Cloudflare’s recent capital raise does not preclude 2019 IPO, sources say

08 April 2019

Cloudflare, which last month closed a USD 150m funding round led by Franklin Templeton, could still launch an initial public offering later this year or early next year, two sector advisors said.
The San Francisco-based software performance and cyber security company had been working with Goldman Sachs on an IPO initially slated for the first half of this year, Reuters reported last October.
Despite its recent capital injection, Cloudflare continues to talk with bankers about a potential listing, according to the first sector advisor. While an IPO is no longer planned in the first half of this year, the company is still expected to pursue one in the next six to 12 months, this advisor said.
The investment strengthens Cloudflare’s balance sheet while simultaneously providing Franklin Templeton— and other large mutual funds like previous investor Fidelity — the opportunity to gain a larger slice of the offering when it happens, the second advisor added.

Cloudflare and Franklin Templeton did not return requests for comment.

To date, Cloudflare has raised more than USD 330m from investors, including New Enterprise AssociatesUnion Square VenturesVenrockPelion Venture PartnersGreenspring AssociatesCapitalGMicrosoft [NASDAQ:MSFT], Baidu [NASDAQ: BIDU], Qualcomm[NASDAQ:QCOM], and Fidelity.
The company’s portfolio of products improve the speed and security of websites, application programming interfaces, software applications and other properties connected to the internet. Its competitors include San Francisco-based Fastly, which hired Bank of America to lead a possible IPO that it could launch later this year, according to a Reuters report on 20 March.
Recent cyber security listings have been a mixed bag of late but are generally viewed as attractive, the first advisor said. Zscaler[NASDAQ:ZS] and Okta [NASDAQ:OKTA] are among recent entrants in the space trading well above their IPO prices. Weaker-than-expected 2019 guidance has dragged down Carbon Black’s [NASDAQ:CBLK] shares. ForeScout Techologies stock [NASDAQ:FSCT], meanwhile, has been up and down but is currently performing well.
Five cybersecurity companies went public last year — more than the two to three normally seen — and public markets remain strong overall, which could pave the way for Cloudflare to follow suit before the end of the year, the second advisor said. This week, Tufin Software Technologies set terms for its NYSE offering, which would be the first cybersecurity IPO this year.
by Troy Hooper in Los Angeles and Chris Metinko in San Francisco