On Wednesday, Klaviyo witnessed a 9.2% increase in its share price during its debut on the New York Stock Exchange. This marked a significant milestone as it became the first prominent IPO for a U.S. venture-backed software company since late 2021. However, the stock’s performance saw a decline throughout the day, with the closing price settling at $32.76, following its initial opening at $36.75.
Yesterday evening, Klaviyo, a marketing automation company headquartered in Boston, set the price for its IPO at $30 per share, surpassing its previous price range by $1, which had been raised in the recent past. This pricing achievement appears to be a positive outcome for the mature startup, as it results in a fully diluted valuation of approximately $9.2 billion. This valuation is in close proximity to the company’s last private valuation of $9.5 billion.
The debut on the stock market, identified by the ticker symbol “KVYO,” occurred just one day after the grocery delivery firm Instacart made its entrance on the Nasdaq, experiencing a noteworthy 12% increase in its stock price after an initial surge of 40%. Both Instacart and Klaviyo are aiming to tap into the technology IPO market, which has remained largely dormant for 21 months.
Established in 2012, Klaviyo specializes in assisting businesses in managing user data and constructing customer profiles for targeted marketing across various channels, including email and text messages. Initially, the company primarily catered to online businesses, particularly in the e-commerce sector. However, Klaviyo has reported an increasing interest from enterprises in diverse sectors such as restaurants, travel, and events and entertainment.
In its prospectus, Klaviyo revealed impressive financial performance, with a remarkable 51% increase in revenue during the most recent quarter, reaching $164.6 million. Notably, the company has achieved profitability, reporting a net income of $10.9 million, a significant turnaround from a year earlier when they incurred a loss of $11.7 million.
Klaviyo’s close association with Shopify, one of its primary supporters and business partners, is noteworthy. Shopify, a prominent e-commerce software provider, holds approximately 11% of Klaviyo’s shares and made a substantial $100 million investment in the company the previous year. As of the conclusion of 2022, Klaviyo disclosed that about 78% of its annualized recurring revenue, which represents the value of its ongoing paid subscriptions, is generated from customers who also utilize Shopify’s platform.
Both BlackRock and Alliance Bernstein have committed to purchasing shares worth up to $100 million each, collectively constituting a significant portion of the overall proceeds.
This offering represents another indication of a resurgence in the U.S. IPO market. The market had remained relatively dry throughout the past year and most of this year until the recent Nasdaq debut of SoftBank Group’s chip designer Arm, which boasted a fully diluted valuation of $54.5 billion.
The most recent software companies with venture capital backing to go public in the United States were HashiCorp and Samsara. Both of them made their stock market debuts in December 2021, a time when the Nasdaq was at its zenith, and investors were willing to pay a premium for companies with strong growth potential. However, 2022 witnessed a surge in inflation and an increase in interest rates, causing a shift away from high-risk investments and marking the most challenging year for tech stocks since the 2008 financial crisis.
Klaviyo serves as a trusted partner to more than 130,000 businesses across over 80 countries. Among the underwriters for the offering are Goldman Sachs, Morgan Stanley, Citigroup, Barclays, Mizuho Financial, and William Blair.
(Source: Ari Levy, Annie Palmer | CNBC | Alex Wilhelm | TechCrunch | Echo Wang | Anirban Sen | Dimpal Gulwani | Timothy Gardner | Miral Fahmy | Reuters)
