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Enterprise Software IPOs Post Enviable Post-IPO Returns

Aug. 07, 2018 1:01 PM ETDocuSign, Inc. (DOCU)AVLR, PS


  • A new report by Shea & Company includes data on Enterprise Software financing, M&A and IPO activity.
  • For IPOs, the sector has shown impressive post-IPO returns.
  • More Enterprise Software companies will likely be floating their shares in the coming quarters; investors should watch for these potential opportunities to generate attractive returns.
  • This idea was first discussed with members of my private investing community, IPO Edge. To get an exclusive 'first look' at my best ideas, start your free trial today >>

Quick Take

A recent report by M&A and financing firm Shea & Company has some interesting and potentially valuable insights from the data contained in it.

The Quarterly Enterprise Software Market Review for 2Q 2018 contains a plethora of U.S. software data for those interested in financing, M&A and IPO transactions for the sector.

Of particular importance to investors interested in IPOs is the impressive post-IPO performance of Enterprise Software firms over the last two and ½ years.

Enterprise Software Post-IPO Performance

The table below shows Enterprise Software IPO performance as of June 30, 2018. However, an important data point is shown in the far right column which I have highlighted in green.

That column indicates the performance of each stock since the IPO and in relation to the IPO price.

Some notable results:

  • There were only four companies that have had a negative return since IPO and two of them were under 10%. This shows there have been very few ‘clunkers’ in the space, indicating generally consistent, high-quality issues.
  • Fourteen companies (out of 32 total) have achieved a cumulative return of greater than 100% since IPO.
  • Recent IPOs such as DocuSign (NASDAQ:DOCU), Avalara (AVLR) and Pluralsight (PS) are typical of recent impressive returns.
  • The median return for all companies was 86%.

(Source: Shea & Company)

DocuSign is an excellent example of an Enterprise Software firm that has outperformed since its IPO.

The above table shows the performance of the stock as of June 30, 2018, when it was priced at $52.95. The stock is currently trading at $60.20, indicating a further 14% return since the end of Q2.

Since going public, DOCU has begun executing on its strategy to expand from its digital signature legacy business into contract lifecycle management software and recently announced an agreement to acquire

This article was written by

Donovan Jones profile picture
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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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