Software Maker Puppet Labs Plans Public Offering for Spring 2016

Puppet Labs Inc. plans to sell shares to the public in the spring of next year, when the maker of server-automation software forecasts that its annual revenue will approach $100 million.

The company is talking to investment bankers and plans to make its selections in the next few months, Chief Financial Officer Bill Koefoed said.

Puppet had a bookings run rate of $75 million for the quarter ended April 30, he said in an interview. The measurement of future revenue extrapolates a quarterly figure to a full year. The Portland, Oregon-based company expects to be cash-flow positive “shortly,” Koefoed said.

Puppet helps customers set up and manage servers and applications in public clouds and corporate data centers. The company and Seattle-based Chef Software Inc. are part of an information-technology segment called DevOps, for Development Operations, which seeks to blend the creation of applications with getting them running, to make the process faster and smoother. Such tools will be in use in 80 percent of the world’s 1,000 biggest companies by 2019, according to research firm IDC.

“IT has had a lot of silos, and one major one is application development and another is making sure the thing works,” said Stephen Elliot, an analyst at IDC. “DevOps is a new way, saying, ‘Why don’t we think about having a single team.’”

Free Software

The challenge for Puppet is getting customers to pay for its premium software because a widely-used basic version is available through a free, open-source license, he said.

More than 25,000 customers use Puppet’s open-source product, which was released in 2005 by founder and Chief Executive Officer Luke Kanies. The paid version went on sale in 2011 and has about 800 customers, including Bank of America Corp. and Inc., according to Koefoed.

“It creates a ton of efficiency, and you can run a ton of servers with fewer systems administrators and get your code to market faster,” he said.

Puppet says it has raised $86 million from backers including Kleiner Perkins Caufield & Byers, True Ventures, Google Ventures, VMware Inc. and Cisco Systems Inc.

Puppet’s initial public offering would be the first for a Portland-based company since 2004, Koefoed said.

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