Morning Markets: Cloudflare is reportedly going public this year, meaning that we have at least two big-name IPOs left in the tank.
News broke yesterday that Cloudflare, an Internet security and content delivery company, will pursue an IPO early this Fall. According to BusinessInsider, Cloudflare intends to float this September after filing a confidential S-1 with the SEC “earlier in the summer.”
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Cloudflare is best known for its CDN, or content delivery network; the company’s services help speed Internet content to consumers around the world, helping the patchwork quilt that we call the web function with minimal delays.
Cloudflare’s business is part of the furniture to a degree. It’s also something critically important to how well online video works, for example. Which makes its debut interesting and somewhat exciting. Here’s part of the Internet’s backbone, going public.
Let’s remind ourselves of where Cloudflare stands as a private company regarding capital raised, private valuation achieved, and revenue-scale.
Since its 2009 founding, Cloudflare has raised $332.1 million in known capital, including a modest $2.1 million 2009 Series A, a $20 million 2011 Series B, a $50 million 2013 Series C, a $110 million 2015 Series D, and its most recent round, a $150 million Series E from this March.
BusinessInsider’s scoop describes that final round as valuing Cloudflare at around $3.2 billion (we’ve reached out to the company for comment on the valuation), making the company a multi-unicorn in startup finance terms. Franklin Templeton Investments led Cloudflare’s Series E. (FTI has put capital into Rent the Runway, Sumo Logic, Bill.com, and Bambu since its Cloudflare investment.)
The reported valuation makes sense. In a GeekWire story from 2018 noting that the company could go public in the first half of 2019, Cloudflare’s revenue was reportedly “well north” of $100 million (recurring-ish, we presume), with “84 percent” gross margins (very good). Toss in some growth and the fact that GeekWire also reported that the firm is “being run at breakeven” and its $3.2 billion valuation looks a little cheap.
Perhaps we’ll see Cloudflare aim for an even higher pricetag in its IPO.
As with many large, private tech companies looking to list, Cloudflare’s IPO coverage has been regular for some time. GeekWire itself cited a Reuters report in its 2018 piece, for example. However, Reuters said that Cloudflare would go public in the first half of 2019. If the September mark holds up, the company will have come in just a few months late.
Cloudflare will not be the first CDN to go public this year. Fastly, another provider in the space, went public earlier this year.
After pricing its IPO at $16 per share, Fastly’s equity skated higher in early trading. Today Fastly is worth $23.19 per share, up about 45 percent. That is a good tailwind for Cloudflare’s own offering. (Crunchbase News spoke with Fastly’s founder here about the offering.)
Cloudflare is a neat company (more on its market impact here), and one that we mostly hear about when it makes a mistake. But regardless of all that real-world chatter, we’re probably going to see an S-1 from the company in short-order and I’m here for it. Bring on the numbers.