The tech IPO market has been in the doldrums this year, but coherent optical module specialist Acacia Communications has bucked the trend. The company’s shares are began trading on the Nasdaq Global Select Market on 13 May under the ticker symbol ‘ACIA’. In honour of the occasion, Acacia’s president and chief executive officer Raj Shanmugaraj rang the Nasdaq opening bell on that day.
Despite the inauspicious date – it was Friday the 13th – shares soared on the first day of trading. The company had priced 4.5 million shares at $23 each, with the aim of raising $103.5 million. Market trading opened at $29 per share, well above the price set, giving the company a market cap of nearly $200 million.
Acacia has been profitable from 2014 onwards, according to its IPO prospectus. On a non-GAAP basis, the company reported 2015 net income of $40.5 million, up from $13.5 million in 2014. Revenue for 2015 was $239.1 million, a 63.5 per cent increase from $146 million in 2014, and has continued on an upward trajectory.
'Profitability is a big piece of why investors like our company,' chief executive Shanmugaraj said in an interview with news channel CNBC. The company’s use of digital signal processing and silicon photonics technology ‘takes Moore’s law into the communications business’ he says, which has helped them achieve profitability sooner.
Acacia has been shipping its products since 2011 and now has more than 25 customers, of which the top five account for about 82 per cent of revenue. Its largest customers are ADVA Optical Networking North America, ZTE Kangxun Telecom, and Coriant, the company recorded in its IPO prospectus. (Alcatel-Lucent was also a top five customer in 2013, but has not continued to be so).
At the OFC show in March, Acacia revealed that since September 2014 it had shipped 13,000 of its AC100 100Gb/s coherent CFP transceivers. The company also announced that it has started sampling optical modules based on the CFP2-ACO Implementation Agreement defined by the Optical Internetworking Forum (OIF), which places the all-important digital signal processor chip outside the module.
