Relativity IPO would test battered software market
Illustration: Sarah Grillo/Axios
Silver Lake-backed Relativity's potential IPO will be a bellwether, coming amid the software slump.
Why it matters: A strong debut could signal renewed confidence in software stocks — especially firms with proprietary data and AI traction.
Driving the news: Relativity, a cloud-based software developer that helps legal teams analyze data and handle compliance and other legal use cases, said Thursday it has confidentially filed for an IPO.
- The company was valued at $3.6 billion in 2021 after Silver Lake's investment.
State of play: The timing seems peculiar given where software stands right now and it could indicate what a software company needs to show investors.
- Bankers have said the IPO window is not closed for software firms that have proprietary data sets, can show AI adoption and growth, and showcase high gross retention rates — indicating their business is not being disrupted by AI.
Zoom in: Relativity has data and in January made a point of telling everyone it has an AI story.
Between the lines: Although legal tech has been popular with investors, it has not been strong in the public market.
- eDiscovery vendor Disco (NYSE: LAW), the most recent prominent legal tech firm to go IPO, went public in 2021 at a nearly $2.4 billion valuation but is now down 90%.
What we're hearing: One SaaS investor says any software company looking to go public in the next six months has a "very rough road" and called the Relativity news "pretty unexpected."
The bottom line: Not many software companies have tested the public market waters recently, and this seems like a particularly odd time to try.
