Members of the Alphabet Workers Union hold a rally outside a Google office in February.
Ed Jones/AFP/Getty Images
About the author: Ben Rose is president of Battle Road Research, an independent equity-research firm.
After a banner year for initial public offerings of technology companies in 2021, the number of
new issues dropped precipitously last year. The stock market correction of 2022 saw the largest
tech stocks decline by a greater percentage than the S&P 500. The fall in investor appetite for
even the most established tech stocks was a key reason for the dearth of new issues. The
correction signaled an end to the era of free money, and the deep compression in valuations
made it difficult for private companies to get a clear picture of their public market value.
All of the tech-company IPOs of 2021 came to market having demonstrated revenue growth
often exceeding 20% in the year prior to their debuts. But virtually all of the tech IPOs that we
added to our Battle Road IPO Review generated losses leading up to their IPOs. Not only were
the companies unable to turn a profit, virtually all recorded even greater losses over the prior
year, as if the companies were being urged by their shareholders to indulge in a final feast to
drive top-line growth. Many of these companies promised that after their IPO, they would
embark on a steady diet of reduced operating expenses, in order to demonstrate a reasonable path
One reason for executives and private round investors to justify the spending binge lies in the
faith in the Rule of 40, which holds that any combination of revenue and earnings growth
summing to 40% will be the best determinant of sustainable demand for a company’s public
market valuation. In theory as well as in practice, a company could have a 20% revenue-growth
rate, for instance, and operate at a substantial loss. The formula worked for several years leading
up to last year’s tech stock rout. But the stress test of last year’s market correction debunked the
Rule of 40. Even the fastest growing companies had their market capitalizations cut to the bone
in a year of growth-stock compression.
The demand for growth stocks has undergone a sea change in the last six months. Technology
behemoths Microsoft , Google , Amazon , Meta Platforms, and Salesforce , among many others,
shed staff in the aftermath of an unsustainable rise in demand for their services, coupled with
over-hiring during the pandemic. The decision to reduce operating expenses by companies that
were already profitable is a sign that the terrain has shifted away from revenue growth at any
price, to growth with a sustainable level of profitability.
Before answering the question why does profitability matter, it is worth asking whether
companies with aspirations to go public in 2023 have the discipline in place to show not only
top-line growth, but a pattern of steadily narrowing losses. My hunch is that many do not. The
message that growth at any price will no longer cut it, is however, being learned the hard way.
Many private companies have had their valuations slashed to reflect the lower valuations of their
public-company peers. Indeed, venture-capital funding fell to a nine year low in the fourth
quarter of 2022, The Wall Street Journal reported. Managing a business profitably will ultimately
be rewarded, but the number of companies able to do so may remain limited.
Profitability matters because it demonstrates that a company has the potential, if not the power,
to determine its own destiny. Conversely, operating losses are an indication that a company has
yet to prove a working business model. The concern is that a company that loses money today
will need to be bailed out tomorrow with future stock offerings or convertible debt, which in turn
will dilute the interest of existing shareholders. It also means that a company will be unable to
repurchase shares to offset equity issuance, a favored form of tech-company compensation
which, if not held in check, results in shareholder dilution.
A company incapable of generating earnings today—no matter how promising its top-line
growth prospects—may not yet be ready for the rough and tumble of the stock market. And if an
unprofitable company does slip through the IPO window, it will likely need to be bailed out by a
new round of investors, public or private. Until private companies and their financial backers
realize that the terrain has shifted away from growth at any price in favor of growth along with
profits—or at least a near-term path to break-even—the tech IPO well is likely to remain dry.
Rather than call out its core manufacturing services as legacy businesses, as the previous management team did in the past, Protolabs is doubling down on the value it can provide in each of its two key manufacturing services: injection molding (IM) and CNC machining. On the IM side, Protolabs is now offering seven-day turnaround time in for mold creation, down from 14 days previously. It has also vowed to compete more rigorously for business with longer lead times. This is in contrast to the past, when Protolabs focused almost exclusively on prototypes and part production runs with quick turnaround times. The company intends to use its internal factories primarily, as well as partners to optimally schedule part production.
