Mavenir has been a prominent player amid this year’s fervor for open, virtualized RAN architectures, which could drive a new, broad ecosystem of suppliers. That objective, in turn, has become associated with the US-driven push to exclude Huawei from the 5G networks of its allies, and to use open platforms to build a western, or even American, mobile industry.
As a US company with a key role in the closely watched open RAN build-out by Dish (see separate item), Mavenir is at the heart of all these related trends, but also has major RAN engagements in other markets such as India. Earlier this month it UK small cell veteran ip.access, gaining open hardware assets geared to the enterprise markets where open RAN’s low hanging fruit will often be found. Ip.access joins a company which is already a mash-up of several firms, bringing together innovators in cloud-native core and virtualized RAN, with an established global business in voice/messaging and IMS systems.
Now Mavenir is looking to ride the wave of open RAN enthusiasm and file for an IPO (initial public offering) on the USA’s Nasdaq exchange. The timing is good – as well as strong market sentiment around open networks and US-based vendors, Mavenir has established revenue and cash streams (unlike some open 5G entrants) and saw its revenues grow by 17% year-on-year in the first half of 2020, despite the disruption of the Covid-19 pandemic.
And it received an endorsement from Vodafone in its open RAN radio unit RFI (see separate item), which placed Mavenir among the top vendors in terms of alignment with its requirements.
The company filed an S-1 form with the Securities and Exchange Commission on October 6. This says that revenues for the full fiscal year to January 31 2020 were $427.2m, up by 8.7% year-on-year, while it halved its annual operating loss to about $10m. In the first six months of the 2020 fiscal year, to the end of July, saw revenues grow to $234.9m, up 17%, and it achieved an operating profit of $17.3m, reversing a year-earlier loss of $36.6m. At the current growth rate, Mavenir would be on course to reach $500m in sales in its current fiscal.
The obvious risk factor in the filing is reliance on a few large customers (despite a diverse overall client base of about 250, many for the established product lines). In fiscal 2019, 30% of revenues came from T-Mobile USA and 17% from Rakuten. However, TMO did renew a 10-year supply agreement as recently as 2018, so that business seems assured. Mavenir’s top 10 customers accounted for 71% of revenue in the first half of this year, but assuming its open RAN and core business becomes an increasingly large proportion of its revenues as operator deployments gather scale, we can also expect its customer base profile to change, especially if new service providers – such as those targeted by ip.access in the enterprise – come into play.
Going public will also help build confidence among some tier 1 operators, some of which are positively impressed by the transparency, as well as the financial backing, that public listing brings.