Amidst the ongoing market turmoil, SuccessFactors (SFSF) was able to price a successful IPO this week. The offering (co-led by Morgan Stanley and Goldman Sachs) priced at the top end of its proposed range ($10) and stands at $12.75 after the first two days of trading. Considering how bleak the market has been over those two days, it's an auspicious debut.
SuccessFactors is the latest in an ever-increasing number of SaaS IPOs. The company raised just over $100mm in the IPO and carries a market cap north of $500mm. My good friend and HCM analyst Jason Corsello has weighed in on the company several times:
- The Looming SuccessFactors IPO
- SuccessFactors IPO - My Take and What It Means
- Why SuccessFactors is the Hottest Vendor in Enterprise Software
I'd like to extend a congratulations to Lars and the team; as well as the VCs involved in this successful deal. One of the funds I manage is a passive investor in SFSF by way of Granite Global Ventures; congratulations to them on yet another winner.
With a successful offering comes real opportunity to grow the business; but being a publicly traded company also brings with it new challenges. SuccessFactors competes in a niche of the market that already has several successful public companies; including Taleo (TLEO), Kenexa (KNXA) and Ultimate Software (ULTI). Authoria is also probably not far off from a public listing potentially. In addition, SFSF will need to deliver on quarterly expectations and must dance the delicate balance of maximizing growth and market share, while at least showing a push toward profitability and margin leverage. I'll be keenly interested in whether the company can use its newfound capital to fill out the whitespace in its services offerings and, in turn, prove itself the equal to Taleo; who has tremendous momentum among customers and the financial community.
Note: This is not a
recommendation to buy or sell SFSF, TLEO, KNXA, ULTI or any other security, but is
personal analysis to foster discussion for informational purposes only.
At the time of this writing, I and/or funds I maintain discretionary
control over, did not maintain a direct position (long or short) in any of the companies mentioned but did maintain a passive investment in SFSF via our participation in Granite Global Ventures. We also may, at times, carry derivative options on underlying
positions as a hedge.
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