Cloudera has set terms for its IPO, estimating an initial market cap that would value the Big Data company at less than half of its most recent private valuation.
The Palo Alto-headquartered company, which offers a management and analytics platform meant to help businesses store and process data, expects to offer 15 million shares at a range of $12 to $14 apiece—a midpoint pricing would raise $195 million.
Major valuation haircut
Perhaps the most notable development in Cloudera's new filing is its projected $1.66 billion initial market cap with a midpoint pricing—more than $2 billion if fully diluted. When Cloudera filed at the end of March, reports indicated the company would seek a value of about $4.1 billion, equal to the valuation generated by its most recent private financing in 2014. At that time, Intel made a $740 million investment at $30.92 per share, more than double the estimated range in the latest filing.
The range is also lower than the value of the stock Cloudera granted to employees just last month, which had an exercise price of $17.85 per share.
Even if the new terms had generated a flat valuation, that still would have indicated Cloudera was potentially overvalued when Intel made its investment three years ago. Check out this detailed analysis of some reasons why Cloudera is valued at much less than it was in 2014. (The article was published before the IPO terms were available, but the points remain the same.)
Cloudera's technology is built on Apache Hadoop, an open-source software that sorts massive amounts of information. Hortonworks (NASDAQ: HDP), a Cloudera competitor that also built its product on Hadoop, went public in late 2014 and has seen its stock price drop significantly since.
Shareholders in Cloudera are likely to be disappointed with what will be a so-called down round IPO. Aside from Intel, which holds a 22% pre-IPO stake, other backers include Accel (16.3%) and Greylock Partners (12.5%).
An outlier for recent tech IPOs
News of Cloudera’s terms comes in the midst of a seemingly wide-open tech IPO window. All five of the year’s biggest VC-backed public offerings in the US have priced at or above their expected ranges, including enterprise tech startup Yext, which debuted on the public markets last week, and Snap, which went public in March to much fanfare.
Even if Cloudera follows suit and prices above its range, the market cap will be significantly lower than its most recent private valuation.
Founded in 2008, Cloudera is expected to price on April 27, according to Bloomberg. The company is set to trade on the NYSE under the symbol CLDR.
According to the filing, Intel has indicated an interest in purchasing up to 10% of the shares of common stock being offered in the IPO, a move that would prevent the company's stake in Cloudera from being significantly diluted.