Wall Street Bids Up Acacia in 2nd Tech IPO of 2016, 1st in MA

The tech IPO drought has momentarily subsided. Acacia Communications raised $103.5 million in its stock market debut today, marking the first Massachusetts tech firm, and second nationwide, to go public this year.

Wall Street may be showing it prefers substance over flash, bidding up the stock price of the profitable (if unsexy) company in early trading. As of this writing, Acacia (NASDAQ: ACIA) is trading around $31, up more than 30 percent from its $23 initial pricing by the company last night. The stock opened at $29 when trading began Friday morning.

Tech companies have been reticent to go public in recent months, amid high-profile de-valuations by some private investors and weak performance by stock markets in general. Before Acacia, only one tech firm had taken the IPO plunge this year—Dell cybersecurity subsidiary SecureWorks (NASDAQ: SCWX). Wall Street did not give the Atlanta-based company a warm reception.

Acacia, meanwhile, priced its stock at the high end of its expected range. Still, its $103.5 million raise was below its initial target of $125 million when the company filed preliminary IPO documents with the SEC in December.

It’s too early to tell whether Acacia will open the IPO window a crack for tech companies. Acacia is not your typical tech startup. The seven-year-old company doesn’t make sexy or headline-grabbing apps or software; it “develops, manufactures, and sells high-speed coherent optical interconnect products”—basically, equipment that Acacia says helps boost communications network performance and improve the infrastructure that handles high-speed data transfer. Local networking companies that came before Acacia include Sycamore Networks, the high-flying but now-defunct company co-founded by Desh Deshpande, and Starent Networks, which was acquired by Cisco for $2.9 billion in 2009.

Maynard, MA-based Acacia raised more than $32 million from private investors including Matrix Partners, Commonwealth Capital Ventures, and Summit Partners.

Unlike many venture-backed tech startups these days, Acacia’s business is in the black. The company reported a $40.5 million profit last year, up from $13.5 million in 2014. Its revenue grew from $146.2 million in 2014 to $239 million last year.

The company employed 228 people as of mid-April, according to SEC documents. That’s up from roughly 80 to 90 employees in February 2014, Matrix Partners general partner Stan Reiss told Xconomy at the time.

Rapid7 was the only Boston-based tech company to go public in 2015. Another company with significant Massachusetts operations, U.K.-based Mimecast, also went public last year.

Xconomy deputy editor Greg Huang contributed to this report.

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

Trending on Xconomy