That special category of finance geeks who know what the term S-1 means (it’s a fancy industry term for an IPO filing) had their hands full this week, the first time in a long while we’ve seen a bunch of tech companies filing to go public. (Pause here for clapping.) After Monday’s filing by Arm, today brought filings from Instacart (known technically as Maplebear, surprisingly!) and Klaviyo, an email marketing software firm for merchants. One thing stands out about all three companies: They’re generating cash (although in Klaviyo’s case that appears to be a recent thing—but still, it’s better than the opposite). 

Anyone with a decent memory will recall that in the halcyon days of the 2021 IPO boom, plenty of companies went public even though their executives couldn’t spell the word profit, much less understand the concept of free cash flow, as we noted in this piece last year. But as we’ve all learned in the past 18 months, higher interest rates means investors put a premium on profits, unlike in the days when cash was so cheap startups could just raise more money to offset operational losses. In other words, the prerequisite for companies wanting to tiptoe back into the public markets right now appears to be evidence of real profitability, which is not a bad thing.