Software Maker Sumo Logic Rises in Debut After $326 Million IPO

Sumo Logic Inc. climbed as much as 25% in its trading debut after raising $326 million in a U.S. initial public offering priced above the targeted range.

The software company’s shares opened trading Thursday at $26.64 after it sold 14.8 million of them for $22 apiece on Wednesday. Sumo Logic, based in Redwood City, California, had marketed the shares for $17 to $21 each.

The shares were up 15% to $25.29 at 1:26 p.m. in New York trading, giving the company a market value of $2.49 billion.
The company’s listing came on the heels of two other cloud-based software makers — Snowflake Inc. and JFrog Ltd. Snowflake gained 112% and JFrog rose 47% in their trading debuts Wednesday.

Sumo Logic is valued at about seven to nine times forward sales multiples. That’s much lower than Snowflake and JFrog, which have higher net retention rates for customers and more sustainable top-line growth, Bloomberg Intelligence analyst Mandeep Singh wrote in a note.
For the six months ended July 31, Sumo Logic lost $36 million on revenue of $97 million, according to its filings.

The company’s largest shareholder is the venture capital firm Greylock partners and its affiliates, with a 19.2% stake after the offering, the filings show.
The offering was led by Morgan Stanley, JPMorgan Chase & Co., Royal Bank of Canada and Jefferies Financial Group Inc.

Sumo Logic’s shares are trading on the Nasdaq Global Select Market under the symbol SUMO.


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