11 ms·

Justworks S-1

43 points by mattmarcus 5y ago

mattbillenstein 5y ago
Ammended S-1: https://www.sec.gov/Archives/edgar/data/0001623414/000162828022000133/justworkss-1a1.htm https://www.sec.gov/Archives/edgar/data/0001623414/000162828...
- jbergstroem 5y ago
  I would recommend linking to this instead since basic things like cap table was left empty
xwdv 5y ago
Would you invest in this company?
- neom 5y ago
  Not investing advice, and technicals aside. When a SaaS company comes out underwritten by JP, Goldman and BoA, it's typically a decent medium term bet. If I decide to take a position in a stock like that, I'd typically take half on IPO, wait for it to drop, take the other half, and hold it 2/3 years long. The institutionals often create enough of a floor that you can make ok money over that timeframe, the problem thereafter is, is this ACTUALLY a growth business, or was it spring loaded? So keeping an eye on it during the time you hold it to judge that is extremely important.
runako 5y ago
Their numbers do not favorably compare against their peers. Paycom (PAYC) is of comparable revenue but profit margin is much higher (looking like ~400% higher) at PAYC. The two are growing at similar rates. I'm wondering why they are choosing to go public now given these numbers.
- rossdavidh 5y ago
  ...because it's IPO now or wait a few years, probably. We're very late in the cycle, I think, and a correction is coming soon. Same reason Zillow got out of the house-buying business, if the truth be told.
omeze 5y ago
Anecdote from when I was working at Plaid on a special product for the Payroll Protection Program, but the engineers @ Justworks burnt the midnight oil to get an MVP that let businesses verify their payroll eligibility with us. Unfortunately didn't get approved in time before the PPP funds to run out, but the team was great! Grats on the IPO :)
Lathie 5y ago
I interned at Justworks years ago and it was a fantastic experience! Congrats to the team!
jackdh 5y ago
I like Justworks, and the fact they actually seem to already be profitable is refreshing.
lefstathiou 5y ago
Link to their Deal Roadshow presentation: https://dealroadshow.finsight.com/retail-roadshows https://dealroadshow.finsight.com/retail-roadshows
- bobdosherman 5y ago
  - Slide 38 has inconsistent signs for their cost of revenue line. Come on GS...you guys are left-lead. - They love to highlight their LTV/CAC ratio, so let me say that their choice of LTV definition is not ideal (footnote 1 on slide 19) - change in adj. gross profit is not necessarily just attributable to the cohort one acquires in a given year (since they're using S&M expense in a given year to represent CAC). This number could be easily biased upwards if previous cohorts are increasing their sub revenue in the current year (which is seems they are given the chart on slide 31). Assuming LTV of a customer is a perpetuity based on retention rates is an assumption many people make, but also will overstate the LTV. View this metric cautiously.
- albertshin 5y ago
  This is a pretty cool site. do you happen to know why this is classified under "retail" roadshow?
  - lefstathiou 5y ago
    It’s for “retail” investors as opposed to institutional. Simply a market convention.
alberth 5y ago
Has anyone used Justworks? How does it compare to other offerings? (This is the first I've heard of them.)
- SkipperCat 5y ago
  We used them at a previous small tech company. My experience was pretty good. They did all the legwork for payroll, med benefits and other HR-type stuff that a team of 10 engineers did not want to bother with. Justworks and it ilk are part of the "business as a service" model that works really well. Corporate GMail or Outlook365 allowed small companies to let go of the burden of Email management, Justwork does the same for benefits/payroll dept. I'm sure Ziprecruiter and other companies are doing the same for hiring departments too.
  - alberth 5y ago
    So if you are a startup and need services to run your business, is there any back office function needed that a combination of Justworks + Google Workspace + Stripe doesn't cover?
    - robbiemitchell 5y ago
      Yes: - Cap table management (Carta) - Reimbursements (Expensify, Abacus, etc.) - Quickbooks Online (accounting) - Accounting and tax services (outsourced/agency) - … probably more I’m forgetting If you work with sensitive data, you’ll eventually want… - Device management (Kandji) - Device and user monitoring (Vanta) - SOC 2 auditing
      - alberth 5y ago
        This is super helpful. Thanks
      - brightball 5y ago
        I can’t speak for Office365, but I know that GSuite includes device management as part of the platform.
TradingPlaces 5y ago
One of the few SaaS prospectuses that isn’t a complete disaster on the operating statement. -GAAP profits -Sales & Marketing in-line -Not funding payroll at shareholders’ expense However, they are very vulnerable to changes in their costs in “Benefits and Insurance”. They get a very thin gross margin here, and that can easily go negative under the wrong circumstances.
- CPLX 5y ago
  In what way are they vulnerable? They are basically a consolidator and reseller of benefits and insurance to SMB's, they're just passing those costs along and charging management fees. They're vulnerable in the way that a gas station, say, is vulnerable to higher gas prices. Like it could impact their business, and changes in the price might change the behavior of their customers, but I don't see any mechanism by which the margin would "go negative" unless I'm missing something.
  - TradingPlaces 5y ago
    “The wrong circumstances” would be, for example, a steep rise in costs across the board, and they are faced with the choice of eating at least some of it, or losing a lot of customers. I spend a lot more time thinking about edge cases since, well, all this. Anyway, if you look at their gross margin on benefits, it varies between 4.8% to 5.9% in the periods they report, so it’s not a constant margin to begin with. Gas isn’t a great analogy because gas is an inelastic product in a very liquid market where everyone on the retail level locally has the same cost structure. That is not the case with benefits
    - CPLX 5y ago
      That's just not how their business model works. They charge a fixed per-employee fee every month. For benefits they give you a quote each year when policies renew and then you decide what you want to do. Their health insurance rates have doubled and tripled for some customers, because our national system for health insurance is insane, and they just tell you that when the renewal comes up and you decide. I'm a customer, I've seen this first hand. Your comment just doesn't really make sense. It's like wondering if a travel agent is going to "face the choice of eating some of the cost" when hotel rates go up or airline tickets get more expensive. The answer is no, that's just not how the pricing model works.

