Source: Nasdaq
Executives pose at the Nutanix IPO at the Nasdaq market site in New York, September 30, 2016.
Technology IPOs have shown some life in September after a brutally slow first eight months of the year.
The main event is Friday, with the Nasdaq debut of Nutanix.
After filing its IPO prospectus in December, Nutanix delayed its offering in the first quarter because of volatility in the stock market and a revaluing of cloud technology companies. Finally, on Thursday night, the San Jose, California-based company raised about $238 million, selling shares at $16 a piece, above the expected range of $13 to $15.
The stock soared 91 percent to $30.60 as of mid-day in New York.
Nutanix, whose data center technology combines computing, storage and networking into a single product, has Silicon Valley watching its every move. That's because Nutanix has the type of rapid growth model that became popular for emerging software start-ups in recent years — raise a ton of money, burn cash to expand quickly, repeat.
More than three-dozen software companies have been valued at $1 billion or more by venture capitalists, according to The Wall Street Journal. Wall Street has responded with a different message: No thank you.
In the past 12 to 18 months, "the Street really made a change and basically made it very clear that they want a path to profitability," said Matthew Howard, a managing partner at Norwest Venture Partners and an investor in enterprise technology start-ups. "If you look at most key metrics, the lines seem to be converging."
VC-backed IPOs
| Company | Type | Offer date | Amount raised |
| Nutanix | infrastructure | Sept. 29 | $238 mln |
| Apptio | software | Sept. 22 | $110 mln |
| Trade Desk | ad-tech | Sept. 20 | $97 mln |
| Everbridge | software | Sept. 15 | $104 mln |
| Twilio | software | June 22 | $160 mln |
Source: Company filings
Those lines for Nutanix are gross profit and expenses, with the latter currently much larger than the former.
Revenue jumped 84 percent in the past year to $445 million. Its gross profit from that was $274 million, while operating expenses were $439 million. Add it all up, and Nutanix reported a net loss of $168 million.
However, billings more than doubled, an indication that there's no slowdown in revenue growth in the near future. Also, three-quarters of customers make repeat purchases, so all of those upfront costs associated with sales and marketing show a return on investment over time.
Founded in 2009, Nutanix has been going up against some of the biggest names in the data center, from VMware and EMC to Cisco andHewlett Packard Enterprise. Developing technology that combines all that functionality — what's known as hyperconvergence — and getting the market to understand, test and adopt it has required a massive investment.
Nutanix raised about $400 million in private financing, including an equity round in mid-2014 at close to a $2 billion valuation. In order to maintain a strong cash position while it waited to go public, Nutanix raised $75 million in debt in June.
"People are using legacy products and they need to be tutored on the advantages of hyperconvergence," said Mohit Aron, a co-founder who left in 2013 to start his own back-up company called Cohesity. "Once you can convert a customer you don't have to do much sales and marketing on that customer."
