If you believe stories that London’s stock market, once the epicentre of global finance, is trapped in a new listings death spiral, then all the more reason to pay attention to the potential stars that have pulled the trigger on IPOs (initial public offerings) in the UK’s capital in recent years.

Online reviews platform Trustpilot (TRST), in our opinion, stands out for a few reasons. One, it is a tech growth business, and most fast-growing tech firms list in the US, or so it seems. Two, its 2021 IPO created the sort of market excitement and noise more associated with Wall Street listings, and three, it was already a business of considerable scale, coming to the London market at a £1.1 billion valuation.

Getting an IPO away is high-pressure for any senior executive but Hanno Damm, chief financial officer of Trustpilot had to contend with Covid challenges too, navigating quarantine and travel restrictions. ‘We did a roadshow in late 2020, in Zurich, Switzerland, because that was a country that we could fly to without any quarantine restrictions,’ says Damm.

Other roadshow meetings were conducted over Zoom. Damm was in New York during the teeth of winter, so when Trustpilot founder Peter Holten Mühlmann flew in for a series of Zoom catchups, the pair decided to jump on a plane to Miami, to escape the ‘Big Apple’ frost.

IPO ROLLERCOASTER

The float went off like gangbusters as thousands of investors piling in as stock trading began, seeing the stock surge from a 265p float price to 449p. But it proved a brief moment in the sun. By the end of March 2022, the stock had slumped to around 150p, leaving many investors deeply underwater.

‘I think the main driver of share price decline was wider market volatility, with multiples given to many software companies have dramatically changed’, says Damm. That stacks up. Microsoft’s (MSFT:NASDAQ) price to sales multiple declined from about 12.5 to below 8 times during 2022.

Damm says investors that were complaining that the company wasn’t investing fast enough in growth were now demanding profits. ‘Where’s my returns?’ was a question Damm and others on the Trustpilot team where frequently facing.

Fund managers found their hands tied as global markets surged then sank with maddening regularity in what Damm calls ‘a low liquidity purgatory.’ There were even fund managers who understood the business and its long-term potential but couldn’t invest more in Trustpilot stock even when its price to sales multiple fell to two times, because their risk teams wouldn’t let them.’

Now, having pivoted to profitability, and making impressive operational progress, investors have been returning to the story. Over the past two years the share price has recovered considerably – from below 65p to 216p – and is closing in on IPO levels.

INVESTMENT RATIONALE

Today, the company hosts more than 300 million reviews and annual recurring revenues were running at $230 million at the end of 2024.

 Or in other words, about 93% of $246 million 2025 forecast revenue is covered from day one, and around 80% for 2026’s $287 million consensus estimate, according to Stockopedia data.

Buying products and services online can be fraught with risk and a platform which helps consumers navigate this is invaluable.

Thousands of businesses now turn to Trustpilot for customer transparency and the underlying consumer data analytics it provides. Crucially, this creates valuable network benefits, where the more consumers that use the platform and share their experiences, the richer the insights the company can offer business clients.

Done well, this creates a virtuous circle where consumers feel drawn to Trustpilot because it is where meaningful services are listed and reviewed, and the more consumers that use Trustpilot, the more businesses will feel they cannot afford not to be on the platform.

Damm uses Peloton (PTON:NASDAQ) as an example. Many customers were complaining about the condition of new bikes being delivered. By tapping into Trustpilot data, Peloton discovered one of its key shipping partners was the common denominator. They hauled them over the coals and the problem was solved.

Expansion into new verticals is now being researched, but importantly, Damm insists this will not see Trustpilot venture into competitive spaces like hospitality, or pubs and restaurant reviews. ‘We are looking at financial services, travel, education, healthcare, markets where consumers really care where they spend their money,’ says Damm.

Some analysts have perceived this as a medium-term risk. ‘The current valuation assumes perfect execution over a multi-decade time horizon despite near-term macro risks and medium-term business profile uncertainty,’ Liberum wrote in a recent note (9 June). Yet even this seeming damning research still put a 200p valuation on the shares, not even 10% off current levels.

If that’s a worst-case scenario, what’s the upside? According to Stockopedia data, the consensus share price target for the next 12-months or so stands at 344p, or nearly 60% higher than where it is today. This will be supported by an ongoing share buyback programme, bolstered to the tune of an extra £20 million in March 2025.

BALANCE BETWEEN RISK AND REWARD

On that basis, we suspect plenty of investors will be intrigued by the balance between risk and reward, especially Damm’s medium-term ambitions for 30%-odd operating margins on mid-teens revenue growth. Last year’s operating margin was 1.8%, according to Stockopedia.

Time will tell which ways these winds blow. In the meantime, Trustpilot isn’t going to be one of the seemingly endless list of UK-listed companies shifting to the US stock market.

‘I spent quite a bit of time in the US meeting with investors, and we’ve been able to attract about 40% of our shareholders from the America. But on a market valuation of less than £1 billion, Damm believes the company is sub-scale for a US listing. ‘We have a very supportive shareholder base, in the UK, US and across Europe,’ says Damm.

That Advent International, a major US tech investment firm, is its largest shareholder (approximately 5%), seems to prove Damm’s point.

‹ Previous2025-06-12Next ›