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Conversica to evaluate IPO in 4Q25

Conversica, a San Mateo, California-based artificial intelligence software firm, is evaluating the possibility of an IPO at the end of 2025, as it continues to consider opportunistic acquisitions, CEO Jim Kaskade told Mergermarket.

The company was planning to do an IPO in 2024 but that plan was delayed as slower economic growth prompted its clients to lower their budgets and reduce headcount, he added.

“2025 would be a bull market and that is expected to continue until 2030. This minimal five years of growth would fuel all of us. Next year would be a much better year to raise capital, or IPO or acquire companies,” he said.

Conversica has a Likely to exit (LTE) score of 52 out of 100, according to Mergermarket’s LTE predictive algorithm.*

The company has not hired investment bankers for the IPO, he added. In the meantime, Conversica may opportunistically consider acquiring AI support-centric companies or those in either horizontal or vertical industries such as automotive AI or communication AI.

Acquisitions might be used to enter new markets such as Latin America, Europe Middle East, and Africa (EMEA) or Asia Pacific. These targets could be companies that have prototypes but may not be revenue generating yet.

Any new talent could be used to augment Conversica’s engineering and data science teams. In 2018, Intelligens.AI, a Santiago, Chile-based startup, was acquired for an undisclosed sum.

As previously reported by this news service, Conversica rebuffed a chance to merge with a SPAC, in addition to turning down offers from strategic suitors and a PE majority recapitalization offer, similar to Vista Equity Partner’s September 2021 strategic partnership announcement with Boston-based Drift.

In 2022, the firm completed a USD 25m Series E financing with investment funds managed by Morgan Stanley Expansion Capital. Its USD 20m Series D round announced in September 2020 was led by Hollyport Capital, an existing investor of Kennet Partners, Conversica’s lead private equity investor. Other investors include Providence Strategic Growth (PSG)Toba Capital and Savano Capital Partners.

Founded in 2007, Conversica provides AI-powered conversation automation solutions for enterprise revenue teams, according to its website. It has 200 employees, he noted.

Conversica recorded a 36% growth in large clients last year, however, the percentage figure declined for small businesses which are struggling, he added. It counts SalesforceOracle and other Fortune 500 companies as its clients, he added.

Kaskade is heads down on execution in 2024 readying itself for the inflection point of AI’s mass adoption by tech firms. It seeks to support clients’ digital journey and have an omnichannel presence.

After a strong 1Q24 growth in revenue, the CEO expects a turnover to continue to increase across the rest of the year due to high adoption. He expects to witness more AI adoption in 2Q24 and 3Q24 due to higher client budgets.

The company’s pipeline of clients is likely to grow non-linearly in 2025, making it a “phenomenal” year, he said.

Early adopters of AI are likely to get higher revenue and EBITDA growth he noted. “It is like printing money. If you apply AI to automate your revenue team activity, they will book more revenue,” he said.

It would be a “big win” if the company achieves an ARR of USD 100m, and a profitable growth of 40% year-on-year, he said.

*Mergermarket’s LTE predictive analytics assign a score to private equity-backed companies to help track and predict when an exit could occur through M&A and IPO, a direct listing or deSPAC transaction.