Twilio, one of the few tech companies testing the IPO waters in 2016, just priced its offering at $15 a share – above its previously targeted range.
The company, which provides phone and text-message services to app developers, is now valued at $1.23 billion, beating the company’s last private valuation of around $1 billion.
That’s an important milestone for the dozens of privately held “unicorn” startups nervously wondering whether their valuations of $1 billion or more will translate to the public markets.
Twilio had previously said that it expected to price the offering between $12 and $14 per share, so it’s already exceeding expectations.
But Twilio will face another big test when its shares begin trading on the NYSE on Thursday, under the symbol “TWLO.” By pricing this offering at a higher price, the company may risk losing the first-day pop in price that Wall Street often views as a positive indicator of a new IPO’s success.
Silicon Valley is watching this deal closely. Twilio is the second overall tech IPO of the year, and the first so-called unicorn startup with a private valuation of $1 billion to go public so far in 2016. Investors will be reading the tea leaves.
Twilio is offering 10 million shares for sale in this IPO, meaning that it’s raised $150 million. Twilio has also granted the offering underwriters the option to buy up to 1.5 million additional shares in the next 30 days, which could net the company another $22.5 million.
In its IPO prospectus, Twilio reported that it’s not profitable, generating a $35.5 million net loss on $166 million in revenue in 2015. The company’s revenue grew 88% between 2014 and 2015. Another big potential sticking point for investors could be Facebook’s WhatsApp, a Twilio customer that accounted for 17% of the company’s 2016 revenue – with no long-term contract.
Twilio says that it’s actively investing in growth, with 28,000 active customer accounts in the quarter ending March 31st, 2016. Companies like Uber and Nordstrom rely on Twilio’s service to send text messages and make automated phone calls to customers.
Founded in 2008, Twilio has raised $233 million in venture capital in its lifetime, from investors including Salesforce Ventures, Amazon, and Chris Sacca’s Lowercase Capital. Twilio had most recently raised $130 million at $11.31 a share in a July 2015 round led by T. Rowe Price.
As reported by Business Insider