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Splunk, which provides operational intelligence software that reports and analyzes up-to-the-minute machine data, today announced a definitive agreement to acquire SignalFx, a cloud monitoring platform for infrastructure, microservices, and containerized apps. Under the terms of the arrangement, Splunk will plunk down approximately $1.05 billion for SignalFx, 60% of which will be in cash and the remainder in common stock.
Both companies expect the deal to close in the second half of fiscal year 2020, subject to regulatory reviews.
Splunk says that SignalFx’s suite will enable its IT and developer customers to better manage and observe data in the cloud, on-premises, or in hybrid environments in real time at scale, while helping to cut costs and boost revenue. How? By leveraging the latter’s platform to split metric data points into two streams — one for human-readable metadata and the other for time-series values — and route them to a Python-like analytics framework configurable via dashboards and APIs.
Splunk points out that according to Gartner, more than 75% of global organizations are expected to be running containerized applications in production by 2022, up from fewer than 30% today. And it cites an IDC report that forecasts app performance monitoring software-as-a-service (SaaS) solutions will grow at triple the rate of on-premises solutions over the next five years.
“Data fuels the modern business, and the acquisition of SignalFx squarely puts Splunk in position as a leader in … observability at massive scale,” said Splunk president and CEO Doug Merritt. “SignalFx will support our continued commitment to giving customers one platform that can monitor the entire enterprise application lifecycle. We are also incredibly impressed by the SignalFx team and leadership, whose expertise and professionalism are a strong addition to the Splunk family.”
SignalFx founder and CEO Karthik Rau added: “By joining Splunk, we will create a powerful monitoring platform — one ready to support CIOs whether they have fully embraced cloud or have existing applications in the data center. As the world continues to move towards complex, cloud-first architectures, Splunk and SignalFx is the new approach needed to monitor and observe cloud-native infrastructure and applications in real time, whether via logs, metrics or tracing. The SignalFx team is thrilled to join Splunk to help CIOs capitalize upon the modern application portfolio.”
SignalFx is one of publicly traded Splunk’s largest purchases to date after its acquisition of security automation and orchestration platform Phantom for $350 million in February 2018, and following its purchase of DevOps incident management startup VictorOps for $120 million in June 2018. As for SignalFx, which emerged from stealth in 2015, the news comes months after it secured $75 million in series E funding from a raft of investors, bringing its total raised to $178.5 million.
Splunk, which was founded in 2003 by Michael Baum, Rob Das, and Erik Swan, had over 18,000 customers worldwide as of early 2016 and notched revenue of $1.27 billion in January 2018. It’s based in San Francisco, with regional operations across Europe, the Middle East, Africa, Asia, and Australia.
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