IPO Alert: Astera Labs is all set to go public. Here’s what to expect

The growing appetite among AI companies to go public is the latest buzz in the IPO market. Recently, AI-focused semiconductor company Astera Labs, Inc. joined the rush for stock market entry, aiming to raise up to $534 million by selling a total of 17.8 million shares. In a regulatory filing, the management revealed that the offering includes the sale of around three million shares by existing shareholders. The IPO price is between $27 and $30.

The Offering

The Santa Clara, California-based company is targeting a valuation of up to $4.5 billion in the offering. After listing, shares of Astera will trade on the Nasdaq stock market under the symbol ALAB. The timing of the IPO is significant considering the growing demand for high-end chips, bolstered by the rapid adoption of generative AI.

Founded in 2017, Astera is engaged in the development of semiconductor-based connectivity solutions for cloud and AI infrastructure, armed with its Intelligent Connectivity Platform. It is estimated that the platform addresses a fast-growing total addressable market of around $17.2 billion. The company has a presence in five countries and employs more than 265 people. Currently, it serves almost all major hyper-scalers and AI platform providers.

Proceeds

Astera plans to use proceeds from the offering primarily for working capital and other general corporate purposes. A portion of the proceeds could be used for acquiring or investing in complementary businesses, products, or services, and also for satisfying the anticipated tax withholding and remittance obligations of approximately $15.8 million related to the net settlement of the company’s outstanding restricted stock units, in connection with the offering.

As a listed company, Astera expects to better position itself to leverage investors’ growing interest in AI-related businesses. In the last four years, the company has rolled out three revenue-generating product families — Aries PCIe/CXL Smart DSP Retimers, Taurus Ethernet Smart Cable Modules, and Leo CXL Memory Connectivity Controllers.

Key Metrics

In the fiscal year ending December 2023, Astera reported revenues of $115.8 million, which is up 45% from the revenue it generated in the previous year. The company incurred a loss of $26.26 million during the year, compared to a loss of $58.36 million in the year ended December 2022. On a per-share basis, net loss attributable to shareholders narrowed sharply to $0.71 from $1.71 per share in the prior year. At $109.3 million, total operating expenses were down 8% annually.