CrowdStrike Ups Its IPO Price, Possibly Valuing Itself Near $6B

Morning Markets: A new price for CrowdStrike, which isn’t a huge surprise.

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Yesterday, CrowdStrike, a cybersecurity company, upped the price range for its IPO shares. From a previous level of $19 to $23, CrowdStrike now intends to price its equity during its public offering between $28 and $30 per share.

The firm’s new price interval is far above its preceding estimate of its value.

And the new figures give it a somewhat close range, giving us a very clear picture of where CrowdStike will price, provided that it doesn’t manage a per-share sticker value slightly higher than its range; pricing above-range is possible. (More on CrowdStrike’s intial S-1 here.)

That CrowdStrike would raise its range is not surprising. As we wrote in a previous piece, the firm’s most recent financial performance has been encouraging:

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 [around $26 million]. The firm’s operating loss fell in the period, compared to the year-ago quarter.

Big growth and falling losses are a good recipe for a higher value.

At the high-end of its new price range, CrowdStrike would be worth around $5.9 billion. Including the underwriters’ option, CrowdStrike would be valued at $5.98 billion at the top-end of its newly-set price range.

So, another IPO is looking pretty solid heading towards launch. That is good new for companies still looking to go public, especially firms spooked by either the lackluster Uber and Lyft IPOs, or the recent repricing of some well-known SaaS companies that we’ve seen.

Illustration: Li-Anne Dias.