Carbon Black IPO Prospectus Reveals Endpoint Security Partner Momentum -

Carbon Black has filed for an initial public offering (IPO), revealing that revenue at the endpoint security software company reached $162 million in 2017, up from $116.2 million in 2016 and $70.6 million in 2015. That's a 51 percent compound annual growth rate (CAGR).

That revenue growth involves a "high-leverage channel model." Indeed, 94 percent of Carbon Black's new or add-on business for the three months ended December 31, 2017, involved channel partners. Those partners include MSSPs and security-focused VARs, the company notes.

Key relationships also span more than 100 incident response firms, including Kroll and Ernst & Young, along with strategic relationships with IBM and VMware, the company adds. Dig a little deeper into the IPO filing, and the company mentions key relationships with Optiv Security Inc. (as a VAR-MSSP); CDW Corp. (software VAR); Arrow Electronics (global distributor); SecureWorks (MSSP).

Carbon Black Losses, Security Opportunities

Still, Carbon Black's pursuit of growth has triggered growing annual losses. Indeed, net losses reached $55.8 million in 2017, up from a $38.7 million net loss in 2015.

Among the bright spots for the company: Recurring revenues now represent 88 percent of total revenues, up from 77 percent in 2015, the company revealed. Still, it's not a pure cloud services story. Only about 18 percent of Carbon Black's total recurring revenue involved cloud services in 2017 -- though that's up from essentially nothing in 2015.

Carbon Black points to the following 10 use-cases for its security products:

Augment or replace legacy antivirus software;

Prevent malware and fileless attacks that do not use malware;

Protect against ransomware;

Hunt down threats;

Respond to and remediate security incidents;

Lock down critical systems and applications;

Protect fixed-function devices;

Secure workloads and applications in virtualized and cloud environments;

Comply with regulatory mandates; and

Enhance other security products through our unfiltered endpoint data.

Carbon Black Partner Bets

Throughout the IPO filing, Carbon Black clearly communicates that the company is betting its business on partners. "If we fail to maintain successful relationships with our channel partners, or if our channel partners fail to perform, our ability to market, sell and distribute our products will be limited, and our business, financial position and results of operations will be harmed," the company warns.