Wi-Fi provider Boingo Wireless is set to go public Wednesday in what could be a good measure of how hot the wireless boom is. The company is seeking to raise some $ 75 million with its public offering, which is coming at a time when IPOs are growing hot again.
Boingo operates a global Wi-Fi network with more than 325,000 hotspots in more than 100 countries. According to its amended S-1, the company increased revenue from $ 56.7 million in 2008 to $ 65.7 million in 2009, a 16 percent increase. Revenue in 2010 grew by 22 percent to $ 80.4 million with adjusted earnings before interest, taxes, depreciation and amortization, growing from $ 13.5 million in 2009 to $ 18.2 million last year, a 35 percent increase. The Los Angeles company, which plans to list on the NASDAQ under the symbol WIFI, is offering 5.8 million shares at a price range of $ 12 to $ 14. Renaissance Capital said at the midpoint of the proposed range, Boingo will command a market value of $ 486 million
While Boingo’s financial outlook is solid (though not scintillating), the company is banking on riding the increased demand for wireless broadband. It cited Cisco’s visual networking index, which forecasts that mobile data consumption is expected to increase 26 times by 2015. The goal is for Boingo to help carriers offload their data needs on to Boingo’s network, helping them stay ahead of the crushing demand for wireless broadband. Even with the rollout of 4G services, Boingo is a good position to participate in the growing consumer appetite for wireless connectivity. The company believes its scalable and global network will provide a reliable way in which to increase capacity for operators.
Carrier offload will have to be a critical piece of Boingo’s success because its consumer business is pretty modest. It had 200,000 subscribers at the end of last year, though that number fell to 158,000 by March. The company has a churn rate of 9.2 percent. That’s a lot of customers it needs to replace each quarter. Boingo also faces risks in negotiating with existing and new venue partners, where it seeks to install its networks. And discussions with carriers can be lengthy and unpredictable, Boingo said in its S-1, which can also cause uncertainty. Not to mention the fact that Wi-Fi is becoming free at more locations like Starbucks and McDonald’s.
Boingo will need to show that it can strike good deals with carriers and be a strong partner for them when it comes to handling their growing data needs. This is a serious concern for operators, so Boingo has a good chance to capitalize if it can execute on its game plan.
The Boingo IPO also highlights the resurgence of public offerings. According to the National Venture Capital Association, 14 venture-backed companies went public in the first quarter of 2011, raising $ 1.4 billion. That was the highest number to go public in a quarter since 2007. Chinese social network Renren and mobile security provider NetQin are among a handful of other companies preparing to go public this week. With Pandora, LinkedIn and Kayak also preparing for IPOs, this year is shaping up to be a big one for tech companies looking to go public.
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