Presidio Launches Tepid IPO
IT services provider Presidio launched its IPO on Thursday to the tune of $233 million, well below the $3 billion or so it was said to be worth when rumors of the company going public first surfaced last November.
Despite Snap's splashy public debut last week, the tech IPO market is still sluggish, having yet to pull out of the lull it fell into somewhere in 2015. And for service providers such as Presidio, the market has never been particularly active. An attempt by Denver-based Optiv to go public late last year fizzled out when private equity firm KKR bought a majority stake in the company, instead.
Presidio is a huge channel player, with around 7,000 customers, about 70 percent of which fall into the lucrative mid-market category. There isn't anything flashy about Presidio. It provides digital infrastructure, cloud and security IT services and posted a solid, if not jaw-dropping, compound annual growth rate of 11 percent over the last five years, putting it at $2.72 billion in fiscal 2016.
However, the year end balance sheet for the last two years has wound up in the red, with a $3.4 million loss last year. As a public company, its biggest rivals will be powerhouses such as Accenture, HPE and IBM. Presidio has said it will be placing increased focus on its cloud and security services, which makes sense as it continues to move from a commodities-based revenue stream to a services model. But only time will tell if it will be able to scale in a new digital IT landscape.
Correction: A previous version of this article put the IPO at $233 billion. It launched at $233 million.