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Tableau, Marketo Surge In Debuts For Software IPOs

Big Data and cloud computing IPOs soared Friday as investor appetite for new issues — particularly potential highflying techs — seems to have fortified.

Tableau Software (DATA), which helps companies mine and make sense of the massive silos of data they collect, surged 63.7% to 50.75 in its first day. Marketo (MKTO), a cloud-based software marketing firm, spiked 78% to 23.10.

The two come a full year after Facebook's (FB) famous IPO flop, which sapped much of the interest in new untested technology stocks.

"Tableau was the IPO that Facebook wishes it was," Kathleen Smith, principal at IPO investment advisory firm Renaissance Capital, told IBD. "That served as the cathartic event for the IPO market.

Tableau raised $254.2 million in its IPO, selling an enlarged 8.2 million shares priced above the expected range at $31.

Big Sales Gains The Seattle-based firm more than doubled sales last year to $127.7 million. Its March-ending first-quarter revenue rose 61%.

But net profit fell 58% to $1.7 million in 2012. Tableau suffered a $4 million loss in Q1, according to its S-1 filing with the Securities and Exchange Commission. Sales and marketing expenses, as well as research and development costs, shot up as the company works to land customers.

Its nearest pure-play rival, Qlik Technologies (QLIK), grew revenue 22% in Q1. It's also struggling to turn a consistent profit. It lost 9 cents a share excluding various items and guided for break-even to a 2-cent loss in Q2. Qlik shares climbed more than 5% Friday to a 13-month best. It's up more than 200% since its 2010 IPO.

Tableau and Qlik also compete against tech heavyweights such as SAP (SAP), Oracle (ORCL), IBM (IBM) and Microsoft (MSFT).

Marketo, meanwhile, raised just over $79 million by selling 6.1 million shares at $13. Subscription revenue climbed 80% to $58.4 million in 2012. Q1 revenue climbed 62% to $19.7 million, according to its S-1 filing.

Net losses for 2012 climbed 52% to $34.4 million. First-quarter losses climbed 43% to $9.5 million. It too has jacked up sales and marketing spending to grow the business.

"They're expensive stocks counting on future growth," said Smith. "These are not value stocks. They will have volatility.

Smith said it's too soon to tell yet whether the successful debuts for Tableau and Marketo signal renewed investor interest in tech issues.

"Good-performing IPOs tend to open the door for others so there might be a shift in the appetite," she said.

Facebook Timeline Facebook began trading a year ago on May 18. It barely closed above its $38 offer price, and then famously lost half of that value within months. On Friday, the social media giant closed at 26.25, still down 31% from its initial valuation.

Sixty-six IPOs have priced so far this year.

The market turned hot this May, with 23 so far. Another seven are in the pipeline for this month. If they all make it, it would be the busiest month since May 2007, before the last recession, Smith said.

Among those on tap for the coming week: Constellium, an aluminum products firm that could raise $400 million; Ply Gem Holdings, a building products firm that could raise $300 million; and Portola Pharmaceuticals, a drug developer expected to raise about $100 million.