(Image source: Nasdaq.)
Duck Creek Technologies, Inc. (Boston), a provider of SaaS-delivered enterprise software to the property/casualty insurance industry, announced the pricing of its initial public offering of 15,000,000 shares of its common stock at a price of $27.00 per share. The shares began trading on the Nasdaq Global Select Market today, Aug. 14, under the symbol “DCT.” The company says it expects to raise in excess of $400 million. Duck Creek announced that it had raised $230 million from new and existing investors on June 10.
“Today marks a significant milestone in a 20-year journey and is a testament to the commitment and dedication of the entire Duck Creek Technologies family,” comments Mike Jackowski, CEO, Duck Creek. “We’ve distinguished ourselves as the market leading SaaS platform for the property and casualty insurance industry by delivering modern technology solutions the help insurance carriers create a safer, more confident world for their customers. And today’s IPO will enable us to continue expanding our services and innovating for the insurance needs of tomorrow. A special thanks to our employees, customers, partners and investors who have helped make today’s IPO possible. We’re only getting started and I look forward to what’s to come in our next chapter.”
Duck Creek’s IPO is a major milestone for the company which was acquired by Accenture in 2011 and became a privately-held company through a joint venture with Apax Partners in Aug. 2016.
“During its most recent period of private ownership, Duck Creek has made noteworthy acquisitions, such as Agencyport and Yodil, it hasgrown its Content Exchange ecosystem, and matured its SaaS Duck Creek OnDemand suite,” comments Donald Light, Director in Celent’s (Boston) North America P&C practice. “Duck Creek OnDemand’s selection by AIG as the global standard for its P&C/general business is a recent major win.”
“Given the warm initial market reception of Lemonade’s recent IPO, it will be interesting how the market welcomes Duck Creek, a much larger and more established insurance technology firm,” Light adds.
Despite the big splash made by Lemonade’s market debut, Duck Creek’s IPO makes more sense, affirms Mike Fitzgerald, Mike Fitzgerald, Principal Analyst, CB Insights (New York). “Duck Creek has proven value in the market; the value in Lemonade is still to be determined,” he observes. “Duck Creek needs to grow and the capital should help them do that. Their platform is consistent with the idea that the traditional ‘core’ systems are more platforms now.
As in the case of Lemonade’s IPO, Duck Creek’s shares sold for higher than the offering price after trading began today, according to Jeffery Williams, Senior Analyst, Forrester (Cambridge, Mass.) “This suggests that the market is very interested in insurance transformation and anxious to invest in proven innovative ideas, and in the case of Duck Creek, sound and transformative technology solutions,” he says. “I believe that Duck Creek’s shares should be more stable in the longer term relative to startups as it’s an established company with a corporate customer base and is not dependent on the retail consumer—who is more fickle and dependent on economic conditions. This should result in it Duck Creek having more stable revenue, profitability and earnings growth relative to some of the start-ups we have seen come to market recently.”
Cash Infusion for R&D, Acquisitions and Expanded Sales Force
The IPO will provide some level of cash infusion for R&D, acquisitions and an expanded sales force to drive revenue levels up to market expectations, according to Martina Conlon, EVP, Research and Consulting, Novarica (Boston). “Their existing customers do not appear concerned or bothered by the IPO,” she says. “I think our industry has become indifferent to all of the IPOs, mergers and acquisitions that have happened over the past few years. The public Duck Creek will still be a stable software company with a dominant position in the market.”
It’s likely that existing customers will eventually see the influence that Wall Street has on product development, customer service and marketing strategies, Conlon notes. “Like Guidewire, the prospectus heavily emphasizes their cloud capabilities and SaaS solutions,” Conlon adds. “Prioritizing driving existing and new clients onto the cloud platform, implementing an efficient SaaS support model and eventually getting to a more multi-tenant model will be key to satisfying market and investor expectations.”