Shares in CrowdStrike, the cyber security company that uncovered Russian hackers inside the servers of the US Democratic National Committee, closed up more than 70 per cent on its first day of trading on Wednesday, in a sign of strong investor demand for the latest listing from Silicon Valley.
The California-based company opened on the Nasdaq at $63.50, up nearly 90 per cent after it priced 18m shares at $34 each late on Tuesday. About 2.3m shares traded hands at the market opening.
CrowdStrike, which raised $612m through its initial public offering, had already lifted its price range to between $28 and $30 a share, from an initial range of $19 to $23.
By close of market, CrowdStrike shares settled at about $58 — 71 per cent higher than its IPO price. This gives the company a market capitalisation of more than $11bn — nearly four times the $3bn at which it was valued at its previous funding round in June last year.
Revenues at CrowdStrike more than doubled in its fiscal year to the end of January, to $250m, according to the prospectus. Subscriptions to its cloud platform, which detects malicious software on computers, doubled year-on-year to more than 2,500.
But net losses widened to $140m in 2019 from $135m the previous year and $91m in 2017.
The cyber security marketplace is crowded and includes big groups such as Microsoft and Cisco, midsized companies such as McAfee, and a long tail of start-ups.
CrowdStrike has made its name through several high-profile investigations as hostile state cyber activity rises. In particular, it discovered two Russian cyber espionage groups — Fancy Bear and Cozy Bear — had hacked the DNC’s email servers and leaked emails in an attempt to influence the US presidential election in 2016.
Founded in 2011, the company joins several “unicorns”, private technology companies with valuations of at least $1bn, that have headed for public markets in 2019.
George Kurtz, CrowdStrike’s chief executive, told the Financial Times that he believed the share price was a sign that investors were increasingly seeking cloud-based cyber security tools.
“The architecture is different,” he said. “[It] can collect data at scale in the cloud and analyse that in real time leveraging artificial intelligence to see threats that have never been seen before [and that] has resonated with customers.”
Mr Kurtz said that the proceeds would go towards expanding internationally and adding new capabilities to its platform.
Tech-related IPOs have had mixed fortunes in recent months. Shares in workplace video app Zoom have jumped 164 per cent since it listed in April. By contrast, shares in ride-hailing companies Uber and Lyft have fallen about 6 per cent and 20 per cent, respectively, since their hotly anticipated IPOs as concern mounts about the lack of profitability in the sector.
According to its regulatory filings, CrowdStrike listed with a dual-class share structure that would give existing shareholders more control. Its backers include private equity group Warburg Pincus, venture capital firm Accel and CapitalG, one of Google’s venture capital arms.
The IPO was led by Goldman Sachs, JPMorgan, Bank of America Merrill Lynch and Barclays.
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