In a first-day jump that hasn’t been since 2014, enterprise cloud platform Nutanix Inc’s shares showed a 130% jump at close of business. It was the best first day pop for a tech startup since Castlight Health Inc. gained 149% in June 2014, and overall the largest since Seres Therapeutics gained 186% in June 2015, with their respective IPOs.
The California-based company priced its share offering at $16 per share to raise about $238 Mn on September 30, 2016. The per-share offering was slightly elevated than the expected range.
Nutanix initially set the price range at $11-$13 and upped it to $13-$15, a move that could have placed its market capitalisation at a lower share than its $2 Bn valuation.
In keeping the share steady at $16, the company avoided this downturn in valuation as well as proved early naysayers wrong regarding a ‘down round’ from its previous valuation in private financing.
According to an official statement given to Market Watch, Nutanix CEO Dheeraj Pandey said, “The stock’s first-day performance showed investor appetite for new companies, and underscored the need for hyperconverged systems, which combine computing and storage. Obviously, there’s a pent-up demand for a good story,” he added.
Nutanix was founded by Dheeraj Pandey, Ajeet Singh and Mohit Aron in 2009. It simplifies cloud-computing and cuts costs by letting clients keep some of their data in-house and outsource other pieces to the cloud. It uses a process called hyperconvergence to do so. Nutanix’s clients include Aflac, Best Buy, eBay, Honda, financial services providers, health-care companies, in around 70 countries.
It is backed by LightSpeed Venture Partners, which owned the biggest stake before the IPO. Other investors include Khosla Ventures, Blumberg Capital II, and Riverwood Capital Partners.
Before Nutanix, Twilio’s June IPO was considered the best debut for tech unicorns. Speaking of the need for more startups to start the IPO process, Renaissance Capital analyst Matthew Kennedy urged other unicorns to move forward and consider IPOs. He also added that the conservative pricing of $16 per share may have been necessary to make the offering comfortable for investors in light of tech startups’ soaring valuations.
There have been 14 IPOs coming from the tech space this year and seven of them have come in this quarter itself, according to Renaissance Capital, manager of IPO-focussed EFTs.
As Nutanix is considered to be the first mover in its field of hyperconvergence, the faith in product and investors has been repaid with a robust debut in the stock market. But the company is unwilling to rest on its laurels and plans to move forward with a bouquet of new offerings.
Dheeraj stated that the company plans to make “box companies vanish”, in an official statement. It also plans to do development work in areas such as automation, machine learning, software, and security.
The story was reported on MarketWatch.