Similarly in CNC machining, formerly known as First Cut, the company has also achieved success with quick turnaround times, but will now be focused on longer lead time business, as well as leveraging its Hubs partner network to create more exotic parts that cannot be produced in house. The overwhelming majority of revenue from Hubs comes from partners with expertise in CNC machining, which enables Protolabs to offer customers a wider range of volume pricing, part tolerances, part complexity and finish options, such as nickel and black oxide plating. The new strategy also enables Protolabs to make a broader outreach to procurement and supply chain teams, in addition to its core community of product developers.
Another strategic shift for the company is more closely monitoring the profitability of each of its key segments, which include 3-D printing as well as sheet metal fabrication. 3-D printing, which contributes about 14 percent of revenue, is known to be less profitability than CNC machining and injection molding. The company operates several factories, and it is likely that the operations will be scrutinized more closely. Similarly sheet metal fabrication contributes less than five percent of revenue, and an undisclosed level of profitability.
A key advantage that Protolabs holds over digital brokers that claim to offer similar services, is that many companies prefer to deal directly with their manufacturing service provider, particularly for proprietary projects that require close manufacturing tolerances. The ability to visit Protolabs’ facilities and “kick the tires” is a key advantage for the company.
The resounding box office success of Top Gun: Maverick, in which Tom Cruise reprises his role as fighter pilot Pete “Maverick” Mitchell, is the most recent example of America’s love of nostalgia. Despite the nearly forty year interval between the two films, diehard fans of the original Top Gun and new filmgoers alike were enticed to return to the big screen.
The Ford Motor Company has a similar opportunity to revisit the phenomenal success of the original Mustang, a two-door sports car that sold over one million units in its first two years. Named after the World War II fighter plane, and launched at the New York World’s Fair in 1964, what came to be known as the “pony car” combined the best of European styling and American ingenuity. In the new age of EVs, Ford has launched the Mustang Mach-E SUV, which carries the Mustang moniker, but, let’s face it, in no way resembles the original.
To be sure, Ford has taken strong steps to electrify its product line, as evidenced by MotorTrend’s recent unanimous selection of the Ford F-150 Lightning as Truck of the Year for 2023. But why not create a real Mustang EV, similar in body design to the one that captured the imagination of a generation of car-buyers. An authentic looking and performing Mustang would give Ford the chance to create a “two-horse” race with Tesla, whose Model 3 is the early leader in the EV passenger car category. By doing so, Ford would be making a statement that it will not cede this all-important segment as the world shifts from combustion engines to electric motors.
Rather than compete solely on the basis of safety features and battery range, Ford could bring back the original pony interior, with its alluring three-dimensional image of horses in flight. Rivian Automotive has made a minor splash in the pickup truck world with its vegan leather interior, an obvious appeal to the environmentally conscious. With vinyl records making a comeback, Ford could bring back the original vinyl interior of the Mustang, or perhaps an engineered material which does not bake or crack in the sun? And as much as many of us enjoy the utter silence of an EV motor, Ford could embed a device that simulates the growl of the Mustang engine, an option for traditional automotive enthusiasts.
And who knows? An EV incarnation of the original Mustang might be even more successful than the original. After all, the new Top Gun: Maverick achieved a 96 percent approval rating on Rotten Tomatoes, while its predecessor tallied a mere 58 percent. So too does Ford have the opportunity to create an even more popular Mustang that would reach a wider audience in a new era of consumer transportation.
Rivian established a first mover advantage in the electric pickup truck market when it launched the R1T in 2021. Having won the coveted Motor Trend Truck of the Year award for 2022, Rivian, we believe, held the market share lead in EV pickup trucks as of the end of 2022.
Fresh on the heels of having won the Motor Trend Truck of the Year for 2023, Ford announced on January 5th that it has sold 15,617 F-150 Lightning trucks since the vehicle was unveiled to customers in May of last year. Ford has not so quietly been claiming that in each of the last two months it has sold more EV pickups than any other manufacturer.
By the end of Q1 2023, it is likely that Ford will pass Rivian to become the overall leader in electric pickup sales in the United States. This is not necessarily surprising, as Ford’s classic F-150 has been the best-selling truck in the United States for 46 consecutive years. Importantly, Ford offers the F-150 in multiple model variants that range in price from $40K to $90K. And Ford has many years of brand equity from which to draw. Moreover, while both Rivian and Ford are relatively inexperienced at building EVs, Ford has a demonstrated ability to produce vehicles in large volumes—something that Rivian has struggled with.
