Shares of traditional SaaS companies fell earlier this year due to investor concerns that software built with AI could eventually replace them. Despite these concerns, Bending Spoons, a company that revitalizes struggling but well-known technology companies by acquiring them, saw its stock price soar upon its market debut.
On Wednesday, it closed at $40.50, nearly 40% above its IPO price of $29. At that price, the 13-year-old Milan, Italy-based company has a market capitalization of $25.7 billion, more than double its last private valuation of $11 billion. The company raised $1.68 billion in the public offering.
Bending Spoons grew quickly by acquiring older but popular brands like AOL, Eventbrite, Evernote, Meetup, and Vimeo and then increasing their profitability, typically through aggressive cost cutting, rolling out new features, and raising prices. The company’s approach is similar to private equity, but with one key difference. Bending Spoons has no plans to sell these businesses.
According to financial information released by the company, its growing portfolio of assets has actually become profitable. Bending Spoons reported first-quarter sales of $601 million and net income of $27.4 million. That’s a significant turnaround from the same period last year, when the company reported a net loss of $112 million on revenue of $259 million, according to SEC filings.
Bending Spoons, which takes its name from a scene in the sci-fi movie “The Matrix,” generated most of its revenue from subscriptions, which accounted for 84% of its business last year.
Prior to the offering, Baillie Gifford was Bending Spoons’ largest outside shareholder, followed by smaller stakes from buyout funds Renaissance Partners, Cox Enterprises, Durable Capital Partners, Fidelity and T. Rowe Price.
The IPO also represents a significant windfall for Bending Spoons’ five co-founders: Luca Ferrari, Francesco Patarnello, Matteo Danieli, Luca Querella and Tomasz Greber.
In addition to Bending Spoons, other investors follow a strategy of acquiring, fixing, and holding on to stalled software companies, often called “venture zombie” companies. These companies include Constellation Software, Curious, Tiny, saas.group, Arising Ventures, and Calm Capital.
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