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Carbon Black Gearing Up For Blockbuster IPO

Published 05/06/2018, 11:38 PM
Updated 07/09/2023, 06:31 AM
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Tech-savvy investors will be jumping with joy after learning that Carbon Black, the Waltham-based cybersecurity company that was previously known as Bit9 Inc., is gearing up for a blockbuster IPO that could reap in more than $150 million for the company. Executives are expecting big things during the company’s IPO, and have recently upped the price range for their initial debut in a sign of what could be one of the most lucrative tech IPOs in a booming market year.


These are the key details behind Carbon Black’s forthcoming IPO, and what investors hungry for a slice of the cybersecurity market will want to brief themselves on before making their purchasing decisions.

Tech IPOs are booming


Investors will doubtlessly find themselves salivating over the prospect of Carbon Black’s (NASDAQ: CBLK) market debut, and for good reasons; tech IPOs have had an astonishingly successful year, and despite major media scandals surrounding established tech behemoths like Facebook (NASDAQ:FB), tech-focused companies appear to be on a hot streak that’s unlikely to end anytime soon. The fact that tech IPOs have been soaring above and beyond expectations recently will thus translate into positive headwinds sure to buoy Carbon Black’s initial debut.


Before investors throw their weight behind Carbon Black entirely, however, they’ll want to take a peak under the hood to see how the company’s internal finances are looking. There, Carbon Black’s executives may have some explaining to do, given that the company has been posting net losses consistently since its inception. Like most fledgling tech companies, however, Carbon Black has a myriad of good reasons to be in the red, namely that it’s investing heavily in its own platform to meet the astonishing demand for its services that’s sure to keep growing in the future.


While the company’s prospectus notes that it accrued net losses of $44.6 million in 2016 and $55.8 million in 2017, for instance, it makes it clear the global market for cybersecurity companies is growing at a staggering pace that demands continued investments in the company’s own platform. A Morgan Stanley (NYSE:MS) blue paper posits that the cybersecurity market could rapidly swell by more than four times overall IT spending. As long as companies and individuals across the market keep dumping obscene amounts of cash into their cybersecurity initiatives, then, companies like Carbon Black can expect to face huge demands for their services.


The fact that Carbon Black’s executives have decided to boost the initial range of their offering from $15 to $17 per share to $17 to $19 per share, too, should indicate to investors that the company’s eyes are set on profitability. If investors buy Carbon Black’s shares at the high end of their expected range, the company’s IPO could net in as much as $152 million for the cybersecurity firm, and would peg its overall market valuation roughly at the $1.2 billion mark. With an influx of cash like that, Carbon Black may get all the funding it needs to finish investing in its own platform so that it can charge head-first towards the competition.

Carbon Black’s revenue is up


Net losses aren’t the only thing investors will be paying attention to in the company’s prospectus, either; there’s some good news, too, namely the fact that the company’s revenue streams have been growing rather impressively as of late. It has been adopted by many thriving tech companies. Carbon Black’s revenue streams rapidly soared from $70.6 million in 2015 to $162 million in 2017, for instance, a 51% compound annual growth rate over a two-year period that will have the eyes of some investors bursting from their heads. If the company can keep its revenue soaring upwards like that, expect its current net-loss woes to be a thing of the past sooner rather than later.


The Massachusetts-based cybersecurity company will be the first from its state to go public this year, and the 8 million shares it intends to offer up to the public will doubtlessly be gobbled up in a quick fashion. Carbon Black is investing heavily in cloud-based cybersecurity initiatives, assuming that future IT growth will largely be based around the cloud, and will thus catch the eye of tech-savvy investors who are looking for cutting-edge companies focused more on tomorrow’s market than today’s. Carbon Black will be using the majority of the funds it gleams from its IPO to invest more in its sales and marketing teams, too, which will please non-tech savvy investors hungry for higher revenue streams. With the company having more than doubled its customer base in a measly two years, it stands to reason that Carbon Black’s current strategy is paying off, and that its IPO will only fuel its dizzying ascent to the height of the market. Tech investors will want to keep their eyes peeled during Carbon Black’s IPO; the market debut will doubtlessly be one of the biggest for the year, and could upend the existing cybersecurity market.

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