It's not just the temperature that's been heating up this month. Nearly two dozen stocks have gone public this month, and all but six of them have moved higher.
Investors who like to buy winners early are being drawn to nCino (NCNO), Lemonade (LMND -2.19%), and Jamf Holding (JAMF 1.53%). Let's take a closer look at what these three hot July debutantes are doing right.
This has been a pretty spectacular month for nCino. The provider of a cloud-based software platform for banks, credit unions, and other financial services institutions began the month on a roadshow to drum up interest for its offering priced between $22 and $24 a share. It worked. The initial pricing range was bumped up the price to between $28 and $29. It reached $31 two weeks ago, and that still wasn't enough. Shares of nCino opened at $71, and that's pretty much where it finds itself now. nCino stock is up 131% off its IPO price, but it's also nearly tripled off the high end of its initial pricing range.
Why is everyone so excited about nCino? Isn't banking boring? Aren't there other fintech platforms out there with more seasoned track records for investors to chase?
Well, there's a lot to like when it comes to nCino. The nCino Bank Operating System makes financials services companies smarter. It uses data analytics, artificial intelligence, and machine learning to digitize, automate, and ultimately streamline everything from the onboarding of new clients to loan management and surfing the wild waves of regulatory compliance. Total revenue soared 51% in fiscal 2020, and the more exciting subscription revenue that now accounts for nearly three-quarters of its top-line mix rose at an even faster 60% clip.
A big metric that investors like to track when it comes to cloud-based subscription platforms is revenue retention rate. For nCino, its subscription revenue retention rate is clocking in at 147%, an encouraging rate that's better than most of the market's cloud darlings.
The insurance industry is a market that's ripe for disruption. It's an old-school business that can use some refreshing, and that's where Lemonade stands (pun intended). Lemonade's recipe calls for a high-tech platform and a splash of altruism that differentiates the fast-growing upstart from legacy insurers.
Lemonade provides just renters and homeowners insurance right now, but it expects to broaden its product line over time. Remember Geico's ad about giving the company 15 minutes to save you some money? Lemonade can get you squared away in just two minutes after chatting with AI Maya, its artificial intelligence chatbot. Its lean infrastructure allows it to offer low rates, and here's where the promised splash of altruism kicks in.
Lemonade cedes 75% of the premiums it collects to reinsurers. It's the reinsurers shouldering the burden of the excess claims on those policies, but Lemonade uses excess premiums to donate to charitable nonprofits selected by the renters. The donation angle is intriguing. Customers are less likely to embellish claims if they know it will hurt a cause that they care about instead of a faceless insurance company.
It all works out well nicely in the end. Lemonade's tech bent makes it attractive to young renters and homeowners. A whopping 70% of its customers are under 35, and they're more likely to go for renter policies (which average just $150 a year). However, Lemonade will be the brand they trust and admire when they finally graduate to homeownership (with policies averaging $900 a year), and things will get even better as Lemonade adds life, auto, and other products. The stock's been blazing, up 152% since hitting the market at $29 three weeks ago.
A newbie among the newbies, Jamf went public at $26 last Wednesday. It's up 55% as of Monday's close. Jamf bills its cloud-based software offering as the world's only vertically focused Apple (AAPL 0.23%) infrastructure and security platform of scale. Organizations lean on the device manager so Apple products deployed to employees can be set up automatically and personalized the moment it is powered on for the first time.
More than 40,000 customers have deployed Jamf to over 17 million Apple devices as of the end of June. Organizations pay Jamf for access to the platform, and its annual recurring revenue -- $224.9 million for the quarter ending in March -- has risen 40% over the past year. It's the industry standard, used by all but one of the top 25 organizations on the Forbes Most Valuable Brands list.
nCino, Lemonade, and Jamf Holding are hot July IPOs. Don't expect them to cool off in August.