Traders work on the floor at the New York Stock Exchange in New York, the US, September 18 2019. Picture ;REUTERS/Brendan McDermid
Traders work on the floor at the New York Stock Exchange in New York, the US, September 18 2019. Picture ;REUTERS/Brendan McDermid

New York — Datadog, a software company that bet it could do better as a public company than in a Cisco Systems   buyout, jumped as much as 53% in its trading debut after raising $648m in its initial public offering.

Datadog shares, which opened at $40.35, were up 35% to $36.49 at 1.46pm in trading in New York. That gives it a market value of $10.54bn, about $3bn beyond the mark it had set earlier for its IPO.

Before the listing, the New York-based company had received a takeover bid from Cisco that would have valued it at significantly more than what it had expected in its IPO, people familiar with the matter said. Datadog rebuffed the advance to pursue the public listing because it felt it could be worth more as a public company over time, the people said.

Software companies that power business processes have delivered about of 2019’s best IPO debuts thanks to their high margins. The value of Zoom Video Communications  and CrowdStrike Holdings have more than doubled since they began trading and are among the 10 best performing offerings in 2019, alongside meat alternative maker Beyond Meat  and about biotechnology firms, according to data compiled by Bloomberg.

Ping Identity Holding, a security software company that raised $188m  in its IPO, also began trading on Thursday. Its shares were up 22% from its IPO price by midafternoon.

Datadog sold 24-million shares Wednesday for $27 each after marketing them at $24 to $26, according to data compiled by Bloomberg. The range had been increased from $19 to $22 earlier. Class A shareholders will get one vote per share, while owners of Class B shares will get 10 each, according to the company’s filings.

The company offers a way for corporations to monitor their software online in simple dashboards that pull together multiple pieces of information. This type of service is growing as more companies outsource their computing needs to the cloud.

Datadog lost $13m  during the first six months of 2019, after earning $498,000 during the same time period a year earlier.

It reported a 74% gross margin on $153m in revenue for the first half of 2019. That compared with a 78% margin on $85m  in revenue for the same period last year, according to its filings.

Bloomberg