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Cloudflare Raises $525 Million in Above-Range IPO

Crystal Tse and Nabila Ahmed

(Bloomberg) -- Cloudflare Inc., a firm that helps websites protect and distribute content, priced its shares above an already elevated target to raise $525 million.

San Francisco-based Cloudflare sold 35 million shares on Thursday for $15 each, the company said in a statement confirming an earlier report by Bloomberg. On Wednesday the company had increased its target ranged for the shares to $12 to $14, after earlier marketing them for $10 to $12.

Cloudflare is valued in the listing at $4.4 billion based on the shares listed as outstanding in its filings with the U.S. Securities and Exchange Commission

About 10% of Fortune 1,000 companies are paying Cloudflare customers, according its filings. The company said its security services blocked an average of 44 billion cyber threats a day during the second quarter.

For the first six months of the year, Cloudflare lost $37 million on revenue of $129 million, compared with a loss of $32 million on revenue of $87 million for the same period last year, it said.

8chan, Shootings

Cloudflare acknowledged in its filings that its risks included negative publicity from the use of its network by 8chan, a website favored by white supremacists and used by gunmen before mass shootings in El Paso, Texas and Christchurch, New Zealand, this year. It also cited the use of its services by neo-Nazi website the Daily Stormer around the time of the 2017 protests in Charlottesville, Virginia.

Conversely, it also faced concerns about censorship for terminating the accounts of such groups, it said.

The company has a dual-class stock structure giving its Class B stockholders 10 votes per share, according to its filings. Co-founder and Chief Executive Officer Matthew Prince will control 12.9% of the company and have 17.1% of the voting power, the company said.

The offering is being led by Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. Cloudflare’s shares are expected to begin trading Friday on the New York Stock Exchange under the symbol NET.

(Updates with valuation in third paragraph)

To contact the reporters on this story: Crystal Tse in New York at ctse44@bloomberg.net;Nabila Ahmed in New York at nahmed54@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Michael Hytha, Anne VanderMey

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