Coverage: Software developer Twilio goes public

Cloud software developer Twilio Inc. priced its initial public offering Wednesday evening at $15, above the expected range of $12 to $14.

Corrie Driebusch of The Wall Street Journal had the news:

The San Francisco company’s IPO priced at $15 each, raising $150 million by selling 10 million shares, the company said in a release late Wednesday. The offering comes during a tough patch for younger, private technology companies as some of their valuations in private fundraising rounds have fallen in recent months. It also comes as U.S.-listed IPOs are on track for their worst year since the financial crisis.

Many investors from Silicon Valley to Wall Street were for that reason watching to see where Twilio—pronounced TWIL-ee-oh—priced its offering. The company last sold shares to private investors at $11.31 a share, according to a regulatory filing, valuing the company at about $1 billion, and those investors will want to see Twilio shares trade above that level.

So far, things are looking good for Twilio. Its IPO priced above the $12 to $14 range the company was targeting. At $15 a share, Twilio has a market capitalization of $1.2 billion, more than what it was valued in its previous financing round.

Twilio, which enables developers to build applications that can interact with customers, whether it is messaging, video or voice, counts as customers Uber Technologies Inc. andHubSpot Inc., among others. Its platform allows Uber passengers to call or text their drivers by connecting the company’s mobile app to the phone network.

Marisa Kendall of the San Jose Mercury News notes that it’s the first Silicon Valley IPO of the year:

The deal, which will be the first Silicon Valley tech IPO of the year, is being closely watched as a bellwether to test whether the market will be receptive of future tech IPOs this year.

“There’s a lot of buzz around this offering, and I think it sends a great signal to the market,” Paul Boyd, managing partner of ClearPath Capital Partners, wrote in an email. “Let’s see if others follow suit and go out the gate.”

Boyd said he’s seen great demand for Twilio shares, and the IPO is oversubscribed.

At $15 a share, Twilio will be worth $1.23 billion. It was worth $1.03 billion as a private company, and its shares were valued at $11.31 during its most recent round of fundraising last year, according to data from venture capital database PitchBook.

Twilio, which provides communication technology to companies including Uber, is set to begin trading on the New York Stock Exchange under the ticker symbol TWLO.

Analysts hope the company’s debut will end the IPO drought in Silicon Valley, which hasn’t seen a tech offering since Square went public in November. But it all depends on how the market responds.

Leslie Picker of the New York Times reports that other unicorns — private companies with a valuation of $1 billion or more — are watching Twilio:

Twilio, based in San Francisco, is being hailed as a trailblazer compared with the almost 170 unicorns — or companies with valuations above $1 billion — that have opted to stay private for now. Twilio was a test of investor receptivity to the software company’s finances, which show 88 percent revenue growth over last year but consistent net losses. As markets become more uncertain, investors have preferred companies doing I.P.O.s to turn a profit.

Twilio generated $167 million in revenue last year from about 25,000 active customer accounts. WhatsApp, the messaging service owned by Facebook, represented 17 percent of that revenue.

Bessemer Venture Partners first backed Twilio in 2009 and is its largest shareholder, owning about 25 percent of the company’s outstanding shares. Fidelity Investments and Union Square Ventures also hold significant stakes. These entities as well as select executives hold 98.6 percent of the voting power after the I.P.O., because of their ownership of supervoting stock.