|Coupa Software: another explosive Silicon Valley tech IPO hits the market |
By Marisa Kendall | firstname.lastname@example.org
The Mercury News
PUBLISHED: October 6, 2016 at 8:07 am | UPDATED: October 6, 2016 at 5:08 pm
(Courtesy of Coupa Software)
Coupa Software team members celebrate the San Mateo-based company’s initial public offering Thursday at the Nasdaq building in New York City’s Times Square. (Courtesy of Coupa Software)
SAN MATEO — Following a recent trend of grand slam tech IPOs, shares of Coupa Software jumped nearly 85 percent in the company’s public market debut Thursday.
The San Mateo-based software company’s shares were trading at $33 when the market closed Thursday afternoon, giving Coupa a market cap of about $1.6 billion — up from its $1 billion valuation as a private company.
It’s the fourth consecutive Silicon Valley tech startup to see a big first-day pop, and it appears that the freeze the valley suffered earlier this year — there were no tech IPOs for the first five months of 2016 — has thawed. Now analysts are turning their attention to the big-name “unicorns” waiting in the wings, such as Snapchat, Dropbox and Spotify.
“I think this just puts another big exclamation point on (the idea that) tech IPOs are rolling again,” said Adley Bowden, vice president of market development and analysis for venture capital database PitchBook. “We expect to see more tech companies go public and hopefully see similar results.”
So far the Silicon Valley tech IPOs that have done well — Twilio, Talend, Nutanix and now Coupa — are companies with little public name recognition. The indicator that the market has recovered will come when name-brand consumer tech companies start going public, Bowden said. Several such companies have been rumored to be planning IPOs, he said, and seeing the recent string of successful offerings could give them the push they need.
San Francisco-based file-sharing and storage company Dropbox reportedly has met with advisers to discuss a possible 2017 IPO. Venice-based messaging service Snapchat, which recently re-branded as Snap, is working on an offering that could price as early as March, The Wall Street Journal reported Thursday. And music streaming company Spotify also is reportedly shooting for an IPO next year.
“Probably not Uber,” Bowden said. “But you’ve probably got a Spotify … You’ve got a Dropbox, maybe even a Snapchat, that are all sort of circling, are close and are likely waiting for these signals in the market to go.”
Seeing those name-brand companies go public will inspire broader confidence in the market, said Jeff Thomas, Nasdaq’s head of listings for the West Coast.
“Really the question is: who’s going to be that first one out?” he said.
Coupa, which sells cloud-based software that helps other companies manage their spending, is less of a household name, largely because it doesn’t cater to consumer clients.
The software company raked in $133 million through its IPO Wednesday evening, offering 7.4 million shares at $18 each — and pricing at the high end of the $16-$18 range the company set the day before. Coupa originally planned to price its shares between $14 and $16, but upped that range in a last-minute show of confidence.
Pricing an IPO is a balancing act, analysts say. While Coupa ultimately left money on the table with its $18 price — since investors were willing to pay nearly twice that on the public market Thursday — that conservative price set Coupa up for a significant first-day bump, which in theory gives it momentum that will lead to long-term value.
Coupa CEO and President Rob Bernshteyn said the company is less focused on its one-day ups and downs. Nevertheless, Thursday was a good day.
“There was celebration, no doubt about it,” Bernshteyn said in an interview with this newspaper. “We’re very happy about being available in the public market.”
The timing of Coupa’s IPO wasn’t dependent on the string of successful tech offerings before it, Bernshteyn said. It was internal factors that pushed Coupa to go public. For instance, the 10-year-old company has proven its worth with big-name clients such as Salesforce, Juniper Networks and VMware, Bernshteyn said, which signaled to executives that Coupa was ready for the public market.
Coupa isn’t profitable, and saw a net loss of $24.3 million on revenue of $60.3 million during the first half of 2016.
Coupa is trading on the Nasdaq Global Market under the symbol COUP.
The software company’s offering comes at the tail end of a year that Bowman said is on track to be one of the slowest in decades for tech IPOs. But those that have gone public this year have done well. San Jose-based cloud computing company Nutanix wowed the valley last week with a 131 percent pop during its first day trading. Earlier this year, San Francisco-based cloud communications startup Twilio saw a 92 percent pop, and shares of Redwood City-based software company Talend jumped up 42 percent.