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Wall Street Beat: Market stokes tech IPOs, as Tableau and Marketo debut

Marc Ferranti and Joab Jackson | May 20, 2013
IPOs ride the market rise, but not all tech companies may benefit.

A strong market gives confidence to companies mulling IPOs, Fitzgibbon said. The opposite also can be true. While many market watchers pointed to Facebook's bungled IPO a year ago as the main reason for the decline in tech IPOs last year, Fitzgibbon noted that a third-quarter market slump -- which had nothing to do with Facebook -- occurred right around that time.

Even if the market stays strong, though, a rising tide may not lift all boats. Of the seven tech IPOs so far this year, three are down from their opening, he noted.

"The key word is 'selective,'" Fitzgibbon said. "Cloud technology is hot," as well as some areas of software. So Tableau and Marketo are in what's generally seen as particularly strong segments of tech right now. Among the more recognized names potentially in the IPO pipeline, Box, the cloud-based file-sharing and storage provider, has publicly stated its intentions of going public. Twitter is also generally seen as being ripe for an IPO.

"People feel like they are swimming in data. Data is in spreadsheets, databases, data warehouses, in the cloud, in Hadoop, one source after the other," said Christian Chabot, Tableau CEO and co-founder. Gartner predicts organizations will spend $81 billion on business analytics and related services in 2014. The company's secret sauce in this crowded field of competitors is a visual query language, first created by Ph.D. researchers at Stanford University. "People can query databases and spreadsheets of every size and format and get pictures of what they want to see," Chabot said. "There's nothing else like it on the market."

The company has been increasing revenue at a vigorous pace, from $34 million in 2010 to almost $128 million in 2012. Net income, during this time, has largely remained steady: $2.7 million in 2010, $3.3 million in 2011 and $1.4 million in 2012. "We're not trying to make too much profit at this point. We're trying to invest every dollar we can back into the business to grow the top-line," Chabot said. The company will use the infusion of IPO money to sell the software in more countries, as well as to port the software work on more platforms. More money will also be channeled into research and development and marketing. "The biggest challenge will be to continue to find exceptional people in software engineering and sales that can take the company to the next level," Chabot said.

Market research forecasts for the year call for a tough hardware market, but paint a brighter picture for software and cloud-oriented technology. IDC this week issued a report projecting worldwide IT spending growth, not including telecom services, of 4.9 percent in constant currency, to $2.06 trillion, down from its previous forecast of 5.5 percent.


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