Cybersecurity startup Aura is profitable and on course for $300 million in annual sales, according to backer and Hollywood legend Jeffrey Katzenberg, but an IPO is not planned in the near term given market volatility.
“We’re $300 million in sales and we’re growing like a rocket. It’s a profitable business with hundreds of millions of dollars in the bank,” Katzenberg said in a discussion at MarketWatch’s Best New Ideas in Money Festival on Wednesday.
Katzenberg backed Aura through his venture capital firm WndrCo, and it has raised more than $650 million, most recently at a post-money valuation of $2.5 billion. The company reported annual sales of $220 million when it announced its latest funding round late last year, but Katzenberg and Chief Executive Hari Ravichandran updated that number at Wednesday’s event.
In a backstage chat, Aura founder Ravichandran clarified that the company is targeting an annualized revenue rate of $300 million by the end of this year and that it is profitable on a free cash flow basis. He said he expects to go public in late 2024 to early 2025, depending on market conditions.
Hari Ravichandran, Founder and Chief Executive of Aura, to speak at the MarketWatch Best New Ideas in Money Festival in New York on Wednesday, September 21, 2022.
market observation
In their onstage discussion, Katzenberg — known for being a co-founder of DreamWorks and Quibi — said that Ravichandran has a mantra for Aura: “I must run the company by value, not valuation.”
“There’s been so much exuberance over the past two years that people are starting to chase the wrong metrics,” Ravichandran said.
Ravichandran said behind the scenes that the company is more interested in acquiring other companies than going public at the moment as it wants to build on the core consumer product the company launched in June 2021 Palo Alto Networks Inc. PANW, -2.23%, to offer a well-rounded security offering for businesses and said it could see Aura doing something similar for consumer security.
As an example, Ravichandran pointed to the company’s acquisition of Circle late last year. However, he warned that given the current market slump, the market for private security companies could take some time to adjust asking prices, suggesting that it could take six to nine months for asking prices to fall to reasonable rates.
Cybersecurity companies have struggled in the public markets, with the ETFMG Prime Cyber Security ETF HACK down -0.87% -26.2% year to date. However, Palo Alto Networks stock has held its ground thanks to its takeover frenzy, falling just 7.8% in 2022, while the S&P 500 index SPX is down 19.1% at -1.71%.
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