Cloud-based private networks provider Aryaka Networks has announced its intentions to IPO in 2018, aiming for a $1 billion valuation. Aryaka currently builds private cloud networks for more than 500 enterprises, enabling them to link branch offices globally. Notable customers include Gucci, Air China Ltd, and Skullcandy. CEO Shawn Farshchi stated that the company would be prepared to go public in 18 months, after which it would monitor market conditions for the optimal time.
Aryaka is still not profitable, but it is growing rapidly and enjoys a near 100% customer retention rate. The company is projecting that it will make $50 million in annual revenue by the end of 2016, up from $24 million in 2015. The company expects to finally become profitable in mid-2017 and foresees a doubling of annual revenue to $102 million by the end of that year. Based on its current revenue streams, Aryaka is worth somewhere between $300 million and $500 million, though it is clearly hoping that valuation will spike significantly within the next two years.
“Traditional networking approaches … offer very limited connectivity to cloud services,” Ashwath Nagaraj, founder and chief technology officer of Aryaka said, describing a trend in which businesses have been migrating away from public networks to the cloud, which bodes well for Aryaka’s bottom line. The software-defined networking market has boomed in recent years and is due to hit $6 billion by 2020, according to IDC.
With that growth has come growing investor interest in cloud-based networks providers. Aryaka scored $16 million in additional financing in March 2015, taking its total to $75 million, after a funding round that included Nexus Venture Partners, Trinity Ventures, InterWest Partners, Mohr Davidow Ventures and Presidio Ventures. It has invested that funding in sales and marketing campaigns to expand its customer base.
While Aryaka has partnered notably with Microsoft, which now offers Aryaka as an option for accessing Microsoft Azure Cloud, it’s an open question whether established telco giants, such as Verizon, will embrace the company and eventually offer Aryaka as part of their services, rather than viewing it as competition.