Duck Creek Technologies $405 Million IPO opens at $42 per share

Duck Creek Technologies Chief Financial Officer, Vincent Chippari, joins Yahoo Finance to discuss the companies IPO.

Video Transcript

JULIE HYMAN: We're also tracking a new initial public offering today. It just started trading a few moments ago, and the shares are off to the races. It's called Duck Creek Technologies. The shares opened at $42 after pricing at $27. They raised just over $400 million, I believe, in that IPO. So we are seeing strong reaction in those shares.

We are joined now by the CFO of that company, Vincent Chippari. He is joining us from Chicago. Vince-- Vinny, I guess, is what you go by. Excuse me. So congratulations on the IPO, we should say.

You guys make software that serves the property and casualty industry, and I believe you're started by insurance-industry veterans. What does your software do or what is it designed to do that you thought wasn't being done in this industry already?

VINCENT CHIPPARI: Sure. So our software runs the core functions of a P&C insurance company. So the core of the system is policy administration and claims processing and billing, and then we have other products that handle distribution management for their agents and things like that, reinsurance-management programs, and data analytics. So really think about running all of the core processes inside an insurance company.

ADAM SHAPIRO: Hey, and congratulations on the IPO. I just wanted to ask you, do I as the consumer notice that when your software is working with the insurance company? Because all of us have the horror stories of fighting the claims office. Does your software get involved in that process?

VINCENT CHIPPARI: So sure. Our software is actually used by a lot of the largest insurers in the world to process their claims. Our software-- we deliver the software as a service in a cloud-based solution, and we're-- you know, one of our goals is to make the insurance industry more efficient by moving to more modern solutions.

INES FERRE: Vinny, Ines here. Given COVID-19 and the fact that everything has really gone digital, including insurance, what are some of your clients looking for as far as features? What are some of the trends that you are noticing with respect to your clients?

VINCENT CHIPPARI: Well, we do have a feeling that the insurance industry wants to move rapidly to more agile solutions. So what they're looking for is the ability to launch products faster, launch different kind of products, be more reactive in the marketplace. Doing that with older-style on-premise solutions has been difficult, so one of the things we're doing is bringing that to the cloud and enable them to be more agile in terms of how they run their business.

JULIE HYMAN: Vinny, you're the numbers guy, so I want to ask you about some of the numbers here. I know you guys have among-- the big insurers among your clients-- Progressive, Liberty Mutual, AIG, Geico. Your revenue was about $153 million, if my information is correct, in the nine months ended in the end of May, and here you are raising more than $400 million in your IPO. Like I said, the shares are going way up today. Did you price the IPO correctly? And now you've got a pretty high price-to-sales ratio given that trailing nine-month sales number.

VINCENT CHIPPARI: We do. I mean, we think we priced-- you know, we think we priced the IPO properly. You know, it's easy to get excited about the, you know, first day of trading reactions.

We're more-- we're a lot more focused on long-term shareholder value and value creation, and we think we've got a good long-term story and expect to have really good, sustainable growth for an extended period of time. We do think the industry is in the early stages of transition of their technology transitions, so we think there's a lot of runway here in terms of being able to grow.

RICK NEWMAN: Hey, Vinny, Rick Newman here. I have a question about climate change. So there's a lot of anecdotal recording about more violent weather, more flooding, more storms, more fires, and things like that. If this is actually happening, one would think it would show up in property and casualty claims. Is that actually happening? Are you seeing an increase in claims over time that can be attributed to changes in weather and climate?

VINCENT CHIPPARI: Well, you know, catastrophic events come in waves and cycles, right? So, you know, of late, I don't think we've seen any notable uptick in claims. Actually, claims volumes during COVID-19 have actually probably been down a little bit overall. But certainly the insurance industry overall is in a healthy condition and has weathered COVID-19 in a very strong fashion. It's a very resilient industry.

ADAM SHAPIRO: Would you expect your business to grow as-- you know, on this climate issue, as claims for weather-related damage and insurance companies have to take on greater roles in that, or would you be susceptible to companies making the decision we're no longer going to cover those kinds of issues?

VINCENT CHIPPARI: Well, the way we price our products is as a function of the written premium that the insurers get, and we think about it in terms of the premium in the world. There's over $2 trillion of written premium globally, and that number increases every year. So even though a company may move in or out of one particular line of insurance, the way our products work and run almost on an enterprise basis for the most part, you know, we're pretty insulated against any individual kind of movement.

INES FERRE: And what are you looking to do with the capital that's raised? What type of expansion are you're looking at?

VINCENT CHIPPARI: Sure. So we have aggressive growth plans, and we continue to invest a lot of money in R&D in terms of developing our products further, invest in our go-to-market operations, our sales and marketing organization. And one of the things we're doing in particular, we want to do some international expansion. And then we'll look at further acquisitions. We've done a few acquisitions in the last few years looking to acquire companies that have product capabilities that, you know, add on to our existing core set.

JULIE HYMAN: Vinny, thank you so much, and congratulations again. Duck Creek CFO Vinny Chippari, appreciate it.

VINCENT CHIPPARI: Thank you.