43 points by mattmarcus 5y ago

Ammended S-1: https://www.sec.gov/Archives/edgar/data/0001623414/000162828022000133/justworkss-1a1.htm https://www.sec.gov/Archives/edgar/data/0001623414/000162828...

jbergstroem 5y ago
I would recommend linking to this instead since basic things like cap table was left empty

xwdv 5y ago

Would you invest in this company?

neom 5y ago
Not investing advice, and technicals aside. When a SaaS company comes out underwritten by JP, Goldman and BoA, it's typically a decent medium term bet. If I decide to take a position in a stock like that, I'd typically take half on IPO, wait for it to drop, take the other half, and hold it 2/3 years long. The institutionals often create enough of a floor that you can make ok money over that timeframe, the problem thereafter is, is this ACTUALLY a growth business, or was it spring loaded? So keeping an eye on it during the time you hold it to judge that is extremely important.

runako 5y ago

Their numbers do not favorably compare against their peers. Paycom (PAYC) is of comparable revenue but profit margin is much higher (looking like ~400% higher) at PAYC. The two are growing at similar rates. I'm wondering why they are choosing to go public now given these numbers.

rossdavidh 5y ago
...because it's IPO now or wait a few years, probably. We're very late in the cycle, I think, and a correction is coming soon. Same reason Zillow got out of the house-buying business, if the truth be told.

omeze 5y ago

Anecdote from when I was working at Plaid on a special product for the Payroll Protection Program, but the engineers @ Justworks burnt the midnight oil to get an MVP that let businesses verify their payroll eligibility with us. Unfortunately didn't get approved in time before the PPP funds to run out, but the team was great! Grats on the IPO :)

Lathie 5y ago

I interned at Justworks years ago and it was a fantastic experience! Congrats to the team!

jackdh 5y ago

I like Justworks, and the fact they actually seem to already be profitable is refreshing.

