Jive talkin’ on Wall Street

by Brenon Daly

Despite one of the more inhospitable environments for IPOs, Jive Software has put in its paperwork for a $100m offering. The company, which sells a social network for businesses, has seen revenue nearly triple from 2008 to $46m last year. In the first half of this year, Jive has continued its strong growth on the top line, pushing revenue up 77%. Assuming it continues to track to that level, it would finish 2011 at about $80m in sales.

Clearly, that growth is what Jive will be selling on Wall Street. And that pitch seems to have caught the attention of IPO investors, at least looking at recent offerings that resemble the planned IPO from Jive. For instance, the financials of Cornerstone OnDemand, which went public in March, line up very similarly with those at Jive. Both companies are relatively immature, having only really begun generating any revenue of note in 2007 and still finishing 2010 with less than $50m in sales. Further, neither Jive nor Cornerstone have been running their businesses at an operating profit, much less a net profit, in recent years.

Not that the ‘sub-scale size’ or red ink has hurt Cornerstone on the Nasdaq. The company hit the market at about $900m, and even after the historical declines on the broad market earlier this month, it is still valued at close to $700m. That works out to an incredibly rich valuation of almost 13 times trailing sales. So maybe Cornerstone’s eye-popping multiple has something to do with Jive’s decision to file its prospectus, even as the market and the economic outlook have deteriorated since Cornerstone debuted.