It's been a good summer for Steve Winn.
The chairman and CEO of Carrollton, Texas-based multifamily software and services provider RealPage took his company public in August, with trading on the NASDAQ beginning August 12. By August 25, the company announced that the underwriters of the initial public offering (IPO)—including New York City-based Credit Suisse Securities USA and Deutsche Bank Securities, Chicago-based William Blair & Co., London-based RBC Capital Markets Corp., San Francisco-based JMP Securities, and Portland, Ore.-based Pacific Crest Securities—had exercised their option to purchase nearly 2 million additional shares, bringing the total IPO size to more than 14 million shares and a market cap of $1.07 billion.
Initially priced at $11 per share, the stock has since crossed the $18 mark and consistently traded in the $17 range. With RealPage’s SEC-mandated quiet period concluding this week, Winn sat down with Multifamily Executive senior editor Chris Wood to share his thoughts on the IPO and the evolving future of both RealPage and multifamily technology.
MFE: Steve, congratulations on an extremely successful IPO. What is the biggest difference between RealPage as a public company and where the firm was strategically situated six months ago?
WINN: There’s not a lot of difference—we really had spent the last two years getting ready to be a public company, so after the IPO, there hasn’t been much change. Virtually all of our operations people are continuing to support our clients and build new products just as they did before we were public. It’s business as usual.
MFE: RealPage had been quite active when it came to acquisitions in the 24 months heading into the IPO. Do you still see additional opportunities in the multifamily technology arena to add new business units and broaden existing platforms via acquisitions?
WINN: We do. Any product that we are not offering to our customers that adds value to the operation of an apartment community is something that we will look to either make ourselves or, if there is a great company already offering that product, we would consider an acquisition of that company. We have done a number of product-extension-type acquisitions in the past, and I expect we’ll continue to be acquisitive in that area.
MFE: What other areas will RealPage deploy capital raised via the IPO?
WINN: We’re constantly expanding our cloud infrastructure to support infrastructure as a service clients and our SaaS [software as a service] clients, so we will continue to invest capital expenditures in that area, and we’ll also use the raise for working capital.
MFE: Leading into the IPO, both Pinnacle and Riverstone Residential announced their adoption of the RealPage cloud computing services model. Do you think broader cloud computing adoption from owner/operators is a near-term reality?
WINN: I think cloud computing is a mega-trend, not just in our industry but in many others. A typical IT investment for an owner can be millions of dollars, and a big chunk of that is very tactical-oriented—managing servers and routers and networks. That can be more efficiently outsourced to a third-party, allowing IT departments to refocus on more strategic activities like building systems to improve operational efficiencies.
In the past, you might see 80 percent of an IT budget focused on keeping the wheels on the car, and 20 percent focused on building competitive advantage through advancements in systems and reengineering. We are suggesting to the industry—and I think we are getting some interesting adoption of this idea—that you should outsource the tactical and take that 80 percent and use it to your strategic advantage.
MFE: What's been the biggest difference in your day now that RealPage is a public company
WINN: There’s really not that much difference—the meetings continue. We haven’t changed the way we operate the business. The CFO obviously has an additional contingent that he has to serve, but the divisional presidents and operating executives are focused on creating value and supporting our customers.
MFE: What's next in the evolution of multifamily IT? What do you see on the horizon of technology and services and how will RealPage evolve to embrace those developments?
WINN: The area I think is most ripe for improvement is the question of how to market, attract prospects, and lease-up an apartment with qualified residents. Online marketing is probably the least well-understood cost that an apartment company has today. They invest in ILS services, but they don’t typically have an effective way of tracking the cost for each lease that originates with each ILS, and they are not exploiting the direct sources of leads effectively.
If you look at the popular and traditional ways of measuring success in online marketing, it is based on the number of leads that are delivered to a property. We think that is absolutely the wrong way to gauge effectiveness of an online marketing program—you really need to look at the number of leases that you are generating. We think there is an opportunity to optimize lead flow and significantly improve the quality of leads received and thereby make it possible to have fewer people engaged in what has become a tremendous amount of work. Technology is the key to that.
