[Updated 10/12/17, 4:58 pm. See below.] Amid another sluggish year for tech IPOs, advocates of Boston’s tech scene can breathe a sigh of relief—the area won’t be shut out this year.
CarGurus and its stockholders raised about $150.4 million in the company’s initial public offering, marking the Boston area’s first tech IPO of 2017. The Cambridge, MA-based software firm is expected to begin trading on the Nasdaq stock exchange Thursday under the ticker symbol “CARG.”
CarGurus, which runs an online marketplace for buying and selling new and used cars, sold 9.4 million Class A shares for $16 apiece, according to a press release. (Technically, the company is selling 2.5 million shares and existing stockholders are selling 6.9 million shares. The IPO underwriters have a 30-day option to purchase an additional 1.41 million shares.) The $16 price was above the company’s earlier plan to sell shares at $13 to $15 per share, according to SEC filings.
The company’s stock opened Thursday at $29 per share and closed the day slightly lower, at $27.58. Still, its closing price was up around 72 percent from the $16 IPO price. [This paragraph added.]
The CarGurus IPO is notable for a few reasons. In an era when many software companies burn through truckloads of venture capital without finding a path to profits, 11-year-old CarGurus has built a profitable business, and it funded itself for the first eight years with just $5 million in outside capital. (It has since pulled in at least $128 million from private investors, including T. Rowe Price Associates, Fidelity Brokerage Services, Winslow Capital Management, and Foxhaven Asset Management, SEC filings show.)
CarGurus generated $198.1 million in revenue last year—more than double its 2015 revenue of $98.6 million. In the first half of this year, it turned an $8.5 million profit on $143.3 million in revenue. The company employs over 500 people, according to SEC filings.
Boston isn’t known for producing big consumer tech companies—with a few notable exceptions. CarGurus CEO Langley Steinert has played key roles in two of them. He founded CarGurus in 2006, and before that, he co-founded TripAdvisor, which is also publicly traded.
Steinert is the largest CarGurus shareholder, and earlier SEC filings indicated he would still control an estimated 53 percent of the voting power of the company’s outstanding stock after the IPO.
Steinert and other CarGurus employees rang the opening bell at the Nasdaq stock exchange Thursday. (See above photo—Steinert is in the center.) In a prepared statement e-mailed to Xconomy, Steinert called the IPO a “significant milestone.” He added, “Our mission to build the world’s most trusted and transparent online automotive marketplace continues, and we’re excited to enter this new chapter.” [This paragraph added.]
Last year, two tech companies in the Boston area went public (Acacia Communications and Everbridge), while there was only one local tech IPO in 2015 (Rapid7). There were five in 2014 (Care.com, Imprivata, CyberArk, Wayfair, and HubSpot).
[Top photo courtesy of Nasdaq.]
