CrowdStrikes Sets IPO Terms, Targets Valuation Between $3.7B And $4.5B

Morning Markets: Back to the IPO beat, let’s check in with CrowdStrike’s latest pricing news.

The IPO interlude is over. This morning CrowdStrike, a technology company working in cybersecurity, announced a price range for its initial public offering. The firm, which operates at a deficit, intends to sell 18 million shares for $19 to $23 apiece.

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Disregarding other shares that may be made available to its underwriters (Goldman Sachs, J.P. Morgan, BofA, and others), the firm will raise between $342 million and $414 million in its debut. On a non-diluted basis, CrowdStrike would be worth between $3.7 billion and $4.5 billion at the two extremes of its proposed price range.

Is that a lot of money? Is that a high valuation? Let’s rewind the clock.

History, Etc.

Across a Series A, B, C, D, a second D, and a Series E CrowdStrike raised $481 million according to Crunchbase data. That’s quite the haul for a private company.

Its largest round while private came to $200 million, which means that if CrowdStrike manages to price its IPO at the size and range that its documents indicate it may, the firm will raise more in its IPO than it ever did in a single round while private. In the era of direct listing and super- and hypergiant rounds, it’s almost an old fashioned situation.

Regardless, when CrowdStrike raised its $100 million Series D, the firm was valued on a post-money basis at $1 billion, according to Crunchbase. Later, the firm added an additional $25 million to that round to “accommodate investor interest,” according to the Wall Street Journal.

But what matters is that in 2017, CrowdStrike had made it into unicorn territory. That streak continued in mid-2018 when the company raised its Series E, a $200 million round that included participation from late-stage venture shop IVP and private equity squad General Atlantic. With a $2.8 billion pre-money valuation according to Crunchbase data, CrowdStrike wrapped 2018 worth $3.0 billion.

So wherever CrowdStrike prices, provided that the bottom end of its range holds, it will secure an up-IPO. That’s good news for its backers, and the IPO market itself; after Uber and Lyft’s twin-disappointments, the IPO market could have turned cold. CrowdStrike, which expects to lose between $26.5 million and $25.7 million on an operating basis in the quarter is hoping that it stays temperate.

Finally, some financial notes.

The Numbers

In the quarter ending April 30, 2019, CrowdStrike grew its revenue from $47.3 million in the year-ago period to $93.6 million to $95.7 million. The company reported ranges, as its accounting for the quarter has yet to close.

With a gross profit of between $63.6 million and $66.6 million (its subscription gross margin came to 71 to 72 percent; services lowered its aggregate margin result), leading to the before-mentioned operating loss. The firm’s operating loss fell in the period, compared to the year-ago quarter.

This is an improvement over our prior notes regarding the firm’s performance, written after it first filed to go public.

Doubling revenue and falling losses are good notes to go public on. Indeed, check the firm’s non-GAAP supplementary table: