ArcSight Inc. (NDAQ:ARST) is planning to raise up to $74.75 million in an initial public offering, according to its S-1 filing with the SEC. The leading provider of data security solutions is definitely in the crosshairs of investors and should prove to be another hot tech IPO.

"We are a leading provider of security and compliance management solutions that intelligently mitigate business risk for enterprises and government agencies," said the company. "Much like a 'mission control center,' our ArcSight ESM platform delivers a centralized, real-time view of disparate digital alarms, alerts and status messages, which we refer to as events, across geographically dispersed and heterogeneous business and technology infrastructures."

How is the company doing? Well, ArcSight was founded in May 2000 and first sold their initial ESM product in June 2002. Since then, revenues have grown from $32.8 million in the fiscal year ended April 30, 2005 to $69.8 million in the fiscal year ended April 30, 2007.  Notably, they achieved positive cash flows from operations in the fiscal years 2004 through 2007.

The future also looks extremely bright for the company. According to a report by IDC, ArcSight's market is projected to grow, in aggregate, from $993.6 million in 2007 to $2.2 billion in 2011, representing a compound annual growth rate of 22.1%. Secordary markets that the company operates in are also projected to grow at rates above 19% compound annual growth.

In the end, this may be an IPO similar to that of VMware which jumped substantially from its initial offering price. The data security market is quickly growing and promises to be one of the hottest areas in the technology sector. Combined, these factors make ARST a stock worth watching!