Tech flocks put misguided faith in IPO market

Circle Internet

19/11/2025 17:06

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Robert Cyran

NEW YORK, Nov 19 (Reuters Breakingviews) - Yet another software developer put its abiding, albeit misguided, faith in the market for new stocks. Gloo, whose Salesforce-like technology helps religious organizations minister to their flocks has carved out a niche for itself, is growing fast and employs former Intel INTC.O boss Pat Gelsinger as its chairman. Those virtues, however, were not enough to capitalize on otherwise roused investing spirits.

Gloo delivered a promising message in its prospectus. Revenue including acquisitions nearly tripled in the six months through July 31, to $32 million, from the same stretch last year. It lacks any significant rival in a U.S. market with some 350,000 congregations, many in need of more modern ways to manage finances and accommodate parishioners.

The valuation it sought was something of a Hail Mary, however. Assume Gloo can generate $100 million of sales over the next 12 months. On the same 5 times multiple that secular Salesforce fetches, it would be worth just $500 million.

One lingering problem: Gloo is also burning more cash, $45 million in the first half of the year, than the revenue coming in. Chief Executive Scott Beck also ruled the roost at chicken chain Boston Market in the mid-1990s before it collapsed into bankruptcy from debt-fueled expansion.

Despite the broad exuberance for stocks, Gloo followed other tech sheep to the slaughter. The top end of its desired $10- to $12-a-share range imputed a market capitalization of $900 million. They sold on Tuesday for $8. Many of this year's hot IPOs, including Figma FIG.N and Circle Internet CRCL.N, also have crashed back to reality. Total proceeds from new issues are climbing slowly, but have a long way to go to reach the go-go days of 2021. It's a blessed sign that the faith of fund managers is not completely blind.

Follow Robert Cyran on Bluesky.

CONTEXT NEWS

Gloo, a software developer that targets religious organizations, said on November 18 that it had sold 9.1 million shares at $18 each in an initial public offering that valued the company at $593 million, assuming underwriters exercise their option to buy shares. The indicated range had been $10 to $12 per share.

Pat Gelsinger, the former chief executive of Intel, is the company’s chairman and head of technology.

The company generated $32.5 million in pro-forma revenue for the six months ending July 31 and an operating loss of $44.8 million. Pro-forma revenue for the year ending January 2025 was $33.2 million with an $84.9 million operating loss.

Rising spirits: US IPO proceeds make slow comeback https://www.reuters.com/graphics/BRV-BRV/BRV-BRV/klpyjzxqjvg/chart.png

(Editing by Jeffrey Goldfarb; Production by Maya Nandhini)

((For previous columns by the author, Reuters customers can click on CYRAN/robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))