Blocking ransomware is big business:

Author

Alex Wilhelm
November 25, 2024 • Estimated Reading Time: 6 minutes

Top News

  • Klarna’s IPO approaches: Klarna, the Swedish buy now—pay later giant, dropped its Q3 results this week. Recall that Klarna has filed privately to go public, meaning that it is one of the first IPOs we’re expecting in the new year. So, how is it doing? Revenue for the nine months ending September of this year grew 23%, on 16% GMV growth (gross sales). Most importantly, Klarna’s income before taxes was effectively flat. Welcome to (near) profitability, Klarna!

  • Social media’s scramble: If you are a big poster, you have lots of options today. X remains a top social destination, but Meta’s not done investing in Threads, and Bluesky is blowing up. Bluesky is doing so well that Threads is aping some of its features — just as the EU is crying foul regarding Bluesky’s lack of data disclosure. Meanwhile, X confirmed that it is deprioritizing posts with links.

  • Blocking ransomware is big business: The old riff that it’s better to sell aspirin than vitamins if you are a startup probably needs an update. Forget aspirin, what about armor? That appears to be Halcyon’s wager, with its anti-ransomware service. The company’s market is so big, and the company is presumably growing so fast, that it just closed $100 million at a billion-dollar valuation.

TWiST500

Up top I added Halcyon to the TWiST500. Not simply because it raised $100 million for a non-foundation-model business in 2024 but because its market is so big. Here’s my logic:

  • Ransomware is a menace that many companies will pay to be protected from

  • And as crypto is going mainstream, the risk of ransomware attacks is likely to go up; the more crypto is liquid the more incentive hackers have to lock down companies to extort them for digital wealth.

  • So, the TAM for Halcyon was going up, and will now go up faster.

Simple enough. Let’s see how that bears out.

To close, a short note on Klarna, a long-time TWiST500 company. I am curious what it will be worth when it lists. Not only because I am a financial nerd, but also because it will determine how well early backers of the fintech giant do from their investment. Which is, recall, the overall ‘theme’ of the list — which companies are going to have the largest outcomes?

The obvious comp for Klarna is Affirm. And it has good news! The price/sales ratio for Affirm was as low as 3.2x in August of this year. Today, Affirm is worth 8.6x its trailing revenues. That’s much better. Affirm is growing faster than Klarna, but appears less profitable on an all-inclusive basis.

If we take Klarna’s revenue from the first three quarters of this year (20.3 billion Swedish Krona), and annualize it, we’re looking at 27.1 billion Krona. In USD terms, that’s about $2.5 billion. Which, if we give it 80% of Affirm’s price/sales ratio, it works out to a market cap estimate of $17 billion. A record for the company? No. But that figure implies that TWiST500 member Klarna is staring down a decacorn exit in 2025. — Alex

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