Dive Brief:
- Cybersecurity unicorn CrowdStrike laid out its ambitions and a proposed maximum aggregate offering price of $100 million in its direct listing documentation with the SEC Tuesday.
- The cybersecurity startup grew from $52.7 million in total revenue in FY 2017 to about $250 million in FY 2019. However, the S-1 form revealed the company had a gross profit of nearly $163 million for FY 2019 despite almost $300 million in operating expenses.
- Net losses have increased from $91.3 in FY 2017 to about $140 million in FY 2019. CrowdStrike expects "to continue to incur net losses for the foreseeable future as we continue to invest in our business, and our sales capabilities in particular, to address our large market opportunity," according to the SEC filing.
Dive Insight:
The current security landscape prepared the stage for CrowdStrike to make its public debut. As more companies are hacked and breached, the cybersecurity unicorn's chances on the market improve.
The cybersecurity industry, including corporate endpoint security, threat intelligence, security and vulnerability management and managed security services, is expected to reach about $29.2 billion by 2021, according to the S-1 form.
The company's Falcon platform is cloud-native and integrates 10 cloud modules via a SaaS subscription-based model that covers the different components of the cybersecurity industry. The company is banking on subscription-based solution to help define "a new category called the Security Cloud," according to the S-1 form.
CrowdStrike's endpoint protection software is sold to enterprises through a subscription model. Subscription customers had a 103% increase from 1,242 in January 2018 to 2,516 in January 2019.
Despite the scope of opportunity and recurring subscription-based revenue, CrowdStrike's financials call for concern. The company's operating expenses are outpacing its revenue; the company expects to spend more when it goes public.
Though not profitable yet, the company's SaaS history is stable enough to make its IPO favorable in the long run.
CrowdStrike is confident in its products. Last year the company joined other security vendors in offering a $1 million warranty for Falcon. The warranty will help protect breached companies from further damage. Companies with good security products find the warranty less burdensome as compared to those with weaker services.