Another headwind facing Rivian is the inevitable launch of Tesla’s Cybertruck. To be clear, the Cybertruck is way behind schedule, relative to original estimates provided by Tesla, but it now appears that limited production will begin this summer. Rather than go head-to-head against Rivian and Ford in the market for conventional-looking EV pickup trucks, Tesla is taking a risk with a unique body style that is sure to electrify some, yet conceivably turn-off others. The angular, space-age body of the Cybertruck is equipped to handle any type of terrain, will supposedly feature a bullet-proof body, and will be manufactured with a unique mix of light-weight aluminum and ultra-hard 30x cold-rolled stainless steel.
From what we can gather, fly-over drone footage available over the Internet of Tesla’s Gigafactory in Texas revealed the recent delivery of at least part of a 9,000-ton Giga Press, which will be used to cast aluminum parts in the first production run. Elon Musk has said the Cybertruck, when available, will be the car he drives to work in Austin. The Cybertruck has the potential to put a freeze on the electric pickup truck market, as consumers will be curious to learn more about it before purchasing a rival vehicle. This is especially true for prospective Rivian buyers who desire an elite luxury pickup truck. While a case can be made that the R1T and Cybertruck may ultimately appeal to different buyers, it is likely that consumers who are interested in the R1T would also consider the Cybertruck for similar reasons. Could this be part of the reason why Rivian stopped disclosing its backlog?
Firms of all sizes from every industry need a system to store and manage their data. To do this, organizations require powerful solutions and technologies. Unsurprisingly, these powerful data storage solutions consume vast amounts of energy, thus having an adverse impact on the environment. As a pioneer in all-flash data storage – data storage infrastructure that only includes flash memory drives rather than spinning disk drives – Pure Storage’s systems mitigate the toll on the environment from all of these data storage endeavors. With sustainability becoming increasingly important to companies, investors, and global citizens, Pure Storage is emphasizing and enhancing the environmental benefits of its data storage solutions over alternatives.
On January 17th, Pure Storage announced that it is now offering an enhanced Evergreen//One Energy Efficiency service level agreement (SLA) that guarantees energy efficiency for firms of all sizes. This new SLA is the first and only guarantee of energy efficiency in the enterprise storage-as-a-service market. The SLA allows companies to measure the energy usage of their data storage systems in Watts per tebibyte. If firms’ maximum Watts per tebibyte thresholds are passed, Pure Storage is committed to providing them with service credits and will undertake remediation actions at no cost. We note that this SLA fully aligns with Pure Storage’s mission to provide organizations with the most sustainable storage solutions.
This new SLA continues Pure Storage’s commitment to offering highly sustainable data storage products that contribute significant environmental benefits over alternative storage systems. Beyond the new SLA, Pure Storage offers the densest and most efficient flash modules on the market, enabling firms to leverage better data storage features at a lower power output and cost than from the company’s rivals. Pure Storage notes that its all-flash storage solutions operate up to 80 percent more efficiently than competing all-flash products. As Pure Storage develops its products with an evergreen architecture – so they do not grow obsolete or have to be replaced – the company can mitigate energy waste by extending the lifespan of its hardware and delivering non-disruptive over-the-air updates. We note that 97 percent of Pure Storage’s products are still in use six-years after they are purchased. Pure Storage is able to provide more effective data storage with less power output and physical equipment, enabling organizations to limit their environmental impacts and costs.
With more and more importance placed on sustainability and the environment, combined with the need for organizations of all kinds to store and manage their data, it is crucial for firms to be able to operate data storage solutions that are not detrimental to the planet. Pure Storage is capitalizing on this, as the company’s all-flash data storage systems are the most environmentally friendly on the market. As firms both large and small view the impact of their decision-making on the health of the planet, Pure Storage has leaned into its ethos, and stands to benefit from rising customer adoption.
Rather than fight it out with the U.S. government over whether a standard Model Y is a cross-over or an SUV, which would make it ineligible for the $7,500 federal tax incentive, Tesla recently enacted over-due price cuts on the Model Y, as well as its entire product line. With a 31 percent price reduction on a base level Model Y (inclusive of the tax credit) Tesla is now better positioned to retain its leading market share of EV sales in the U.S., which currently stands at 65 percent.
