The Strategist

Top 5 of Successful High-Tech IPOs in 2015


12/25/2015 - 15:08



The outgoing year was not fruitful in regard to high-tech companies’ IPOs. However, some players have managed to attract Wall Street’s attention and held initial publics very well.



Photo credit: Lending Memo
Photo credit: Lending Memo
Observing lack of high-profile IPOs, financial analysts concluded that the "Unicorn" era is coming to the end (“Unicorns” are technology companies that have achieved valuation of more than $ 1 billion without going public). Critics gave disappointing forecasts for the Internet companies, preparing for going public in future .

BusinessInsider made a selection of the most successful high-tech IPOs in 2015.

5. Atlassian: + 35,67%

10th of December, Australian company Atlassian raised $ 462 million, posting 22 million shares at $ 21 on the NASDAQ. Thus, the company was valued at $ 4.4 billion. The deal surpassed Atlassian’s expectations in all respects. A week ago, the share price was projected at $ 16,50-18,50, then the company has adjusted the forecast to $ 19-20. In addition, the actual number of outstanding shares was higher than the expected 10%.  

At the end of 2015, Atlassian’s IPO took fifth place by amount of raised funds. At the same time, according to Renaissance Capital experts, the world IPO market will amount worst this year since 2009.
Atlassian sells enterprise software, including messenger and tools for project management and document collaboration.

Software products developmed by Atlassian Software System are used by over 24 th. companies around the world, including such famous as Facebook, Twitter, Citigroup, eBay, Netflix and Nike, BMW, Cisco, Adobe, Apache.

4. Square: + 38%

Start-up of electronic payments Square, created by the founder and CEO of Twitter Jack Dorsey, had an initial public offering (IPO) on the New York Stock Exchange (NYSE) in November this year. The offering price was $ 9 per share, below the expected range of $ 11-13 and much lower than price of $ 15.46, paid during the last round last fall.
Bidding began on November 19th. The company received a ticker SQ. The opening bid started at $ 11.20 per share. During the IPO, Square raised $ 243 million ($ 80 million lower than expected), failing to realize 27 million shares. Thus, the company's market capitalization was only $ 2.9 billion, while private investors previously estimated it at $ 6 billion.

"The deal reflects a change in the investors’ attitude to these companies, - says Jeremy Abelson, managing the fund's investments at Irving Investors. - These companies are spending significant resources trying to increase revenue, yet so far, the situation with profitability is bad."

Some of the later private investors of Square defended their interests with a scheme known as “ratchet”. If offering price is lower than the specified minimum (in the case of Square, threshold was $ 18.56), investors will receive remaining amount in additional shares. In this case, such investors became at least two banks involved in the IPO: JPMorgan and Goldman Sachs. The agreement cost the company about $ 93 million, or 10 million shares.

3. Fitbit: + 43,15%

Fitbit debuted on Wall Street as a public company, with its shares traded at 43% above the price proposed by the manufacturer of portable devices itself.

With the announced price of $ 20 per share, the market opened at $ 30.40. Earlier Fitbit increased its IPO price range from the original $ 14-16 to $ 17-19. With share price at around $ 30, the company’s value amounts to approximately $ 6 billion.

Handheld devices Fitbit fix medical records, collect information, as well as count calories and taken steps when doing fitness. Smart watches also offer appropriate features, but many analysts prefer specialized fitness trackers, claiming that they have simpler interface, work longer on battery power and cost less.

According to a research firm NPD Group, Fitbit controlled 85% of the market fitness trackers in the United States in the first quarter of 2015.

For 2015, the company expects to earn revenues of $ 1.6- $ 1.7 billion and a profit per share (non-GAAP) in the range of $ 0.69 to $ 0.77. This is much higher than analysts' expectations, predicting this year's $ 1.41 billion in revenue and $ 0.61 adjusted earnings per share.

2. Shopify: + 46,59%

The service that provides e-commerce solutions for businesses, has shown some of the best results in the stock market among tech sector players. Growth of interest in online commerce spurs demand for the company's products, which automatically affects the capitalization. Given that the online segment will continue to grow, Shopify’s future is bright.

During the IPO in May, the Canadian company’s shares started trading at $ 17 per share, above the original $ 16. Now shares are traded at $ 24.92

1. GoDaddy: + 69,9%

The American company GoDaddy, specializing in domain name registration and hosting, raised $ 460 million in an initial public offering on the New York Stock Exchange under the symbol GDDY and was valued at $ 4.5 billion. In the first day of trading, the company sold 23 million ordinary shares priced at $ 20 apiece. This price was higher than the planned corridor ($ 17-19). The placement’s organization was entrusted to Morgan Stanley, JP Morgan Securities and Citigroup.

Over the last three years, GoDaddy’s revenues grew approximately 52% to $ 1.4 billion in 2014. Over the past three years, the company did not show profits, but the loss narrowed to $ 279 million in 2012 to $ 143.3 million in 2014. GoDaddy filed an IPO application in 2006, but later canceled it, citing unfavorable market conditions. In June 2014, the application was renewed.

source: businessinsider.com