CrowdStrike, the enterprise-focused endpoint cyber security company, completed its initial public offering on Wednesday, and certainly did so in fashion. The company, whose last private funding round was in May of 2018, opened trading at $64 a share - 88 percent above its IPO price of $34. More impressive still, the closing price of $58 represents a 252% increase per share over its last private round from only eleven months ago.
Of course, the company’s IPO represents the beginning of a long road. As a public company, management will have to prove to its many new (and often less patient) public investors that the company’s history of losses will eventually flip to profits. Further, CrowdStrike’s share price and implied value will be substantially more susceptible to influence by outside, macroeconomic factors. Taken together, there is no way to tell where the company’s stock might trade going forward despite the strong showing of enterprise software IPOs in 2019. Still, private investors – both venture capitalists and secondary market participants – certainly have plenty of reasons to celebrate today.
The company’s directional financial results likely helped to entice investors. CrowdStrike grew revenue 110 percent to $250 million in fiscal year ending January 2019, per the company’s filings with the SEC. Furthermore, revenue has grown at a pace of over 100 percent in 7 of the 8 most recent quarters. While such growth is likely to slow eventually, the 26x EV/Revenue multiple at market close on Wednesday is reasonable given such growth.
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