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Danish online reviews platform prepares for Main Market listing
Thursday 04 Mar 2021 Author: Steven Frazer

Online business reviews platform Trustpilot has announced its intention to float on London’s Main Market and hopes to raise $50 million to fund growth and pay down debt. Market speculation suggests that an initial public offering of a 25% stake could give the business a near £1 billion valuation.

The reviews and recommendations engine will be familiar to thousands of UK investors. It allows people to review and leave feedback for goods and services bought online using a one to five-star rating system.

Trustpilot, founded in Denmark in 2007, makes money by analysing reviews and recommendations data and providing insights and analytics to business owners on a ‘freemium’ basis.

That means it offers some analysis for free, hoping to upsell customers to more detailed reports and insights as the potential of improved customer experience and sales conversion becomes apparent.

The company has enjoyed rapid growth in recent years and reported its first profit in 2020. Trustpilot’s financials are ‘certainly something to note’, said Megabuyte analyst Indraneel Arampatta.

Revenue has grown from $64.3 million in 2018 to $102 million in 2020 (to 31 December), launching the company into profit for the first time. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) swung from a $21.5 million loss to a $6.1 million profit, supported by rapidly growing user engagement that drove greater domain engagement.

User reviews have grown more than 10-fold since 2015 to around 120 million, with the number of digital businesses tapping this source of data surging more than 600% in seven years. The company today employs nearly 700 staff globally.

Trustpilot believes that there is a massive digital market worth $6.3 billion to attack across the UK, Europe and US which remains underpenetrated. Analysts also see huge potential in Asia, where the company has a far weaker presence.

‘The listing may just provide the firepower required to develop this organically or even through acquisition’, said Megabuyte’s Arampatta.

‘With fast growth, a proven subscription-based business model and high gross margins underpinned by a modern, highly scalable technology platform, we have all the attributes required to thrive as a listed business’, said Trustpilot chairman Timothy Weller.

A Trustpilot IPO would come in the wake of greetings cards company Moonpig’s (MOON) own £1.2 billion float last month, with several other technology and platform businesses thought to be mulling listing plans. Food delivery app Deliveroo is expected to unveil its own multibillion pound listing in the coming weeks, while digital doctor Babylon Health and car seller Cazoo are also in the IPO frame.

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