Sumo Logic Files for IPO
Sumo Logic, the Redwood City, California-based log analytics firm that has made “Continuous Intelligence” its tagline and which competes against the likes of Splunk and Elastic, has filed to go public.
Sumo Logic develops a cloud analytics service that allows companies to analyze their machine data. “We help our customers: monitor and troubleshoot their applications and their cloud and on-premise infrastructure; manage audit and compliance requirements; rapidly detect and resolve modern security threats; and extract critical key performance indicators, or KPIs, from various types of machine data to gain visibility into customer behavior, engagement, and actions,” the company stated in its S-1.
When Datanami visited with Sumo Logic at its Illuminate 2019 conference last September, the company’s CEO and president, Ramin Sayar, made a compelling case for having an integrated approach to tackling emerging data volumes.
“The continuous data tsunami is impacting the way every team, every individual needs to be able to communicate and more importantly collaborate to make real time intelligence decisions,” Sayer said during his keynote a year ago. “Every team is dealing with the lack of visibility because they have siloed tools, and siloed tools actually prevent intelligent decisions.”
According to the IDC, there will 140 ZB of data generated in 2024, and one-quarter of that will be real-time. “In order to obtain real-time insights, organizations need a solution that can collect data from different sources in different formats, continuously ingest, normalize, and analyze such data, and elastically scale,” the company says in its S-1. “Continuous data requires continuous intelligence.”
According to the company’s S-1 filing, it is scanning nearly 900 PB of data per day, including nearly 19 billion events per second, on behalf of its clients. In July 2020 alone, the company claims to have scanned 27.1 exabytes of data and 49.9 quadrillion events.
The company has grown its revenues quickly in recent years. It recorded about $68 million in revenue during the fiscal year ended January 31, 2018, which grew to about $155 million in revenue for the fiscal year ended January 31, 2020. As the company has grown market share, it’s recorded net losses; it recorded a $32 million loss in 2018 and a $92 million loss for the fiscal year ended January 2020.
Sumo Logic has about 2,100 customers, according to its S-1. Prominent customers include: 23andMe, Alaska Airlines, Land O’Lakes, Major League Baseball, Netflix, PagerDuty, Petco, and LendingTree (click here for a Datanami case study on the Sumo Logic implementation for LendingTree).
As is the case with any S-1, Sumo Logic listed some of the headwinds that it faces. The COVID-19 pandemic, in particular, has slowed renewals, the company says. However, it has also accelerated companies’ adoption of digital transformations, which could bolster demand for its service.
The company’s latest round of financing occurred in May 2019, when it raised $110 million at a valuation in excess of $1 billion. The company’s primary competitors include Elastic, which raised $250 million in an October 2018 IPO, and today has a market capitalization of $8.8 billion; and Splunk, which went public in 2012 and today has a market capitalization of $32 billion.
Sumo Logic wants a piece of that market (ostensibly the “continuous intelligence” market), which CEO Sayer last year estimated was worth $50 billion to $60 billion per year.