As of January 2016, an estimated 25% of websites use the WordPress platform. The ubiquitous content management tool is the work of Matthew Mullenweg, who set out in 2003 to democratize the Web by using open-source software to give anyone with a computer the capacity to publish their thoughts on their own website. In 2005, Automattic Inc. became the corporate face of WordPress, and it is currently valued at around $1.2 billion. After 10 years of steady growth as the market leader, the question is whether 2016 will be the year of Automattic's long-awaited initial public offering (IPO).
WordPress has become one of the biggest content management platforms on the Web by offering one of the easiest and most secure ways to publish a website. It powers more than a quarter of the world’s websites and is second only to Google in the number of monthly unique visits in the United States. Its closest competitor is Joomla, which has less than 3% market share. In addition to serving the publishing needs of individuals, Automattic offers an enterprise version of WordPress that allows clients to run custom code. The New York Times has been a longtime user of the WordPress platform.
Although the WordPress platform is free for individual users, Automattic offers several tools and services that generate substantial revenues, such as premium subscriber services, platform add-ons and ads placed on user sites. It also generates revenue from its enterprise version. Although Automattic doesn't release its financial information to the public, its revenues are estimated to be around $50 million annually, and the company is profitable.
Automattic's goals are ambitious, aiming to capture more than 50% of the global market. It expects that its move into mobile applications will solidify its position as the market leader and spur its growth toward its goal.
The Case for an Automattic IPO in 2016
By any measure, Automattic is a good candidate for an IPO in 2016. It has secure revenue growth. It is already profitable. It has dominant market share. After its founders turned down a $200 million offer in 2007, industry analysts have thought that Automattic is still an acquisition target. With a valuation of more than $1 billion, the company is more than able to stand on its own. Over the last few years, Automattic has raised more than $300 million, with its most recent round of $160 million in 2014. In similar situations, venture capitalists have been known to become anxious to find an exit; for Automattic, the most likely exit would be an IPO.
The Case Against an Automattic IPO in 2016
What investors have come to learn about Automattic is that nothing is automatic about the company’s future. Where most analysts see large, late-stage rounds of financing as a next step toward an IPO, Automattic's chief executive officer (CEO) and founder, Mullenweg, sees it as an opportunity to remain private as it continues to pursue its growth targets. He has indicated that the last round of financing solidifies Automattic as an independent company and that his investors aren't looking for a quick turnaround. Mullenweg wants to get to over 50% market share and secure WordPress's dominance as a mobile publishing platform, which he sees as the future of content management technology.
Although most of the pieces are in place for a successful IPO, all indications are that Mullenweg is in no hurry to seek out public capital. Having turned down $200 million more than eight years ago, you can probably take him at his word. Chances of an Automattic IPO in 2016 are slim.