A Gartner report estimates the IT operations market in 2016 to be a $23 billion industry. It also pegs the business intelligence and analytics market to be worth $17.1 billion. Together the two industries are estimated to grow 8% annually to $53.8 billion in 2020. Within the industry, the application performance monitoring market is seen as a $12 billion opportunity by Billion Dollar Unicorn player AppDynamics. It was looking to go public early this year at an estimated valuation of $1.9 billion. Then, in a sudden twist, it was acquired by Cisco for roughly twice the valuation at $3.7 billion.

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AppDynamics Financials

San Francisco-based AppDynamics was founded in 2008 by Computer Associates alumnus Jyoti Bansal. He set up AppDynamics with the intention of creating a solution that could deliver application performance monitoring tools for the growing distributed architectures. Essentially, he wanted to be able to “ was looking to go public” in the world.

AppDynamics’ platform provides organizations with a unified, real-time view into software application and IT infrastructure performance. It deploys self-configuring software agents into the enterprise’s software application and IT infrastructure environments. The deployment can happen on cloud, on-premise, or hybrid environments. These agents then map business transactions at the code level of the underlying software applications and utilize machine learning to create dynamic baselines by determining the normal behavior of individual software applications and business transactions. The process enables customers to detect deviations from these norms.

AppDynamics’ platform has been well received by the market. Its revenues for fiscal years ended January 31, 2014, 2015, and 2016 were $23.6 million, $81.9 million (up 247%), and $150.6 million (up 84%), respectively. However, AppDynamics was still not profitable. It incurred net losses of $68.3 million, $94.2 million, and $134.1 million in the fiscal years ended January 2014, 2015, and 2016, respectively. For the nine months ended October 31, revenues grew 54% to $158.4 million and losses increased marginally to $95.1 million from $92.4 million a year ago.