Software company Cloudera raised $225 million in an initial public offering on Thursday, a source familiar with the situation said, giving the company a market valuation of about $1.9 billion, a steep fall from the $4.1 billion it was once valued at in the private market.
Investors including chip company Intel piled into Cloudera several years ago when a flood of money into private technology companies pushed valuations skyward.
Cloudera said it priced its shares at $15, above its indicated range of $12 to $14, but still a far cry from the $30.92 a share that Intel paid in 2014.
Cloudera will begin trading tomorrow on the New York Stock Exchange under the symbol “CLDR.”
The source asked not to be named because the negotiations are confidential. Cloudera and Intel did not immediately respond to requests for comment.
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Palo Alto, Calif.-based Cloudera, like rival HortonWorks, focuses on helping corporate customers manage data through “Hadoop,” an open-source software system that can sort and handle the increasingly massive amounts of data generated through the Internet and mobile devices.
Intel, which took a 18% stake in Cloudera in its initial $740 million investment and subsequently bought more shares, will hold a 19.4% stake in Cloudera after its IPO. Cloudera’s data business is meant to help Intel diversify away from its core business of making chips for data centers.
Since Intel’s investment, Cloudera has had to invest heavily in marketing to help grow its revenue and has had to discount its products due to increased competition.
In its fiscal year that ended January 31, Cloudera had $261 million in revenue and spent $203 million on sales and marketing. It posted a loss of $187 million for the year.
Cloudera is not the first company in recent years to have gone public at a lower valuation than its private market level — known in investment parlance as a down-round IPO.
Mobile payments company Square Inc had a down round IPO in 2015 with a market capitalization of $2.9 billion, a steep discount from its private valuation of $6 billion. Its market capitalization now sits at $6.7 billion.
Still, a down round IPO can be a disappointment for employees with expectations of big payouts.
Morgan Stanley, J.P. Morgan, and Allen & Company are helping to lead the IPO.