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Splunk, a fast-growing business intelligence company backed by Ignition Partners and others, is considering an initial public offering that could value it for as much as $1 billion, sources tell Bloomberg News.

San Francisco-based Splunk established a branch office in Seattle’s South Lake Union neighborhood last year under the direction of former Microsoft Technical Fellow Brad Lovering. The company also has reeled in a number of Seattle area customers, including Expedia, InfoSpace and Zulily.

Daily deal site Zulily, for example, uses the Splunk service to analyze site traffic and better predict site outages (A significant problem given the company’s rapid growth over the past year). It also uses the service to measure real time site traffic, answering questions such as: “How many customers are using Facebook Share button” or “How many customers are using search?” (More on the use cases of Zulily and others in this blog post from Splunk).

It is a bit of a rocky time for IPOs, with just three venture-backed companies going public during the third quarter. Even NVCA president Mark Heesen noted that the IPO market “screeched to a halt” in the second half of the third quarter.

Founded in 2004, Splunk recorded revenue of $67 million last year, according to Bloomberg. It has more than 2,900 customers.

Bellevue-based Ignition Partners led a $25 million round in Splunk in 2007, with the firm’s John Connors joining the board. Other backers of the company include August Capital, JK&B Capital and Sevin Rosen Funds, with total funding now standing at about $40 million.

 

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