So much for the first tech IPO of the year.
Cisco just snapped up AppDynamics for $3.7 billion, one day before the software developer was scheduled to sell shares to the public at a valuation of less than $2 billion.
AppDynamics develops software to help companies ranging from Capital One Financial to Expedia monitor their mobile apps and websites for bugs and fix them before customers drop off. Founded in 2008, the company generated revenue of $158.4 million in the first nine months of 2016, up 54 percent from the prior year.
"From a strategic perspective, this is a company that Cisco has had its eye on for some time," said Rob Salvagno, head of corporate development at Cisco. "The IPO created a timing piece that we needed to be mindful of."
AppDynamics marks the biggest deal for Cisco CEO Chuck Robbins, who took over the networking giant from John Chambers in 2015. He's orchestrated at least 17 acquisitions, including the $1.4 billion purchase of Jasper Technologies a year ago to bolster Cisco's business in connected devices.
Robbins is tasked with pushing Cisco into a new era of computing. The big switches and routers that made Cisco a dominant force in computer networking through the last decade are no longer in high demand, as businesses move to buying commodity boxes controlled by customizable software. For Cisco to stay relevant in a world of cloud-computing and big data, the company needs to own more of the software that corporations are buying.
AppDynamics said in its IPO prospectus that as of Oct. 31, it had about 1,975 customers, including over 275 of the Global 2000. CEO David Wadhwani, who joined in 2015, will run a new software business in Cisco's internet of things (IoT) and applications business, and the deal is expected to close in the quarter ending in April, Cisco said.