UserTesting To Go Private In $1.3 Bln Cash Deal; Q3 Loss/share Narrows; Stock Climbs In Pre-market

UserTesting, Inc. (USER), a video-based human insight company, announced Thursday that it has entered into a definitive agreement to be acquired by Thoma Bravo, a software investment firm, and Sunstone Partners for $7.50 per share. The all-cash deal is valued at around $1.3 billion.

Separately, UserTesting reported narrower net loss per share and higher revenues in its third quarter.

In pre-market activity on the NYSE, UserTesting shares were trading at $7.45, up 93.01 percent.

The transaction, which was unanimously approved by the UserTesting board of directors, is currently expected to close in the first half of 2023, subject to customary closing conditions.

Upon completion of the transaction, UserTesting’s stock will no longer be publicly listed and UserTesting will become a privately held company.

The offer represents a premium of approximately 94 percent over UserTesting’s closing stock price on October 26, and a premium of approximately 97 percent over the volume weighted average price of UserTesting’s shares for the 30 trading days.

Following the deal closure, Thoma Bravo and Sunstone Partners intend to combine UserTesting and UserZoom, which Thoma Bravo acquired majority control of in April 2022.

UserTesting’s CEO, Andy MacMillan, will lead the combined company.

The agreement includes a “go-shop” period expiring on December 10, which allows the UserTesting board of directors and its advisors to actively initiate, solicit and consider alternative acquisition proposals from third parties.

In the deal, Morgan Stanley & Co. LLC is serving as exclusive financial advisor to UserTesting.

In its third quarter, UserTesting’s net loss widened to $15.19 million from last year’s loss of $9.64 million, while net loss per share narrowed to $0.11 from prior year’s loss of $0.49 on higher share count.

Adjusted net loss was $6.4 million, or $0.04 per share, compared to loss of $8.7 million, or $0.45 per share in the same period last year.

Total revenue went up 28 percent to $49.41 million from $38.65 million last year.

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