Elastic, the company that offers open source data search and visualization software, filed for an initial public offering with the U.S. Securities and Exchange Commission earlier this month. According to its updated prospectus, the tech firm intends to list shares on the New York Stock Exchange under the “ESTC” symbol.
The Mountain View, California-based company plans to raise $193 million by selling 7,000,000 million shares at a price range of $26 to $29. Elastic would command a market value of $2.4 billion at the midpoint of the price range. Shares of the company are expected to begin trading on October 4, 2018.
RBC Capital Markets, J.P. Morgan, Barclays, and Goldman Sachs are the joint book-running managers on the offering. The underwriters have also been granted an option to purchase an additional 1,050,000 shares at the price of the offering.
Elastic is best known for its Elasticsearch search engine that allows organizations to instantly find relevant information and relevant insights. The firm offers the platform as part of a bundle known as the Elastic Stack, which includes three data management tools.
Among them is the Logstack engine, which is used to ingest records from external sources. The other two are the Beats data aggregation system, and the Kibana visualization tool.
Elastic generates revenue from customers/businesses that pay subscriptions fees to use its services. Most of its revenues come from companies within the US, such as Uber, Sprint, Walgreens, Merck, and Adobe. Customers have downloaded its products over 350 million times since January 2013, according to the company.
In fiscal 2018, Elastic reported a loss of $52.7 million, and revenues of $159.9 million, up 81% from the previous year. The company recorded revenue growth of 79% to $56.6 million in the just-concluded quarter, with losses coming in at $18.6 million due to increased research marketing expenses.
According to International Data Corporation (IDC), Elastic’s market opportunity is quite large at $45 billion this year. The drivers of its market include cloud infrastructure adoption, digital transformation, surges in security and software-related spending, data availability and demand prescriptive and predictive analytics.
Elastic plans to use the proceeds of its IPO as follows: “We currently intend to use the net proceeds from this offering primarily for general corporate purposes, including working capital, research and development, sales and marketing activities, general and administrative matters and capital expenditures, although we do not currently have any specific plans with respect to the use of proceeds for such purposes.”
The company was founded in the Netherlands in 2012 and leverages 994 full-time workers in 35 countries across the world. Its headquarters are based in Mountain View, California, while Amsterdam serves as its center in Europe.
Management is under co-founder and chief executive officer Shay Banon. Steven Schuurman, who also co-founded the company resigned as CEO in 2017 but is still a board member.
Elastic has the backing of several investors including SV Angel, Index Ventures, New Enterprise Associates, Benchmark and the Australian Government Future Fund.
It has listed Splunk Inc, Micro Focus International PLC, Amazon.com Inc., Alphabet Inc., Microsoft Corp, and Oracle Corp as its competitors.