Snyk CEO favors Wall Street IPO in 2026

Israeli code security company Snyk reported an expected annual recurring revenue (ARR) of $300 million, but prefers to wait with IPO plans until at least 2026, company CEO Peter McKay told TechCrunch. Earlier this year, there were reports that Snake had filed a confidential prospectus with the SEC regarding a Wall Street IPO in 2025.

“We have $435 million in the bank and we’re very close to breaking even,” MacKay told TechCrunch. “In 2025, we won’t burn any cash, so I can choose when I go public. There’s no rush.” He said that while market conditions are expected to improve in 2025, he favors 2026 in terms of the regulatory and economic environment.

ARR measures how much money a startup is expected to earn in a year from regular customers, and is different from how non-tech businesses, such as stores or restaurants, measure their revenue. While in regular companies every purchase is new and uncertain, in startups that sell software on a subscription basis, customers pay regularly every month or year. For example, if a startup has 100 customers who pay NIS 100 per month each, the monthly recurring revenue is NIS 10,000, so the ARR would be NIS 120,000. Although this metric helps investors see a company’s revenue potential, it has some big drawbacks: it doesn’t show the company’s expenses, it assumes that all customers will stay throughout the year (which doesn’t always happen), and it doesn’t reflect how much it costs the company to acquire. On these clients in the first place.

Snyk is a digital gatekeeper

Snyk was founded in 2015 by three graduates of the IDF’s 8200th Intelligence Unit – Guy Podjarny, Assaf Hefetz, and Danny Grander. The company has developed a smart software tool that helps developers write more secure code. The tool acts like a digital “gatekeeper” – it automatically checks your code, identifies security issues and software licensing issues, and suggests solutions to fix them. The system is constantly improving – it learns from the experiences of developers around the world and updates itself when new security issues are discovered. The main advantage of Snyk is that the system integrates seamlessly with developers’ workflow, so they can check and fix security issues without stopping their ongoing work.

The company has witnessed significant growth in recent years. From a valuation of $1 billion in early 2020 to a peak of $8.5 billion in 2021. However, in 2022, The Information published a critical analysis that included a list of cybersecurity companies that it claimed were too highly valued compared to their revenues. . Among the five listed companies, there are three Israeli companies, including Snake. The article focused on the companies’ high revenue multiples, with Snyk valued at 85 times its annual revenue. In comparison, leading publicly traded cybersecurity companies, such as SentinelOne and CrowdStrike, traded at much lower multiples of just 30 to 34 times their revenues, in that period. In 2022, amid a slowdown in the global technology market, the company was forced to implement two large rounds of layoffs: the first in June, which included 30 employees, and the second in October, when 200 employees were laid off – 14%. Of the company’s workforce.

Artificial Intelligence: The main source of growth

Snake currently sees AI as a major development opportunity and an important source of growth. According to McKay, there’s a clear reason for this: code written by AI has 30% to 40% more security issues, especially when used by new programmers, which increases the need for security systems like those offered by Snyk. He told TechCrunch that this strategy has already proven itself, as about a third of the company’s revenues today come from solutions related to artificial intelligence. During the past two years, Sneek Company has worked to expand its capabilities by acquiring other companies, including two Israeli companies. In 2023, Snyk acquired Enzo Security and Helios, which specializes in developing tools for developers and securing applications in the cloud.

Published by Globes, Israel Business News – en.globes.co.il – on December 9, 2024

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