Amsterdam-Based AVG Files For IPO On NYSE

Last week, antivirus maker AVG Technologies filed with the SEC to list on the New York Stock Exchange for an IPO. The Amsterdam-based company was founded in 1991 to keep computer systems safe from virus attacks. Today they help more than 106 million consumers across 185 countries ward off online attacks and provide real-time defenses against real-time threats on desktop, laptop, and mobile devices.

AVG Technologies’s Financials
AVG operates on a freemium model by letting users download their antivirus software free and charging for additional services and products with premium functionality and enhanced customer support through annual or multiyear subscription sales. As of September 2011, of 106 million active users, AVG had more than 15 million paid subscribers. The company also earns revenues for online services which are accessed through their browser toolbar and provide dynamic secure search capabilities through agreements with major Internet search providers, including Yahoo and Google. Although downloads are the primary source of sales among AVG’s offerings, they also have a network of resellers and distributors, including CNET, Ingram Micro, and Walmart.

Last year, AVG earned revenues of $217.2 million, up from $113.8 million in 2008, at a CAGR of 38%. Earnings grew annually at 42% to $67.2 million from $33.1 million in 2008. In 2010, Yahoo contributed 21.6% and Google contributed 10% to their annual revenues. During the same period, 69% of their revenues were generated online and the balance came from their global distributor network. Revenues for the nine-month period ending September 2011 grew 24% over the year to $198.1 million. Earnings more than doubled to $66.8 million during the same period.

So far, they have raised $252 million funding from investors, which include Intel Capital, Enterprise Investors, and private equity firm TA Associates. The company expects to raise $125 million through listing on the NYSE at an expected price of $16-$18 per share.

AVG’s Growth Plans
To continue to expand their security offerings, apart from R&D, AVG also invests in acquisitions. Last year, they acquired Bsecure Technologies, a provider of family security products. Bsecure’s offerings are focused on parental control and household-related security products that AVG believes will help them expand within the home Internet security segment.

Nearly a year ago, they acquired mobile security firm DroidSecurity to expand within the mobile device market. Tel Aviv-based DroidSecurity makes cloud-based security products for smartphones, tablets, and other devices that operate on the Android operating system. At the time of the acquisition, DroidSecurity’s mobile security app had been downloaded 4.5 million times and was ranked among the top 50 most popular apps for Android-based devices.

AVG has been trying to improve the monetization of their user base and are indeed seeing improvement as revenue per active user increased from $1.53 for the year ending December 2008 to $2.21 for the year ending December 2010. They believe the increased revenues came in from the introduction of the dynamic secure search solution they introduced. They continued to add to their offerings by launching LiveKive last year, a solution that lets users store, share, and back up files on the cloud. Similar to Dropbox, LiveKive files are accessible on iOS and Microsoft OS for computers and on Android, iPhone, iPad, and iPod touch devices. LiveKive services are available free up to data usage of 5GB and cost $79.99 a year for unlimited capacity. For now, I believe that with a focus on monetization, AVG seems to be on the right path. It is great to see an Amsterdam software company gaining global momentum.