The move recognizes the unsustainable 30 percent-plus rise in Tesla’s list prices over the last two years brought about by supply chain bottlenecks and component shortages coming out of the global pandemic. Rather than rely on Tesla’s generous pricing umbrella, competitors will have to follow suit. The next battleground will be the composition of battery materials and critical minerals thresholds required to qualify for the full federal credit.
At the start of the New Year, Tesla’s core EV models, the Model 3 sedan and Model Y small SUV, became eligible for a U.S. federal income tax credit for the first time in over two years.
The most important price cut was on the base-level Model Y, which was reduced from $65,990 to $52,990—a 20 percent reduction. When factoring in the $7,500 federal tax credit, the price cut amounts to a 31 percent reduction in price. At its new price point, the base level Model Y for the first time fits comfortably within the $55,000 cap for passenger cars and cross-overs.
Over the last two years, Tesla Model 3 prices rose by over 30 percent, as component shortages and supply chain bottlenecks drove prices higher both during and immediately following the end of the pandemic in the U.S. These price increases were unsustainable, and inconsistent with growing the EV market further. The new Model Y price opens up an entirely new segment of buyers unable to afford a $66,000 car, and makes Tesla’s pricing more consistent with the intent of the Inflation Reduction Act, whose goal was to stimulate demand for non-carbon emitting vehicles, while making EVs more affordable. The previous federal tax credit had income limits, and some lawmakers complained that it subsidized EV purchases only by the wealthy. With a $125,000 single tax payer, $150,000 head of household, and $300,000 joint household income limit, the new tax credit opens up the market to a new demographic that may not have considered an EV purchase previously.
It will be interesting to see whether Tesla will be able to keep up with demand. The Model Y and Model 3 together account for about 65 percent of the EV market in the U.S. At the end of 2022, Tesla was just getting started in the ramp-up of its Austin Texas factory, which was said to be producing about 12,000 Model Ys per month. In Austin, production is limited to the Model Y. The ramping of production means that Tesla will achieve greater scale economies as time progresses, particularly as component shortages and supply chain bottlenecks continue to improve.
With trailing twelve month sales of $1.9 billion, a market cap of $8.4 billion, $1.2 billion in cash, and zero bank debt, Dropbox (NASDAQ: DBX) is a leading provider of cloud-based file synchronization, backup, and content management software. Founded in 2007, the inspiration for the company came from CEO Drew Houston, who, as an M.I.T. student, began to conceive of an easier way to backup and share files.
Originally conceived as a way to conduct cloud-based file sync and backup—essentially replacing the need for a flash drive—Dropbox has evolved into a cloud-based content management software company, with subscription and monthly use plans for consumers, and businesses, which range in size from freelancers to the Fortune 100.
Since its inception Dropbox has deployed a bottoms-up freemium sales model, in which users typically sign up for a free service plan, and migrate over time to a paid plan, through either an annual subscription—greater than 50 percent of the time—or a monthly plan. Dropbox’s content management software plans range from free to more than $240 per year, depending on the level of functionality and customer support selected. The company’s unique freemium model has enabled it to reach and serve over 600 million registered users in 180 countries, who manage over 550 billion pieces of content.
At the end of Q3 2020, the company had 15.3 million paid users generating average revenue of nearly $128 per year, as compared to last year, when it had 14 million paid users, who generated an average $123. Roughly 12 million, or 80 percent of the company’s 15 million paid users use Dropbox for work purposes.
Dropbox does not break out revenue by vertical industry, however some of the more popular ones include technology, media and advertising, as well as construction. Other popular verticals include colleges and universities, manufacturing firms, consumer and retail, and financial services. As a content management tool, Dropbox is used by virtually all functional groups, including sales, marketing, product, design, engineering, finance, legal, and human resources.
Paying users as a percentage of the registered total is just three percent as of the most recent quarter. Dropbox believes that as many as 350 million, or roughly 60 percent of its non-paying, registered installed base of 585 million are high value targets, meaning that they exhibit many of the same characteristics as its installed base. By virtue of their existing registration, the company has created a large funnel from which to draw future paid subscribers. It can also reach and sign up prospective users at a fraction of the cost of many enterprise software companies that rely primarily on a direct sales force.
Over the last several years, Dropbox has expanded from a focus on consumers to small, mid-sized, and large businesses and non-profits, including colleges and universities. The company’s software is well-suited to workgroups of all sizes, which must collaborate across multiple functional areas and geographies. The company has been assisted by the growing trend to remote work, as stay-at-home orders mandated by governments, corporations, and non-profits, in the U.S. and abroad, in the wake of COVID-19, has increased the pace with which knowledge workers must collaborate regardless of their physical location.
