Updated from 12:41 p.m. EDT
In yet another signal of a slackening IPO market,
on Thursday closed its first day of trading with its stock price sitting exactly flat with its already discounted IPO price.
After jumping as high as $7.52 following its debut shortly after noon EDT, shares of RightNow traded down to close at $7, its offering price. That price represented a discount from a previously estimated price range of $9 to $11 for its initial offering of 6 million shares. A selling stockholder on Thursday also reduced the number of shares to be sold to 300,000 from 600,000, valuing the entire offering at $44.1 million.
While nothing to jump up and down about, RightNow's first-day showing outperformed the broader Goldman Sachs Software Index, which fell 1.5% Thursday amid a huge market selloff. Still, it paled in comparison with fellow customer relationship management software vendor
first-day performance, which set a record this year for new tech issues with a 56.4% pop above its $11 offering price. Since then, however, Salesforce shares have lost more than a quarter of their value after the company
warned that profit and revenue would be lower than expected. Salesforce shares fell $1.08, or 9%, to close Thursday at $10.90, a dime below the offering price.
RightNow is one in a line of companies to discount its offering price amid a rockier stock market. Nearly one-third of the companies that have gone public this year have trimmed their offering price from the initial range, while only 15 IPOs, or 12%, priced above that range, according to Thomson First Call.
Other companies have opted to sit out of the public markets altogether. Earlier this week (on Wednesday), two companies -- Nanosys and Empi -- withdrew their IPOs.
Despite the more tentative environment, Wall Street continues to wait with bated breath for search-engine firm
IPO, which could price as early as next week. But recent dynamics have even cast a shadow over Google, as rumors swirled Thursday that even its hugely anticipated IPO could be on the ropes.
In addition, RightNow's offering comes at a difficult time for the software industry, which was stung by a rash of second-quarter warnings. The Goldman Sachs Software Index has declined nearly 14% since the beginning of the year.
Like Salesforce, RightNow provides software on demand -- software delivered via the Internet as a hosted service -- and stands to gain from the growing desire of companies to contract out their software and avoid complicated installations. But while Salesforce specializes in software that automates sales and marketing processes, RightNow focuses on applications for customer service and call centers -- and consequently also could gain from the offshore outsourcing boom.
RightNow's direct competition includes
as well as the world's largest software makers, including
This marks RightNow's second attempt to go public. The first came in April 2000, but RightNow dropped that effort in November 2000 as investor ardor for IPOs and all things tech was rapidly cooling. (Credit Suisse First Boston was lead underwriter on the would-be offering in 2000; Morgan Stanley and San Francisco-based Thomas Weisel Partners are co-leads for the current offering.)
RightNow's bottom line edged into the black for the first time in March, when it posted a $76,000 quarterly profit on $12.9 million in revenue. That represented a 65% jump in revenue from the same period a year ago and considerable improvement over the company's biggest loss -- of $19.6 million -- in 2000.
For the six months ended June 30, the company earned $714,000, or 3 cents a share, on $27.6 million in revenue. And in 2003, RightNow lost $4.1 million on revenue of $35.9 million, compared with a $2.8 million loss on $26.9 million in revenue in 2002.