DocuSign Climbs in Trading Debut After $629 Million U.S. IPO

(Bloomberg) -- Electronic signature software company DocuSign Inc. rose as much as 38 percent on its first day of trading in the U.S. after raising $629 million in its initial public offering.

The stock climbed 35 percent to $39.10 at 2:18 p.m. in New York, valuing the San Francisco-based company at about $6 billion. DocuSign sold 21.7 million shares for $29 a share in the fourth-largest technology and communications listing on a U.S. exchange this year, according to data compiled by Bloomberg.

The company, which had been eyeing an IPO for at least five years, had initially marketed the stock for $24 to $26 apiece. That range was increased to $26 to $28 after investors showed strong demand for the shares during the roadshow.

DocuSign will use the proceeds to continue investing heavily in sales and marketing to expand in the U.S. and overseas, according to Chief Executive Officer Dan Springer.

“Going forward, we’re going to aggressively continue to invest,” Springer said Friday in a Bloomberg TV interview. “We think we’ve just penetrated a small part of the opportunity.”

Overseas Push

The company will push for growth by landing new customers, particularly overseas, where it currently derives just 17 percent of its revenue, he said. Almost two-thirds of its spending went to sales and marketing last fiscal year. Springer said he expects that to continue.

More than 370,000 companies use DocuSign’s software to automate business agreements and electronic signatures, according to the filing. It lost $52 million on $519 million in revenue for the year ended Jan. 31. In the previous year, it lost $115 million on $382 million in sales.

The listing trails the March IPOs of Chinese video company iQiyi Inc., which raised $2.25 billion, and file-storage company Dropbox Inc., with $869.4 million in stock sold at an $8.2 billion valuation. DocuSign’s listing is the bread and butter of technology IPOs: A midsize company that sells to business customers.

Another enterprise technology company, Smartsheet Inc., priced its shares at $15 on Thursday, $1 above the marketed range to raise $175 million. Smartsheet rose as much as 25 percent Friday. A third, Carbon Black Inc., is expected to price its offering of as much as $136 million on May 3.

Pivotal Software Inc., backed by Dell Technologies Inc. in the third largest tech-IPO of the year, got a lukewarm reception after its $638 million listing. The stock is up only 21 percent since it priced on April 20. Chinese video site Bilibili Inc. is down 5.3 percent from its $483 million March 28 IPO. Both deals priced within their marketed share price range.

Road to IPO

DocuSign, founded 15 years ago, has had a long road to becoming public. Management had been discussing plans for an IPO since at least 2013. Its listing was slowed by a lengthy CEO search and conflicting views among its 12-person board and 120 board advisers. Springer was hired as chief last year after a 15-month search.

“I think this company has actually been IPO ready for a while,” he said.

He set out to achieve three things before taking it public, he said. DocuSign needed positive cash-flow, a proven ability to expand internationally and the right management team for facing public investors. It has ticked off all of those boxes, he said.

DocuSign has raised more than $450 million in private funding from investors including Microsoft Corp. and venture capital firm Kleiner Perkins Caufield & Byers, according to its website.

Morgan Stanley and JPMorgan Chase & Co. are leading the offering. The company is listed on the Nasdaq Global Select Market under the symbol DOCU.

©2018 Bloomberg L.P.

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