Company: Carbon Black, Inc.
Symbol: CBLK
Description: They are a leading provider of next-generation endpoint security solutions.
Trade Date: 5/4
Shares: 8 million
Price Range: $15.00-$17.00
Underwriter(s): Morgan Stanley, J.P. Morgan
Co-Manager(s): KeyBanc Capital, William Blair, Raymond James, Cowen
Terms Added: 4-23-18
Business: Their predictive security cloud platform continuously captures, records and analyzes rich, unfiltered endpoint data. They believe the depth, breadth and real-time nature of their endpoint data, combined with the strength of their analytics platform, provides customers with the most robust and data-intensive solution to address the complete endpoint security lifecycle. Their solutions enable customers to predict, prevent, detect, respond to and remediate cyber-attacks before they cause a damaging incident or data breach.
Organizations globally are re-platforming their IT by investing in cloud computing and workforce mobility, which has resulted in enterprise environments that are more open, interconnected, and vulnerable to cyber-attacks. In the past, knowledge workers only had access to applications and data inside the corporate network perimeter, which were firewalled off from potential cyber threats. Today, an increasingly mobile workforce and the explosion of enterprise data and applications in the cloud have expanded the attack surface beyond the traditional network perimeter. In response, cyber attackers have adapted their attack methods and tools to directly target the endpoint. In short, the endpoint is the new perimeter.
Financials: They have experienced strong revenue growth, with revenue increasing from $70.6 million in 2015 to $116.2 million in 2016 and $162.0 million in 2017, representing a 51% compound annual growth rate over the same period. They have a subscription-based revenue model that provides visibility into future revenue. Recurring revenue represented 77%, 83% and 88% of their total revenue in 2015, 2016 and 2017, respectively. Annual recurring revenue, or ARR, was $76.8 million, $124.2 million and $174.2 million as of December 31, 2015, 2016 and 2017, respectively. They define ARR as the annualized value of all active subscription contracts as of the end of the period. ARR excludes revenue from perpetual licenses and services. The portion of ARR related to their cloud-based subscription contracts was $2.5 million, $15.1 million and $46.0 million as of December 31, 2015, 2016 and 2017, respectively. The percentage of their total recurring revenue generated by sales of their cloud-based solutions was negligible in 2015, 7% in 2016 and 18% in 2017. They incurred net losses of $38.7 million in 2015, $44.6 million in 2016 and $55.8 million in 2017 as they continued to invest for growth to address the large market opportunity for their platform.
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