LifeLock Inc., an online provider of identity-theft protection services, is exploring an initial public offering, Chief Executive Officer Todd Davis said.
The Tempe, Arizona-based company is talking to banks including Goldman Sachs Group Inc. (GS:US) and JPMorgan Chase & Co. (JPM:US) about handling the IPO to sell a 10 percent to 15 percent stake, he said.
“The IPO market looks intriguing,” Davis said in an interview. “We don’t have a sense of urgency, and aren’t locked into any one path yet.”
Founded in 2005, LifeLock provides its 2.2 million users with fraud protection for $10 to $25 a month. Membership is surging more than 10 percent a year, Davis said, keeping pace with growth in reported crimes and the market for services to deflect would-be offenders. LifeLock, along with ID Analytics Inc., a company it acquired last month, had revenue of more than $200 million in 2011.
The company is likely to seek a valuation of as much as 7 times sales, according to a person with knowledge of the matter, who asked not to be identified because the deliberations are private. An IPO filing may come within the next year, this person said.
More than 11.6 million U.S. adults were victims of identity fraud last year, according to Javelin Strategy & Research. The market for identity and access management services reached $3.7 billion in 2010, according to consulting firm RNCOS.
“If identity theft happens, we try to help and work with the bank, the IRS, whoever,” Davis said. “We’ll spend $1 million.”
‘Opportunities for Acquisitions’
Some of LifeLock’s sales come from analytic tools that help more than 280 corporate clients, including payday loan providers, predict the likelihood of fraudulent transactions. LifeLock bought ID Analytics for an undisclosed sum to expand into these theft-prevention services.
More deals are possible, Davis said.
“We’ll still continue to look for emerging technologies,” Davis said. “I certainly think there will be opportunities for acquisitions going forward.”
LifeLock has raised about $200 million from investors including Bessemer Venture Partners, Goldman Sachs and Kleiner Perkins Caufield & Byers (ZZISK:US), Davis said.
The company may be worth about $1 billion, or about five times annual revenue, said Tom Taulli, who runs IPOPlaybook.com in Newport Beach, California.
“This would be attractive in the public markets,” because it has recurring revenue, Taulli said.
Gene Yoon, a managing director at Goldman Sachs, is on LifeLock’s board of directors, which also includes Google Inc.’s former Chief Financial Officer George Reyes and Tom Ridge, former U.S. secretary of homeland security.
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