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US IPO Weekly Recap: DocuSign leads tech wave as IPO market hits 5 homeruns

April 27, 2018
Weekly Recap

• Driven by a surge in tech, all 5 IPOs traded up 30% or more (44% avg.)
Tech is by far the year's best IPO sector, averaging 30% vs. 4% for non-tech
AXA Equitable launched its $3.5 billion IPO, the largest since Alibaba in 2014
• A flurry of deals joined AXA on the May IPO calendar; next up is tech IPO Carbon Black

Technology asserted its place as the top-performing IPO sector in a strong week for growth IPOs. Five deals raised a combined $1.4 billion. The four tech IPOs priced above their proposed ranges, and two priced above their upwardly-revised ranges, a first since January 2015 (SHAK and ONCE). These two software unicorns, DocuSign (DOCU) and Smartsheet (SMAR), combine high growth and large markets, along with steep losses. Fast-growing and profitable laser manufactuer nLight (LASR) soared 56%. Software provider Ceridian HCM (CDAY) had the best first-day pop (+42%) for a tech LBO in the past 10 years. Just as rare, fast-growing insurer Goosehead (GSHD) popped 58% after pricing below its range. 

5 IPOs During the Week of April 23rd, 2018
Market Cap
at IPO
Price vs.
First Day
at 04/27
Goosehead Insurance (GSHD) $85M $350M -33% +58% +58%
Operates and franchises personal lines insurance agencies in the US.
nLight (LASR) $96M $611M 14% +68% +56%
Leading manufacturer of high-power semiconductor and fiber lasers.
Ceridian HCM (CDAY) $462M $3,048M 10% +42% +39%
Provides enterprises with human capital management software.
DocuSign (DOCU) $629M $5,460M 16% +37% +37%
Provides the world's leading cloud-based e-signature platform.
Smartsheet (SMAR) $175M $1,668M 36% +30% +30%
Provides a spreadsheet-based work collaboration platform.

These IPOs screened out well on IPO Pro's proprietary Quick Take. Explore IPO Pro's enhanced profiles with a free trial.

DocuSign (DOCU) raised $629 million ($466 million excluding insiders) at a $5.5 billion market cap, then popped 38%. The large, fast-growing unicorn has become synonymous with e-signatures, making impressive inroads at large enterprises. While it has a history of operating losses, free cash flow recently turned positive.

Smartsheet (SMAR) priced its $175 million IPO at $15, well above its original range of $11-12. The work collaboration unicorn was valued at a market cap of $1.7 billion, before flying up 30% on Friday. Smartsheet's blazing-fast growth and large market opportunity more than made up for its massive losses.

nLight (LASR) raised $96 million by pricing above its range at $16, before flying up 68% on its first day. The company boasts strong growth, expanding margins and an experienced management team. However, it faces a number of key risks: high customer concentration, low revenue visibility and exposure to China.

Ceridian HCM (CDAY) raised $462 million at a market cap of $3.0 billion. LBOs rarely pop; Ceridian's 42% initial gain was the best for a technology LBO in the past decade (there have been 34). Investors were likely attracted to the fast growth of its Dayforce software platform. However, we note that Ceridian's post-IPO debt of $671 million is still relatively high.

Goosehead Insurance (GSHD) priced its $85 million IPO at $10, well below its range of $14-16, then rocketed 66% to close at $16.65. Companies rarely pop after pricing below the range. The 5-year average is +2.5%, and the last time a company priced down and popped 50% or more was in 2014. While a number of factors (available to IPO Intelligence clients) likely led to pricing pushback, Goosehead's differentiated model has helped it achieve strong organic growth. 

IPO Pipeline Update: GreenSky files for an estimated $1 billion IPO
5 Filings During the Week of April 23rd, 2018
Sector Lead
GreenSky (GSKY) $1,000M Financials Goldman
Operates a digital lending platform.
Kiniksa Pharmaceuticals (KNSA) $100M Health Care Goldman
Clinical-stage biotech developing treatments for autoinflammatory and autoimmune conditions.
Scholar Rock (SRRK) $75M Health Care Jefferies
Preclinical biotech targeting growth factor inhibition for a variety of diseases.
Evo Payments (EVOP) $300M Technology JP Morgan
Provides payment processing services to merchants and financial institutions.
MR2 Group (MRMR) $18M Industrials ThinkEquity
Data-collection firm providing market research under the Precision Opinion brand.

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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has returned 1.5% year-to-date, while the S&P 500 is down -0.1%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Spotify (SPOT) and Snap (SNAP). The Renaissance International IPO Index is up 1.7% year-to-date, while the ACWX is up 0.6%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and Samsung BioLogics.