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CrowdStrike IPO success puts spotlight on endpoint security

Cybersecurity firm CrowdStrike made its successful Wall Street debut Wednesday. The company closed its trading with a share price of $58.

Endpoint security vendor CrowdStrike raised more than $600 million in its initial public offering Wednesday. CrowdStrike shares closed at approximately $58 per share, 70% above its IPO price of $34.

The CrowdStrike IPO has given the company a market capitalization of around $11.4 billion.

The company was valued at over $3 billion last year following a $200 million venture capital funding led by General Atlantic.

CrowdStrike filed a registration statement for the proposed IPO on May 14 and was expected to price its 18 million Class A shares at between $28 and $30 a share. Underwriters including Goldman Sachs, J.P. Morgan, Bank of America, Merrill Lynch and Barclays each received a 30-day option to purchase an additional 2.7 million shares.

"Today's achievement validates the critical wager we put on bringing to market game-changing technologies to help organizations defend themselves from cyberattacks in a modern and efficient way," CrowdStrike CEO and co-founder George Kurtz said in a blog post.

With the CrowdStrike IPO, the company joins a list of tech companies such as Uber, Lyft, Zoom and Pinterest that have gone public this year.

The company rose to fame after it helped trace the cyberattack on the Democratic National Committee to Russian threat actors in 2016. Since that time, CrowdStrike emerged as a go-to vendor for both threat detection and incident response, handling post-breach investigations for organizations such as the National Republican Congressional Committee.

"We launched CrowdStrike in 2011 to transform security to meet the needs of modern businesses in the cloud era. Our IPO is an important milestone, and we couldn't be more excited as we look forward to continuing to outwit cyber adversaries to keep our global customers safe," Kurtz said in a statement.

The high interest and valuation is a reflection that cloud-driven endpoint security is a hot market and CrowdStrike's cloud model is disruptive, according to Gartner vice president and analyst Peter Firstbrook.  

"Cloud-driven security services have significant advantages over on-premises versions that go beyond typical SaaS value propositions," Firstbrook wrote in a recent report on endpoint protection shifting to the cloud. "Cloud-delivered security solutions can centralize the process intelligence and implement new detection methods and new services in a more agile way. Cloud-based detection techniques are also more difficult for attackers to test against without divulging new evasion techniques."

"These solutions are becoming more extensible than their on-premises counterparts. Cloud vendors are adding products that utilize the same agent and data as on-premises EPP solutions; for example, vulnerability detection, user and entity behavioral analytics (UEDB), and file integrity monitoring (FIM)," he added. "Indeed, CrowdStrike has launched an app store facility to allow partners to build their own apps on top of the data already collected."

Headquartered in Sunnyvale, California, the cybersecurity firm was founded by former McAfee executives Kurtz and chief technology officer Dmitri Alperovitch. CrowdStrike is supported by original investor Warburg Pincus; other investors including Accel, CapitalG, General Atlantic, Rackspace and Telstra Ventures.

The cloud security vendor's Falcon platform is powered by artificial intelligence to detect and prevent cyberattacks on endpoints. CrowdStrike customers include Tribune Media, Amazon Web Services and Credit Suisse.

According to its S-1 filings, CrowdStrike reported a net loss of $140 million on $250 million in revenue in its last fiscal year ending January 31.

Earlier this year, CrowdStrike struck a major partnership with Dell that integrated the security vendor's Falcon platform with Dell's endpoint security portfolio. The company recently settled a two-year legal battle with NSS Labs over test results for one of CrowdStrike's products.

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