Construction workers will assemble the display for the RSA Conference at the Moscone Center in San Francisco, California.
Paul Chin | San Francisco Chronicle via Getty Images
Nothing lowers expectations for Cybereason’s growth. Rather, the continued increase in ransomware attacks has forced clients to spend more on security systems, and security software companies are ahead of schedule in terms of revenue.
But Cybereason is cutting costs anyway, and last week it was 10% dismissal Of that workforce, or about 100 employees.Reductions follow this year’s dramatic economic fluctuations and defeat them Software stock Entered the public market.
Cybereason’s story resonates with many of the more than 450 vendors participating in RSA, the premier conference for security software enterprises. The scale, scale, complexity, and potential damage caused by cyberattacks is about protecting data and networks, no matter how corporate IT and finance departments respond to inflation and potential economic slowdowns. It means that the budget is expanding.
According to the company, the global cybersecurity market is expected to grow at an annual rate of 9.5% and reach approximately $ 375 billion annually by 2028. Vantage Market Research.. That’s about twice the overall growth forecast for IT spending, at least over the next two years. Gartner..
Still, the closing of the IPO window prevented Cybereason from planning its next round of funding.Private capital could have been an option, but there are probably painful conditions and almost certain price cuts from the company. Valuation of $ 3 billion Achieved in last year’s funding round. CEO Lior Div chose to cut costs and save cash instead.
Lior Div, Cybereason
Kiyoshi Ota | Bloomberg | Getty Images
“We worked under the assumption that capital would be available at the same price as needed,” Div said in an annual interview in San Francisco this week. RSA Conference, See last year’s company’s operational plans. “We weren’t optimized as a business.”
There is no demand issue.
April report from security company Sososo Sixty-six percent of the organizations surveyed say they were hit by a ransomware attack in 2021. This is an increase from 37% in the previous year. According to the report, the average ransom payment has almost quintupled to over $ 800,000.
Ransomware attacks occur when a hacker group breaks into a corporate network, takes data hostage, and demands a large amount of money from the victim in exchange for access to the data.
The crisis has intensified this year, and cyber attacks from Russia are national Ukrainian invasion During February.Cybersecurity authorities in the United States and four allies Advisory In April, we warned of a surge in cyber activity. “In response to the unprecedented economic costs imposed on Russia and the support of supplies by the United States and its allies and partners.”
Cybereason’s technology is designed to recognize when and how malicious attacks are occurring by keeping track of what is happening in the network in real time. The company is particularly effective in helping clients fend off ransomware attacks, thanks to the web of sensors around the world that automatically identify suspicious and unfamiliar ones that have invaded the network.
Last year, Cybereason raised $ 325 million, leveraging its insatiable demand for high-growth software names. Div said it set out to raise just $ 200 million, but the funding was so free and easy that the company grew.
Four months later, Nasdaq peaked. Since then, the tech heavy index has fallen 27%. Cybereason’s closest public market rival, SentinelOne When CrowdstrikeIn that range, it decreased by 66% and 35%, respectively. Meanwhile, SentinelOne’s most recent quarterly revenues were up 109% year-on-year and CrowdStrike was up 61%.
All in all, investors have moved away from high-growth technology to names and sectors that are generally considered safer in an environment of rising inflation and interest rates. The IPO market has stopped, as Cybereason did. Submit documents confidentially For future offerings.
“Okay, we were going out, and now we have to make sure we are financially responsible and can continue to do business for years.” Did, “Div said.
Neither SentinelOne nor CrowdStrike have withdrawn their previous hiring plans, but broader market slides require pre-IPO and earlier companies to reassess their outlook based on the new reality of capital markets. there is.
Deep Instinct, a startup trying to prevent ransomware using deep learning, Cut 10% of sales people this week. This is the percentage that continued to grow until the first quarter of this year, despite an increase of more than 200% in annual recurring revenue last year.
Lane Bess, chairman of DeepInstinct, said the company needs to be more efficient in its sales activities.
“We looked and said,’Where is the most effective company?'” Beth said in an interview at RSA. “Are we doing well in the low-end market with in-house sales reps? No. Is there a channel partner that can reach that low-end market? Yes.”
In late May, cloud security software vendor Lacework announced 20% cut Only six months after raising $ 1.3 billion of employees at a valuation of $ 8.3 billion. According to the company, “earthquake changes” in the market have forced corrections.
“We have no control over our surroundings, but our responsibility is to control how our business operates, make changes as necessary, and put the company in the best position for continuous and long-term success. There is, “says Racework. Blog post..
Temporary dismissals and layoffs of companies in fast-growing modes can have a trickle-down effect on the industry’s entire labor market. While all CEOs and recruiters will still find it difficult to compete for the best technical talent, especially in the area of security, market turmoil has led employers to rethink their thinking about compensation.
Todd McKinnon, CEO of, said: Octa, A company that provides identity management software to companies. “We want our salary to be at the top of the market, but no more. If the market goes down, we don’t want to slow down the adjustment.”
Like listed companies, Okta was hit by a 58% drop in stock prices this year. However, there is no shortage of business opportunities. First-quarter revenue increased 65%.
“Private citizens still have a lot of money,” McKinnon said, so he didn’t expect a flood of talent to suddenly hit the market. Venture capitalists poured a record $ 332.8 billion into US startups last year. This is twice the amount of the previous year. National Venture Capital Association..
High-value private security companies such as Snyk ($ 8.5 billion), Tanium ($ 9 billion or more), and Illumio ($ 2.75 billion) maintain sufficient capital and are in business boom.
Snyk CEO Peter McKay admitted that “the cost was significantly higher than what we could raise in multiples so far,” but after raising $ 530 million last year, his company said it was okay.
“We don’t have to pull it up,” McKay said. McKay’s technology helps customers quickly find vulnerabilities in their code. “We have taken the path to profitability and accelerated the path to profitability.”
Charles Ross, Chief Customer Officer Tanium, His team said he was watching what the client was doing, but so far there are no signs of a slowdown. Last year, the company closed its largest customer and revenue quarter in history after increasing its workforce by 1,000, or more than 80%.
One of Ross’s hearings from customers is that they are consolidating their security portfolios into several key vendors and reducing them elsewhere. Tanium’s technology gives IT administrators visibility into the entire network, assessing threats, and identifying where protection is lacking. According to Ross, this is usually alongside software from endpoint security providers such as CrowdStrike and SentinelOne.
“They are making us run better together,” Ross said in an interview at RSA.
And in IllumioCEO Andrew Rubin said at his latest board meeting last month that the topic of headcount reductions or dismissals was “included in the agenda.” I didn’t. “
“We have no internal conversation about dismissing someone,” said Rubin of the company.Raised $ 225 million last year.. He said the company “has a runway for years, years, years.”