Nutanix shares surged 66 percent in their trading debut on Friday morning, one of the strongest first-day gains for a new technology stock offering so far this year.
The company, a provider of cloud-based storage for businesses, waited for nine months for its initial public stock offering as choppy markets kept many other private companies away. Nutanix was one of the few venture capital-backed start-ups brave enough to file plans for its initial offering last year.
So far in 2016, 17 tech companies have listed in the United States, the lowest number since 11 deals in 2009, according to data from Dealogic. Before Nutanix, this yearâs new listings were trading an average of 72 percent above their offer prices, compared with an average of 35 percent across all sectors for domestic initial public offerings. Nutanixâs gain is second to that of the cloud communications provider Twilio, which jumped 92 percent on its first day in June.
The pop suggests investors are still eager for hot tech offerings after all. After much anticipation, Nutanix priced its $ 238 million offering on Thursday evening, with a valuation of $ 2.18 billion â slightly higher than the one it received in the private markets two and a half years ago.
Although Nutanix did not receive the large premium that its latest investors would have liked, the company, which was founded seven years ago, avoided the fate feared by others of pricing shares at a steep discount to their most recent private funding round. Nutanixâs shares are listed on Nasdaq under the ticker symbol NTNX.
Nutanix was among the so-called unicorn class (those with valuations of $ 1 billion or more) of technology companies on every prospective initial public offering list. So far, it is one of only a handful of venture capital-backed companies with valuations greater than $ 1 billion to go public this year.
Nutanixâs Opening Day
With nearly 4,000 customers as diverse as Nordstrom, Nintendo and the Department of Defense, Nutanix garnered widespread attention for innovative technology that combined servers, storage and related software into one platform.
Prominent venture capitalists such as Khosla Ventures and Lightspeed Venture Partners, as well as the heavyweight mutual fund Fidelity Investments, invested more than $ 300 million in the company. After Nutanix postponed its initial offering earlier this year, it issued $ 75 million worth of debt to Goldman Sachs for additional cash.
Nutanix, based in San Jose, Calif., was able to increase revenue 84 percent during the year through July 31, generating about $ 445 million. Net losses, however, widened about 34 percent as Nutanix spent millions of dollars more on sales and marketing and research expenses.
Another large risk emerged after Dell and EMC combined on Sept. 7. Dell accounted for a âmeaningful portionâ of Nutanixâs total sales over the last few quarters, the company said in its initial offering filing. Through the acquisition, Dell controls VMware, which competes with Nutanix.
The company has warned that if Dell chooses VMwareâs products over its own, it could harm Nutanixâs operating results and cause a decline in the stock price.
Nutanix offered 14.9 million shares, at $ 16 each, the company said in a news release late Thursday. Previously, the company marketed 14 million shares at a range of $ 11 to $ 13 a share; it increased the range to $ 13 to $ 15 on Thursday after the underwriters felt more confident about investor demand.
The company has a dual-class share structure, meaning that holders of Class B stock will have 99 percent of the voting power. Those investors who bought Class A shares through the offering will have only 1 percent.
Goldman Sachs, Morgan Stanley and JPMorgan Chase managed the offering. Wilson Sonsini Goodrich & Rosati, as well as Fenwick & West, provided legal counsel.