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The Download: BroadSoft ranks among the year's best IPOs

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By Steven Overly
Monday, January 3, 2011

Shares of Gaithersburg-based BroadSoft closed at $24.35 each on Wednesday, Dec. 29, a 170.5 percent increase over its initial public offering price in June of $9 per share. That climb places the company among the year's best-performing IPOs.

BroadSoft executives attribute the share value's growth to a well-timed offering on the heels of a two-year drought in the United States' IPO market, and greater demand for voice, data and video services transmitted via the Internet.

BroadSoft sells software that helps telecommunications companies manage their networks and bill business and residential customers. The company counts more than 450 clients worldwide, including Verizon and McLean-based Primus, said Leslie Ferry, BroadSoft's vice president of marketing.

The company raised $67.5 million as a result of its June public offering of 7.5 million shares. It also filed forms with the Securities and Exchange Commission in December to sell an additional 5.3 million shares, including 500,000 held by the company, at $22 apiece.

As telecommunications companies transition their networks to Internet-based platforms and more companies turn to Web-based software and services, also known as cloud computing, Ferry said BroadSoft has attracted more business. Indeed, the company narrowed its loss to $3.2 million during first nine months of 2010 compared with a loss of $8.2 million during the same period in 2009.

"The growth of enterprises moving to cloud and hosted services . . . really hit a good point for us, so we were able to capitalize on that trend," Ferry said.

Industry research firm Infonetics estimates the company held 40 percent of its market at the end of the third quarter. The firm does not track BroadSoft's stock price or public offering, said Diane Myers, the directing analyst and a former BroadSoft marketing director.

More companies opted to trade shares on the public market in 2010 than in the previous two years combined, an increase largely attributed to a more favorable economic climate than that marred by the depths of the nation's recession. Renaissance Capital, a Greenwich, Conn.-based global IPO research firm, counted 154 U.S. public offerings in 2010, compared with 63 in 2009 and 31 in 2008.


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