As a software or tech company prepares for a public listing, the spotlight on financial reporting becomes intense—and few things come under the microscope as sharply as revenue.
So, what do all things revenue – revenue recognition, automation and management – have to do with taking a company public?
In short: everything.
Effective revenue management—particularly adherence to revenue recognition standards like ASC 606 and IFRS 15—can unlock a higher valuation, reduce the risk of financial misstatements, and create more strategic options for the company, whether through a traditional IPO, SPAC, or direct listing.
Below we explore the role of revenue recognition, revenue automation and holistic revenue management in a successful IPO, we outline common revenue challenges for pre-IPO companies, and highlight how a finance data platform with revenue recognition capabilities can be a game-changer.
Why IPO stakeholders should care about revenue
Every IPO journey brings together a unique mix of stakeholders, each with their own goals—but all of them rely on clear, predictable, and compliant revenue reporting supported by granular, trusted data.
- The CFO is facing the pressure of new regulatory and reporting requirements. Public scrutiny demands confidence in revenue projections and a rock-solid handle on compliance.
- Venture Capitalists are focused on maximizing the company’s valuation and exit potential. Clean, well-documented revenue streams can command higher multiples.
- Private Equity investors often come in with the goal of professionalizing operations. Financial controls and robust revenue systems are a fast track to IPO readiness.
- Advisors must help limit risk, ensure compliance, and make the company attractive to potential acquirers or public investors.
For each of these stakeholders, revenue isn’t just a line on the income statement—it’s a critical indicator of business health, maturity, and long-term viability.
Three common revenue challenges for Pre-IPO companies
Revenue Predictability
Public companies need to do more than grow revenue; they need to project it with confidence.
Can you:
- Forecast revenue across multiple scenarios?
- Identify where future revenue will come from—by product, region, or service?
- Respond quickly with accurate guidance for analysts and investors?
Predictable, well-understood revenue builds credibility with the market and helps ensure a smoother transition to life as a public entity.
Revenue recognition compliance
The leap from private to public financial reporting is steep—especially under complex standards like ASC 606 and IFRS 15.
Many private companies:
- Lack familiarity with the nuances of revenue recognition standards.
- Rely heavily on Excel-based processes that won’t scale post-IPO.
- Don’t have the resources or systems to meet the demands of public company reporting in a short time frame.
Without automation and expertise, the risk of delays and misstatements rises quickly.
Revenue confidence
In a public setting, errors are costly—not just in dollars, but in trust.
To instill confidence, companies need to:
- Establish strong internal controls and data governance.
- Centralize and reconcile data with precision.
- Replace manual processes with automated workflows that reduce human error.
- Clearly explain accounting decisions to auditors and other stakeholders.
Confidence in revenue reporting translates directly into confidence in the business as a whole.
With Aptitude RevStream fewer journals and fewer manual tasks reduce business risks during month-end close, making it a much more seamless process. As soon as we close, the data is readily available, giving our revenue and FP&A teams an accurate, real-time platform for forecasting and planning.
-Declan O’Donoghue, Senior Principal Analyst, Red Hat
How automation helps
For software companies preparing to go public, automation can be the difference between a clean transition and a chaotic scramble. An automated revenue management solution like Aptitude RevStream provides:
- Centralized, auditable revenue data
- Support for multi-GAAP and multi-currency requirements
- Automated contract modifications, SSPs, and allocations
- Scalable reporting that grows with your business
A simple solution to a complex problem
RevStream takes a complicated mesh of data and turns it into clear actionable solutions that help your team achieve their goals. Here’s a breakdown of how it works:
- Transaction Hub: A powerful repository of contract, order and business events. This interfaces with existing source systems (like ERP, CRM, contract, billing and sales) to collect, aggregate and enable transactions for revenue recognition.
- Revenue Arrangement Manager: This defines performance obligations and customer arrangements, and automatically tracks and manages contracts in accordance with ASC 606and IFRS 15.
- Standalone Selling Price (SSP) Engine: This automates historical transaction analysis and testing to determine SSP and support the processing of high transaction volumes.
- Revenue Recognition Manager: This increases efficiency and reduces the risk of non-compliance by providing full automation of revenue and cost accounting through a highly configurable rules engine.
- Revenue Reporting Platform: This leverages financially controlled, trusted, and rich operational and revenue data models.
- Revenue Insights: A rich library of pre-packaged analytics that deliver valuable business insights to drive smarter decision making, accurate forecasting and real time, strategic foresight.
Client snapshots: Automation in action
- A US-based company preparing for IPO faced overwhelming complexity with ASC 606 compliance. Aptitude enabled them to meet requirements in a fraction of the time it would’ve taken to implement a general-purpose solution.
- A Swiss open-source software provider needed to meet US GAAP requirements ahead of its IPO. Aptitude helped automate manual revenue processes, including multi-GAAP and multi-currency reporting, and enabled revenue automation features that weren’t available in their previous system.
- Another client adopted Aptitude RevStream specifically to centralize and professionalize their revenue management program ahead of an IPO. Automation delivered more accurate insights, better reporting, and fewer manual interventions—exactly what investors want to see.
If you’re interested, you can hear more client perspectives here!
Ready for public markets?
Whether you’re planning to go public in six months or just starting to explore your options, it’s never too early to evaluate your revenue management strategy.
Because when revenue is predictable, compliant, and trusted, it creates more than a better IPO—it builds a stronger company.
