Free anti-virus software maker AVG Technologies filed to raise up to $125 million in an IPO.
AVG, provides free anti-virus and monetizes it by serving targeted advertisements and by driving traffic to online search engines such as Google and Yahoo. Yahoo accounted for 21.6 percent of the AVG’s total revenue in 2010, while Google contributed less than 10 percent to its revenue in the fourth quarter of the same year, according to IPO filing.
“The whole ‘freemium’ model has been effective in gaining subscribers, so their strategy seems to be less focused on growing the subscription revenue – if you look at the growth rate year over year.” William Blair & Co analyst Jonathan Ho told Reuters.
Using the ‘freemium’ model, AVG pulled in $130 million in the first nine months of 2011, AVG’s subscription revenue rose marginally to $130.1 million, while its platform-derived revenue almost doubled to $68.02 million. AVG reported a net income of $99.7 million on total revenue of $198.1 million for the nine months ended September 30. AVG had a user base of 106 million of which 15 million are paid users, which is very high for a fremium model.
“I think that (there is) strong demand for security, given the recent cyber-security headlines, and that’s giving the folks (a) chance to take advantage of the high valuations these stocks are attracting”, said Ho.
Avast Software BV, another anti-virus software maker, filed for a $200 million IPO recently and Imperva, data security raised $90 million in its IPO.