Gigamon’s IPO Success

According to an IDC report, the worldwide application performance management software market is projected to grow 13% annually from $2.2 billion in 2012 to more than $3.5 billion by 2016. Another report by Frost & Sullivan expects faster growth. According to the researcher, the industry will see 15% annual growth and be worth $4.5 billion by 2017.

Gigamon’s Offerings

Milpitas, California–based Gigamon was founded in 2004 by veterans of the network management and monitoring industry. It was founded to offer services that help with intelligent traffic visibility networking for organizations, data centers and service providers worldwide. Through its services, infrastructure architects, managers, and operators are empowered with visibility into the traffic across their physical and virtual networks.

Gigamon’s products include its patented solution, which consists of distributed network appliances that provide advanced network traffic intelligence that is then distributed to management for analysis, compliance, and security-related activities. Its solutions help organizations ensure that their network infrastructure is reliable and secure while managing costs. GigaVUE, its core  product, is a data access switch that aggregates, replicates, filters, and divides traffic flows across multiple Ethernet-based passive monitoring tools for organizations of varying sizes.

Gigamon’s Financials

Gigamon sells its products both directly and through channel partners. As of March 2012, it had more than 825 customers worldwide and provided services to 60 of the Fortune 100 companies. With growth in the industry, Gigamon has also seen strong revenue growth. Revenues grew from $31.4 million in 2009 to $68.1 million in 2011, recording an annual growth of 47%. It ended last year with revenues of $96.7 million and turned in profits of $7.5 million.

The company recently reported Q2 results for the year, with revenues growing 44% over the year to $32.4 million. The market was looking for revenues of $30.9 million. EPS of $0.13 was significantly better than the Street’s projected loss of $1.03 per share for the quarter.

Gigamon’s Product Enhancement

As part of its product enhancement, Gigamon recently updated the Management Layer that helps network services teams deliver visibility across departmental silos within the IT organization. These individual teams within the IT operations will now have the ability to dynamically change monitoring and traffic visibility policies based on their requirements.

Analysts are pleased with Gigamon’s performance. The data center offerings make the company a likely acquisition target by several bigger IT players. Earlier this year, Ixia acquired Gigamon’s competitor, Anue Systems Inc, for $145 million. Gigamon’s high margins and strong revenue growth also make it an attractive target.

Gigamon has received $23 million in funding from Highland Capital Partners. Recently, it listed on the NYSE at a price of $19 a share. The IPO helped the company raise $128 million for funds for research and development and expanding its global presence. The stock is currently trading at $33.80, with a market capitalization of $1.03 billion.