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After a period of IPO market dormancy, a number of highly anticipated IPOs are expected for 2025. However, companies looking to go public must navigate an increasingly complex landscape — balancing investor expectations with macroeconomic pressures, geopolitical uncertainty, and shifting trade policies.
At ICONIQ Growth, we’ve analyzed the evolving IPO landscape, including key trends from recent tech IPOs and lessons from top-performing public companies. Our latest report, Navigating a Successful Public Offering in Today’s Market, highlights the financial and strategic imperatives for companies preparing to go public.
State of the IPO Market: Is the Window Reopening?
The IPO market has been in flux over the past few years, impacted by economic uncertainty, rising interest rates, and geopolitical volatility. While tech IPOs thrived in the low-interest-rate environment of 2020-2021, the past two years saw a significant slowdown.
However, recent IPO successes signal investor appetite for scaled, profitable companies – Companies like Rubrik, OneStream, and ServiceTitan have proven that public market investors are willing to reward companies with strong financial profiles and category leadership. However, geopolitical uncertainty and the impact of tariffs may pose new risks in 2025. For companies considering an IPO, this shift represents a critical opportunity to enter the public markets—but only if they are well-prepared to navigate these emerging risks.
What Drives Valuation Today?
Even with macroeconomic and geopolitical uncertainties, the fundamental drivers of IPO valuation remain the same — but with a stronger emphasis on growth durability and financial discipline.
Our research shows that:
- Rule of 40 has become an increasingly important driver of valuations in the last few years as profitability has become more critical amidst a challenged growth environment
- However, when we evaluate the balance between growth vs efficiency, we find that growth and profitability do not have equal importance in weight with regard to valuations (i.e. forward revenue multiples)
- In fact, we find that in today's market environment growth is valued 2-3x more than FCF margin due to the “Growth Multiplier Effect”, which suggests that in today’s market, investors are willing to pay a significant premium for high-growth companies that can also scale efficiently
Incremental Margin: The Most Overlooked IPO Metric
For companies preparing to go public, incremental margin is emerging as a crucial, yet often underappreciated, financial metric. Incremental margin measures how much of each additional dollar in revenue translates into profit, serving as a key indicator of operational efficiency and long-term sustainability.
- Top-performing public companies maintain incremental margins in the 20-30% range, ensuring they can scale profitably even as revenue growth naturally slows post-IPO
- Companies like Veeva and Atlassian have successfully maintained strong incremental margins while shifting their focus from pure growth to profitability post-IPO, resulting in sustained valuation growth over time
- ServiceTitan’s IPO success in late 2024 was largely driven by investor confidence in its improving operating margins, reinforcing the importance of balancing growth and efficiency in the run-up to an IPO
Lessons from Recent IPOs: What Works in 2025?
Our analysis of recent IPOs highlights several key takeaways for companies preparing to go public:
Investor Education is Essential
What used to require one round now takes 2-3 rounds of pre-roadshow meetings, emphasizing the need for earlier and more frequent investor engagement to identify anchor investors. Early investor education also helps refine disclosure packages, allowing companies to adjust their S-1s and strike the right balance of information sharing.
Evolving Leadership Teams
Companies that successfully go public build out their executive teams 2-3 years ahead of IPO to ensure a strong operating rhythm and public-market credibility.
While the CFO has always been a critical role, the dramatic investment in buy-side relationships necessitates exceptionally strong and public-ready CFOs who are able to articulate the story and maintain a beat & raise motion (often for 6-8 quarters). The Chief Revenue Officer (CRO) and Chief Marketing Officer (CMO) also play a crucial role in establishing a repeatable, scalable revenue model that supports investor confidence. Lastly, we see companies increasingly involve Chief Product Officers and Chief Technology Officers in the roadshow process to articulate the long-term product strategy and AI capabilities.
A Strong Beat-and-Raise Motion is Key
Post-IPO success depends on meeting and exceeding revenue guidance consistently. Top-performing IPOs have demonstrated the ability to beat consensus estimates by 3-5% each quarter, ensuring positive momentum in the public markets. In fact, we find that successful companies start operating as a public company and building a robust beat-and-raise motion years in advance prior to an actual IPO.
Want to Learn More?
For deeper insights, data, and case studies, download our full report.
Published:
March 19, 2025
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