- Nginx, one of the most important software companies you've never heard of, is getting bought by the $9.6 billion F5 Networks, which is a rival, in a deal valued at about $670 million.
- Nginx powers more than half the busiest websites in the world, including sites run by Starbucks and McDonald's.
- F5 Networks helps developers secure and manage their web apps, which made it a rival to Nginx - and now also a natural fit as an acquirer.
- We talked to both CEOs about how the deal came together - and why Nginx will keep supporting open source.
- Nginx has raised $103 million, with investors including Goldman Sachs, Telstra Ventures, and New Enterprise Associates.
Nginx (pronounced "engine-X"), the company behind the very popular open-source-web-server software of the same name, has been acquired by F5 Networks, a rival, which is valued at about $9.6 billion on the public market.
In a press release on Monday, F5 said that it plans to acquire all shares of Nginx in a deal that values the company at $670 million, "subject to certain adjustments," and that Nginx CEO Gus Robertson and the company's cofounders, Igor Sysoev and Maxim Konovalov, will all be staying on as employees of F5 after the acquisition closes.
While Nginx isn't the largest or most valuable software company, it's one of the startups that secretly runs the internet: The Nginx web server is the third most widely used in the world, behind only Microsoft and Apache and ahead of Google.
Well over half of the busiest websites in the world, including ones operated by McDonald's and Starbucks, rely on Nginx. Last year, Robertson told Business Insider that the company's business had seen 100% year-over-year growth every year since 2014, with companies coming to Nginx to help make their websites load faster and more efficiently.
The core Nginx web server is available as open source, meaning that anybody can download and use the code as they wish. In recent years, Nginx's main push to build the business has been Nginx Plus, a paid premium service that helps developers build modern applications for mega-clouds, such as Amazon Web Services and Microsoft Azure.
This is where F5 and Nginx became rivals - and also where a tie-up starts to make sense.
F5 helps companies make sure that their apps and software are both highly secure and highly performant, assisting with spotting and solving bottlenecks. Some of F5's products then competed head-to-head with Nginx and Nginx Plus.
Francois Locoh-Donou, CEO and president of F5 Networks, praises Nginx for its "leading software application delivery and API management solutions," as well as its "unparalleled credibility and brand recognition" and "massive open source user base" as factors that dovetail nicely with its business.
The Nginx brand will stick around, as will its headquarters in San Francisco, though plans are underway to introduce integrations with F5's other security and application-monitoring tools, the release said. Robertson will report directly to Locoh-Donou as part of F5's senior leadership team after the close.
In its lifespan, Nginx has raised $103 million from investors including Goldman Sachs, Telstra Ventures, and New Enterprise Associates, though we don't know the company's most recent private valuation.
How the deal came together
In an interview with Business Insider after the announcement of the deal, Robertson said this all began with the discussion of a partnership between the two companies. Things snowballed after a business dinner with Locoh-Donou and blossomed into a full-on acquisition.
"We felt there were a lot of synergies," said Robertson, who also praised F5's base of 25,000 paying customers.
According to Locoh-Donou, the move represents a push for F5 from the data center, where it's been most successful, and into the cloud, where Nginx has a strong presence. Locoh-Donou said the goal is to help customers manage their apps, wherever they may be - their own servers, the cloud, or even across multiple clouds.
"There's no company today that offers application services across all those environments," Locoh-Donou said.
With Nginx, Locoh-Donou said, F5 gets access not only to its tech but also that goodwill it's built with open-source communities. To that point, Locoh-Donou said, expect the core Nginx software to continue as it has, same open-source license and all - but also expect Nginx and F5 to push harder, potentially into new markets, with new open-source projects.
In general, Locoh-Donou said, customers should anticipate that F5 won't be interfering with what Nginx has been doing, but that it rather plans on investing in accelerating it.
"Virtually everything Nginx has been doing is valuable to F5," Locoh-Donou said.