Updated with opening price and analysis.
In the year’s first big enterprise technology initial public offering, application network platform provider MuleSoft Inc. went public today and its shares jumped some 44 percent over the offering price.
It offered 13 million Class A shares on the New York Stock Exchange at a price of $17 per share, above an initial guidance of $12 to $14 a share. in initial trading Friday morning, the shares topped $24, boosting its valuation to $4 billion. The gain held to the market close, as shares rose 7.75 percent on the day, to $24.75 a share.
The big jump in price means the company left money on the table that it could have pocketed had it gone with an even higher price. But big first-day share pops are seen as a positive indication of high investor demand.
And not only for MuleSoft itself. Dozens of enterprise software companies have been waiting for a more receptive market to go public, so MuleSoft’s success may spur more to offer shares too. Earlier this week, two other enterprise software and services companies, Okta Inc. and Yext Inc., announced plans to go public. And big data pioneer Cloudera Inc. reportedly has filed confidentially to offer shares to the public for the first time.
The IPO saw MuleSoft raise $221 million on a market cap of $2.14 billion and a fully diluted market value of approximately $2.9 billion.
According to its IPO filing, MuleSoft lost $50 million on $188 million in revenue in 2016. Those losses were lower, however, than the $65 million it lost in 2015, with revenue growing 70 percent year-on-year as well. The company added that it had over 1,000 customers located in 60-plus countries across every major industry including 30 customers with over $1 million in annual contract value of subscription and support contracts.
As the first major enterprise software IPO of 2017, the float is being watched carefully to see whether an appetite has returned to the markets for serious tech floats, particularly of companies dubbed “unicorns,” those with valuations higher than $1 billion. As of its last round, MuleSoft had a $1.5 billion valuation, meaning that the IPO price is a significant increase.
Neha Sampat, chief executive officer and co-founder of Built.io and a competitor to MuleSoft, told SiliconANGLE via email that the IPO is a validation of how important integration technology is to companies that are running workloads in the cloud.
“MuleSoft’s IPO is a testament to the opportunity and growth demonstrated in the integration space and it will be exciting to see the broader market validate this,” Sampat said. “To take it a step further, I believe conversations around integration will now evolve, and more and more businesses will recognize that APIs [application programming interfaces] are the fabric that makes IoT useful and profitable. This ‘Internet of APIs’ approach will mirror the rise of mobile several years ago and is set to follow the same path to adoption, yielding unprecedented business opportunities.”
Battery Ventures General Partner Dharmesh Thakker told SiliconANGLE that the MuleSoft IPO was a sign of the times and that many of 2017’s tech IPOs will look more like “workhorse” MuleSoft than the “sexier, consumer-focused Snap,” which went public earlier this month.
“More than $300 billion in annual corporate IT spend is now up for grabs as incumbent vendors like Cisco, EMC, Oracle and others lose ground to nimbler startups offering software and IT services over the cloud, often with open-source technologies. Snap and MuleSoft could wind up being a tale of two IPOs,” he added.
Despite MuleSoft’s pop, there’s no guarantee that tech IPOs will fare well. Information Technology services firm Presidio Inc., for instance, went public on March 10 and its shares rose only 1 percent after pricing at the low end of its intended range. It was not the typical venture-backed offering, however, since it was coming out after being taken private by an alternative investment firm.
With reporting from Robert Hof