Data analytics company Sumo Logic today announced the pricing of its initial public offering of 14.8 million shares of its common stock at $22 per share, which is higher than the anticipated range of $17 to $21 per share. Its debut marks the first cybersecurity company IPO this year.
Sumo Logic was founded in 2010 and has since raised more than $340 million in public funding, Crunchbase reports. Its cloud-native Continuous Intelligence Platform automates the collection and analysis of application, infrastructure, and security data. Security analysts, developers, and IT teams can use it to analyze log and event data, and monitor and troubleshoot applications, systems, and services. The tool scans 873 petabytes of data daily on average, Sumo Logic says.
The company has 2,130 customers as of July 31, 2020, as indicated in its SEC filing. Among them are major companies including Alaska Airlines, JetBlue, Land O'Lakes, Major League Baseball, Netflix, Salesforce, and Twilio. It has seen substantial financial growth: In fiscal years 2018, 2019, and 2020, its revenue was $67.8 million, $103.6 million, and $155.1 million, respectively.
That said, its losses have also increased. Sumo Logic reports net losses of $32.4 million, $47.8 million, and $92.1 million for the fiscal years 2018, 2019, and 2020, respectively.
Estimates indicate gross proceeds from today's IPO are expected to be $325.6 million, before deducting underwriting discounts, commissions, and other offering expenses. The offering is expected to close on Sept. 21, 2020, and is subject to customary closing conditions.
Sumo Logic plans to use these funds to further develop and grow its platform for machine data and analytics, says co-founder and CTO Christian Beedgen. He co-founded the company coming out of ArcSight, where he learned how to use unstructured SIEM data for security analytics.
"We sort of understood, being developers ourselves, how this can also apply to this emerging way of large-scale web applications," he explains, noting that "smaller and smaller teams can use all these emerging technologies to build bigger and better products."
However, things do become complicated. Now IT teams not only have to host applictions, they have to handle containers, which have to be orchestrated, and there are more layers of obstruction in the IT that runs business apps. A challenge for every company is the wide range of sources from which security data can come in, and this continues to be a problem today, Beegden says.
Over the years, Sumo Logic's focus has been on delivering the observability and security it believes a cloud SIEM tool should offer. As they sought to expand on the idea of machine data and analytics, "we found ourselves in a market that was suddenly larger than we ever even hoped for."
Today's IPO does not change Sumo Logic's strategy, he adds. It enables the company to invest more in building a better product and to do it faster.
"Both in terms of product development and go-to-market, those are pretty heavy-duty markets and areas," he says. "These are rich products and they need to change and evolve as the world of IT constantly changes and evolves. It feels like it's actually accelerating."
A major part of this growth is investing in talent -- specifically, people in product development who can help build more products and quickly. He points to Sumo Logic's 2019 acquisition of JASK Labs as an example of an important step toward building out its SIEM tool. JASK Labs built cloud-native autonomous security operations center (ASOC) software, which will be combined with Sumo Logic's SIEM and compliance tools to create a new security intelligence platform.
Security is an important angle for the company, Beedgen says, and it has been a priority for customers from the start.
"I think we're really well-positioned to execute against that in a much more focused fashion over the next few years," he notes. "This is a major part of what this company does, and continues to do, and will be known for. That's how I look at it."
Read the full release for more details.