Tags: palo alto | ipo | expected | range

Palo Alto's IPO Priced Above Expected Range

Thursday, 19 July 2012 06:15 PM

Palo Alto Networks Inc., a maker of Internet firewalls, raised $260.4 million in its initial public offering, pricing the shares above its already-increased range.

The company sold 6.2 million shares at $42 apiece, it said in a statement Thursday, after offering the shares for $38 to $40 each. Palo Alto Networks initially said it would offer the shares for $34 to $37 and raised the range this week. The stock will starting trading Friday on the New York Stock Exchange under the symbol PANW.

Palo Alto Networks, based in Santa Clara, California, raised the amount it was seeking by 8.1 percent to as much as $248 million on July 17, after a person with knowledge of the IPO said it had received more than enough orders to cover the offering. The company joins scheduled IPOs from Kayak Software Corp., Five Below Inc. and Fender Musical Instruments Corp., to mark the busiest day for U.S. initial offerings since April, according to data compiled by Bloomberg.

The midpoint of the range valued the company at about $2.6 billion, or 12 times sales of $220 million in the 12 months through April 30, according to Bloomberg data.

Palo Alto’s offering follows the successful debut by ServiceNow Inc. last month, which opened the gates for other IPOs after the flop of Facebook Inc.’s $16 billion initial share sale froze the U.S. market for more than a month.

Emerging Force

While shares of Internet companies such as Facebook, Groupon Inc. and Zynga Inc. have declined since their IPOs in the past year, some technology firms that sell services and products to companies have fared better. In addition to ServiceNow, which sells technology-management software, Splunk Inc., a data-analytics company, has risen 72 percent since its IPO on April 18.

Palo Alto is an emerging force in the market for corporate anti-hacking technology, where its competitors include Cisco Systems Inc., Juniper Networks and Check Point Software Technologies. Revenue at the company, led by Chief Executive Officer Mark McLaughlin, has surged at least 57-fold since 2008 as more businesses invest to shield their networks from outside threats.

The company, founded in 2005, planned to offer 4.69 million shares, while existing holders offered 1.5 million, regulatory filings show. Venture firms Greylock Partners and Sequoia Capital didn’t plan to sell shares and will own more than 41 percent of the company after the IPO, according to regulatory filings.

Morgan Stanley, Goldman Sachs Group Inc. and Citigroup Inc. led Palo Alto’s share offering.

The company’s sales in the three months ended April 30 were $65.7 million, more than double the $31.2 million a year earlier, according to data compiled by Bloomberg. Net income in the nine months ended April 30 was $5.34 million, compared with a loss a year earlier, with sales for that period approaching $180 million, the company said in a filing.

The global market for enterprise network security may rise to $12.5 billion by 2015 from $10 billion this year, Palo Alto said in its filing, citing IDC.

© Copyright 2021 Bloomberg News. All rights reserved.

Thursday, 19 July 2012 06:15 PM
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