Dropbox, whose revenues have grown from $1.1 billion in 2017, the year before it came public, to roughly $1.9 billion this year, has grown organically, with the assistance of only a few tuck-in acquisitions along the way. As Dropbox shifts its emphasis from consumer file sync and share to content management for businesses of all sizes, many greenfield opportunities lie ahead.
Founded in 2011 by former M.I.T. classmates Seth Birnbaum and Tomas Revesz, and headquartered in Cambridge, Massachusetts, EverQuote is a leading online insurance marketplace. EverQuote’s goal is to revolutionize the insurance shopping experience for consumers and modernize the way insurance providers reach customers. In doing so, the company intends to become the largest online store for insurance policies in the U.S.
Without any acquisitions, EverQuote has blossomed quickly, with a compound annual revenue growth rate of 32 percent over the last five years. Revenue has risen from $126 million in revenue in 2017, to $163 million in 2018, to $249 million last year. Unlike many VC-backed companies that have required multiple rounds of financing in the face of mounting losses, EverQuote was largely bootstrapped, with just $10 million of equity capital raised to fund the business before its IPO in June of 2018. In Q3 of 2019, the company generated its first non-GAAP operating profit, and has demonstrated consistent profitability in each of the last four quarters, with cash on the balance sheet rising steadily from $37 million at the end of Q2 last year, to $54 million this year.
Automotive insurance, EverQuote’s first addressable market, remains its largest, comprising over 80 percent of revenue. EverQuote’s online platform is facilitated by proprietary data and technology, which matches consumers with insurance options offered by carriers and independent agents tailored to their specific criteria. The criteria may include desired demographics, driving history, and the prospective policy holder’s driving track record.
EverQuote has invested heavily in data science, including machine learning, as well online advertising to efficiently match buyers and sellers of insurance policies. The company’s data assets include over two billion consumer-submitted data points that have come from 65 million quote requests, and 178 billion ad impressions, which have been acquired through its more than $650 million in advertising spending since inception. Over time, the company intends to fully automate the bidding process across most of its traffic sources, and is also working to achieve deeper integration with its insurance partners.
EverQuote boasts an expansive network of more than 100 insurance carriers, including the twenty largest property and casualty carriers in the United States, as defined by premium volume. In addition, the company partners with more than 8,000 insurance agencies. EverQuote’s leading partners include Progressive Casualty Insurance Company (which accounted for roughly 20 percent of revenue in 2018 and 2019) as well as StateFarm, Farmers, Esurance, Liberty Mutual, and Nationwide.
EverQuote gives consumers a single point of reference for insurance shopping. While EverQuote’s service is free for consumers, the company generates revenue through the sale of consumer referrals to insurance providers. According to EverQuote’s 2019 consumer survey, customers reported an average annual premium savings of $610 for insurance policies purchased through its marketplace.
EvreQuote has created a self-sustaining business model, having achieved EBITDA profitability and free cash flow generation in each of the last four quarters, although its progress is not reflected in the Street Consensus, which measures GAAP profitability. As an “asset light” business, like Google and Facebook, EverQuote generates more than $1 million in revenue per employee, and over half of its 300 employees are analysts, data scientists, and engineers. The company’s balance sheet is solid, even after the recent Crosspointe acquisition, as it will likely have more than $40 million in cash and no debt at the end of the current quarter.
With trailing twelve month revenue of $1.25 billion, and a recent market cap of $8.7 billion, IPG Photonics (NASDAQ: IPGP), based in Oxford, Massachusetts, is a leading developer of fiber lasers, fiber amplifiers, and diode lasers. The company’s products are utilized primarily in the automotive, industrial machinery, consumer product, and medical industries.
IPG Photonics was founded in Russia in 1990 by then 52 year-old physicist Dr. Valentin P. Gapontsev, Ph.D. Born at the outset of World War II, Dr. Gapontsev earned his Ph.D. in laser material science from the Moscow Institute of Physics & Technology in 1972. In addition to his numerous awards in science and technology, the Russian-born Gapontsev is known as one of the fathers of fiber lasers, stemming from his original work in laser material science. Today, the 81 year-old founder remains IPG’s Chairman and CEO, and through direct and indirect share ownership, controls the overwhelming majority of the company’s common stock. Originally, IPG produced custom glass and crystal lasers, wireless temperature meters, and laser components. The company subsequently shifted focus to high-power fiber lasers and amplifiers in 1992.
