Earlier this year, shares of traditional SaaS companies fell as investors worried that AI-built software could eventually replace these businesses. Despite these concerns, Bending Spoons, a company that buys and reinvigorates stagnant but well-known technology companies, saw its stock price soar in its market debut.
Wednesday's closing price was $40.50, nearly 40% above the public offering price of $29. At this price, the 13-year-old Milan, Italy-based company has a market capitalization of $25.7 billion, more than double its previous private valuation of $11 billion. The company raised $1.68 billion in a public offering.
Bending Spoons has grown rapidly by acquiring older but once popular brands, such as AOL, Eventbrite, Evernote, Meetup, and Vimeo, and increasing profitability, usually through aggressive cost-cutting, new feature introductions, and price increases. The firm's approach is similar to private equity, with one important difference. That said, Bending Spoons has no plans to sell these businesses.
The company's financial disclosures show that it has turned its growing portfolio of assets into one that is indeed profitable. Bending Spoons reported revenue of $601 million in the first quarter and generated net income of $27.4 million. This is a significant turnaround compared to the same period last year, when the company reported a net loss of $112 million on revenue of $259 million, according to SEC filings.
Bending Spoons, whose name comes from a scene from the sci-fi film The Matrix, derives most of its revenue from subscriptions, which accounted for 84% of its business last year.
Before the sale, Baillie Gifford was Bending Spoons' largest outside shareholder, followed by smaller investors from buyout funds Renaissance Partners, Cox Enterprises, Durable Capital Partners, Fidelity and T. Rowe Price.
The IPO will also be of great benefit to Bending Spoons' five co-founders: Luca Ferrari, Francesco Patarnello, Matteo Danieli, Luca Querera and Tomas Graeber.
In addition to Bending Spoons, other investors are following a strategy of acquiring, fixing, and holding onto stalled software companies, often referred to as “venture zombie” companies. These companies include Constellation Software, Curious, Tiny, saas.group, Arising Ventures, and Calm Capital.
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