McAfee Details IPO Plans In New SEC Filing

Security technology developer McAfee plans to raise up to $682 million in its IPO as it seeks to become a publicly-listed company for the first time since 2011.

San Jose, Calif.-based McAfee on Tuesday filed its amended S-1 form with the U.S. Securities and Exchange Commission in which it said it plans to sell 30,982,558 shares at an initial public offering price of between $19 and $22 per share for a total of $681.6 million.

Current shareholders of McAfee are also looking to sell an additional 6,017,442 shares. Together, that will be a total of 37 million shares which, at the maximum of $22 per share will mean a total IPO value of $814 million.

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With the IPO, McAfee expects public stockholders to have a 22.4-percent economic interest in the company, compared to continuing owners’ 72.2-percent economic interest and management owners’ 5.5-percent economic interest. Among the continuing owners is Intel, which in 2011 acquired McAfee, then a publicly-listed company, in a deal valued at about $7.7 billion.

McAfee plans to list on the Nasdaq market under the symbol “MCFE,” according to the S-1.

The latest filing was no surprise as McAfee late last month first filed for an IPO as a placeholder.

The new filing has been long in coming. McAfee in the summer of 2019 was reportedly working to pursue an IPO that was expected to value the company at at least $8 billion.

McAfee, in its filing, said it has been a leading brand in cybersecurity for over 30 years. The company’s consumer-focused products protected over 600 million devices as of June 27.

McAfee’s enterprise business counts as customers 86 percent of the Fortune 100, 78 percent of the Fortune 500, and 61 percent of the Global 2000 companies. The company also claims that over 25 percent of its 250 largest enterprise customers and 45 percent of its largest 250 enterprise customer annualized contract value come from government business.

The indirect channel is a big part of McAfee’s business. The company in its S-1 said its top three channel partners include distributors Ingram Micro, which accounted for 15 percent of its net revenue; Tech Data, which accounted for 5 percent; and Arrow Electronics, which accounted for 3 percent during the 26-week period ended July 27.

McAfee in the S-1 said its net revenue was $2.64 billion in fiscal 2019, which generated a net loss of $236 million for the year which ended Sept. 28, 2019. However, business seems to have been improving, with net revenue of $1.40 billion and net income of $31 million reported for the 26-week period ending June 27.

For the quarter ended September 26, 2020, McAfee reported preliminary total net revenue of $731 million, up 2.1 percent over the $716 million the company reported for the same period 12 last year. This includes an expected increase in consumer net revenue partially offset by a decline in expected enterprise net revenue.

Preliminary operating income for the quarter was $135 million, up from last year’s $120 million. This includes estimated consumer operating income $100 million to $110 million, up from last year’s $71 million, and estimated enterprise operating income of $20 million to $25 million, up from last year’s $18 million loss.