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KnowBe4 IPO Valuation: 10 Things to Know About $KNBE Cybersecurity

Credit: KnowBe4

KnowBe4, the cybersecurity awareness training company backed by Goldman Sachs and KKR, has launched a successful IPO (initial public offering) on April 22, 2021.

Shares in KnowBe4 (NASDAQ:KNBE)  jumped more than 40 percent at the opening. The IPO comes after KnowBe4 in mid-April 2020 filed an updated S-1 form with the SEC, which followed an initial form S-1 in March 2021 with the SEC to pursue an IPO

Here are 10 things to know about the KnowBe4 IPO:

1. Potential Stock/Ticker Symbol: KNBE.

2. Annual Revenue: $174.9 million in 2020, up from $120.6 million in 2019 and $71.3 million in 2018.

3. Annual Recurring Revenue (ARR): $198.4 million in 2020, up from $145.4 million in 2019 and  $88.6 million in 2018.

4. Annual Net Losses: A $2.4 million net loss in 2020, smaller than a massive $124.3 million net loss in 2019 and more modest $9.2 million net loss in 2018.

5. Channel Partner Revenue: In 2020, 37.4 percent of KnowBe4's revenue involved MSPs and channel partners. The company did not mention percentage of revenue from partners in 2019 and 2018. As KnowBe4's  business becomes more mature, the company believes "the revenue contribution from channel partners and MSPs will continue to increase," the company says.

6. Enterprise Customers & MSPs - Longer Sales Cycles: The number of customers KnowBe4 serves has increased on an absolute basis, but there has been a "decrease in year-over-year growth in number of customers since December 31, 2018 as a result of an increased focus on enterprise customers and MSPs, which are subject to longer sales cycles," the company says. "Additionally, as our customer base grows and as our market penetration increases, we do not expect to continue to grow at the same year-over-year rate."

7. Customer Base: KnowBe4 has 36,753 customers as of December 2020, up from 30, 259 in 2019 and 22,521 in 2018. The company has Federal Risk and Authorization Management Program (FedRAMP) authorization to sell into federal government agencies. Perhaps most impressively, no single direct customer accounts for more than 1 percent of annual revenue.

8. Competition: KnowBe4 mentions Proofpoint, Mimecast and Cofense as rivals that "attempt to address the security awareness market through their own infrastructure-centric product offerings." But alleges that the rival offerings are often "tied to other products within their portfolio and do not focus on changing human behavior. While there are some smaller security awareness focused companies in the market, none have grown to a meaningful scale to be considered a material competitor."

9. Top 10 Security Awareness Training Companies: MSSP Alert takes a closer look at KnowBe4 Rivals and Alternatives here.

10. Valuation & Target Raise: KnowBe4's IPO valuation could be roughly $3 billion, the filing suggested ahead of the actual IPO. At the top end of the valuation range, KnowBe4 would raise about $213 million, Reuters says. But shares surged more than 40 percent on IPO day.

Blog originally written March 21, 2021. Updated April 22, 2021 with new valuation information.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.