Apptio, maker of cloud-based software to manage IT, taps banks for an IPO that could value the company at about $1B
Apptio Taps Banks for IPO — Cloud IT Software Maker Working With Goldman, J.P. Morgan and Bank of America on IPO — Apptio Inc., a maker of cloud-based software …
Context & Ripple Effects
When Apptio hired Goldman Sachs, J.P. Morgan and Bank of America in mid-2015, the pitch was an IPO around a $1B valuation. The filing that followed made the case concrete: $129.3M of 2015 revenue, up 21% YoY, against a net loss that widened to $41M.
By September 2016 the deal had cleared the market — priced at $16 per share, above the expected $13–$15 range — and the stock's first-day surge to $22.55 left Apptio worth roughly $840M, just under the figure floated when the banks were first signed up.
First-order effects
- Apptio converts to a public company with disclosed financials and a traded share price, while Goldman Sachs, J.P. Morgan and Bank of America land lead roles on a flagship enterprise-cloud offering.
Second-order effects
- A deal that prices above its range and pops 40% on debut hands every comparably sized cloud IT-management vendor a fresh public benchmark — and pressure to either list or be priced against one.
Third-order effects
- Closing near $840M despite strong first-day demand shows public markets marking down the ~$1B private-era valuation for an unprofitable subscription business — a template for how late-stage cloud-software marks get re-priced at the IPO window.
The trend: Enterprise cloud-software companies are reaching public markets before profitability, with investor demand strong enough to beat pricing ranges yet still below the valuations bankers originally floated.