Splunk acquires monitoring and analytics firm SignalFx for $1.05 billion

Splunk claims SignalFX acquisition will enable it to offer application performance management from cloud-based apps to on-premise applications

Splunk is to acquire cloud monitoring firm SignalFx in a cash and stock deal valued at $1.05 billion.

SignalFX specialises in real-time monitoring and metrics for cloud infrastructure, microservices and applications. Splunk claims that the acquisition will enable it to offer application performance management, from cloud-native apps to on-premises applications, including in-house developed apps.

"The acquisition of SignalFx squarely puts Splunk in position as a leader in monitoring and observability at massive scale," Splunk's CEO Doug Merritt claimed in a statement.

"We are also incredibly impressed by the SignalFx team and leadership, whose expertise and professionalism are a strong addition to the Splunk family."

About 60 per cent of the deal will be in cash and the remaining in Splunk common stock. Both firms expect the deal to close in the second half of fiscal 2020 -before the end of January 2020.

Privately held SignalFx was founded by Karthik Rau and Phillip Liu in 2013. It specialises in providing real-time cloud monitoring solutions, predictive analytics and many other solutions.

The products offered by the company enable users to analyse, visualise, automate and alert on metrics from applications, infrastructure, containers, microservices, and functions. The SignalFx platform can alert users to anomalies in their data within two to five seconds.

To date, the company has received approximately $178.5 million in venture funding from investors that include Tiger Global Management, General Catalyst, CRV and Andreessen Horowitz.

Splunk offers software solutions to monitor and analyse machine data in real-time for IT and security operations, and is listed on the Nasdaq stock exchange.

According to Splunk, the two companies have a significant overlap in terms of customers. The deal will enable Splunk to work at a more direct and detailed level with SignalFx's technology, enabling it to challenge key players such as Cisco AppDynamics and Dynatrace in the application performance monitoring market.

The acquisition will also help Splunk become a much stronger player in the cloud space as it expands its support for cloud-native apps and modern infrastructures.

With its $1.05 billion price tag, SignalFx is Splunk's biggest-ever acquisition. Last June, the company acquired DevOps incident management firm VictorOps for $120 million. Prior to that, it purchased security automation platform Phantom for $350 million.

In 2016, Splunk said that it was adding machine learning capabilities to its four main software packages and services, and rolling out a new user interface intended to take Splunk to less technical end users.

On Wednesday, Splunk reported a net loss of $100.87 million in the second quarter of the fiscal year on revenues up by 33 per cent to $517 million. Last year, the company had reported a loss of $103.50 million in the same quarter.