Can You Invest in Rippling Pre-IPO? Details & Alternatives to Consider

When will Rippling IPO?

Rippling hasn't announced an IPO yet, so it's not on the IPO calendar. Rumors suggest it's gearing up for an IPO in 2025, but there's no way to be sure exactly when Rippling might go public.

Typically, companies choose to wait until they reach sufficient size since the expenses associated with being a public company can be prohibitive for small businesses. However, Rippling is probably already big enough to be a public company for reasons that will be evident in a moment.

Start-up companies (like Rippling) also ordinarily wait until the business can demonstrate two things: a predictable pattern of growth, outcompeting key rivals, and a viable path toward profitability. Companies that can't demonstrate these two things may not enjoy a successful IPO.

Is Rippling profitable?

We can't definitively say whether Rippling is a profitable company. The company hasn't gone public, so some of the most useful information isn't publicly available. But here's some of the financial information we know and can glean about this business.

• First, it's clear that Rippling is a high-growth company. According to Sarca's market reporting, Rippling grew over 52% YoY to a total revenue of roughly $570 million.
• Second, Rippling is a subscription-based business. And its latest funding round suggests it's already generating a whopping $350 million in annual recurring revenue.
• Third, Rippling is also a well-funded business. According to TechCrunch, it has raised $1.4 billion in funding as of its Series F round.

Software-as-a-service (SaaS) businesses like Rippling typically have very high gross profit margins. So, it's likely earning an outsize gross profit. It's probable that Rippling is growing a high-margin revenue stream very fast. But it's still likely losing money on a net basis because that's normal for an enterprise software company at this stage.

After all, Rippling's institutional investors want to see the company spend money to grow at an outsized rate -- that's why they're giving it money in the first place. So, companies at this stage are unlikely to hold back on growth to boost profits.

ETFs with exposure to Rippling

Exchange-traded funds (ETFs) are for investors who want to invest in a theme without picking the individual winners of that theme. ETFs own many stocks in the same category and offer shareholders instant diversification. Since Rippling isn't publicly traded, it doesn't have stock held by an ETF. But there are some ETFs for related investing themes.

One possible theme is cloud-based software. Investors who like the idea of Rippling could buy shares of The Global X Cloud Computing ETF (CLOU -1.22%). Many of the companies held in this portfolio are enterprise software companies with a SaaS business model, just like Rippling.

Another possible theme for investors who simply like the idea of younger companies as opposed to stodgy stalwarts is IPO stocks. In this case, investors could consider the Renaissance IPO ETF (IPO -1.09%).

This fund has holdings in many exciting companies that have gone public in recent years. And when it finally does go public, there's a chance that The Renaissance IPO ETF could buy shares of Rippling to add to the portfolio.

Should I invest in Rippling?

When a company goes public through an IPO process, the registration documents are packed full of useful information. This can help investors decide whether to invest in the company. In this case, however, plenty of information is still lacking, so it's hard to say whether it will be a good investment.

Investing is also personal. And a high-growth software start-up might not be a good option for every kind of investor.

That said, investors can think about Rippling in terms of risk and reward. For example, studies have shown that many of the best stock performers are high-growth companies. Growing at a triple-digit pace and well funded for future growth, Rippling could be a rewarding opportunity.

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