McAfee's IPO (initial public offering) has been priced at $20 per share, and the cybersecurity software company's stock ($MCFE) will begin trading today (Thursday, October 22) on the Nasdaq.
The journey to IPO has been a lengthy one. Private equity firm TPG acquired a majority stake in McAfee from Intel in 2016. At the time, the company's valuation was $4.2 billion. Fellow PE firm Thoma Bravo took a minority stake in McAfee in 2017. Thoma Bravo also owns such cybersecurity firms as Barrracuda and Sophos,
Here are 10 things for partners, customers and potential investors to know. according to a McAfee's amended Form S-1 SEC filing and additional financial reports.
Note: Originally published September 28. Article updated regularly thereafter.
1. Expected McAfee Stock Symbol: $MCFE.
2. IPO Goal and Valuation Target: McAfee originally wanted to raise $814 million at a company valuation of roughly $9.5 billion, Reuters reports. But the actual raise was actually about $620 million at a valuation of roughly $8.6 billion, according to a Reuters update.
3. Revenue:
- $2.635 billion for the fiscal year ended December 28, 2019, up 9.4 percent compared to $2.409 billion in the previous year.
- In the first half of 2020, McAfee revenue was $1.4 billion.
4. Adjusted EBITDA & Net Income:
- Adjusted EBITDA: $799 million for the fiscal year ended December 28, 2019, compared to $540 million for the previous year..
- Net Income: McAfee had a $236 million net loss for the fiscal year ended December 28, 2019, compared to a $512 million net loss for the previous year. Net income was $31 million for the first half of 2020.
5. McAfee Consumer Business: According to an SEC filing, the consumer-focused products protected over 600 million devices as of June 27, 2020. The consumer go-to-market strategy consists of a digitally-led omnichannel approach to reach the consumer at crucial moments in their purchase lifecycle via several direct and indirect channels. McAfee has longstanding exclusive partnerships with PC makers and continue to expand its presence with mobile service providers and internet service providers (ISPs) as the demand for mobile security protection increases.
6. McAfee Enterprise Business: McAfee's enterprise business spans:
- 86% of the Fortune 100;
- 78% of the Fortune 500; and
- 61% of Global 2000 firms.
- 46.6% of fiscal 2019 net revenue was earned outside of the United States.
7. Revenue From Distribution Partners: Ingram Micro (15 percent), Arrow Electronics (7 percent), and Tech Data (6 percent) generated a big portion of McAfee's revenues in fiscal 2019. The Ingram Micro percentage figure remained unchanged in the first half of 2020, though the Arrow (3 percent) and Tech Data (5 percent) figures dropped significantly during the period.
8. MSP and MSSP Partner Strategy: McAfee briefly mentioned its MSP partner strategy twice in the SEC filing, and an associated MSSP partner strategy six times. McAfee sees MSSPs as both a partner opportunity and challenge, stating:
"Some of our enterprise customers have outsourced some or all of the management of their information technology departments to large system integrators. Some customers have also outsourced portions of their cybersecurity operations to MSSPs. If this trend continues, our established customer relationships could be disrupted, and our solutions could be displaced by alternatives offered by system integrators and MSSPs that do not include or use our solutions. These displacements could negatively impact our financial results and have an adverse effect on our business."
9. Consumer Security Rivals: In the consumer cybersecurity market, McAfee mentioned competition from such companies as NortonLifelock, Avast/AVG, Kaspersky, Trend Micro, ESET, and Microsoft. McAfee also mentioned point-tool providers, such as Cujo and Dojo in the home IoT space and AnchorFree, ExpressVPN, and ProtonVPN in the network security space.
10. Enterprise Security Rivals: In the enterprise cybersecurity market, McAfee mentioned such rivals as Symantec (a division of Broadcom), Palo Alto Networks, Sophos, Microsoft, Trend Micro, and SentinelOne in the endpoint, networking, and CASB space, as BlackBerry Cylance focusing on a subset of the cybersecurity market. Additional competitors include:
- Crowdstrike, VMware Carbon Black, and Tanium in the endpoint market;
- Netskope, and Bitglass in the CASB market;
- IBM and Cisco Systems in network intrusion;
- Forcepoint, and Zscaler in the SWG market; and
- IBM, Splunk, Micro Focus, Dell, and LogRhythm in the security operations market.
