Courtesy of Mercury News

Big data brought big money to San Francisco on Thursday, as analytics company Splunk took in more than $200 million in its initial public offering, then saw its stock price more than double in its first day on the open market.

Splunk sold 13.5 million shares at $17 apiece, after increasing the price twice -- from an initial range of $8 to $10, to $13, and finally to $17. That price, which generated $229 million for the company before expenses and set its valuation at slightly less than $1.6 billion, was not high enough for Wall Street, however, as the stock debuted on the Nasdaq at $32 at 8:20 a.m. Pacific time Thursday, an immediate increase of 88.2 percent.

Shares in San Francisco-based Splunk nearly doubled when it reached... (The NASDAQ OMX Group, Inc.)

The premium price for Splunk stock zoomed even higher during the day's trading, as shares traded hands in a range of $30.92 to $35.85 before closing at $35.48, an increase of 108.7 percent from the IPO price.

Splunk co-founder Michael Baum, who is now a venture capitalist focused on the big data sector, said he was "a bit surprised" by the enthusiasm for Splunk, pointing out that underwriter Morgan Stanley had told him "it was the most oversubscribed IPO they had ever done," with demand for 36 times more shares than were being offered.

Splunk is a "big data" company, one of the hottest trends in enterprise technology companies. Splunk's software allows companies to sift through the reams of information they must now crunch: Web page addresses, radio-frequency ID tags used in retail supply chains, information from GPS satellites and more.

The company's technology runs in more than half of the Fortune 100 companies, including Facebook and Wal-Mart Stores, but many companies use a free version of Splunk's software in what is referred to as a "freemium" model. Splunk hopes to get companies hooked on their services before signing them up as paying customers.

Splunk has found success with the structure, roughly doubling revenue in each of the past five years and bringing in $121 million in its most recent fiscal year.

However, the company has never turned a profit, including posting a net loss of $5 million on an adjusted basis for the previous fiscal year.

The company's growth and the success of the freemium model are what powered the company's results Thursday, Baum said in a phone interview from New York, where he was on the floor at the Nasdaq for the bell ringing.

"I don't think institutional investors understand the whole big data thing yet," said Baum, a partner at Menlo Park-based Rembrandt Venture Partners, later adding, "I think it's really more about the company's growth. All these investors care about is growth."

Growth is continuing to boom, as Splunk now has more than 4,000 customers, Baum said, up from about 3,700 quoted in a regulatory filing for the IPO. Baum expects that number to continue growing thanks to the visibility the IPO is generating and the pay-as-you-go model that the co-founders based on by-the-minute cellphone plans.

"You download the software for free, you get 500 megabytes a day, and if you want more than that, you go ahead and buy a data plan with us and trade it up as you need it. The customers really like that model. It's very simple, they only pay for what they need and they actually get a lot of use out of it before they start paying for it."

Splunk was founded eight years ago by a trio of engineers, Erik Swan, Rob Das and Baum. Swan and Baum developed a search startup that was acquired by Infoseek, which was eventually sold to Disney; and Swan and Das worked together at Taligent, a mid-'90s collaboration between Apple Computer ( AAPL) and IBM to develop a next-generation operating system.

Using their experience with search and ease of use, the group looked to bring the search concept to the vast amounts of data being accumulated by computers that have become faster with larger storage capabilities.

When a website crashed, for instance, "People would spend hours going through log files," Das said in an interview last year, so Splunk developed a search function that focuses on data pegged to a specific time stamp and key terms. If a company running the software encounters a problem with its website, the client's IT staff can query for particular machine language that may reveal the error.

Once the error is found and fixed, Das added, the client can save those troubleshooting searches and use them to track ongoing data, in order to prevent the same problem from recurring.

The company found enthusiastic investors in its early days as well, bringing in $40 million in venture capital from Sevin Rosen, August Capital and Ignition Partners. Splunk's website says it has more than 500 employees worldwide.

Splunk is one of eight companies planning to make public market debuts this week, including two other Silicon Valley enterprise software firms. Infoblox, a Santa Clara maker of network-control software, and Proofpoint, a Sunnyvale data protection firm, are both scheduled to begin trading Friday.