This Small Intelligence Economy Pioneer Could be the Next Splunk

Sumo Logic is making waves in this space

Over the past decade, multiple mini “economies” have emerged as technology has redefined the way we do things.

The sharing economy with Uber and Lyft. The passion economy with YouTube and Patreon. The cloud economy with Amazon Web Services and Microsoft Azure. The influencer economy with Instagram.

But one economy trumps them all, mostly because it’s the only economy that is relevant to everyone in business: The Intelligence Economy.

Thanks to an explosion in the volume of data a business generates every day from customer transactions, feedback surveys, social media impressions, so and so forth – as well as dramatic advancements in our ability to process and understand that data – there has been a massive pivot in enterprises towards intelligent, data-driven decision making.

That’s the Intelligence Economy.

An economy defined by businesses gathering data, analyzing that data, and making smarter, better business decisions because of that data.

Of course, turning data into insights isn’t easy – and the emergence of the Intelligence Economy has sparked a surge in demand for services and tools which help companies do just that.

Case-in-point: Splunk (NASDAQ:SPLK). The data analytics company was worth less than $3 billion back in 2013. Today, it’s a $30 billion company – meaning an investment in Splunk back in 2013 would’ve scored you 10X returns.

And guess what? We may have found the next Splunk – at a time when the Intelligence Economy is really just starting to take off.

One small, emerging data analytics company is positioned to be the next Splunk – and it could, much like Splunk did over the past few years, rise by as much as 10X in the 2020s as the Intelligence Economy enters a new era of accelerated growth.

The “Economic” Machine Data Analytics Platform Purpose-Built for Everyone

New to Wall Street and at the heart of the Intelligence Economy with a compelling solution, $2.8 billion machine data analytics company Sumo Logic (NASDAQ:SUMO) is a name you will be hearing a lot of over the next 5 to 10 years.

Sumo Logic has created a robust, end-to-end enterprise software platform which aggregates and unifies all of a company’s machine data into one place, so that the data can be easily monitored, transferred, edited, and analyzed.

It’s one foundational data hub with many value-additive applications across the enterprise.

For example:

  • Nintendo (OTC:NTDOY) uses Sumo Logic to boost cybersecurity. With Sumo Logic, Nintendo aggregates all user security data onto one platform, programmatically tracks that data, identifies cybersecurity threats by noting anomalies in the data and automates responses to those threats.
  • Netflix (NASDAQ:NFLX) uses Sumo Logic to optimize the customer experience. By aggregating, tracking, and managing incident reports and system outage data, Netflix leverages Sumo Logic to make sure you and I always have a great experience streaming our TV favorite shows.
  • Ulta (NASDAQ:ULTA) uses Sumo Logic to improve back-end operations and product assortment. The beauty retailer first used Sumo Logic to attain a real-time view of order throughput to manager order volumes, and then pivoted to also using Sumo Logic to dynamically identify hot-selling items and adjust inventory.

Get the point?

Sumo Logic has truly created a one-to-many data analytics platform that has ubiquitous appeal and infinite applications.

This is important because a 2019 New Vantage survey found that only 31% of companies today consider themselves “data-driven”… and yet, a 2020 Forrester Consulting Survey found that data-driven organizations are 58% more likely to beat revenue goals than non-data companies.

In other words, data-driven organizations do better, but most companies have yet to make the pivot.

The implication, of course, is that as data-driven organizations widen their lead over non-data counterparts in the 2020s, the laggards will be forced to rush into the Intelligence Economy, creating a surge in demand for data analytics platforms.

Sumo Logic is at the epicenter of that demand surge, with a platform that literally any company can use for literally any purpose.

Of course, there’s also Splunk, whose data-to-Everything platform offers many of the same benefits as Sumo Logic’s core platform.

But, Splunk is positioned as the more sophisticated, premium offering in the market… with a steeper learning curve, an intimidating UI, and higher per usage prices… whereas Sumo Logic is the budget offering, with an easy-to-use, friendly interface and lower per usage prices.

In that sense, the best way to think of Sumo Logic is as the Toyota (NYSE:TM) of the booming Intelligence Economy, whereas Splunk is the Mercedes or BMW.

News flash: Toyota sells a lot more cars than Mercedes or BMW, because cost is a primary driver of consumer economic decisions.

It’s also a primary driver of enterprise economic decisions.

So… when I see that Splunk has 400 customers with over $1 million in ARR, $2.4 billion in revenues, and a $30 billion market cap… but Sumo Logic has just 29 customers with over $1 million in ARR, just $155 million in revenues, and a $2.8 billion market cap…

I chalk up the discrepancy to one thing – Splunk is seven years older than Sumo Logic – and nothing more.

That’s why I think Sumo Logic’s huge revenue growth rates (revenues rose by 50% in 2019) are here to stay for a lot longer.

Could this company one day reach a Splunk-like valuation of $30 billion… or even bigger?

Absolutely.

And that’s why you should go ahead and put freshly public Sumo Logic stock on your radar today.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

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Article printed from InvestorPlace Media, https://investorplace.com/2020/09/this-small-intelligence-economy-pioneer-could-be-the-next-splunk/.

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