Sourcefire Glows on Debut

First security IPO in months opens with higher than expected share price

In its first day of trading as a public company, Sourcefire shares opened at $15 -- higher than initial estimates -- and peaking at $16.45 before they closed at $15.49. (See Sourcefire Fires Up for IPO and Sourcefire Shapes Up for IPO.)

And for its trouble, the open-source security vendor raised $89.4 million today, well above its estimate of $80.8 million.

Trading under the symbol "FIRE," the company originally priced its 5,770,000 shares between $12 and $14, although these were over-subscribed in the run-up to today's IPO.

Recent tech sector IPOs have seen shares skyrocket during their first day of trading. What makes Sourcefire's IPO significant is the fact that very few security startups make public offerings at the moment. Over the last few years M&A has become a much more likely exit strategy in the security space. (See Cisco Buys IronPort , Radware Unveils Security Strategy, and Symantec Buys Altiris for $830M.)

Sourcefire is also unique among recent IPOs in that its flagship Snort IDS technology is open source. To date, there have been 3 million downloads of Snort, and, in a recent SEC filing, the vendor cited more than 100,000 registered users of the technology.

Over the coming months, Sourcefire is looking to exploit this installed base to sell its 3D family of security products, which includes its Defense Center hardware for analyzing network data and enforcing policies.

An S-1 document filed with the SEC last week reveals that the vendor is also planning to target its Intrusion Sensor product at branch offices and remote locations.

The IPO will also help fund international expansion. Last year, only 19 percent of Sourcefire's revenue came from international customers, although the vendor is now looking to double its workforce in Japan and Europe, according to the SEC filing.

Deals looming on the horizon are also likely to aid the company. Sourcefire recently signed an OEM deal with Nokia for its security software and technology, and is now looking to expand its OEM alliances and distribution deals, according to the S-1: "We believe that we will generate an increasing amount of revenue from government suppliers such as Lockheed Martin, Northrop Grumman, and Immix Technology."

— James Rogers, Senior Editor Byte and Switch

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