Several indicators suggest that Snyk, a developer security startup recently valued at $7.4 billion, might be gearing up for a public offering.
The company began drafting an IPO prospectus in January 2024, with potential plans to file in the following months, according to The Information. It also achieved $300 million in annual recurring revenue (ARR) and aims to be cash-flow positive by 2025, as noted by CEO Peter McKay on LinkedIn. Additionally, there’s optimism about a more favorable regulatory climate under President Trump.
Despite these signals, McKay told TechCrunch that Snyk isn’t in a hurry to go public.
“We have $435 million in the bank and are nearing break-even. By 2025, we won’t need to burn cash, so I can choose the right time to go public. There’s no urgency,” McKay explained.
While McKay anticipates improved regulatory conditions in the coming year, he views 2026 as an even better time for an IPO.
“The new administration seems likely to ease IPO and M&A processes. We believe 2025 will be a favorable year, but 2026 looks even better,” he said. “Internally, we’re prepared for an IPO, but we’re keeping an eye on external factors.”
Snyk, which helps developers identify security issues in their code, has raised over $1 billion and disclosed $173 million in losses for 2023. McKay expects these losses to decrease by half in 2024 and for the company to break even in 2025.
Despite its focus on cost reduction, Snyk continues to invest in acquiring smaller companies in the developer security space. Recent acquisitions include Helios in 2023 and DeepCode in 2020, both for undisclosed amounts. Snyk credits DeepCode as the foundation for an AI product that has independently generated $100 million in ARR—one-third of the company’s total revenue.
“The only area where we’ll spend significantly will be on acquisitions,” McKay noted.
While there’s speculation that AI-driven coding tools might eventually replace developers and impact Snyk’s business model, McKay remains optimistic. Over the past year, the number of developers using Snyk’s platform has grown.
Interestingly, the rise of AI-generated code may benefit Snyk. McKay estimates that AI-written code tends to have 30% to 40% more vulnerabilities, particularly when created by less experienced developers. This trend increases the demand for Snyk’s security tools.
“It’s definitely been a positive factor for us,” McKay added.