Shares of Palo Alto-based Cloudera spiked more than 20 percent in the company’s public market debut Friday, marking the latest in a string of local enterprise software IPOs to see healthy day-one pops.
Cloudera closed at $18.10 Friday, above the $15 IPO price set the evening before. But some of the excitement that performance should have caused was tempered because Cloudera ended the day worth about $2.3 billion — a far cry from the $4.1 billion valuation it last received as a private company.
For investors hoping to see the IPO market rebound after a sluggish 2016, Cloudera’s down round has a silver lining. It’s encouraging that Cloudera accepted the discount and priced an IPO anyway, said Rohit Kulkarni, managing director of research at private securities investment platform SharesPost.
“It’s a healthy sign that another ‘unicorn’ is going public,” he said.
Cloudera, which provides an open source data analysis platform to other companies, raised $225 million with its initial public offering Thursday, making the deal the largest enterprise tech IPO of the year, Kulkarni said.
The company follows San Francisco-based cloud startups Okta and Mulesoft into the public market, both of which saw healthy first-day pops when they started trading earlier this year. The uptick in activity, which kicked off with Snap’s $3.4 billion IPO last month, comes on the heels of a year that saw deal volume slow to a trickle. But the market appears to be turning around. So far 45 IPOs have priced this year — nearly three times as many as at this point last year, according to Renaissance Capital, which manages IPO-focused exchange-traded funds.
Cloudera shares opened at $17.87 Friday morning, spiking to a high of $19.31 before coming back down. The company offered 15 million shares, pricing them above the $12-$14 range it had targeted earlier this month.
Cloudera is trading on the New York Stock Exchange under the ticker symbol CLDR.
Intel paid $31 per share for Cloudera stock in 2014 — a deal that valued the company at $4.1 billion during a time when cash was pouring into startups and valuations were skyrocketing. Now some companies, including Cloudera, have to take a haircut to bring those valuations back down to a more realistic level, Kulkarni said.
Roughly one in six VC-backed tech IPOs — including Square and Box in 2015 — value the company below what it was worth in its last round of private financing, Kulkarni said.
“A down round isn’t the end of the world,” he said.
The real test, Kulkarni added, is how Cloudera performs in the next three to five years.
Intel also views Cloudera as a strategic partner, which means the larger company may have attributed added worth to its 2014 investment, driving Cloudera’s valuation higher than what it might otherwise have been. Given that relationship, Cloudera co-founder and chief strategy officer Mike Olson said that 2014 number shouldn’t be used as a benchmark.
Olson said Cloudera’s investors are “quite happy” with Friday’s valuation. So is the company, he said.
“We’re all really pleased with how the stock performed and how the market valued the business,” he said. “It was a great day.”
Intel poured $766.5 million into the company as of Jan. 31, and after the IPO was expected to control more than 19 percent of Cloudera’s stock.
Like many tech startups going public, Cloudera is not profitable. The company brought in $261 million in revenue in the fiscal year ending Jan. 31, up 57 percent from $166 million the year before, according to documents the company filed with the Securities and Exchange Commission in preparation for its IPO. The company’s net losses were $187.3 million last fiscal year, and $203.1 million the year before.
Cloudera shared the spotlight Friday with Arizona-based online used car seller Carvana, which also raised $225 million in its IPO Thursday, and had the honor of ringing the opening bell at the New York Stock Exchange on Friday morning. But Cloudera had the last laugh. Carvana was trading 26 percent below its IPO price when the market closed Friday afternoon.
