GFI Software (GFIS) Postpones $79 Million IPO

GFI Software hoped to raise roughly $79 million in an IPO (Initial Public Offering) today (Friday, Nov. 22). Overall, GFI looked to be valued at nearly $500 million. But the IPO was postponed, according to a GFI letter submitted to the SEC.

GFI CEO Walter Scott had been marching toward the IPO for more than year, and I suspect the effort will resume in the near future (just a guess). The company made multiple SEC filings revealing clues about the potential IPO. At the same time, GFI Max General Manager Alistair Forbes has been busy building and expanding the company’s MSP-centric software base — pushing beyond remote monitoring and management (RMM) to also offer a range of mobile and backup services.

Chatter about the potential IPO had been spreading most of this week. But Renaissance Capital reported around 9am ET on Nov. 22 that the IPO had been postponed. Then, the official confirmation letter showed up on SEC.gov.

Financial Stats & Market Changes

Despite GFI’s decision to postpone the IPO, the company remains in growth mode. For the September 2013 quarter, GFI Software sales rose 41% to $43 million, gross margin was 84% and the company had a $3 million profit, according to SeekingAlpha.

GFI Software’s potential pursuit of an IPO arrives amid major changes on the MSP software landscape. Earlier this year, Insight Venture Partners acquired Kaseya and tucked in Zyrion and Rover Apps; SolarWinds acquired N-able Technologies; and AVG Technologies purchased Level Platforms. Also this year, ConnectWise reorganized and trained its sales team to cross-sell PSA, RMM and sales quoting software from ConnectWise, LabTech Software and Quosal.

Meanwhile, some MSP-centric software and cloud companies have been pushing into the VAR market in search of more growth. In start contrast, GFI Software’s strategy involves helping VARs become MSPs. In an SEC filing, GFI estimates that there are roughly 200,000 IT services providers worldwide, and the shift from reactive break-fix services to pro-active managed services is accelerating, the company indicated.

In August 2012, GFI CEO Walter Scott told MSPmentor that roughly 10 percent of the IT channel had shifted to IT services. In the days ahead, we’ll see if Scott has an updated estimate on that figure.

Stay tuned to this blog entry for potential updates on the IPO in the days and weeks ahead.