April 05, 2013, 4:26 PM — Though the tech IPO market has gone from a boil to a simmer, some companies in areas such as big data and cloud-related technology are plunging in.
Just this week, business intelligence software provider Tableau Software and cloud-based marketing automation vendor Marketo announced IPO plans. So far this year five tech vendors have launched IPOs, according to the IPOScoop website.
But there's no doubt that the IPO market for tech has cooled relative to other sectors. For example, already 11 financial companies and six health care companies have issued IPOs in 2013. Going forward, there are more financial and health care companies that plan IPOs than tech companies, according to data compiled by IPOScoop.
In comparison, at this time last year tech was by far the IPO leader, representing 37 initial offerings in the 12 months to March 2012 while the second-ranking sector, consumer services, accounted for only 26 IPOs. What happened?
"There is a strong corollary between technology IPOs and the Nasdaq, which is tech-laden," said John Fitzgibbon, who runs IPOScoop. "Traditionally, 60 percent to 70 percent of tech IPOs were on the Nasdaq, and the Nasdaq has been a laggard."
So far this year, the Nasdaq Composite is up 6.8 percent, compared to 12.27 percent for the Dow Jones Composite Index and 9.38 percent for the broad-based Standard and Poor's 500 Index. Within the Nasdaq itself, the Computer Stock Index is up just 0.42 percent for the year, compared to 10.53 percent for industrials and 14.72 percent for insurance companies.
"It's an old saying but the tape tells the story -- the demand just isn't there for tech stocks," said Fitzgibbon. Still, within the tech IPO scene there are hot spots, like cloud-related technology, he pointed out.
Analytics software vendor Tableau, which decided it was time to announce its plans for an IPO earlier this week, is an example. Just last month, Tableau updated its namesake software with connectors designed to allow its users to work with cloud-based data from Google Analytics, Salesforce.com and Google BigQuery. Tableau is seeking to raise $150 million. Unlike other young analytics companies, the company turned a profit last year, earning net income of $1.6 million on revenue of $127.7 million.
Also this week, cloud-based marketing automation vendor Marketo announced plans to raise up to $75 million in an IPO. Marketo's revenue jumped from about $14 million in 2010 to $58.4 million last year. However, the company lost $34.4 million after spending $37.8 million on sales and marketing.