Datadog Raises $648 Million in U.S. IPO Priced Above Target

Crystal Tse, Bloomberg News

A pedestrian holds an umbrella while crossing the street front of the Nasdaq MarketSite in the Times Square area of New York, U.S., on Friday, Sept. 6, 2019. U.S. stocks advanced and Treasuries were mixed as Federal Reserve Chairman Jerome Powell’s latest comments did little to alter views on Federal Reserve policy. , Bloomberg

(Bloomberg) -- Datadog Inc. raised $648 million in its U.S. initial public offering, pricing its shares above an already increased target range.

The New York-based software company 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.

The listing values Datadog at $7.83 billion based on the total number of shares to be outstanding as listed in its filings. Class A shareholders will get one vote per share, while owners of Class B shares will get 10 each, according to the filings.

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

Within weeks of its listing, Datadog received a takeover bid from Cisco Systems Inc. that would have valued it at significantly more than what it had been 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.

Datadog reported a 74% gross margin on $153 million in revenue for the first have of 2019. That compared with a 78% margin on $85 million in revenue for the same period last year, according to its filings. The company had a profit of 498,000 during the first half of 2018, though it lost $13 million during the period this year.

The offering is being led by Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Credit Suisse Group AG. Datadog is expected to begin trading Thursday on the Nasdaq Global Select Market under the symbol DDOG.

--With assistance from Gillian Tan and Ian King.

To contact the reporter on this story: Crystal Tse in New York at ctse44@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Michael Hytha