The next big Israeli IPO on Wall Street is underway. Cyber security company Tufin has filed a prospectus for an offering on the New York Stock Exchange, on which it will be traded with the ticker symbol TUFN when the offering is completed. "Globes" first reported Tufin's planned IPO last November.
Ramat Gan-based Tufin was founded in 2005 by CEO and chairperson Ruvi Kitov and CTO Reuven Harrison, both formerly employed at Check Point (Nasdaq: CHKP). The company manages network security for organizations and provides cyber security solutions in various environments: local area networks, private cloud, public cloud, and hybrid.
Tufin's system studies the organizational network and automatically analyzes the risk of any change taking place for the security levels. A respectable list of underwriters is accompanying Tufin's IPO: JP Morgan, Barclays and Jefferies, as well as Oppenheimer, Piper Jaffray, Stifel, and William Blair. The prospectus submitted lacks figures for the amount of the offering and the valuation at which the company plans to raise money, but according to estimates previously published in "Globes," Tufin is seeking a valuation of $500 million.
424 employees, 217 in Israel
The financial figures in Tufin's prospectus show growth in revenue, but also a net loss at the annual level (although the company posted a profit in the fourth quarter). Tufin's revenue totaled $85 million in 2018, 31.7% more than in the preceding year. Its revenue is divided almost evenly between sales of products and professional services and maintenance. The company grew in both areas last year: 38% in product sales and 26% in services and maintenance.
Tufin's gross profit margin is 94.5% for products, 73.8% for services, and 84.2% overall, slightly down from 85.3% in 2017. Operating expenses grew to $73.5 million last year, but its operating loss was reduced from $2.3 million in 2017 to $1.9 million in 2018. Tufin's net loss grew from $2.8 million in 2017 to $4.3 million in 2018.
The company also provides non-GAAP figures that exclude various accounting items. Its non-GAAP operating profit totaled $1.2 million in 2018, compared with a $152,000 operating loss in 2017. The company's expense for stock-based compensation remuneration for employees totaled $3.2 million in 2018, compared with $2.1 million in the preceding year. One cause of this increase was the expansion of Tufin's workforce in recent years. The company currently has 424 employees, of whom 217 are in Israel, 119 in the US, 22 in the UK, and the rest in other countries. Tufin has 152 R&D employees and 166 employees in marketing and sales.
Tufin had $15.2 million in cash at the end of 2018, and has raised $26.8 million in four financing rounds since it was founded. The leading shareholders in Tufin are the Marker (28.9%), Catalyst (26.4%), Vintage (10.5%), and Sherbank (6.6%) funds.
Kitov and Harrison each own 9.6% of Tufin's shares. Catalyst has two representatives on the company's board of directors: Edouard Cukierman and Ohad Finkelstein. The company's prospectus states that its management, board of directors, and all of its shareholders have agreed not to sell shares for 180 days after the offering. At this stage, the prospectus does not include an offer to sell by the existing shareholders in the framework of the IPO.
According to the prospectus, Tufin has more than 2,000 customers worldwide. The company says that most enterprises do not have effective and comprehensive security policy management, which it says is critical for control of changes in the network.
Published by Globes, Israel business news - en.globes.co.il - on March 7, 2019
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