Data security B2B SaaS platform Carbon Black this week joined the slew of tech companies filing for IPO in 2018. The Massachusetts-based company uses big data and analytics to anticipate and prevent cyberattacks on businesses’ endpoint data. Carbon Black is not yet free-cash-flow positive, though ahead of its $100 million common stock IPO goal the business reported over 88% of 2017 revenue was recurring, with customer retention rate of 93%. Last year, the company earned $162 million in revenue (39% increase from 2016) and experienced net losses of $55.8 million (up 25% YoY). Despite decreasing percent-of-revenue losses, Carbon Black may still be challenged to demonstrate a growth rate fast enough to attract investors over other tech stocks. Morgan Stanley and JP Morgan are listed as underwriting the deal.
In crypto-banking news, JP Morgan is currently the target of a federal class-action lawsuit for charging exorbitant fees on Chase customers’ cryptocurrency purchases. The plaintiff, who is suing JP Morgan in a Manhattan District court for all fees charged plus $1 million in damages, claims that the bank had been charging cash-advance-level fees (up to 30%) on purchases of cryptocurrency. Such measures have grown more common among card-issuers, as banks aim to make it increasingly unappealing to invest in cryptocurrency.
In marketing news, Google confirmed this week that the search engine algorithm updates released March 7 and 9 were not targeted at low quality sites, but instead intended to grant visbility to the most relevant content. Sites whose rankings were affected by the update should not interpret it as an indicator of their site’s quality, but rather relevance to the search query. A senior webmaster trends analyst at Google suggested that those impacted by the update should seek user feedback on page setup and ensure that Google can crawl all pages on the site as well as index the content properly.
The tech world this week is buzzing with Facebook CEO Mark Zuckerberg’s congressional testimony following the Cambridge Analytica data breach. Lawmakers examined Zuckerberg on Facebook: collecting data of non-users (“shadow profiles”), not explicitly asking users to opt-in to share private data, exhibiting a lack of repercussions for censorship mistakes, enforcing no separate rules for minors and the number of “like” / “share” buttons on non-Facebook pages that track behavior. Zuckerberg often responded with a promise to follow up, likely meaning more information will come to light regarding how the social media giant collects data.
New in SaaS listings this week is a $121K B2B real estate company, with strong CAGR of c.155% for the 2015 to 2017 period, a highly differentiated product driving low customer churn rates of c.3.7% and high CLV of c.$5,215 over the last 12 months. This well-known business offers a robust API offering unique integrations in the lucrative $217 trillion real estate market. If you are interested in this business, follow the link to request a prospectus.
In events news, Founder Thomas Smale is currently in Austin, where he will be hosting a networking drinks event tonight. Stop by to have a drink on us if you are around! Thomas will next be off to Magento Imagine on April 23-25 in Las Vegas. Come say hi if you will be in the area, or reply to this email to set up a meeting.
Finally, in honor of our latest event sponsor Time Doctor we have also just released the “Team Two Day Ticket” for those who want to bring along team members! Get 4 tickets for the price of 3 and an additional 75% off if you use code TEAMDISCOUNT at check out. Remember, the FE client discounts end on Sunday, so make sure to use code FEINTERNATIONAL for 50% off any tickets. Seats are packing up, so don’t wait around to reserve your spot!
Continue reading below for more on Carbon Black’s IPO, JP Morgan’s lawsuit, and Mark Zuckerberg’s congressional testimony.
SaaS – B2B Real Estate – $6K MRR
Notable client base with a history of successfully servicing multiple Fortune 1000 customers
A high customer lifetime value of $6,000 for enterprise customers over the trailing 12 months
Dominant position within the $457 billion marketing industry
Team of freelancers transitioning with the business post sale
Yearly net profit: $74,000
Asking price: $225,000
In The News…
Carbon Black Files for IPO
Carbon Black has filed for a $100 million IPO set for 2018.
According to filings with the SEC, Carbon Black has joined the group of tech companies who have filed for an IPO in 2018. The SaaS company, which is based in Waltham, MA, uses big data and analytics to protect businesses’ security through predicting unknown attacks to companies’ data in order to prevent them. Their product claims a 99.79% efficacy in real-time protection with a 0% false-positive rate, and generated a 39% increase in revenues from 2016 to 2017 ($116.2M to $162M). The tech company has raised over $190 million in its time as a private company, and has not run into much trouble sticking with clients. According to the company, “recurring revenue represented 77%, 83% and 88% of our total revenue in 2015, 2016 and 2017, respectively.” While the company grew at 39% last year, this increase is down from the 64.7% growth the year before.
Potential challenges for the company will likely include increasing net losses and whether it can grow faster than its competitors to attract investor interest.
JP Morgan Sued for Exorbitant Fees
JP Morgan is being sued for charging “sky-high” interest rates on customers purchasing cryptocurrency with their credit cards.
On Tuesday, Brady Tucker, a Chase credit-card customer, filed a lawsuit against JP Morgan for classifying his cryptocurrency purchases as cash advances and subsequently charging him interest rates up to 30% a year, plus additional fees. In a federal class-action lawsuit against the banking giant, Tucker filed in Manhattan citing Chase silently charging cash-advance fees despite him paying off the charges by the end of the billing cycle. Tucker believe that this would be enough to not incur finance charges but discovered the cash-advance fees were being incurred. In this suit, Tucker is seeking a refund of all related fees plus $1 million in damages, stating “Chase silently smacked them with instant-cash-advance fees, plus much higher interest rates than normal, and left them without any recourse.”
Brady Tucker v. Chase Bank USA will take place in a US District court in Manhattan.
Facebook CEO Mark Zuckerberg Testifies Before Congress
This week, Facebook CEO Mark Zuckerberg testified before Congress in light of the recent Cambridge Analytica scandal.
In a testimony wherein he admitted that his personal data was breached, Zuckerberg stated that it was Facebook’s mistake for believing Cambridge Analytica when they stated that the data had been deleted and would not be used. Recently, Facebook announced that it will remove the option to incorporate data provided by third-party data brokers within its advertising system. Marketers will lose access to about half of Facebook’s 1,200 targeting criteria. Facing significant pressure to increase regulations following a scandal with Cambridge Analytica accessing millions of users’ data, Facebook is making changes to what it will allow marketers and advertisers to access in their advertisement retargeting. Facebook is going through the process of investigating other developers with access to a large amount of data before the platform was closed. When asked if he was willing to change his business model, Zuckerberg stated that they learned in 2015 that Cambridge Analytica they got in touch with them demanded that they delete data and the chief data officer Zuckerberg stated that new European GDPR regulations will be extended to American users as well.
Prominent concerns from Congress included identity theft, collecting data on non-users and Facebook collecting 29,000 data points on users.
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