Bending Spoons defies SaaS decline, surges 40% on first day of trading

Earlier this year, shares of traditional SaaS companies fell amid investor concerns that AI-based software might eventually replace those companies. Despite these concerns, Bending Spoons, a company that acquires stagnant but well-known technology companies and revitalizes them, saw its shares soar in its market debut.

It closed at $40.50 on Wednesday, nearly 40% above its IPO price of $29. At that price, the 13-year-old Milan, Italy-founded company has a market capitalization of $25.7 billion, more than double its recent private valuation of $11 billion. The company raised $1.68 billion in its offerings.

Bending Spoons grew rapidly by acquiring legacy brands that were hugely popular, such as AOL, Eventbrite, Evernote, Meetup and Vimeo, and then turning them profitable, usually by dramatically cutting costs, launching new features and raising prices. While the company’s approach is similar to private equity, there is one key difference: Bending Spoons has no plans to sell these companies.

The company’s disclosed financial statements show that it has already turned its growing portfolio of assets into profits. Bending Spoons reported revenue of $601 million for the first quarter, generating $27.4 million in net income. This is 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 filing.

Bending Spoons, whose name comes from a scene in the sci-fi film The Matrix, generates the majority of its revenue from subscriptions, which made up 84% of its business last year.

Prior to the offering, Baillie Gifford was the largest outside shareholder in Bending Spoons, followed by smaller stakes from buyout fund Renaissance Partners, Cox Enterprises, Durable Capital Partners, Fidelity, and T.J. Rowe Price.

The IPO also represents a major windfall for Bending Spoons’ five co-founders: Luca Ferrari, Francesco Patarnello, Matteo Daniele, Luca Cirella and Thomas Greber.

Besides Bending Spoons, other investors follow the strategy of acquiring, fixing, and holding on to defunct software companies, often referred to as “Zombie Adventure” Companies. These companies include Constellation Software, curious, Small in size, SaaS.group, Emerging projectsand Quiet capital.