Bloomberg News

Jive Surges in Trading Debut After Pricing IPO Above Range

December 14, 2011

(Updates with CEO’s comment in sixth paragraph.)

Dec. 13 (Bloomberg) -- Jive Software Inc., a company that helps businesses communicate using Facebook-style tools, jumped 25 percent in its first day of trading, signaling that investors remain hungry for social-networking stocks.

The shares climbed to $15.05 on the Nasdaq Stock Market, a day after the Palo Alto, California-based company priced its stock at a higher-than-expected level in an initial public offering. Jive sold 13.4 million shares at $12 apiece, topping an earlier proposal to offer 11.7 million for $8 to $10 each.

Jive is capitalizing on the popularity of Facebook Inc. and Twitter Inc. by bringing social features to the business world. Revenue at the company, which counts NetApp Inc., Avon Products Inc., Yum! Brands Inc. and Nike Inc. among its clients, has surged in the past three years as workers seek new ways to communicate with their colleagues, customers and suppliers.

“Consumers have led this generation of technology, and enterprises are now being forced to catch up,” said Jive investor Trevor Loy, a general partner at Flywheel Ventures in Santa Fe, New Mexico. “The story of Jive is just now being heard by mainstream enterprise customers.”

Jive competes with a phalanx of social-media startups, as well as established business-software companies such as Salesforce.com Inc. and International Business Machines Corp. The IPO performance helps set the company apart from its rivals, Chief Executive Officer Tony Zingale said.

‘Very High Bar’

“Going public is a very high bar, and we just distanced ourselves from all the wannabes in the space that deliver a piece of the offering,” he said in an interview today. “It just got much harder for them to compete.”

Jive’s sales climbed 73 percent to $54.8 million in the first nine months of the year. Even so, increasing spending on product development, marketing and overhead has widened losses. Jive posted a net loss of $38.1 million in the period, compared with $20.9 million a year earlier.

With outstanding shares of 59.1 million, Jive has a market value of $888.9 million. That’s about 13 times its trailing 12- month sales -- a much richer valuation than those of its larger rivals. The ratio is about 3 for Microsoft Corp. and 2.1 for IBM, which are both named as competitors in Jive’s IPO filings.

IPO Flurry

Jive is one of 11 companies seeking to raise a total of $3.8 billion in U.S. IPOs this week, the most since March. At least three other U.S. companies that sell software as a service have registered for IPOs since August. ExactTarget Inc., a provider of e-mail marketing services, filed in November, three months after rival Eloqua Ltd. Bazaarvoice Inc., whose software helps companies communicate with their customers, announced IPO plans the same month.

Jive’s IPO may pave the way for other developers of online business software to go public in the next year or two, said Zach Nelson, CEO of the Web-based accounting-software maker NetSuite Inc., a supplier to Jive.

The list may include Workday Inc., a startup that handles human resources, finances and payroll for companies. The startup, which announced $85 million in funding from investors such as T. Rowe Price Group Inc. and Morgan Stanley in October, may go public next year or in 2013, Nelson said. Trustwave Holdings Inc., which delayed its offering on Aug. 10, also might sell shares to the public next year, said Nelson, who sits on Trustwave’s board.

“Jive is a great example of what can happen,” he said.

Paying Down Debt

About $20 million raised in the Jive IPO will be used to pay down loans, according to regulatory filings. Morgan Stanley and Goldman Sachs Group Inc. managed the offering.

Sequoia Capital, the biggest Jive shareholder, and Kleiner Perkins Caufield & Byers, another venture backer, didn’t plan to sell shares. According to regulatory filings, their stakes will be 29 percent and 11 percent, respectively, after the IPO.

Co-founders Matthew Tucker and Bill Lynch, who owned about 14 percent each before the IPO, will see their stakes cut to 11 percent apiece. Zingale, the CEO, is trimming his ownership to about 5 percent from 7 percent.

Facebook, the world’s largest social-networking service, is making preparations for its own IPO, a person with knowledge of the matter said last month. The company may raise about $10 billion in a deal that would value it at more than $100 billion, the person said.

--With assistance from Lee Spears in New York and Aaron Ricadela in San Francisco. Editors: Elizabeth Wollman, Nick Turner

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Jennifer Sondag at jsondag@bloomberg.net


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