Following Snap's (SNAP) $3.4 billion IPO on March 2, the next tech company scheduled to go public is Mulesoft, a software company that competes with the likes of IBM (IBM) , Oracle (ORCL) and Google parent Alphabet (GOOGL) .
Mulesoft's initial public offering is scheduled for Friday and is expected to price at around $17 per share.
Without the sky-high valuation and brand recognition of Snap, Mulesoft is considered to be a better barometer of the tech IPO market this year than Snap. After a chilly reception for tech IPOs in 2016, during which time only 16 public offerings took in $1.8 billion, analysts and investors are excited to see renewed interest in the market.
"Mulesoft is a very normal enterprise cloud tech IPO. We will see more companies like Mulesoft go public than companies similar to Snap for (the) next six to nine months," predicted Rohit Kulkarni, managing director at SharesPost, which provides private investment research. "Public investors will have (a) good appetite for this IPO with good financials."
"There is only one Snap and with a $25 billion valuation, only a handful of companies were worth that much," added Matt Kennedy, analyst at Renaissance Capital, a provider of IPO research and funds. "But there were tens of these high-growth enterprise software companies that have indicated plans to go public.
"So the Mulesoft IPO is like Blackline (BL) , Coupa Software (COUP) and Everbridge (EVBG) last year," said Kennedy. "Those are what these pre-IPO companies are going to be looking at when determining when they go public."
Snap's IPO earlier this month was highly anticipated by investors. The company's shares jumped 44% on their first day of trading and another 10% on their second day, finishing that Friday at $27.09, well above Snap's opening price of $24. But shares of Snap -- which has not yet turned a profit -- have mostly fallen since then. They declined another 4.4% on Monday, closing at $21.09.
San Francisco-based Mulesoft unveiled its financials in an S-1 regulatory filing on Feb. 17. The tech unicorn, valued at $1.8 billion, will offer 13 million shares priced between $12 to $14 on the New York Stock Exchange. It expects to raise a total of $169 million. The company will trade under the ticker MULE.
Mulesoft makes money from subscribers to its application programming interface (API) management and application integration software services. The company counts Coca Cola (KO) , McDonalds (MCD) , Spotify and Bank of America (BAC) as major clients, but still mostly operates a money-losing business. In 2016 MuleSoft posted a $49.5 million loss on $187.7 million in revenue, compared to a $65.4 million loss on $110.3 million in revenue in 2015.
Founded in 2006, Mulesoft closed a major financing round of $128 million in May 2015. Led by Salesforce (CRM) Ventures, the funding round drew investors like software company ServiceNow (NOW) , Cisco (CSCO) Investments, Adage Capital Management, Bay Partners, Brookside Capital, Hummer Winblad Venture Partners and Lightspeed Venture Partners. Lightspeed holds the largest stake at 17.1% and is also a major investor in Snap.
Although Mulesoft may benefit from the initial euphoric effect that the Snap IPO exerted on the market, the company still has some notable risks, including a history of incurring net losses in each year since its inception, including a loss of $47.8 million in 2014. The company reported an accumulated deficit of $236.2 million as of Dec. 31, 2016.
Mulesoft has also warned of a significant increase in operating expenses as it drums up sales and marketing efforts, continues to invest in research and development and expands its operations and infrastructure, both domestically and internationally. Besides that, there are significant legal, accounting and other expenses related to being a public company.
But Santosh Rao, head of research at Manhattan Venture Partners, believes that MuleSoft will get the benefit of the doubt given its robust top-line growth, declining losses and a strong roster of customers.
"Pent-up demand for enterprise software companies, in general, plus a low float at the IPO will provide enough tailwind to give the stock a healthy 'pop' at the open. Nutanix (NTNX) and Twilio (TWLO) , two recent enterprise software IPOs, were well received," said Rao.
"That said, both Nutanix and Twilio have pulled back appreciably with Nutanix trading below its IPO open price and Twilio nearing the open price. Both, however, are still above the IPO offer price, which is good," he said.
Editor's pick: This article was originally published on March 13 and has been updated to include pricing information of Mulesoft shares