Briefing

Cloudflare’s stock surges more than 20 per cent on its first day of trading

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The San Francisco-based web security company increased its share price to US$15—from a range of US$12–US$14—and sold 35 million shares, to raise US$525 million ahead of its Friday IPO. By the end of its first day on the New York Stock Exchange, the company’s stock was up to US$18.12 in late afternoon trading, bringing its valuation to above US$5 billion. (The Logic)

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Talking point: Two days before going public, it hiked its share price range—from US$10–US$12 to US$12–US$14—and then bumped it again on the eve of its IPO. Cloudflare joins other money-losing tech companies to go public this year, but it’s so far bucking the trend that has seen high-profile flops like Uber and Lyft. Michelle Zatlyn, the company’s Canadian co-founder and chief operating officer, told The Logic investors advised the company during its road show that they were willing to pay more than what the firm had initially expected. Unlike Uber and Lyft, Cloudflare’s losses are shrinking relative to its revenue growth, and it has a comparatively short-term path to profitability. The company has 74,873 paying customers and counts 10 per cent of the Fortune 1,000 among them. It posted US$129.2 million in revenue for the first half of 2019, a 48 per cent increase over the same period the year before. Losses as a percentage of its revenue fell from 37.3 per cent to 28.5 per cent.