Contact: Scott Denne
In what’s becoming a recurring story in the back half of 2016, another high-growth enterprise tech company has gone public with a big first-day pop and a double-digit multiple. Today it’s Coupa that’s reaping Wall Street’s generosity. The spend management software vendor debuted at $35 per share, just shy of double the offering price, and was up past $40 in early trading. Like other recent debuts, Coupa is coveted by investors because it’s been able to carve out pockets of growth in an otherwise stagnating IT market.
At the end of last month, Nutanix (valued at 10x trailing revenue) had a similar pop on its first day, backed up by 85% topline growth. Twilio now sits at 24x trailing revenue following a tripling of its stock price since its June IPO. For its part, Coupa currently sports a $1.8bn market cap and a 6x multiple on the strength of 66% revenue growth last year.
According to 451 Research’s Voice of the Connected User Landscape, 21% of respondents in an August survey anticipated their company’s IT spending would decrease in the next quarter, compared with 15% projecting an increase. A six-point distinction in a single survey isn’t particularly telling on its own. However, the long-term trend of that quarterly survey indicates a market that’s been flat for a while. Over the past six years, respondents forecasting an increase have outnumbered those expecting a decrease in only one out of every eight surveys. And the percentage expecting an increase has only topped 20% twice. Compare that with the three years leading into the last recession, when the number never dropped below 24%.
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