NEW YORK (AP) – Shares of SuccessFactors Inc. climbed nearly 40 percent in their market debut Tuesday after the company's initial public offering of 10.8 million shares priced at the high end of the expected range.
Shares jumped $3.57, or 35.7 percent, to $13.57 in morning trading. Shares traded as low as $12.58 and as high as $14.14 earlier in the session.
Shares opened at $13 after pricing at $10 per share late Monday, for total proceeds of about $90.2 million after expenses, according to the company's latest filing with the Securities and Exchange Commission.
The San Mateo, Calif.-based company had expected the offering to price between $8 and $10 per share.
Of the total shares offered, SuccessFactors sold 10 million shares and a group of selling stockholders offered 790,000 shares. Based on the offering price and the total shares outstanding following the IPO, SuccessFactors has an initial market capitalization of about $497.4 million.
SuccessFactors provides human-resources software to more than 1,400 customers in a variety of industries, with more than 2 million users around the world. Customers include American Airlines, Wachovia Corp., Lowe's Cos. and T-Mobile USA Inc.
The on-demand model is attractive for companies because it reduces the high, upfront cost of installing complex software. Instead, the software application is hosted by SuccessFactors and customers pay a fee to access the application over the Internet using a standard Web browser.
While analysts had pegged the deal as promising, noting such things as the company's attractive client base and excellent top-line growth, they also warned of its significant losses.
“The key to that deal is how investors view how much money they are losing,” Paul Bard, an analyst at Renaissance Capital's IPOHome.com, said last week.
For the nine months ended Sept. 30, SuccessFactors reported a loss of $49.2 million, compared with a loss of $22.9 million in the year-ago period. Revenue more than doubled to $44.1 million from $21.2 million in the first nine months of 2006.
Morgan Stanley & Co. and Goldman, Sachs & Co. served as lead managers of the deal. JPMorgan, JMP Securities and Pacific Crest Securities also served as underwriters. The underwriters have been granted the option to buy up to about 1.6 million additional shares to cover any overallotments.
The offering is expected to close on Nov. 26.
Shares are trading on the Nasdaq Global Market under the symbol “SFSF.”