Sumo Logic’s Trading Debut Rise Adds to Software’s Strong Week

Software Maker Sumo Logic Rises in Debut After $326 Million IPO

18 Sep 2020, 08:55 AM IST

(Bloomberg) -- Sumo Logic Inc. climbed 22% on its first day as a public company after a $326 million initial public offering, following even stronger trading debuts this week by two other cloud-based software makers.

Snowflake Inc. gained 112% in its first day of trading while JFrog Ltd. rose 47%, the best performances so far for the 18 IPOs that have priced this week. Unity Software Inc., a developer of software used to design video games, is seeking to raise as much as $1.2 billion in its listing set to price Thursday.

Sumo Logic sold 14.8 million shares for $22 apiece on Wednesday after marketing them for $17 to $21 each. The shares closed Thursday at $26.88, giving the Redwood City, California-based company a market value of $2.65 billion.

Telemedicine provider American Well Corp. climbed 28% in its trading debut Thursday, after its IPO raised $742 million.

Two other companies sunk in their debuts Thursday. Broadstone Net Lease Inc., a real estate investment trust, had priced its IPO at the bottom of its marketed range to raise $570 million. Its shares fell 4.1% Thursday.

Packaging and container maker Pactiv Evergreen Inc. had one of the worst launches this year on a U.S. exchange. After pricing its shares below its targeted range to raise $575 million, the company’s stock dropped 22% Thursday.

For More: Pactiv Evergreen Falls in U.S. IPO After Downsizing Offering

Sumo Logic is valued at about seven to nine times forward sales multiples. That’s much lower than Snowflake and JFrog, which have higher net retention rates for customers and more sustainable top-line growth, Bloomberg Intelligence analyst Mandeep Singh wrote in a note.

For the six months ended July 31, Sumo Logic lost $36 million on revenue of $97 million, according to its filings. The company’s largest shareholder is the venture capital firm Greylock Partners and its affiliates, with a 19.2% stake after the offering, the filings show.

Sumo’s offering was led by Morgan Stanley, JPMorgan Chase & Co., Royal Bank of Canada and Jefferies Financial Group Inc. The shares are trading on the Nasdaq Global Select Market under the symbol SUMO.