IPG debuted on the NASDAQ on December 13th, 2006 in a 10.4 million common stock offering, with 7.6 million coming from the company, and 2.8 million from shareholders. Merrill Lynch and Lehman Brothers were joint book-running managers for the offering, assisted by Needham & Company, Thomas Weisel Partners, and Jeffries.
IPG pursues a strategy of vertical integration, purchasing only the raw material inputs utilized for its products. Thus, it designs and manufactures nearly every key component used in its finished products, ranging from semiconductor diodes to optical fiber preforms, to finished fiber lasers, and amplifiers. The company also creates complementary products utilized with its lasers, such as optical delivery cables, fiber couplers, beam switches, optical processing heads, and chillers. Vertical integration enables the company to reduce manufacturing costs, improve quality control, as well as ensure product integration, and the protection of its intellectual property. IPG has also accumulated over 350 patents, with more than 80 more pending.
Automotive, broadly defined, is IPG’s largest vertical market, contributing roughly 20 percent of revenue. The company’s lasers are utilized for a variety of cutting and welding applications, including body welding across all types of production vehicles. In Q1 of this year, IPG received its first large order for Adjustable Mode Beam (ABM) lasers, which are utilized for electric vehicle battery welding. The new ABM lasers allow for “spatterless” welding, greater reliability, and higher wall plug efficiency. Another key application for electric vehicle batteries come from IPG’s pulsed laser, which is utilized for foil cutting.
With its cutting edge, unique proprietary technology, focus on vertical integration, and global reach, IPG is helping to illuminate the way to automated industrial production.
IAC/Interactive (NYSE: IAC), the large internet and media conglomerate with a market cap of $21 billion, annual sales of roughly $4.8 billion, $3.4 billion in cash, and $3.1 billion in total debt, announced its intention on Friday, December 20th to acquire Care.com for $15 per share in an all cash deal. The valuation is, according to IAC, a 34 percent premium to Care.com’s closing share price on October 25, 2019, the last trading day before a press account indicated that a deal might be in the offing.
With a history of acquiring somewhat distressed internet companies with solid brands and customer sets, IAC’s acquisition of Care.com is consistent with several of its previous purchases, including Ask Jeeves, and Angie’s List, which following its merger with HomeAdvsior is now called ANGI Home Services (NASDAQ: ANGI). Our understanding is that IAC will roll Care.com (previously) into the IAC/Interactive umbrella. As part of the deal, IAC has already assigned a new CEO to run Care.com. It would not be unreasonable to assume that pending changes to its management and operational structure, that IAC would either establish a tracking stock, or spin-off Care.com in the future, perhaps under a new name, or with additional businesses currently owned by IAC, or ones yet to be acquired.
Undeniably, it has been a challenging year for Care.com. Back in March of 2019, The Wall Street Journal published a damaging expose which criticized Care.com’s screening processes, and found hundreds of instances in which daycare centers listed on its website were not properly vetted. The WSJ expose prompted Care.com to immediately remove flawed agency listings as well as unveil new security and background checks to be paid by the company.
The June resignation of the company’s CFO, who remained in a transition role through August 31, the early August announcement that founder, Chairwoman, and CEO, Sheila Marcelo would transition to a new role as executive chairwoman, along with a reduction in revenue and earnings guidance, all contributed to a 70 percent contraction in its share price. In our opinion, the damage inflicted on Care.com’s brand is by no means permanent, though the cost to ensure consumer satisfaction with the level of background checking on caregivers remains in flux. An additional question mark has been the cost of assigning Care.com employees to fulfill caregiving roles for the corporations and universities utilizing its last minute backup care services.
Getting Care.com’s board to agree on a take-over bid may have been easier than hiring a brand new executive management team, which would have much work to do behind the scenes to re-establish a profitable, predictable growth trajectory. A new team would also be required to make decisions publicly, rather than behind the aegis of a large conglomerate, such as IAC/Interactive. We have no reason not to believe that all reasonable strategic buyers were consulted during the company’s sale process, so it is unlikely—though not impossible—that another suitor would enter the fray to make a higher bid Care.com.