Network security firm files for IPO

Sourcefire, known for its anti-hacker software, began in '01

October 26, 2006|By Stacey Hirsh | Stacey Hirsh,Sun Reporter

The company — Sourcefire Inc., the Columbia network security company that started in its founder's living room and has since grown to a 174-person business, said yesterday that it plans to go public.

The company - best known for its anti-hacker technology, Snort - filed a registration statement late yesterday afternoon with the Securities and Exchange Commission for an initial public offering.

"Clearly, it's an important milestone in the company's evolution," Wayne Jackson, Sourcefire's chief executive officer, said of the plans to go public. He declined to talk about specifics.

Sourcefire has applied to list its common stock on the Nasdaq stock market under the ticker symbol FIRE.

The preliminary prospectus filed yesterday did not indicate how many shares the company or shareholders planned to sell in its IPO or a price range, and it did not indicate how much money shareholders and the company are planning to raise.

Sourcefire did say that it plans to use proceeds from the IPO to finance growth.

Jeffrey W. Englander, an independent analyst who follows the information security industry, called Sourcefire's filing a positive step.

Englander was expecting Sourcefire to submit the filing later this year or early in the first quarter and said the company's submitting it now "indicates they're very confident in how things are going and how the future looks."

Sourcefire has grown in size and revenue since it was founded five years ago. Revenue has grown from $159,000 in 2001 to $32.9 million last year, according to the filing. Sourcefire's revenue was $28.9 million for the nine months that ended Sept. 30.

Though the company has never had a profitable year, it reported a net income of $205,000 for the third quarter, according to the filing. It posted a net loss of $5.5 million in 2005.

Martin Roesch, the company's chief technology officer, started Sourcefire in his Eldersburg home in 2001. The company has offices around the world, including sales offices in France, Germany and Sweden.

Sourcefire's network security software has become an industry leader. Snort, its open-source intrusion-prevention technology, analyzes network traffic to protect against hackers.

Sourcefire also makes software to manage that data. The company also makes real-time network awareness technology, which maps out exactly what the network looks like.

In October last year, Sourcefire made headlines when it announced plans to be acquired by Israeli-based Check Point Software Technologies Ltd. for $225 million. The acquisition raised national security issues and came under investigation by the Committee on Foreign Investment in the United States, the same agency that investigated Dubai Ports World's bid to run some operations at six U.S. ports including Baltimore's.

Check Point announced in March that it was pulling out of the deal.

In an interview with The Sun shortly after that deal fell through, Jackson said Sourcefire had the potential to be a billion-dollar company as it grabs a share of markets beyond intrusion prevention.

Sourcefire's investors include a handful of venture capital firms and directors and executives of the company, according to the SEC filing. Roesch has an 8.4 percent stake in Sourcefire, and Jackson owns 4.4 percent, according to the SEC document.

The filing shows that Sierra Ventures owns about one-third of Sourcefire, New Enterprise Associates about 18 percent, Inflection Point Ventures nearly 9 percent, Core Capital Partners 7.6 percent and Sequoia Capital 7.5 percent.

stacey.hirsh@baltsun.com

Sourcefire at a glance

Business:

Network security

Founded:

2001

Headquarters:

Columbia

CEO:

Wayne Jackson

Employees:

174

Investors:

Sierra Ventures, New Enterprise Associates, Inflection Point Ventures, Core Capital Partners, Sequoia Capital, Cross Creek Capital L.P., Meritech Capital Partners

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