Technology

Sumo Logic IPO Sees Strong Premium for Growth of Continuous Intelligence

Business intelligence was one of the key buzzwords in years past. With the explosive growth of the cloud, machine learning, automation and artificial intelligence, is it a shock that there is already a new term? A fresh initial public offering (IPO) from Sumo Logic Inc. (NASDAQ: SUMO) wants the next big term to be “continuous intelligence,” and investors just paid a premium for its opening value in Thursday’s IPO.

Sumo Logic calls itself the pioneer of continuous intelligence. The company describes this new software category as enabling organizations of all sizes “to address the challenges and opportunities presented by digital transformation, modern applications, and cloud computing.”

Sumo Logic sold 14 million shares at $22 apiece, and all the shares were sold by the company itself. Its indicated price range had been $17 to $21 per share ahead of the formal pricing. Prior to assuming any of the 2.22 million shares in the overallotment option and other fees and commissions, the gross proceeds from offering were $325.6 million.

Morgan Stanley and JPMorgan were the lead book-running managers for Thursday’s IPO. RBC Capital Markets and Jefferies were listed as book-running managers, and the co-managers were William Blair, Cowen, Piper Sandler and BTIG.

The company’s Continuous Intelligence Platform automates the collection, ingestion, and analysis of data and information across multiple platforms for actionable insight within seconds. This pertains to applications, infrastructure, security and Internet of Things data.

Some of Sumo Logic’s more highly visible customers include 23andMe, Alaska Airlines, JetBlue, LendingTree, Major League Baseball, Netflix, PagerDuty, Petco, Pitney Bowes, Salesforce.com, Ulta Beauty and many more. The IPO filing even showed how fast Sumo is adding customers: 1,626 as of January 31, 2018, up to 1,900 as of January 31, 2019, then to 2,137 as of January 31, 2020, and as of July 31, 2020, it counted 2,130 customers.

Sumo also noted that it is growing its top-paying customer base rapidly as well. As of July 31, 2020, it had 330 customers listed as above $100,000 in annual recurring revenues. Of the high volume customers, it counted 29 as of July 31, 2020, that were now above $1 million in annual recurring revenues.

As with most of the emerging IT companies coming public with software and cloud offerings, Sumo Logic is not yet profitable. It is still rapidly growing revenues: fiscal 2018 ($67.8 million), 2019 ($103.6 million) and 2020 ($155.1 million). Revenue for the six months ended July 31, 2019, was $70.2 million, for and July 31, 2020, it was $96.6 million.

With an opening price of $26.64, Sumo Logic was valued at roughly $2.6 billion. Its shares were last seen trading at $25.30.