Tech profitability matters again

AirBnB, Uber, and Lyft have one ominous thing in common: when they went public, they burned a lot of cash (and still do). Similarly when WeWork tried to do it’s IPO, the company was so unprofitable the IPO couldn’t launch and the company had to restructure. It seems however that the desire for profitability is back, at least among consumer focused tech IPOs (excludes SaaS). Below are the last 6 IPO’s of consumer focused tech companies and notice all but one generated an operating profit at the time of the IPO.

Additionally, three of the companies had operating margins of 20% or greater. Those same companies (Bumble, Coinbase, and Doximity) all have negative net investment because they have more cash on the books today than the total amount of capital taken on (debt+equity)

There are of course exceptions, especially in SaaS, but if these 6 IPOs are any indicator, profitability in tech may matter once again, so pay attention to your margins. I’ll update this post as more consumer focused tech IPO’s occur.

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