money and for brands that attract customers they may not have otherwise.
Facebook and Zynga’s rough IPOs made people wary of consumer Internet companies on the stock market. Despite that, analysts predicted that 2013 would be a good year for tech IPOs as the stock market stabilized and the economy picked up. The companies to watch, however, are not consumer companies — research firm CB Insights said cloud computing and analytics companies are the most promising, and the top IPO contenders for 2013 are primarily business-focused and enterprise companies.
RetailMeNot is already profitable and charged on ahead to the stock market. Bloomberg wrote that investors hope that RetailMeNot’s IPO will get other consumer tech companies like Twitter, Evernote, Pinterest, Fab.com, Dropbox, and Airbnb off the bench.
Austin company WhaleShark Media acquired Australian RetailMeNot in 2010. WhaleShark Media has raised $300 million to date and assumed the name of RetailMeNot. In 2011, the company started on acquisition spree and scooped up VoucherCodes.co.uk as well as other local coupon sites including deals com in Germany, bone-de-reduction and Poulpeo in France, and most recently, actiepagina.nl in the Netherlands.
Investors/major shareholders include Austin Ventures, Norwest Venture Partners, JP Morgan, Institutional Venture Partners, Adam Street Partners, and Google Ventures. Half of the shares were sold by existing investors and half were sold by the company.