Postman holds the line at $5.6 billion as developer-tools spending normalises

Postman's ability to sustain its 2021 valuation of $5.6 billion through the extended software-spending downturn of 2022-2024 is a testament to the stickiness of infrastructure-level developer tools, as opposed to the application-layer software that saw the sharpest corrections in both public and private markets. The company, founded in Bengaluru by Abhinav Asthana, Ankit Sobti and Abhijit Kane and now headquartered in San Francisco, has grown from an API-testing tool into a comprehensive platform that covers API design, documentation, mocking, testing and monitoring across the full software development lifecycle. Postman's user base is extraordinary by any measure: the platform claims over thirty million developers worldwide and is used by the overwhelming majority of Fortune 500 companies' engineering teams in some capacity. This free-tier adoption has been the company's most durable moat, creating a generation of developers who have used Postman since their first API integration and who bring it with them as they move between employers. Converting this free base into paying enterprise accounts - through team collaboration features, access controls, compliance tools and private API networks - is the monetisation flywheel the company has been building for several years. The developer-tools spending correction of 2022-2024, which saw companies like HashiCorp, New Relic and Twilio see significant revenue compression as enterprise customers rationalised their software stacks, affected Postman less than many peers. This is partly because API infrastructure is harder to remove mid-cycle than peripheral developer productivity tools - an organisation that has built its internal API documentation and testing on Postman has significant switching costs once the integration is established. It is also because Postman's pricing is relatively modest per seat, making it harder to justify cutting in a cost-review exercise. The India angle on Postman is an important part of the story. While the company is headquartered in the United States, a significant portion of its engineering and product work remains in Bengaluru. Several of the company's largest customers are Indian IT services firms and global technology companies with major India development centres, creating a natural home-market advantage in a category where the US is usually assumed to be the only market that matters for enterprise software. What to watch: whether Postman pursues an IPO as the developer-tools market recovers, how it differentiates from the API management layers being built into hyperscaler cloud platforms, and whether its AI-assisted API development features gain enough traction to support a re-rating. Whether the AI-assisted API development features generate enough incremental revenue to support a higher multiple at IPO than a pure testing-tool comps analysis would support is the pricing question that bankers will work hardest on.

Original source: TechCrunch