The vast majority of IPOs had strong first day performances, as investors bid up prices in contemplation of substantial future growth.
This excerpt is from our complimentary Q1 2012 Software Industry Financial Report which can be downloaded here: http://www.softwareequity.com/research_reports.aspx
The software IPO market began the year with a bang, as eleven software/SaaS and Internet companies went public in 1Q12, compared to only four in the first quarter of 2011 (Figure 25). Collectively, these eleven newly listed companies touted a median TTM revenue growth rate of 49.8% and a median TTM EBITDA margin of 3.8%. In aggregate, they raised nearly $1 billion, ranging individually from $22.7 million to $147 million.
The two biggest IPOs of the quarter were Millennial Media (NYSE:MM), an online mobile advertising solution that raised over $123 million and ExactTarget (NYSE:ET), an email marketing provider for Fortune 500 companies that raised $147 million. Of the 11 newly trading companies in 1Q12, all are headquartered in the US except for AVG technologies (NYSE:AVG), which is based in Norway.
The stock prices of these 11 newly listed companies performed exceptionally well in Q1, increasing a median 65.6% by the close of the quarter. Five of the new public market entrants advanced 80% or more by March 31, led by Brightcove which rewarded investors with a 125.5% return. The median revenue growth rate of the eleven was a noteworthy 49.8%. Four of the eleven companies grew revenue by more than 50%, led by Millennial Media (116.8%) and Yelp, Inc. (74.5%).
The vast majority of IPOs had strong first day performances, as investors bid up prices in contemplation of substantial future growth. Millennial Media debuted at $13 and closed the first day of trading at $25, up 92.3%. Yelp, initially priced at $15 per share, closed its first day at $24.58, up 69.3%. Other strong first day performances were turned in by Demandware (47.4%) and ExactTarget (32.2%). All but one of the first quarter’s IPOs (Millennial Media) were able to achieve 1Q12 stock returns above their first day return.