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CyberScope – Q2 2017 Market Review

By Max O'Connell 04 Jul 2017

Welcome to the Q2 2017 edition of the Cyberscope – Results International’s regular market update for the global Cybersecurity space.

In a quarter beset by multiple cyber-threats, Wannacry and Petya being the most notorious, it comes as no surprise Q2 has seen a continuation of the strong stock market performance this year with share prices up by 18% on average. Overall, the Index has kept ahead of the Nasdaq over the last year, up 28.1% against the Nasdaq’s 26.8% gain over the same period. Strong performance in public markets has come from the Endpoint sector in particular, with Sophos the standout performer and the recently IPO’d Okta (identity and access management) seeing a 38% rise in share price on its first day of trading.

M&A deal volume in Q2 has remained strong with a total of 38 transactions recorded, up 22.5% against Q2 2016 performance. Of particular note was Microsoft’s acquisition of Hexadite, showcasing the importance that machine learning and AI hold for the world of cybersecurity – an acquisition that is sure to spark renewed interest in applying AI technology to current solutions. This trend has continued early into H2 with Darktrace raising a further $75m in a Series D round led by Insight Venture Partners that values the company at $825m.

The second quarter also witnessed several players making a push into the UK cyber services market, most notably F-Secure’s acquisition of penetration testing provider Digital Assurance and Claranet’s acquisition of Sec-1. Results International acted as exclusive advisor to F-Secure on its transaction with Digital Assurance. The moves coming at a time when organisations globally are gearing up for new EU data privacy regulations (GDPR) next year, enforcing companies to have adequate security measures in place to protect sensitive customer information – services such as penetration testing and vulnerability assessments amongst others will become even more critical for organisations to assess vulnerabilities within their infrastructure.

Notwithstanding the high M&A volume seen over Q2, the most notable activity has certainly been in the private markets, with an unprecedented six fundraises that surpassed the $100m mark (Tanium, Cloudflare, Cybereason, Illumio, Crowdstrike, NetSkope). Given the aforementioned Okta’s performance since its float and improving valuations in the sector, a number of these companies will now be giving further consideration to IPOs of their own.

Overall, a most encouraging quarter for the world of cybersecurity – across both the public and private markets. As such now would be a good time to be contemplating fundraising, exit or growth through acquisitions in the cybersecurity space – if you are, please do get in touch.

Click on the image below to view the report.

Cyberscope

We hope that you enjoy the document and look forward to discussing the data and underlying themes with you. We have also produced our view on the previous quarter’s proceedings in a series of other market reviews on:

Digital Services

Enterprise Software

HealthTech

AdTech & MarTech

The Tech Report (all 5 sectors)

Max O'Connell

Associate

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