Splunk To Pay $1B For SaaS App Monitoring Firm SignalFx

Splunk, an IT operations management and information security company, announced today it has clinched a deal to buy cloud software application monitoring company SignalFx for $1.05 billion.

San Francisco-based Splunk (NASDAQ: SPLK) says the acquisition will enable it to give businesses a real-time, panoramic view of the performance of their cloud-based applications, whether their data is crunched by on-premise office computers or in outside cloud-based servers. SignalFx’s tools will augment Splunk’s services, including IT operations management (ITOM) and artificial intelligence for IT operations (AIOps), the larger company says.

SignalFx was co-founded in 2013 by CEO Karthik Rau (pictured) and then-chief technology officer Phillip Liu, who is now a member of the company’s board of directors. The startup emerged from stealth mode in 2015 with new technology to help developers of cloud-based apps monitor the performance of those apps over the broad universe of customers’ computers. The company used an analysis of aggregate data to distinguish actual app failures from those due to clients’ computer breakdowns. It has since branched out into other services such as infrastructure monitoring.

San Mateo, CA-based SignalFx just raised $75 million in a Series E funding round in June, bringing its fundraising total to $179 million, as VentureBeat reported. The company’s early investors include Andreessen Horowitz and Charles River Ventures. Tiger Global Management led the most recent round.

Both Splunk and SignalFx are competing in a big market for enterprise software that helps businesses to make the most of cloud-based applications sold on a subscription basis (SaaS), and to avoid problems such as security breaches. A report by Data Bridge Market Research predicts that the global market for SignalFx’s specialty, application performance monitoring, will rise to more than $12 billion by 2026, up from about $5 billion in 2018, as cited by VentureBeat.

Under the terms of the acquisition deal, Splunk will pay about 60 percent of the purchase price in cash and 40 percent in Splunk common stock.

Splunk shares closed up 1.37 percent at $128.46 before the SignalFx deal was announced. Splunk also released its second quarter earnings report after the close of trading Wednesday. The company posted revenue of $517 million for the fiscal second quarter ending on July 31, a rise of 33 percent year-over-year. Its GAAP operating loss for the quarter was $87 million.

Photo courtesy of SignalFx

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy

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