There have been 188 initial public offerings so far in 2018, and about one-fifth of them have been in the technology space. A few of the more highly anticipated ones, like Airbnb, Buzzfeed, and Lyft, actually didn't materialize this year, while other companies such as Spotify went public via the direct listing route instead of an actual IPO. Below are the top seven performers of the tech stocks that finally did hit the public markets, based on returns from the initial offering price of the shares, which are often allocated primarily to institutions.
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7. Anaplan (up 57.4%)
Cloud software company, Anaplan (NYSE: PLAN) went public in October, right in the middle of a tech-sector train wreck, yet popped 30% from its $17 offering price to close above $23 after its first day of trading. The share price for the online collaborative corporate planning service has been fairly volatile since then, however, but at the end of November, the company issued its first quarterly earnings report, and said revenues rose 40% from the year-ago period, in part because Anaplan's average existing customer spent 24% more money with the company than it did a year prior. Shares -- which had fallen below the IPO price -- have since soared 35%. Anaplan is still reporting significant losses, however, so investors may still see the stock price bounce around a lot.
6. Smartsheet (up 60%)
Cloud-based platforms are the theme du jour among IPO-ing tech companies this year: Smartsheet (NYSE: SMAR), like Anaplan, offers a collaborative service that enables companies to plan, capture, manage, automate, and report on work at scale. It went public in April on the same day as fellow enterprise-software company DocuSign, and raised $150 million after pricing its stock at $15 per share. Though it more than doubled in value in about four months time, Smartsheet has given back over a quarter of those gains. It now trades north of $24 a share. In its recently reported third quarter, its revenues jumped year over year and its losses narrowed, beating analyst expectations.
5. Pluralsight (up 62.3%)
On May 17, online education provider Pluralsight (NASDAQ: PS) priced its offering at $15 per share, slightly above the $12 to $14 range that was expected. The stock was an immediate hit, closing that first day 33% higher at $20 a share. Pluralsight offers cloud-based technical training that's used by a majority of Fortune 500 companies. The IPO infused Pluralsight with $310.5 million in capital and gave it a $2.5 billion market cap at the offer price, but shares recently closed over $24 for a $3.5 billion valuation.
4. Ceridian HCM (up 66.5%)
Ceridian HCM (NYSE: CDAY) is a "human capital management" firm (that's what the HCM stands for) that operates in the cloud, providing human resources, payroll, benefits, and workforce and talent management services similar to those offered by its much larger rival Workday. What separates Ceridian from other providers is its ability to do same-day pay, which is critical in the growing gig economy. But it's much more than just that; among the diverse clients using its premiere Dayforce platform are BlackRock, Trader Joe's, and the Denver Broncos.
3. i3 Verticals (up 66.6%)
Founded in 2012, i3 Verticals (NASDAQ: IIIV) offers integrated payment and software solutions for small- and medium-sized businesses. It went public in June at $13 a share and raised $86.5 million in the process. Unlike Pluralsight, however, its market cap is a much more modest $577 million, though its stock closed recently under $22 a share. That's only 4% lower than the $25.50 peak it hit at the beginning of October following its first quarterly earnings report as a public company. It beat Wall Street's top- and bottom-line estimates, but there's a lot of competition in its space, including PayPal, Worldpay, and Square.
2. Elastic (up 114.8%)
Big data firm Elastic (NYSE: ESTC) powers the searches that help connect ride-share customers at Uber and Lyft with drivers, connects those looking for partners on Tinder, and even helps grocery shoppers find the items they need at Instacart. It also counts giants like Barclay's, Cisco, and Sprint among its customers. Since it went public just two months ago, it has built up a bullish analyst following, and investors have pushed its stock to over twice its $36 offer price, which at the time raised $252 million. Yet the stock has been volatile, with wide swings in price, and Elastic itself remains a loss-producing operation. In fact, its losses actually widened to $27.5 million last quarter, even as revenues rose 72% to $63.6 million.
1. Zscaler (up 161.6%)
The best performing tech IPO of 2018 has been Zscaler (NASDAQ: ZS), a cybersecurity provider that went public back in March at $16 per share and has more than doubled in value as it's posted solid earnings, grown revenues, and turned a (non-GAAP) net profit for its last quarter. It was also one of four cloud-based service providers given an opportunity to achieve certification through the FedRAMP Connect Program, which would allow it to provide security solutions across U.S. government agencies. Earlier this year, it was certified by the FCC to provide cloud security solutions to agencies anywhere on any device. Such authorizations will enable Zscaler to grow its business with the federal government. With a market cap of $5.4 billion, however, Zscaler is about a quarter of the size of rivals like Check Point Software, Fortinet, and Palo Alto Networks, which may put a drag on its stock once the euphoria of the IPO wears off.
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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Check Point Software Technologies, PayPal Holdings, Square, and Workday. The Motley Fool has the following options: short January 2019 $82 calls on PayPal Holdings and short January 2019 $80 calls on Square. The Motley Fool recommends DocuSign, Fortinet, and Palo Alto Networks. The Motley Fool has a disclosure policy.