We are drafting the S1 and you can expect something later in the year, said CEO Robert Shaw, suggesting that the timing looks right for a flotation late in 2005 or early 2006. We’re showing a growth rate in excess of 100% year-on-year and we’ve had a straight run of nine profitable quarters, he said. The company reportedly clocked revenue of $15m in 2003.
The vendor claims to have over 100 customers using its security information management software, a market that caters specifically to the needs of the big businesses. Our systems power the operations of the largest service providers and suit the needs of the Global 2000 enterprise, said Shaw. Some organizations need to handle 50 to 60 million events a day in real time. That’s a tremendous flow of security data, and it is going to be very difficult to control the operation and management of security without software support.
Security information management has become one of the hot topics in the enterprise IT security space because of the sheer volume of security data that organizations need to monitor. Additionally, increased demands from regulators to prove that sensitive customer data is held securely is forcing many organizations to put in place the reporting tools needed prove to auditors that they have adequate security measures to comply with prevailing and emerging regulations.
Demand for security information management software and service is heating up, according to recent market research from Datamonitor, the parent company of ComputerWire. It will continue to drive the market forward over the next four years at a 35% CAGR, reaching $575m by the end of 2008. Shaw is more aggressive in his estimates of market size. It’s likely to be at $300m this year, and should grow to $1.2bn by 2007, he said.
The security event management space in which ArcSight competes against the likes of OpenService, eSecurity and netForensics, is also becoming hot with likely M&A activity, with Computer Associates and BMC nominated as two of the big systems management vendors that could eventually look to flesh out their product portfolios with the acquisition of this niche software.
ArcSight has raised nearly $30m since starting up in June 2000, and has the backing of some big-name investors such as Kleiner Perkins Caufield and Byers. ArcSight is also partly funded by Q-Tel, a private non-profit organization funded by the Central Intelligence Agency that serves US national security interests.
Shaw hinted that the proceeds of any IPO could be put to use buying pieces of security technology that would move the ArcSight portfolio from one that currently fits fully under the security information management umbrella and into the enterprise security management mainstream. There are some pieces we need and I would prefer to buy rather than build them, he said, noting a wish-list that included asset auto discovery software, policy, vulnerability, and configuration management technology.
Shaw suggested that the average deal size at Arcsight is in the region of $400,000. The payroll runs to 200.
