• by Ray Schultz , October 19, 2017

SendGrid, hoping to ride the wave of an email market estimated as $11 billion last year, has filed a statement with the Securities and Exchange Commission for an initial public offering.

The Denver-based email services firm has applied to have its stock listed on the New York Stock Exchange as SEND.

Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC will serve as joint book-running managers for the offering. Acting as co-managers are William Blair & Company, L.L.C., KeyBanc Capital Markets Inc., Piper Jaffray & Co. and Stifel, Nicolaus & Company, Inc.

The company has 32,488,855 shares of outstanding common stock, effective in June of this year.

The share prices were not clear at deadline. The net proceeds will be used for working capital and general corporate purposes. The company may also make strategic acquisitions or investments, although none appear to be in the offing.

Among the potential risk factors are market uncertainties, the possible unreliability of email service providers and a range of regulatory issues. 

SendGrid says it provides three basic services: Email API, introduced in 2009; Marketing Campaigns, launched in 2015;  and Expert Services, fielded in 2016.

The majority of its revenue growth has been derived from the Email API service, which “allows developers to use our API in their preferred development framework to leverage our platform to add email functionality to their applications within minutes,” the filing states.

The company adds that it has “processed over one trillion emails since inception, including over 210 billion emails in the first six months of 2017.” It has 55,000 customers, and has added 326 employees over the last three years. 

SendGrid lists its competitors as:

Companies that offer transactional email services, including Amazon, Mailgun, Oracle and SparkPost
Companies that offer email marketing services, including Adobe, Campaign Monitor, Endurance, IBM, MailChimp, Oracle and Salesforce

One of those rivals hails the IPO as a sign of email market strength.  

“SendGrid filing for an IPO is further proof that the email delivery service market is both large and fast-growing,” says SparkPost CEO Phillip Merrick.

Claiming to be the “other major participant in this market,” Merrick adds that “we are excited to see this development and anticipate a strong reception in the public markets."

According to the SEC filing, SendGrid’s net revenue went from $42.8 million in 2014 to $79 million in 2016. Sales totaled $51.8 million for the six months ended on June 30 2017.

The combined net loss was for the above time frame was $13 million, including $3.1 million for the six-month period ending last June 30.

The firm’s adjusted net loss was $12 million for the period, totaling net income of $600,000 for the six months ending on June 30.  

SendGrid estimates that its total addressable market for  transactional and marketing emails was $11 billion in 2016.

The SEC filing reports that 36% of SendGrid’s revenue has been international, and that it has been enjoying an 84% growth rate.