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DataDog's stock clustered as IPOs after rejecting Cisco's offer to buy

DataDog, a cloud monitoring-as-a-service company, saw its stock rise 50 percent above its original stock price when it debuted on the stock market on Thursday, proving that subscription-based software is all the rage among IT buyers.

DataDog's shares rose to $ 40.50 out of the gate, up from the original stock price of $ 27, and valued the company at $ 11.7 billion.

Cisco Systems, a rival to DataDog, offered to buy New York City-based DataDog for a "significantly higher" sum than the $ 7 billion valuation the company targeted when DataDog filed for public release in August, according to Bloomberg citing sources that are familiar with the matter.


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A Cisco spokesman declined to comment on rumors or speculations regarding the report. DataDog did not answer questions about Cisco's pre-release buyout attempt.

Prior to its US IPO on Wednesday, DataDog collected $ 648 million and sold 24 million shares for $ 27 each after marketing them between $ 24 and $ 26. The listing on Thursday morning valued Datadog at $ 7.83 billion.

DataDog offers a subscription-based service that developers and IT administrators can use to monitor applications and underlying infrastructure. The software can track performance for systems running in public clouds, or in corporate data centers.

The nine-year-old company competes with such cloud providers as Amazon Web Services and Microsoft Azure, as well as players such as Cisco, Elastic and Splunk.

DataDog reported revenue of $ 198 million in 2018, in addition to a net loss of $ 10 million for that year, according to the S-1 filing with the US Securities and Exchange Commission. The company said it had 1,212 employees operating in 24 countries as of June 30, 2019.

The successful IPO shows that the market favors software companies focusing on subscription-based services. Even current IT executives are turning their attention to subscriptions and services, as opposed to hardware sales.

Cisco, for its part, has been successful in acquiring companies just before the IPO, including AppDynamics, which the San Jose, California-based tech giant picked up for $ 3.7 billion in 2017.

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