Earlier this week, we reported on the dearth of venture-backed initial public offerings during the second quarter. Just 11 companies made the leap during the second quarter, marking a 42 percent decline.
Now, here comes some interesting research from Tableau Software’s Daniel Hom who looks at the makeup of today’s crop of tech IPOs.
Hom, who writes the IPO Dashboards blog, finds that 73 percent of recent tech IPOs weren’t profitable when they made the jump to the public markets. That compares to just 34 percent of tech IPOs that were losing money at the time of their IPOs during the freewheeling days of the dot-com boom in 1999.
But while profits may not be a prerequisite, revenues seem to be. Hom found that 60 percent of tech companies today had revenues of $100 million or more when they completed their IPOs, including companies such as Groupon, LinkedIn and ExactTarget. By contrast, just 34 percent had hit that milestone in 1999.
Washington state’s only tech IPO of the past year — online real estate company Zillow — actually ranked at the bottom of the list in revenues. But it also had the smallest loss of the bunch, and it has since become a profitable company in its first few quarters on Wall Street. Investors have applauded Zillow’s performance, one of the best in the crop of IPOs. Its stock has nearly doubled from the $20 offering price last July.
Here’s a look at Hom’s report, with the red lines denoting losses.