Boston’s newest publicly traded tech company is also among the most valuable: Shares in Duck Creek Technologies started trading on Aug. 14, and the company’s market capitalization quickly climbed past $5 billion.
Haven’t heard of Duck Creek? That may be because it specializes in software for the property and casualty insurance industry. There are plenty of opportunities for growth in that $15 billion global market, but it’s not particularly consumer-friendly.
You also may not be aware of Duck Creek for this reason: It’s a relative newcomer around here. The software company bought a smaller business in Boston called Agencyport in 2016, a deal that prompted Duck Creek to establish its headquarters in the city. In 2018, Duck Creek relocated to new digs in the Seaport, consisting of 30,000 square feet at 22 Boston Wharf Road.
It was a bit of a winding road up to that point. In 2011, consulting giant Accenture acquired a roughly 10-year-old, Missouri-based insurance software business with the Duck Creek name — a moniker inspired by a waterway that ran through a founder’s farm. Accenture merged Duck Creek with one of its in-house software businesses. Eventually, British private equity firm Apax Partners showed up to invest in 2016, essentially carving Duck Creek out of Accenture and turning it into a standalone company by taking majority ownership in 2016. The Agencyport deal happened around the same time.
In the two years leading up to the IPO, a number of other investment firms kicked in money to help fuel Duck Creek’s growth.
The company reported $171 million in revenue in its last fiscal year, though it has still been losing money, including a loss of $16 million in that 12-month period.
Investors, however, are betting on more growth ahead: Duck Creek raised $405 million in its initial public offering last week, and the stock price surged quickly on the open market, rising from $27 at the IPO to $41 on Friday.
Apax and Accenture remain key investors. Instead of cashing them out, chief executive Mike Jackowski plans to use the IPO proceeds to invest in expansions in Europe and the Asia-Pacific region, and in making more mergers and acquisitions.
“We just have an incredible opportunity in front of us,” Jackowski said. “Our opportunity is based on the premise that the industry will transition to run core systems in the cloud. We’re in the early innings, if you will, of that transition.”
Nearly 1,400 people work at the company today, including 150 at the Boston headquarters, Jackowski said. (He said the firm’s largest operation is in Mumbai, where about 400 people work.)
The company is hiring more employees in the Boston area, and across its global operations, to keep up with the demand for its software and to grow the business, Jackowski said. Duck Creek has the potential to be a flagship company for Boston’s burgeoning “insurtech” scene, a roster that includes the likes of Corvus, EverQuote, Insurify, and Openly.
Many big property and casualty insurers still use “legacy systems,” Jackowski said, the kind that depend on racks of servers humming in their offices. Duck Creek already has a number of big-name clients — Liberty Mutual, AIG, and Geico among them — interested in harnessing the computing power of the cloud, a catchall term for remote data centers.
Donald Light, a specialist in property and casualty insurance at financial consultancy Celent, said Duck Creek was one of the first technology providers for the insurance industry to offer a full suite of cloud-computing products. Insurers, he said, are shifting more data to cloud storage and are increasingly seeking software that can run remotely to make better use of analytics and artificial intelligence.
“Basically, insurance systems that are designed to run in the cloud give a lot more agility, a lot more flexibility, a lot more analytical power,” Light said. “It’s a more powerful environment than running the same software on servers in the insurance companies’ own data centers.”