Website security company Cloudflare is preparing for a $3.5 billion IPO

  • Sources told Reuters that Cloudflare is preparing for an initial public offering valuing it over $3.5 billion.
  • The startup provides software to improve security and loading time for websites.
  • Cloudflare would reportedly go public in the first half of 2019.
Matthew Prince of CloudFlare.
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Matthew Prince of CloudFlare.

Cloudflare, a U.S. startup whose software makes websites load faster and with greater security, is preparing for an initial public offering (IPO) that could value it at more than $3.5 billion, people familiar with the matter said.

The company is looking to go public in the first half of next year, the sources said this week, joining a string of software and internet firms seeking to tap the stock market and capitalize on strong investor appetite and rich valuations.

The IPO will be led by investment bank Goldman Sachs, said the sources, who asked not to be named because the matter is confidential. Exact timing of the IPO has not been finalized, the sources added.

Cloudflare did not respond to requests for comment. Goldman Sachs declined to comment.

Despite a recent pullback in the major indexes of public equity markets, such as the S&P 500, technology firms are increasingly ramping up efforts to tap those markets while interest rates remain low and valuations of private companies are relatively high.

Reuters reported last week that CrowdStrike, a security software firm, had also hired Goldman Sachs to lead an IPO that could value it at more than $3 billion.

Founded in 2009, Cloudflare provides cloud-based Web services that help improve user experience on websites through actions such as making videos load faster. It also protects against cyber attacks, among other services.

The company runs a so-called content delivery network that competes against services from Akamai and offerings from Alphabet's Google and Amazon's cloud computing units.

Its clients include companies such as Zendesk and Cisco. It serves a total of 10 million website domains and the average Internet user touches its services around 500 times per day, according to its website.

In 2015, Cloudflare raised $110 million from investors including Fidelity, Alphabet, Microsoft, Baidu and Qualcomm.