George Kurtz
Photograph by Patrick T. Fallon/Bloomberg
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CrowdStrike Holdings
,
a provider of cloud-based security software, had a spectacular public market debut, pricing higher than expected and then soaring.
The initial public offering was priced at $34 a share, jumping past the expected range of $28 to $30 a share, a strong signal that investor interest was high. The stock has taken off from there.
After opening at $63.50, CrowdStrike stock was at $61.32 in afternoon trading, up $27.32 from the IPO price, a gain of about 80%. It moved as high as $67 earlier in the day, nearly double the IPO price, while the
S&P 500
was a little lower.
The company sold 18 million shares in the offering, which was led by
Goldman Sachs Group
(ticker: GS),
JPMorgan Chase
(JPM),
Bank of America
Merrill Lynch (BAC), and
Barclays
(BCS). After the offering, the company has about 200 million shares outstanding, giving it a valuation of well over $12 billion.
The strong reception at least in part reflects the company’s rapid growth. For the January 2019 fiscal year, CrowdStrike (CRWD) reported revenue of $249.8 million, up 110% from the previous year, with a loss of $140.1 million.
For the April quarter, the company estimates it had revenue of between $95.7 and $93.6 million, and a loss from operations in the range of $25.7 million to $26.5 million. The company’s largest investors include Warburg Pincus, Accel and CapitalG.
Founder George Kurtz, a former chief technology officer at McAfee, leads the company. “There’s not been a foundational security company born in the cloud,” he said in an interview. “That’s something investors have an appetite for.”
He says CrowdStrike has a huge opportunity. The market it could potentially serve is about $29 billion, Kurtz says, and growing as the company adds new functionality to its security software platform.
The security sector has never had the kind of dominant players that have emerged in other enterprise software niches, but Kurtz thinks CrowdStrike has a chance to be the
Salesforce.com
of security.
“We deliver value in a unique way,” he says. “Security point products have historically driven the buying cycle: firewall, antivirus. But what people are really buying is that they don’t want to be breached. If firewalls and antivirus worked, they would not need a company like CrowdStrike.”
Write to Eric J. Savitz at ericsavitz@barrons.com
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