Several factors might lead you to believe that Snyk, the developer security startup most recently valued at $7.4 billion, will go public soon.
The company has drafted an IPO prospectus for January 2024 and plans to file it in the coming months, The Information reported. The company also recently hit $300 million in ARR and is on track to become cash flow positive in 2025, CEO Peter McKay posted on LinkedIn earlier this week. Additionally, there is general optimism that the regulatory environment will become more friendly under President Trump.
However, McKay said in comments exclusive to TechCrunch that Snyk is in no rush to IPO.
“We have $435 million in the bank and are very close to breaking even. We won't be burning any cash in 2025, so we can choose when to go public. Hurry up. There’s no need,” he said.
McKay believes the regulatory situation will improve next year, but expects 2026 to be even more favorable.
“I think with the new administration, both IPOs and M&A will be a little bit easier. I feel like 2025 will be even better and 2026 will be even better,” he said. “Inwardly, I feel like I’m ready.” [to IPO]. Externally, I think we're keeping an eye on it. ”
Snyk, which alerts developers to potential problems when writing code, has raised more than $1 billion and spent about $173 million in 2023, the company said. McKay said he expects to cut losses in half in 2024 and reach breakeven next year.
But Snyk has no plans to scale back on its strategy of acquiring small and medium-sized development security companies like Helios this year and DeepCode in 2020 (both for undisclosed amounts). Snyk credits DeepCode as the backbone of its AI product, which recently alone exceeded $100 million in ARR, or one-third of Snyk's total revenue.
“I think the only place we spend money is in acquisitions,” McKay said.
There's a lot of hype about AI coding tools replacing developers, but this could someday become a problem for Snyk's business model. But on the other hand, McKay said Snyk has seen an increase in the number of developers using its platform over the past 12 months.
And the more programmers rely on AI to write code, the better it could be for companies. McKay estimates that AI-generated code contains 30-40% more vulnerabilities, especially when used by junior developers. This increases your chances of leveraging Snyk's security tools.
“It's definitely a tailwind,” he said.