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Avalara Is Latest Tech IPO to Pop; Shares Are in the Cloud


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Shares of Avalara (AVLR), a maker of cloud-based tax-compliance software, are up 70% in its IPO debut today.

The 14-year-old firm-the 20th tech company to go public this year-is at $40.85 per share. Last night, it priced its IPO at $24 per share, well above its estimated range of $19 to $21.

The company raised $180 million through its sale of 7.5 million shares.

The Seattle-based company, which has raised more than $300 million from private investors, is one of at least nine software-as-a-service businesses to successfully go public this year. Other notable performers include DocuSign (DOCU) and Smartsheet (SMAR), both of whose stock spiked at least 20% in their first day of trading.

"Investors like the visibility and predictability of recurring revenue," Avalara  Chief Executive Scott McFarlane  tells Barron's. "The cloud- or SaaS-based model has come of age, and we knew the concept of sales-tax automation was inevitable."

Jay Ritter, an IPO expert who teaches corporate finance at the University of Florida, counts 20 tech-related IPOs this year, 16 since mid-March and more than half with subscription models.

Avalara's promising first day ends a week of strong tech IPOs.

Shares of Adyen (ADYEN.Netherlands) rose nearly 90% in their first day of trading on Wednesday, leaving the payment-processing company with an initial market valuation of $15.8 billion.

Alex Niehenke, a partner at Scale Venture Partners, a venture-capital firm that has backed DocuSign, Box (BOX), and HubSpot (HUBS), tells Barron's the current climate reminds him of a snowstorm. "As successful IPOs slowly pile up, it's hard not to notice," he says, pointing to "high quality" offerings from Dropbox (DBX), Twilio (TWLO), and Cloudera (CLDR).

Niehenke defines high-quality companies as ones that are visible and predictable in growth, especially those with recurring revenue from subscriptions.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Technology , Stocks
Referenced Symbols: AVLR , DOCU , SMAR , BOX , HUBS



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