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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