Antivirus software developer AVG Technologies has filed an initial public offering (IPO) looking to raise up to US$125 million in funds amid high investor demand for security software stocks.
According to a Reuters report last Friday, the Netherlands-based company is known for its free suite of antivirus products and monetizes its large user base through targeted advertisements and driving traffic to online search companies such as Google and Yahoo. Besides its free software, AVG also provides a paid subscription software version with more advanced features, and this business strategy is known as the "freemium" model, it stated.
"The whole 'freemium' model has been effective in gaining subscribers, so their strategy seems to be less focused on growing the subscription revenue--if you look at the growth rate year over year," William Blair & Co analyst Jonathan Ho said in the report.
The filing indicated that the company had 106 million active users as of Sept. 30, 2011, but only 15 million users paid for the service. The proposed offering is said to consist of ordinary shares sold by AVG as well as selling shareholders, though the number of shares to be sold or the expected share price were not revealed, the report noted.
Ho also told Reuters that demand for security software stocks was on the rise given the recent concerns related to widespread hacking, giving them a chance to take advantage of the high valuations attached to these stocks.