Cloudera Going Public: What's Next for Cloud IPOs?
Investors will get a fresh crack at another cloud stock on Friday, as Cloudera (NYSE:CLDR) makes its debut on the New York Stock Exchange (NYSE:ICE).
The company raised $225 million, selling 15 million shares of its common stock at $15.00 per share. That topped the initial offering price range of $12 to $14 per share.
Founded in 2008, the subscription-based enterprise data company backed by Intel (NYSE:INTC), was previously valued at $4.1 billion back in 2014. Now, with the IPO is valued at $1.9 billion, a significant decrease as investors temper their love for Silicon Valley unicorns.
“We did research on it and it’s not earning money. It’s burning through a lot of cash,” said Kathleen Smith, principal at Renaissance Capital. “It’s going to be a few years, but if they slowed down their investment in sales and marketing, they would be able to draw money to the bottom line. We think it will be three years before it gets to cash flow break even.”
But due to Cloudera’s robust subscription revenue growth and recurring revenue, Smith believes investors will tolerate the big data company’s losses.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| MULE | NO DATA AVAILABLE | - | - | - |
| OKTA | OKTA INC. | 76.57 | +1.12 | +1.48% |
| YEXT | YEXT INC. | 8.40 | +0.45 | +5.66% |
| AYX | NO DATA AVAILABLE | - | - | - |
| PSDO | NO DATA AVAILABLE | - | - | - |
“The attractiveness of Cloudera has to do with a reasonable valuation and also strong interest in the subscription-based enterprise software group,” she said.
Cloudera, which will trade under the ticker CLDR, isn’t the first of its kind to go public this year. Of six tech IPOs so far this year, four – including MuleSoft (NYSE:MULE), Yext (NYSE:YEXT), Snap (NYSE:SNAP), and Alteryx (NYSE:AYX) – listed on the Big Board, while two – Okta (NASDAQ:OKTA) and Presidio (NASDAQ:PSDO) – went public on the Nasdaq.
“The demand for cloud-based tech IPOs has been very high so far in 2017,” a spokesperson for the NYSE said.
Despite trailing the NYSE in terms of tech listings so far this year, the Nasdaq has a positive outlook for its IPO pipeline.
“As volatility remains low and the U.S. equity market reaches all-time high, we expect to have a robust pipeline for the rest of 2017. The strong performance of recent enterprise technology IPOs also make the public market a more attractive platform for similar companies to raise capital and continue to grow,” Jeff Thomas, vice president, head of Western Region Listings at Nasdaq, told FOX Business.
While 2016 was a slow year for tech IPOs, and despite kicking off 2017 with the disappointing debut of Snap (NYSE:SNAP), the parent of popular mobile app Snapchat, many analysts acknowledge that this year will be a healthy one for companies to go public.
“We think that we’re definitely going to have a better year than we did last year, based on the issuance we’re seeing,” Smith said. “Any IPO-ready private company that is not moving forward with an IPO in this environment needs to have their head examined. There’s never been a better time to go public.”
This is part of FOXBusiness.com’s Industry Forecast series that deep dives into cloud innovations across global businesses.
------This story has been updated to clarify the number of tech IPOs on both the NYSE and the Nasdaq so far this year.