After the bell yesterday, Apple-device management company Jamf announced its final IPO pricing. We’ve been tracking the Jamf IPO for some time, as it is yet another example of a technology company worth $1 billion or more going public during the COVID-19 pandemic.
Back in March, we’d have guessed that today’s IPO market would be devoid of any public offerings, let alone a litany of successful flotations. But, 2020 is unpredictable; instead of seeing an IPO drought, there have been a modest deluge of debuts.
And yesterday Jamf continued the trend of recent IPO pricing strongly, at times selling more shares in the bargain.
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Jamf’s IPO underscores that public market investors are hungry for new technology offerings and keen on growth but are willing to accept what startups would consider middling expansion — and sufficiently greedy to pay up both before and after a company begins to trade.
This is the IPO market that unicorns were waiting for.
Happily, more companies — and let’s be so bold as to say unicorns — could approach the public markets in short order. The Exchange spoke with Wouter Witvoet, CEO of startup equity service provider Secfi, yesterday to get his view on today’s IPO market and coming offerings. Sitting as he does between growing startups and their vested employees, Secfi has a fascinating lens into the maturity of the firms we discuss when we talk about future IPOs.
On the subject of companies going public today with strong pricing runs, Witvoet said that “what you’re seeing is that IPOs have dried up for a very long time, and people want to deploy cash.” More cash means more dollars chasing IPOs, which helps explain the current pricing cycles we’ve seen. Witvoet cited Palantir as a company that is “making use of the opportunity that there is somewhat of an IPO window now to go public,” going on to say that he had expected Snowflake to stay private longer, but that it instead opted to start its own IPO process, perhaps due to attractive market conditions.
The warm waters, then, really are driving more companies to debut. Which is good. It means more S-1s for you and me to read and unpack. For so many employees, founders and investors, it could finally bring enough liquidity to melt a good piece of the unicorn equity glacier.
With that context, let’s discuss Jamf’s IPO price point and new valuation.
More dollars, more shares
From its raised IPO range of $21 to $23 per share, Jamf priced at $26 per share. The company also announced that it would sell several million more shares in its public offering.
Jamf sold the same 13.5 million shares, but existing shareholders sold an extra 2 million shares for a total of 4.5 million. Another 300,000 shares were added to the underwriters’ option, bringing it to 2.7 million shares, again offered by existing shareholders. So, 18 million shares were sold for $468 million, of which $351 million went to Jamf. The company’s full IPO sale could generate $538.2 million, inclusive of the full underwriter’s option.
At $26 per share, Jamf is worth just over $3 billion, a huge step up from its initial IPO valuation range that started under the $2 billion mark.
It’s easy to see how Jamf is a good indicator of how strong today’s IPO climate is; adding 50% from the a company’s lower-end pricing to its final IPO pricing is steep. If the company opens strongly, all the better for the point.
At some point we’ll stop writing about how strong the IPO market looks and covering the stock market reaching new highs. At some point, we’ll stop masticating on SaaS valuations and their historically stretched prices. But not today.
Ahead, we have the possible debuts of megaunicorns like Palantir, DoorDash, Airbnb, Coinbase, Snowflake and others to look forward to, let alone a litany of smaller, less-famous unicorns that managed to secure a $1 billion valuation. Making that point with an example, I spent half an hour chatting with the CEO of Contentful yesterday, a company that should soon be a candidate for our $100 million ARR club and an IPO candidate thereafter. You might not have heard of the Berlin-born Contentful. There are hundreds of similar companies out there.
Let’s see how Jamf starts trading and how soon it takes for another S-1 to drop.