A Trio of SaaS (Software-as-a-service) IPOs

On Friday 06/26/15, 3 SaaS firms are set to IPO. The three companies are Appfolio, Xactly, and Alarm.com (APPF, XTLY, and ALRM, respectively). The last time that I can remember seeing 3 SaaS firms IPO on the same day was on 03/21/14, with Borderfree, Amber Road, and A10 Networks (BRDR, AMBR, ATEN). That week in March also saw 2 other SaaS IPOs, Paylocity (PCTY) and Q2 Holdings (QTWO), and a 3rd company, Globoforce (THNX), that postponed its IPO. During the Week of 09/16/13, three SaaS companies, Fireeye (FEYE), Rocket Fuel (FUEL), and Benefitfocus (BNFT), went public, all of them performing extremely well.

Below is a table of some key data from the aforementioned SaaS IPOs

Company (Ticker) Business Description Deal Size ($mm) First Day Return 4 mo. post IPO return
Rocket Fuel (FUEL) Automated digital ad buying $116 93% 17%
Benefitfocus (BNFT) Employee benefits software $131 102% 46%
FireEye (FEYE) IT security software $304 80% 104%
Amber Road (AMBR) Cloud-based global trade management software $96.4 31% -3%
BorderFree (BRDR) International e-commerce software $80 25% -10%
A10 Networks (ATEN) Data center optimization software $187.5 9% 2%
Paylocity (PCTY) Cloud-based payroll and HCM software $119 42% 16%
Q2 Holdings (QTWO) Online banking SaaS platform $101.4 17% 1%

Basically what the same-day IPOs of APPF, XTLY, and ALRM show is the market for both IPOs and SaaS is heating up right now, and in the past when this has happened (September 2013 and March 2014) the SaaS firms have performed well post IPO. With this in mind, APPF, XTLY, and ALRM appear to be solid investments through the summer. ALRM is especially an exciting one, since it also is in the IoT (Internet of Things) sector, which has seen an influx of investor enthusiasm and awareness with Google’s acquisition of Nest in January 2014, and the emergence of other high profile IoT firms such as Jasper Technologies, Acquia, and Control4 (CTRL, the first pure play IoT company to IPO).

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