Q1 Tech IPO Recap: Double Last Year, Tech IPOs on “Cloud” Nine

Nineteen tech companies priced IPOs in the first quarter of 2012 – over twice the number in the first quarter of 2011. This strong pricing momentum and continuing substantial tech backlog present a healthy picture for tech IPOs in 2012.

Looking closely at the Q1 tech IPO pricing stats, it is a story of fairly recent building momentum. As of February 15th, only one tech IPO had priced above the range (Guidewire), with five pricing below, and two pricing within. Since then, however, we’ve had a nice turnaround in pricing performance with seven pricing above, three pricing within, and only two pricing below the range. Hopefully this signifies some renewed risk appetite for equity investors (see my colleague David Ethridge’s recent comments on this in his blog post).

As an IPO asset class sub-category, tech IPOs’ median offer/current performance in Q1 was +46%, compared with +15% for non-tech IPOs. Much of this can be attributed to the number of cloud-related companies and the current strength of that sector.

The above cloud related IPOs have a whopping 76% median offer/current, and include the best performing IPO of 2012 so far w/ Guidewire Software, which has more than doubled in price since its IPO in late January.

Although cloud computing has certainly made a huge impact on the market thus far in 2012, it is hard to look past another of this year’s notable social media IPOs: Yelp! The internet based review site had a 74% CAGR in user reviews from 2008 to 2011, driving an 80% CAGR in revenues over that same period. Investors obviously put faith in this review → visitor → revenue growth circle, as Yelp priced at $15 per share (above its filed range of $12-14), and is currently trading above $27, +80% offer/current and $1.6billion+ market cap.

Q1 ended with a bang for tech pricings as well, with 4 tech IPOs in the last week of March (3 pricing above the range). One of these was Millennial Media, a leading independent mobile advertising platform company.  Millennial Media closed on its first day of trading +93%, the highest of any IPO this year.

Tech IPO momentum is definitely strong as we enter Q2 2012…

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