Snowflake has entered advanced discussions to acquire Observe Inc. in a deal valued at roughly $1 billion, according to people familiar with the matter. If Snowflake completes the transaction, it will mark the company’s largest acquisition to date.
What Observe Inc. does
Observe Inc. develops application monitoring and observability software that helps engineering teams analyze logs, metrics, and traces from modern cloud-native systems. The platform allows companies to diagnose outages, monitor performance, and understand system behavior in real time. Observe built its product to run natively on Snowflake’s data cloud, which already stores large volumes of customer telemetry data.
Why Snowflake wants Observe
Snowflake aims to expand beyond data warehousing and analytics into operational use cases. By acquiring Observe, Snowflake can embed observability directly into its platform instead of relying on external monitoring vendors. This move lets Snowflake:
- Offer developers and IT teams native monitoring tools on top of Snowflake data
- Increase customer usage by supporting real-time operational workloads
- Compete more directly with observability leaders such as Datadog, Splunk, and New Relic
- Capture more value from the massive volumes of machine-generated data already flowing into Snowflake
Strategic significance
The talks signal Snowflake’s shift toward becoming a full-stack data and operations platform, not just a storage and analytics engine. Observability tools generate continuous, high-volume data streams, which align well with Snowflake’s consumption-based revenue model. If Snowflake integrates Observe tightly, customers can monitor applications, investigate incidents, and analyze historical performance without moving data outside the Snowflake ecosystem.
Deal status
Negotiations remain ongoing, and neither company has announced a final agreement. Snowflake and Observe can still change terms or walk away before signing. If the companies finalize the deal, Snowflake will likely use a mix of cash and stock, subject to regulatory review.
Big picture
Enterprise software companies increasingly pursue acquisitions that bring mission-critical operational tools closer to their core platforms. Snowflake’s pursuit of Observe reflects that trend and highlights how observability has become a strategic priority in the cloud era.