Shares in enterprise software company MuleSoft jumped more than 45% in their first day of trading, possibly paving the way for other firms in the sector to go public this year.
The stock closed at $24.75 a share on Friday, after reaching a high of $25.92. MuleSoft had priced its 13 million share offering at $17 a share on Thursday, raising about $221 million in capital and valuing the company at around $2.14 billion.
MuleSoft’s market debut beat that of Snapchat parent company Snap Inc., which rose 44% in its first day of trading earlier this month.
“Sine MuleSoft is the first enterprise software company to go public in 2017, it might inspire more companies of a similar stripe to follow suit,” Business Insider said, noting that security startup Okta filed preliminary paperwork for an IPO last week.
MuleSoft, which was founded in 2006, provides the Anypoint platform to help companies integrate disparate software applications, data, and devices through what are known as “application programming interfaces,” or APIs. Customers include Coca-Cola, McDonald’s, Salesforce, Spotify, Unilever, and Bank of America.
The company lost $50 million on $188 million in revenue in 2016, but its losses shrank from $65 million in 2015, and its revenue grew 70% from the previous year.
“Strong growth in 2016 was driven a growing customer base as the total number of customers rose by nearly 28% towards 1,071,” Seeking Alpha reported. “The real kicker came from those customers being more active, as they ordered more software solutions. Average revenues per user rose by 36% to $143,000 per year.”
Rohit Kulkarni, managing director at Sharepost, said MuleSoft’s opening “pop” suggests public equity investors “are still very hungry to invest in growth stories [and] investor sentiment is positive for such enterprise software offerings.”
“Investors want to know that there’s a long-term growth trajectory for the company, they want to know that there’s a big market and market opportunity, and if you have those two things and you’re showing that you’re executing as a company then you usually can go forward,” Mulesoft CEO Greg Schott told CNBC.