AppDynamics

AppDynamics was founded in April 2008 by Jyoti Bansal and Bhaskar Sunkara, two engineers who had previously worked together at Wily Technology, an early application performance management (APM) pioneer acquired by CA, Inc. in 2006. Bansal (an IIT Delhi computer science graduate who moved to Silicon Valley around 2000) served as CEO, while Sunkara served first as Director of Engineering and later as CTO. Drawing on their Wily experience, the founders built a next-generation, agent-based APM platform designed for the complexity of modern distributed, virtualized and (later) cloud-native and microservices architectures — automatically mapping application topology, providing code-level diagnostics, and correlating technical performance with business transactions and revenue impact in real time.

The company grew quickly, becoming one of the leading independent APM vendors alongside New Relic and (later) Dynatrace and Datadog, and expanded into business performance monitoring, end-user monitoring, infrastructure monitoring and DevOps analytics. It raised venture capital across roughly nine rounds from investors including Greylock Partners (an early/seed backer, with partner Asheem Chandna on the board), Lightspeed Venture Partners, Institutional Venture Partners, General Atlantic, Adage Capital Partners and Altimeter Capital, among others — accumulating over $300 million in preferred-stock financing (AppDynamics' S-1 disclosed $310.1 million of redeemable convertible preferred stock outstanding as of October 31, 2016) ahead of its IPO. In 2013, CA Technologies (which by then owned AppDynamics' old alma mater Wily) sued AppDynamics for patent infringement; the two-year dispute was settled in 2015 with a modest fixed payment from AppDynamics. David Wadhwani, a former Adobe executive, joined as President and CEO in September 2015, with Bansal transitioning to Founder and Chairman.

AppDynamics filed its S-1 registration statement with the SEC on December 28, 2016, seeking to raise roughly $100 million+ on the Nasdaq under a proposed price range of $10.00–$12.00 per share (implying a market capitalization of roughly $1.4 billion at the midpoint) — a valuation well below the peak private marks some late-stage software 'unicorns' had commanded. The roadshow proceeded through mid-January 2017, with pricing expected the evening of January 24, 2017, ahead of a planned January 25 Nasdaq debut. In one of the most dramatic moments in recent tech IPO history, AppDynamics instead announced on the night of January 24, 2017 — literally hours before its shares were set to price — that it was withdrawing its IPO and had agreed to be acquired by Cisco Systems for approximately $3.7 billion in cash and assumed equity awards, a price representing a roughly 2.5x-plus premium over the company's expected IPO valuation. The deal, one of Cisco's largest acquisitions ever at the time, was widely covered as a case study in 'IPO jilting' — a company going public one moment, and being swallowed by a strategic acquirer offering a knockout premium the next — and fueled broader industry debate about whether such outcomes reflected the strength of the M&A market for enterprise software versus the perceived risk/discount of the IPO market.

Business model

B2B enterprise software sold via annual/multi-year subscription and term-license contracts to IT operations, DevOps, and application-development teams, distributed through direct enterprise sales plus channel/reseller partners.

Subscription and term-license software revenue (SaaS and self-managed deployment options) plus support/maintenance; per its December 2016 S-1, AppDynamics reported revenue of $23.6M (FY2014), $81.9M (FY2015, +247% YoY) and $150.6M (FY2016, +84% YoY), with $158.4M for the nine months ended October 31, 2016, alongside substantial net losses ($68.3M, $94.2M and $134.1M respectively) typical of a high-growth pre-IPO SaaS company.