Snyk, the developer security startup valued at $7.4 billion, is not rushing to go public, despite strong financials and a recent milestone of hitting $300 million in annual recurring revenue (ARR). In an exclusive comment to TechCrunch, CEO Peter McKay revealed that the company is in no hurry to file for an initial public offering (IPO), citing a desire to wait for a more favorable regulatory environment.

Earlier this year, Snyk was reportedly drafting an IPO prospectus, with plans to file within months. However, McKay's comments suggest that the company is taking a more cautious approach. "We've got $435 million in the bank and are very close to break-even. In 2025, we won't burn any cash, so I can pick the time when I go public. I don't need to rush," he said.

McKay believes that regulatory conditions will improve next year, but sees 2026 as being even more favorable. "I think the new administration will make things a little bit easier on both IPOs and M&A. We feel 2025 will be better and 2026 will be even better," he said. This optimism is likely fueled by the current administration's stance on regulatory issues, which is seen as more business-friendly.

Snyk's financial performance has been strong, with the company disclosing that it burned about $173 million in 2023. However, McKay expects to cut losses by half in 2024 and break even next year. The company's strategy of acquiring smaller firms in the dev security space, such as Helios and DeepCode, has also been successful. DeepCode, acquired in 2020, has been credited with being the backbone of an AI product that recently surpassed $100 million in ARR on its own, accounting for a third of Snyk's total revenue.

One potential challenge for Snyk's business model is the growing trend of AI coding tools replacing developers. However, McKay sees this as an opportunity rather than a threat. "The more programmers rely on AI to write the code, the better it might be for the company," he said. This is because AI-generated code includes 30-40% more vulnerabilities, especially when used by junior devs, providing more opportunities for Snyk's security tools. "It's definitely been a tailwind," he added.

Snyk's decision to wait on an IPO is likely a strategic move to maximize its valuation and minimize regulatory hurdles. With a strong financial position and a growing market for dev security tools, the company is well-positioned to take advantage of favorable market conditions when it decides to go public. For now, Snyk's focus remains on executing its growth strategy and capitalizing on the growing demand for its security solutions.

In conclusion, Snyk's decision to delay its IPO plans is a testament to the company's confidence in its financial performance and its ability to navigate the regulatory environment. As the dev security space continues to evolve, Snyk is well-positioned to remain a leader in the market, and its eventual IPO is likely to be highly anticipated by investors and industry watchers alike.