lefstathiou 5y ago

Link to their Deal Roadshow presentation: https://dealroadshow.finsight.com/retail-roadshows https://dealroadshow.finsight.com/retail-roadshows

bobdosherman 5y ago
- Slide 38 has inconsistent signs for their cost of revenue line. Come on GS...you guys are left-lead. - They love to highlight their LTV/CAC ratio, so let me say that their choice of LTV definition is not ideal (footnote 1 on slide 19) - change in adj. gross profit is not necessarily just attributable to the cohort one acquires in a given year (since they're using S&M expense in a given year to represent CAC). This number could be easily biased upwards if previous cohorts are increasing their sub revenue in the current year (which is seems they are given the chart on slide 31). Assuming LTV of a customer is a perpetuity based on retention rates is an assumption many people make, but also will overstate the LTV. View this metric cautiously.
albertshin 5y ago
This is a pretty cool site. do you happen to know why this is classified under "retail" roadshow?
- lefstathiou 5y ago
  It’s for “retail” investors as opposed to institutional. Simply a market convention.

alberth 5y ago

Has anyone used Justworks? How does it compare to other offerings? (This is the first I've heard of them.)

SkipperCat 5y ago
We used them at a previous small tech company. My experience was pretty good. They did all the legwork for payroll, med benefits and other HR-type stuff that a team of 10 engineers did not want to bother with. Justworks and it ilk are part of the "business as a service" model that works really well. Corporate GMail or Outlook365 allowed small companies to let go of the burden of Email management, Justwork does the same for benefits/payroll dept. I'm sure Ziprecruiter and other companies are doing the same for hiring departments too.
- alberth 5y ago
  So if you are a startup and need services to run your business, is there any back office function needed that a combination of Justworks + Google Workspace + Stripe doesn't cover?
  - robbiemitchell 5y ago
    Yes: - Cap table management (Carta) - Reimbursements (Expensify, Abacus, etc.) - Quickbooks Online (accounting) - Accounting and tax services (outsourced/agency) - … probably more I’m forgetting If you work with sensitive data, you’ll eventually want… - Device management (Kandji) - Device and user monitoring (Vanta) - SOC 2 auditing
    - alberth 5y ago
      This is super helpful. Thanks
    - brightball 5y ago
      I can’t speak for Office365, but I know that GSuite includes device management as part of the platform.

TradingPlaces 5y ago

One of the few SaaS prospectuses that isn’t a complete disaster on the operating statement. -GAAP profits -Sales & Marketing in-line -Not funding payroll at shareholders’ expense However, they are very vulnerable to changes in their costs in “Benefits and Insurance”. They get a very thin gross margin here, and that can easily go negative under the wrong circumstances.

CPLX 5y ago
In what way are they vulnerable? They are basically a consolidator and reseller of benefits and insurance to SMB's, they're just passing those costs along and charging management fees. They're vulnerable in the way that a gas station, say, is vulnerable to higher gas prices. Like it could impact their business, and changes in the price might change the behavior of their customers, but I don't see any mechanism by which the margin would "go negative" unless I'm missing something.
- TradingPlaces 5y ago
  “The wrong circumstances” would be, for example, a steep rise in costs across the board, and they are faced with the choice of eating at least some of it, or losing a lot of customers. I spend a lot more time thinking about edge cases since, well, all this. Anyway, if you look at their gross margin on benefits, it varies between 4.8% to 5.9% in the periods they report, so it’s not a constant margin to begin with. Gas isn’t a great analogy because gas is an inelastic product in a very liquid market where everyone on the retail level locally has the same cost structure. That is not the case with benefits
  - CPLX 5y ago
    That's just not how their business model works. They charge a fixed per-employee fee every month. For benefits they give you a quote each year when policies renew and then you decide what you want to do. Their health insurance rates have doubled and tripled for some customers, because our national system for health insurance is insane, and they just tell you that when the renewal comes up and you decide. I'm a customer, I've seen this first hand. Your comment just doesn't really make sense. It's like wondering if a travel agent is going to "face the choice of eating some of the cost" when hotel rates go up or airline tickets get more expensive. The answer is no, that's just not how the pricing model works.