When is Justworks Going Public?
Justworks is set to be one of the first major IPOs of 2022, but will it see the same uncertain fate as many of last year's public debutants?
Jan. 10, 2022

2021 was a record year for initial public offerings (IPOs), with roughly 1,080 companies going public. Despite all of these companies choosing to go public in such a short space of time, not all of them were entirely successful. 

The Renaissance IPO Index, which tracks newly listed U.S. companies and their performance, finished down approximately 8% for the year. Comparatively, the S&P 500 index rose by 25% for the year.

Justworks, a cloud-based human resources (HR) software platform, will be hoping to buck that trend as it looks to go public imminently.

What does Justworks do?

Justworks offers a suite of software capabilities for small businesses that encompasses payroll, tax filings, onboarding, time management, and much more. Its mission is "to help entrepreneurs and businesses grow with confidence." It offers a simple and intuitive platform that allows smaller businesses to focus on the things that matter while leaving some of the more "nitty-gritty" tasks to Justworks.

The company's core business line is its cloud software subscription service. This accounted for $87.4 million in revenue from June 2020 to June 2021. The firm also collects what it terms as "benefits and insurance-related revenue." This involves collecting revenue related to administrative fees from its customers for various insurance plans such as medical or dental. It accounted for $895.3 million in the same year period but cost Justworks $842.9 million in fees, indicating that it's a low-margin form of revenue.

When can I buy Justworks stock?

No specific date has been given by the company for its impending IPO just yet, but S-1 filings went through last week in a move that signals an impending offering. The firm will offer 7 million shares priced between $28 and $32 per share. Justworks will be listed on the NASDAQ exchange under the ticker symbol "JW."

Justworks' financials

For the fiscal year ending May 31st, 2021 Justworks reported total revenue of $982.7 million. This represents a growth of 32.4% year-over-year (YoY). This also represents the first year the company did not report an operating loss since its inception in 2012. With the firm looking to continue to expand its customer base as it goes public, it's very likely that it could post further losses. In fact, for the three months ending on August 31st, 2021 the company reported a net loss of $5.1 million.

Justworks' growth potential

Justworks offers an interesting value proposition to investors. Its target market is U.S.-based small businesses with less than 100 employees. According to its S1 filing, this accounts for approximately 40 million employees across the nation. This market is typically underserved as smaller companies often have complex needs and simply aren't as lucrative as larger multinationals.

By targeting this niche, Justworks has fantastic potential to carve out a formidable market share. The company estimates that its current addressable market size is $40 billion. If the firm can further penetrate this market and continue to offer an expansive suite of core capabilities, it could see remarkable growth.

However, the company also faces a number of notable risks. Competition from larger companies could hamper Justworks' growth. The firm also needs to address its history of operating losses. Despite subscription revenue increasing consistently since 2019, the cost of revenue is also continuing to rise. Potential investors will be eager to see a clear path towards profitability for the company before parting with their money.

As one of the first major IPOs of the year, it's very possible that Justworks benefits from the hype surrounding many public debuts over the last number of years. Investors would be wise not to get caught up in this, and to remember the underlying financials of the company. Waiting to see a couple of quarterly earnings reports before investing is never a bad choice, and could be of particular benefit here as Justworks seems to be right on the cusp of becoming profitable.

Top Ten Stocks To Buy Now
Commit to your future wealth today and join 1000s of subscribers receiving:
  • New stock picked every week out of 60,000 worldwide
  • Ten Foundational stocks to hold until 2034
  • A library of 60 stocks with analysis
  • 10 year Track record of performance
By submitting your email address, you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Policy and Terms of Use.

The Home of Successful Investing.

© 2024 MyWallSt Ltd. All rights reserved.







This website is operated by MyWallSt Ltd (“MyWallSt”). MyWallSt is a publisher and a technology platform, not a registered broker-dealer or registered investment adviser, and does not provide investment advice. All information provided by MyWallSt Limited is of a general nature for information and education purposes, and you should not construe any such information as investment advice. MyWallSt Limited does not take your specific needs, investment objectives or financial situation into consideration, and any investments mentioned may not be suitable for you. You should always carry out your own independent verification of facts and data before making any investment decisions, as we cannot guarantee the accuracy or completeness of any information we publish and any opinions that we publish may be wrong and may change at any time without notice. If you are unsure of any investment decision you should seek a professional financial advisor. MyWallSt Limited is not a registered investment adviser and we do not provide regulated investment advice or recommendations. MyWallSt Limited is not regulated by the Central Bank of Ireland. MyWallSt Limited may provide hyperlinks to web sites operated by third parties. Your use of third party web sites and content, including without limitation, your use of any information, data, advertising, products, or other materials on or available through such web sites, is at your own risk and is subject to the third parties' terms of use.