Snyk’s Path Towards Profitability and Public Trading
Developer security startup Snyk, recently valued at $7.4 billion, has hinted at going public. The company began drafting an IPO prospectus in January 2024 and expects to file within months. Despite this, and reaching a $300 million ARR landmark, Snyk is not in a rush to go public. This, according to CEO Peter McKay, is due to the company’s strong financial position and expectations of a more favorable regulatory environment in the future.
Financial Performance and Projections
Snyk has managed to secure a robust financial position, with $435 million in the bank and a trajectory towards breaking even. CEO Peter McKay stated on LinkedIn, >”We’ve got $435 million in the bank and are very close to break-even. In 2025, we won’t burn any cash, so I can pick the time when I go public. I don’t need to rush.”
Snyk is also on track to be cash-flow positive in 2025. The company has raised over $1 billion and disclosed that it burned about $173 million in 2023. McKay expects to cut losses by half in 2024 and achieve break-even in 2025. The company’s strong cash position gives it the flexibility to choose the right time to go public.
Regulatory Environment and Timing
The company is also keeping an eye on the regulatory environment, expecting conditions to improve in the next few years. McKay said, >”I think the new administration will make things a little bit easier on both IPOs and M&A. We feel 2025 will be better and 2026 will be even better.”
While Snyk feels internally ready to go public, it is still watching the external environment. The company is not eager to rush the process, considering the evolving regulatory landscape and its own financial health.
Acquisitions and Revenue Streams
Snyk has been following a strategy of acquiring smaller firms in the developer security space, like Helios and DeepCode. These acquisitions have been instrumental in developing its AI product, which recently surpassed $100 million in ARR — a third of Snyk’s total revenue. McKay said, >”I think the only place we will burn money will be on acquisitions.”
This approach signifies the company’s commitment to investing in AI technology and promising ventures in the developer security space. The success of its AI product also shows the potential of such acquisitions to contribute significantly to the company’s revenue.
AI Coding Tools and Developer Security
There’s a growing trend of AI coding tools replacing developers, which could pose a potential threat to Snyk’s business model. However, McKay argues that the use of these tools can actually benefit the company. He estimates that AI-generated code includes 30% to 40% more vulnerabilities, especially when used by junior developers. These vulnerabilities present more opportunities for Snyk’s security tools.
Despite the rise of AI coding tools, Snyk saw an increase in the number of developers using its platform over the past year. This suggests that the need for developer security remains high, and Snyk’s tools continue to be relevant and valuable in the market.
