FireEye (FEYE) and Rocket Fuel (FUEL) will be the most newly minted public technology companies after they priced Initial Public Offerings (IPOs) last night and hit the market in open trading today, confirming a red-hot market for technology IPOs. Both companies priced shares higher than initial expectations.
FireEye’s deal got hotter as the week went on, as it bumped up its price range several times, settling into $17-$19 expected range. But then last night it was then was able to sell shares at $20 a piece. It sold 15 million shares, raising $300 million, giving the company a valuation of $2.3 billion at the IPO price. The lead underwriters included Morgan Stanley, Goldman Sachs, JP Morgan, and Barclays. It starts trading on the open market today.
Rocket Fuel sold 4 million shares at $29 per share, raising $116 million. It also starts trading today. The underwriters were Credit Suisse and Citigroup.
FireEye was founded by former Sun Microsystems engineer Ashar Aziz, who is now the CTO. The CEO is David DeWalt, the former CEO and Chairman of McAfee Inc., a long-time leader in the security space that was acquired by Intel (INTC). FireEye develops real-time security scanning software, including protection against malware. It also makes security appliances which are installed by enterprises to scan and protect against security threats. It was founded in 2004 as NetForts Inc. but changed its name in 2005. It’s headquartered in Milpitas, Calif.
Everyone in Silicon Valley seems to agree that the Internet security market is very hot. This was confirmed by Cisco’s (CSCO) acquisition of SourceFire in July for $2.7 billion.
FireEye reported $83 million in revenue and a net loss of $36 million in 2012. In the first six months of 2013, it has reported total revenue of $62 million and net loss of $67 million.
Rocket Fuel uses data analysis and complex algorithms to tell digital marketers the best way to spend their money. It’s main product is an “automated decision-making platform” for ad buyers. The company booked $16.5 million, $44.7 million, and $106.6 million, respectively, in 2010, 2011, and 2012. However, it is still spending money to grow. In the years 2010, 2011, 2012, losses were $3.2 million, $4.3 million, and $10.3 million, respectively. It lost $11.9 million in the first six months of this year.
Who’s cashing in on the deals? For FireEye, the largest shareholders prior to the offering included Sequoia Capital, Norwest Venture Partners, and DAG Technology Partners, with 21%, 20%, and 7.4%, respectively. Those stakes will be reduced by the dilution from the IPO. At todays’ debut market cap, Sequoia will have a stake equal to about $400 million. Not a bad take.
FireEye founder Aziz held 10% of the IPO and CEO DeWalt held 4.5% prior to the offering, giving them stock equal to about $200 million and $90 million at the IPO price, respectively. Those number will be quickly readjusted when the issue starts trading and the final dilution numbers are available.
For Rocket Fuel, executives and founder Goerge H. John (CEO), Richard Frankel (President and CFO), and Abhinav Gupta (VP, Engineering) held 12%, 10%, and 7.5%, respectively, before the IPO.
Top investors in Rocket Fuel include MDV (Mohr Davidow Ventures), with 40% of the company prior to the offering, Nokia Growth Partners, 9.5%, and Northgate Capital, with 7.2%.