Boston-based software company Klaviyo made a successful debut on the New York Stock Exchange (NYSE) on Wednesday, boosting hopes for a revival of the tech IPO market after a near two-year lull. The marketing and data automation provider saw its shares jump 23% to $36.75 in their debut, following the pricing of 19.2 million shares at $30 each on Tuesday, leading to a valuation of just over $9 billion on a fully diluted basis.
Klaviyo raised $576 million in proceeds from the initial public offering (IPO), with a significant portion of this sum being used to cash out existing investors. Large investment firms BlackRock (NYSE:BLK) and AllianceBernstein (NYSE:AB) have agreed to buy up to $100 million worth of shares each, accounting for a sizeable chunk of the total IPO proceeds.
The successful listing of Klaviyo, under the ticker symbol "KVYO", comes just a day after grocery delivery company Instacart started trading on the Nasdaq. Both companies are seen as trying to reignite a tech IPO market that has been virtually inactive for 21 months. The recent public debut of UK-based chip designer Arm, controlled by Japan's SoftBank (TYO:9984), also indicates a potential resurgence in the sector.
Founded in 2012 by software engineers Andrew Bialecki and Ed Hallen, Klaviyo helps companies store user data and build profiles to target them with marketing via email, text messages, and other channels. The company got its start in the e-commerce industry by primarily serving online businesses but has recently seen growing demand from companies in other sectors like restaurants, travel, and events and entertainment.
One of Klaviyo's biggest backers and sources of business is e-commerce software vendor Shopify (NYSE:SHOP), which owns roughly 11% of Klaviyo's shares. As of the end of 2022, about 78% of Klaviyo's annualized recurring revenue was derived from customers who also use Shopify.
In an interview with CNBC on Wednesday, Klaviyo CEO Andrew Bialecki highlighted the company's positive relationship with market-leading platforms like Shopify. He explained that while these platforms deal with payment and back-office functions, Klaviyo focuses on enhancing the customer experience on the front end.
Klaviyo's recent performance has been strong, with the company reporting a 51% revenue growth in the latest quarter to $164.6 million. The company has swung to profitability, reporting net income of $10.9 million after losing $11.7 million a year earlier. As of June 30, Klaviyo had more than 130,000 customers, up from 105,000 customers a year ago.
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