Dive Brief:
- SecureWorks launched its IPO on Thursday, but the Dell-owned cybersecurity company raised significantly less than the $181 million it had originally hoped for.
- In the first U.S. tech IPO of 2016, the company raised $112 million and priced eight million shares at $14. SecureWorks had initially priced shares at $15.50 to $17.50, according to filings with the Securities and Exchange Commission.
- SecureWorks had originally planned on pricing nine million shares, but cut the number of shares it was offering for the IPO.
Dive Insight:
SecureWorks makes software that helps enterprises monitor their infrastructure and protect against malicious activity. The company targeted a valuation of $2 billion last summer, but a weakening of the market has caused expectations for many tech companies—particular cybersecurity companies—to decline.
By mid-April last year, six tech companies had already set prices for their IPOs, according to Thomson Reuters. But this year, companies have lagged behind. Investors are watching the SecureWorks IPO closely, hoping the move will encourage other cybersecurity firms to move forward.
Many cybersecurity firms have seen their valuations plummet over the last six months. Analysts say high-profile data breaches drove security spending up in 2015, making cybersecurity company valuations too high. Both Optiv Security and Blue Coat Systems are expected to launch IPOs later this year, but given the current state of the shaky market, it remains to be seen whether or not they’ll move forward.
SecureWork’s profit margins may also have had an adverse effect on the IPO. Currently, SecureWorks doesn’t make a profit. The company generated $339.5 million in revenue last fiscal year, but its net loss of $72.4 million was nearly twice as high over the same period.
