Is Splunk, heading towards IPO, really the next Oracle?

April 28, 2011, 5:54 PM UTC
Image representing Splunk as depicted in Crunc...
Image via CrunchBase

FORTUNE — Companies like SAP (SAP), Oracle (ORCL) and IBM (IBM) sell fancy business software that analyzes data created by humans. But what about the terabytes upon terabytes of data that are created by machines? That’s where Splunk comes in. You may not have heard of the oddly named startup, which got its start as a search engine for IT professionals, but you probably will soon. The company is growing fast and is now used by all kinds of businesses to not only extract but also analyze all sorts of machine-generated data (the dense and opaque log files created by servers, applications and devices “talking” to each other).

Since launching in 2004, Splunk has signed on a diverse enterprise customer base ranging from Cisco Systems (CSCO) to Macy’s (M) to Vodafone, who use Splunk’s service to monitor routers and switches, manage servers and investigate virus attacks. To date, the company has about 2,500 customers across 74 countries.

“We expanded from a few IT guys using it down in the basement to the people running the business,” says Godfrey Sullivan, Splunk’s CEO. “People are beginning to see the value in machine data.”

Sullivan is best known as the former CEO of Hyperion Solutions, a business intelligence company which sold to Oracle for a cool $3.3 billion back in 2007. He believes Splunk has the potential to become a multi-billion-dollar company á la Oracle, and is preparing the San Francisco-based startup for an IPO (he says it should be ready to operate as a public company by 2012). But just how big can Splunk get on its own? It’s still too early to tell, but early indications are promising. Though the company is private, it discloses revenue, which reached $66 million last year. This year, Sullivan expects to break the $100 million mark. Not bad for a startup that makes money from making sense of machine data.

“Splunk is blazing the trail and creating the market,” says Peter Goldmacher, a senior research analyst with Cowen and Company.”The technology is clearly validated. Now it’s about distribution and sales. And Godfrey [Sullivan, Splunk’s CEO] is critical for that.”

Sullivan is hiring aggressively to meet growth. Splunk currently has about 350 employees, and he says he will hire up to 150 more this year (including a CFO, part of the company’s preparations to go public). Two of Splunk’s original founders, Rob Das and Erik Swan, are still with the company. But the third co-founder and former CEO, Michael Baum, left after Sullivan came on board in 2008 and he was demoted.

Splunk’s modern San Francisco offices have a Google-like feel (think vintage arcade games, dogs and free snacks). But fast expansion usually goes hand-in-hand with a change in corporate culture. The company will soon open another office in Silicon Valley and is also hiring in other parts of the U.S. and abroad. All this as Yahoo contemplates spinning off analytics division Hadoop into a separate company which, based on the way the tools are used, would be both a complement and potential competitor to Splunk’s business. But then, analytics are being eyed as an area where cloud-based tools have yet to tap their broader potential markets.

“It’s still a small business, and you have to deal with high growth, stay aggressive and continue to create the market,” says Goldmacher, the Cowen and Company analyst. “But these guys aren’t sitting still.”

In other words, expect to hear more about Splunk. Even if you’re not an IT guy toiling away in a basement.

More from Fortune: