Cloud Stocks: Sumo Logic’s IPO Is Going Strong
I’m publishing this series to discuss a topic that I follow closely — cloud stocks, trends, strategy, acquisitions, and more. I like fundamentals-focused business building, and outline the principles of fundamentals-focused business building in my free Bootstrapping course.
According to an Allied Market Research report, the global big data and business analytics market size is estimated to grow at 11% CAGR to $420.98 billion by 2027. Conducting analytics on structured data is relatively simpler when compared with conducting analytics on unstructured data. Redwood City-based Sumo Logic (NASDAQ: SUMO) was set up in 2010 to provide organizations with the ability to harvest structured and unstructured data from application infrastructure and mobile sources to become one of the most powerful machine data analytics services in the world. The company went public late last year, and despite the market turmoil, appears to be doing well.
Sumo Logic’s Financials
Recently, Sumo Logic announced its third-quarter results. The first announcement since it listed. Revenues for the quarter grew 28% to $51.9 million and it ended the quarter with a loss of $0.06 per share.
For the current quarter, Sumo Logic expects revenue of $51.8-$52.3 million and a loss per share of $0.13-$0.12. It expects revenues between $200.3-$200.8 million with a loss per share between $0.79-$0.78 for the year. The market was looking for revenues of $52.14 million for the quarter with a loss of $0.12 per share and revenues of $199.78 million for the year with a loss of $0.79 per share.
Sumo Logic’s Offerings
I had met with Sumo Logic’s former CEO Vance Loiselle a few years ago. He had talked in detail about the founding principles of the organization. Sumo Logic uses data from multiple devices to offer a purpose-built, cloud-native service that analyzes over 200 petabytes of data and 20 million searches and delivers tens of millions of insights. During the quarter, it continued to add several new services to expand its prowess in the market.
Sumo Logic has built strong ties with AWS. During the quarter, it announced the general availability of both AWS Observability Solution and the Sumo Logic Software Development Optimization solution (SDO). AWS Observability Solution gathers, consolidates, and analyzes telemetry data from popular AWS services, while SDO integrates and analyzes data from multiple DevOps tools, providing developers present-time insights into software development pipelines. It also announced its new integration with AWS Network Firewall, a managed service that simplifies the act of deploying essential network protections for all Amazon VPCs on AWS.
Additionally, it announced new distributed tracing capabilities to its previously existing Microservices Observability Solution. The new capabilities integrate application and infrastructure logs, metrics, traces, and metadata and enable sophisticated analytics on both structured and unstructured data. Other new releases include SecOps Team Reporting which comes with pre-built dashboards, enabling SecOps teams to get live views on data ingestion, usage, and SecOPs metrics. It announced several detection improvements such as new chain, threshold, and aggregation rule types to further improve automatic threat detection capabilities, thus helping cloud SIEM customers with specific use cases.
Over the past decade, Sumo Logic has built a real-time SaaS platform to operate and secure applications at cloud scale. It offers more than 150 applications and integrations that make it easy for organizations to aggregate data across their stack and down their pipeline. Apps help users gain insights from their data source by providing example searches and dashboards for common use cases. The range of apps and integrations cover use cases ranging from development to security, operations, and even productivity enhancement. Sumo Logic does not, as yet, have an ISV-focused PaaS strategy. I believe in the importance of a PaaS strategy for SaaS players. Read my recent article Cloud Stocks: Which SaaS Players Will Win in PaaS.
Sumo Logic’s stock is trading at trading at $31.02 with a market cap of $3.14 billion. It touched a high of $35.70 in December and a low of $16.71 in October. It went public in September last year when it raised $325.6 million at a valuation of $2.2 billion by selling stock at $22 apiece. Prior to the listing, it had raised $340 million in 6 funding rounds from investors including Franklin Templeton Investments, Battery Ventures, Tiger Global Management, Stutter Hill Ventures, Accel, Sequoia Capital, DFJ Growth, IVP, Sapphire Ventures, and Greylock.
Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.
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