The stock of software company Apigee Corp (NASDAQ:APIC) had a disappointing trading debut on Friday, as it opened at $20.5 initially and then tumbled 1.76% to $16.7 before the closing bell. The stock was trading further 1.14% lower at $16.5 in after-market trading yesterday.
The company issued 5.1 million stocks at a price per share of $17, raising a total of $86.7 million in its initial public offering (IPO). Currently, the company has a market capitalization of $485.97 million, with 29.09 million stocks. Apigee provides software known as Application Programming Interfaces (API) that enable users to share services and data across different devices and application by securing and managing the interface between applications.
The company has been operating since 2004 as Sonoa Systems Inc. by offering software that allowed applications to directly communicate, and changed its corporate name to Apigee in 2010. The company never revealed its private valuation and revenue. Its revenues climbed roughly 22% to $52.7 million last year, but its net loss soared 135% to $60.8 million.
Apigee CEO Chet Kapoor believes that an IPO is a key milestone for the company and IPO should aid the in increasing its commercial activities and providing funds for acquisitions. He said: “A lot of people get focused on what an IPO does for current investors and employees, but its very good for customers and partners." Although, the company performs an important function, which is esoteric, it had a difficult time explaining its story and business model to investors.
“We gave the example of how you can personalize things with apps, and to deliver a connected experience you need APIs that are secured, managed, analyzed and scaled, and that’s what Apigee does,” Mr. Kapoor said, adding: “The moment they made the connection to the connected experience and how many apps are in their professional lives, they got the story.”
Following the IPO, the largest investor of Apigee is Norwest Venture Partners with a 21.5% stake. Other investors include Bay Partners with 15.2%, Third Point Partners with 9.8% and Wellington Management with 6.4%. As per a regulatory filing, Wellington and Third Point showed interest in acquiring up to $1.75 million common stocks for the IPO.
The San Jose, California-based company is trading on the NASDAQ with the ticker"APIC." Credit Suisse Securities, JPMorgan Securities and Morgan Stanley & Co had roles of joint book running managers for the IPO. Nomura Securities International, JMP Securities and KeyBanc Capital Markets’ division Pacific Crest were co-managers of the IPO.