UPDATED 14:39 EDT / MAY 26 2016


In sign of improving IPO market, Twilio files to go public

Two weeks after the technology industry’s second public offering of the year, a third is already in the pipe. Twilio Inc. this morning reported to the Securities and Exchange Commission (SEC) that it’s planning to hit the stock market under the symbol “TWLO”  with the help of Goldman Sachs, J.P. Morgan Chase & Co. and a number of other big-name underwriters.

The filing puts the communications provider’s funding goal at $100 million, though the amount will probably change since tech companies often revise their numbers in the weeks and days leading up to their IPOs. Given Twilio’s strong market position, the pricing target is more likely to go up than down, but the firm’s chances of meeting the target can’t be predicted with as much certainly.

The past few quarters have seen Wall Street adopt a cautious approach towards the tech industry. While profitable outfits like Atlassian Inc. and Acacia Communications Inc. had no trouble attracting investors to their IPOs, many of their loss-making peers failed to meet their price targets. Unfortunately for Twilio, it falls firmly in the latter camp: Today’s paperwork reveals that the outfit closed 2015 with a net loss of $35.5 million on revenues of $166 million.

The latter figure constitutes a massive 88 percent increase over the previous year, which provides some reason for optimism. But it’s clear that public investors don’t place as much importance as growth as they once did, especially when a company has to spend more than its income to achieve it. As a result, a successful IPO from Twilio would send an encouraging signal to the other unprofitable technology startups that have been holding off their stock market plans until now for fear of lackluster interest. 

Image via Pixabay

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