Confluent share surges 25% in IPO, co-founder becomes new cloud computing billionaire

update: The story has been updated to reflect that as of Monday, June 28, Confluent’s share price had risen to $ 52, and all three Confluent co-founders became billionaires.

In 2011, three LinkedIn employees (Jay Kreps, Neha Narkhede, and Jun Rao) developed technical tools to help professional networks handle huge amounts of messages, network requests, and profile views. The realization of data streams can be a problem not only for LinkedIn, but also for other companies that are a trio of open source software, and in 2014 we set out to set up a company around it called Confluent.

Ten years later, Kreps, Narkhede, and Rao are millionaires, as Confluent’s stock soared by more than 20% on the first day of trading.

Confluent based in Mountain View, California Listed on Nasdaq At a price of $ 36 on Thursday, it raised $ 828 million and valued the company at about $ 9.1 billion. Confluent shares closed at $ 45.02 after day one, rising 25% and Confluent’s market capitalization rose to $ 11.4 billion. (((update: As of Monday, Confluent shares were trading at $ 52, with the company’s market capitalization swelling to over $ 13 billion. )

In an interview, Kreps said Confluent benefits from the continuous shift of enterprise resources and data to the cloud. Due to these trends, the market capitalization of snowflakes released last fall exceeded $ 74 billion. Databricks, another player trying to help businesses access vast amounts of data, recently reached a $ 28 billion private market valuation. Make some of its founders millionaires,Also.

“There’s a lot of excitement in the larger data ecosystem,” Kreps said. Forbes In an interview. “The move to the cloud makes it easier to take advantage of these new data technologies.”

Confluent appears to fit as the “central nervous system” of all these data. In particular, it supports large data streams that large companies process in real time. (Beyond the original LinkedIn use case, consider Netflix, which filters recommendations in response to user input, Audi, which provides diagnostics to drivers, etc. What is this data in the data warehouse? It’s quite different. A data lake or other infrastructure built to replace an onsite server rack. Instead, it’s “data on the move,” he says.

If it sounds confusing, you are not alone. 2015 Forbes Magazine profile We compared Confluent’s data stream with the Chocolate River at the heart of Willy Wonka’s fictional chocolate factory. “Event Streaming”, or another concept at the core of Kreps’ technical view of future IT infrastructure “Open source as a service” Not so good. “One of the challenges I’ve had with Confluent from the beginning is that if there’s something really new, it’s almost by definition no vocabulary to talk about,” Kreps admits.

Many companies bought in the same way. Confluent reported ending fiscal year 2020 with revenue of $ 236.6 million, up 58%. In the most recent reporting quarter, these sales were up 51% to $ 77 million.

However, while Confluent claims to operate with $ 50 billion in market opportunities, its growth is slowing. Revenues increased 130% year-on-year between 2018 and 2019, as venture capital firm Matt Turck pointed out: break down Of the company’s S-1, $ 280 million in cash reserves as of March 31 appears to be relatively small compared to the company’s losses, but in the most recent quarter it was $ 44.5 million in 2020. Is $ 229 million.

Given that trajectory, there is little incentive for Confluent to stay private for much longer, and there is a risk that it will no longer be considered a high-growth business after a year or two. Meanwhile, by raising more than $ 800 million, it has strengthened its financial resources and continues to spend in opposition to Mr. Krebs saying “grab the land” at the head of the IT forest. ..

The desire to make such a profit is directly listed by Confluent, even though partner Bill Girly has a benchmark, a venture capital firm that has emerged as a major shareholder and a major supporter of IPO alternatives. That’s a big reason to choose a traditional IPO over. .. According to Krebs, Girly didn’t call directly to promote the listing, but Confluent will pursue private funding in parallel with the direct listing and become one of the first companies to get burned. Did not want.

“The combination has all the inefficiencies of private financing,” Krebs claims. “Even in the six months between a company’s listing and its listing, there is often a big difference.” Confluent’s CEO not only started with him, but the options eventually became more common. He says he expects to be.

The IPO has so far been rewarded with Kreps and his co-founders. According to Confluent, Kreps owned about 24 million shares. Submission to S-1 RegulatorThere are another 1.2 million shares of vested options and nearly 4.6 million shares that have not yet been vested. Excluding unconfirmed shares, Kreps’ total shares against Confluent are worth just over $ 1.1 billion. Leaving Confluent’s day-to-day work, Rao isn’t too late. He still owns 24.4 million shares in the IPO and has a net worth of just under $ 1.1 billion. (((update: With a stock price of $ 52 on Monday, Krebs and Lao’s fortune is currently valued at about $ 1.3 billion. )

Narkhede, Confluent’s third co-founder, is still a board member of the company and reached millionaire status a few days after the IPO. According to Confluent’s submission, all three founders sold more than 2 million shares in July 2020, with Krebs and Narkede each selling about $ 40 million and Lao $ 30 million. Narkhede went a step further and sold another 5.3 million shares in September for a total of about $ 78 million. At the IPO, her and related family trusts still fully own about 18.4 million shares, with just over 800,000 rights vested. With a share price of $ 52 on Monday, Narquede’s net worth is close to $ 1.1 billion.

Krebs didn’t sound impressed (though he didn’t sound surprised either) when asked about his new millionaire status. “I didn’t have time to think about it because it’s been a lot of work for the last six years,” he said. “I want to do something good for the world with money, but I don’t have a deep idea of ​​all that.”

Confluent share surges 25% in IPO, co-founder becomes new cloud computing billionaire

Source link Confluent share surges 25% in IPO, co-founder becomes new cloud computing billionaire

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