From Needham & Company:
U.S. equity markets staged an impressive turnaround in February. Despite a prolonged slump at the start of the year on concerns related to prospects for growth in China and the U.S., along with uncertainty in the emerging markets, domestic equity markets rallied to new highs at the end of the month on the back of Janet Yellen's testimony which voiced a potential decrease in tapering as response to recent disappointing domestic data points. On the final Thursday of February, the S&P 500 index rose 9 points to 1,854, surpassing its previous record high of 1,848, eventually closing out the month at 1,859. Furthermore, the Dow finished at 16,322, just short of its 16,576 record, and the NASDAQ added 1.0% on the week to finish at 4,308, short of its record close of 5,049.
In total, there have been 42 IPOs raising $8.2bn so far in 2014, the highest YTD activity since 2007 (also 42 IPOs). February activity saw 24 deals raise $2.3bn, the most active February since 2007 (27 IPOs). Of the 24 deals which priced in February, Varonis Systems (VRNS) was the only technology related deal. The VC backed company, which priced on February 27th, opened up 77% and eventually closed up 100% from its offer price on its first day of trading.
The technology IPO backlog remains very robust, however, with eleven companies filing their initial S-1 statements in February: GrubHub (GRUB), a developer and operator of an online food-ordering website, seeks to raise $100M; Everyday Health (EVDY), a provider of online consumer health solutions, seeks to raise $115M; 2U (TWOU), a provider of higher education degree programs online, seeks to raise $100M; A10 Networks (ATEN), a network equipment manufacturer, seeks to raise $100M; King Digital Entertainment (KING), an interactive mobile entertainment & gaming company, seeks to raise $500M; Borderfree (BRDR), a provider of international ecommerce solutions and cross-border expertise, seeks to raise $86M; Aerohive Networks (HIVE), a manufacturer of a cloud-managed mobile networking platform, seeks to raise $75M; Q2 Holdings (QTWO), a provider of cloud-based virtual banking solutions, seeks to raise $138M; Castlight Health (CSLT), a provider of software designed to make health care pricing options transparent, seeks to raise $100M; Amber Road (AMBR), a provider of global trade management products and solutions, seeks to raise $75M; and Rubicon Project (RUBI), an internet advertiser which automates the buying and selling of ads, seeks to raise $100M.
Also of note are two companies who filed their S-1 on March 3rd: Five9 (FIVN), a provider of cloud software for contact centers, seeks to raise $115M; and Opower (OPWR), a software company that helps utilities meet their efficiency goals through effective customer engagement, seeks to raise $100M.
The closely-watched, CBOE Volatility Index (VIX) fell to 14 by the end of February. Despite the index's stint in the high teens and twenties, we have not seen the spike meaningfully halt activity in the equity markets and have enjoyed healthy market activity throughout 2014. That said, as the calendar turns to March, investors will remain focused on the developments in the Soviet bloc given the mounting geopolitical concerns over the sovereignty of Ukraine.
* The IPO Thermometer, measuring returns on IPOs in the last 90 days, was +95%, while the NASDAQ saw returns settle at +6% over the same period. Four companies remain in the 90-day look-back: Autohome (ATHM) is trading up 142% from its offer price; Nimble Storage (NMBL) is up 129%; Varonis Systems (VRNS) is up 96%; and Care.com
(CRCM) is up 9% from its initial offering price. (pg. 1 as of 2/28/2014)
* The IPO Scorecard shows the issuer's first day trading results in comparison with its initial filing range. In February, Varonis Systems (VRNS) priced 22% above the midpoint of its range ($17 - $19) and traded up 100% on its first day. (pg. 2)
* Page 3 is a linear version of the IPO scorecard. Note that data in September and October of 2011 was limited due to inactivity. (pg. 3)
* The CBOE Volatility Index (VIX) is the most widely followed gauge of uncertainty in the market. The volatility charts track the CBOE VIX volatility index and its correlation to the rate of new issuers. The VIX closed February at 14. We view a reading below 20 as generally favorable for near-term capital markets activity. (pg. 5 -6)
* The technology IPO backlog grew in February: one company completed its initial public offering (VRNS); eleven companies filed their initial S-1 (GRUB, EVDY, TWOU, ATEN, KING, BRDR, HIVE, QTWO, CSLT, AMBR, RUBI); and no companies withdrew their registration statements. (pg. 10)