Sumo Logic’s stock soars as private equity firms target it for acquisition

The publicly traded, cloud-based utility monitoring software program supplier Sumo Logic Inc. has emerged as a possible acquisition goal, attracting the curiosity of personal fairness corporations Thoma Bravo, Vista Fairness Companions and Francisco Companions, in accordance with a report by The Data at the moment.

The Information cites an individual aware of the matter as saying that each one three corporations have approached Sumo Logic over the potential for a sale. It wasn’t made clear if Sumo Logic Chief Govt Ramin Sayar (pictured) is receptive to the thought.

The report despatched Sumo Logic’s replenish greater than 30% Monday, reaching an intraday excessive of $10.25, with the rally triggering a halt in buying and selling at one level through the day.

Sumo Logic is a supplier of cloud-based information analytics software program that’s utilized by tons of of enterprises to acquire insights into the state of their info know-how infrastructure. Its software program encompasses areas corresponding to log administration, Amazon Net Companies monitoring, Microsoft Azure and Google Cloud administration, Kubernetes administration, plus microservices and cloud safety monitoring. As well as, the platform lends itself to business-oriented use instances corresponding to buyer analytics and also can support in cyberattack mitigation.

The corporate presently has a market capitalization of $920 million, however like many know-how suppliers it has struggled within the wake of a worldwide financial slowdown. During the last 12 months, its shares have misplaced greater than 40% of their worth. It has already discovered itself the goal of activist funding agency Scalar Gauge Fund, which took sizeable place within the firm final 12 months and pressured it to simply accept considered one of its companions, John Harkey, as a board member. Scalar agreed to a customary standstill, voting and different provisions.

Throughout its most up-to-date, fiscal 2022 third quarter earnings report, Sumo Logic delivered decent results with a revenue of 4 cents per share earlier than sure prices corresponding to inventory compensation. Income grew 27% to $79 million, beating Wall Road’s targets.

Regardless of that, Sumo Logic does stay unprofitable, posting a web lack of $26.3 million, in comparison with a lack of $30.8 million a 12 months earlier.

On the time of these outcomes, Constellation Analysis Inc. analyst Holger Mueller stated the actual fact it was unable to chop its losses regardless of rising income reveals that it’s struggling to develop its buyer base with out spending cash. “Sumo Logic nonetheless faces a problem, and the crew round Ramin Sayar will both should outgrow its price base, minimize prices someway, or a minimum of higher handle the expectations of buyers,” Mueller stated.

Sumo Logic’s subpar efficiency was additionally famous by RBC Capital Markets Inc. In an October report, it named Sumo Logic in a listing of software program corporations which are most likely to be acquired.

Thoma Bravo has been benefiting from the downturn within the know-how sector. During the last 12 months, it has paid greater than $25 billion to accumulate corporations together with Coupa Software Inc., SailPoint Technologies Inc. and Anaplan Inc. Its most up-to-date acquisition passed off inside the final 24 hours, when it spent $1.34 billion to accumulate the digital investigation software program supplier Magnet Forensics Inc.

Photograph: SiliconANGLE