Boston-area antivirus and security software maker Carbon Black files for IPO, reports $162M revenue on a $56M net loss in 2017, up from $116M in revenue in 2016
Dan Primack / Axios :
Context & Ripple Effects
Carbon Black's filing extends a run of loss-making enterprise software companies testing the public markets: accounting software maker BlackLine confidentially filed in late 2016, AppDynamics filed that December showing a $95M loss on $158M in revenue, and fellow security vendor ForeScout followed in October 2017 with a $75M loss on $167M in revenue — nearly the same shape as Carbon Black's $56M loss on $162M. The filing also lands in a strong moment for its home market, with Crunchbase reporting Boston had drawn $5.2B in 2018 funding, tracking to overtake New York as the second-largest US hub.
The company's own arc resolves quickly in the coverage: within a month of filing, Carbon Black raised $152M and closed up 26% on day one at a $2B valuation, confirming the market's appetite for unprofitable but fast-growing security vendors.
First-order effects
- Carbon Black converts private-market backing into public currency, gaining capital and acquisition stock just as its revenue growth accelerates from $116M to $162M year over year.
- Public-market investors get direct exposure to endpoint security growth without waiting for profitability, repricing comparable private security startups overnight.
Second-order effects
- ForeScout's similar loss-on-growth profile made Carbon Black's filing a test of whether security buyers of IPOs are category-agnostic; the successful debut hands Crowdstrike a proven template when it files a year later with an even larger $140M loss on $249.8M in revenue.
- Rival security vendors face pressure to show comparable growth rates before their own listings, since the market is clearly paying for top-line expansion rather than earnings.
Third-order effects
- If the pattern holds — BlackLine, AppDynamics, ForeScout, Carbon Black, then Crowdstrike — public markets institutionalize a listing model where deep losses are acceptable collateral for hypergrowth, reshaping how venture-backed software companies time their exits.
- Boston's exit pipeline strengthens relative to other hubs: a $2B local listing reinforces the city's position as a startup-exit center outside Silicon Valley at the same moment its funding totals challenge New York's.
The trend: Cybersecurity companies are going public while still deeply unprofitable, with each successful high-loss IPO lowering the bar for the next one.