Job cuts hit cybersecurity firms despite surging growth from attacks

A construction crew assembled a display for the RSA conference at the Moscow Center in San Francisco, California.

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Nothing has lowered Cybereason’s expectations for growth. Conversely, the steady increase in ransomware attacks has forced its customers to increase spending on security systems, putting security software companies ahead of schedule when it comes to revenue.

But Cybereason cuts costs anyway, confirming it last week 10% layoff Its employees or about 100 employees. These reductions follow the dramatic fluctuations in the economy this year and the impact it has had Software stocks Have taken over the public market.

Cyberson’s story echoes with more than 450 vendors attending the RSA, the premier conference for companies in security software. No matter how the corporate IT and financial sectors respond to the scale, magnitude, complexity and potential damage, inflation and potential recession caused by a cyber attack, the budget expands while protecting data and networks.

The global cyber security market is expected to grow at a rate of 9.5% per annum, reaching $ 375 billion per year by 2028. Vantage market research. This is, at least in the next two years, more than double the growth rate for overall IT costs. Gardner.

However, as the IPO window closed, Cyberseason’s plans for the next financial round were thwarted. Private capital may have been an option, but there may have been painful terms and an almost certain markdown from the company’s $ 3 billion estimates Achieved last year’s funding round. CEO Lior Dive chose to cut costs and save money instead.

Lear TV, Cybereason

Kiyoshi Oda | Bloomberg | Getty Images

“We are working under the assumption that we have the quantity we need and the capital available at the same price,” Dive said in an annual interview in San Francisco this week. RSA Conference, Refers to the company’s action plans for the past year. “We have not improved as a business.”

Demand is not the problem.

A report in April from the Defense Agency Sophos 66% of surveyed companies will be affected by a ransomware attacks in 2021, up from 37% in the previous year. The average redemption amount is almost five times higher than the $ 800,000, the report says.

Ransomware attacks occur when a group of hackers infiltrate a corporate network and then hold data hostage.

The war in Ukraine is making things worse

The crisis has intensified this year, with cyber attacks on the rise following Russia’s Invasion of Ukraine In February. Released by cyber security officials of the United States and four allies Advice In April, a warning was issued about an improvement in cyber operations in response to “unprecedented economic costs imposed on Russia and material support from the United States and US allies and partners.”

Cybereason’s technology is designed to know when and how malicious attacks take place by establishing a static real-time view of what is happening within the networks. The company has been particularly effective in helping customers prevent ransomware attacks, thanks to a network of sensors around the world that automatically detect anything suspicious or unfamiliar attacking a network.

Last year, Cybereason raised $ 325 million, taking advantage of the unmet demand for high-growth software names. Div said he was just starting to raise $ 200 million, but the company grew because the money was so free and easy.

Four months later, the Nasdaq peaked. Since then, the technology-heavy index has dropped 27%. Cybereason’s closest public market competitors, SentinelOne And CrowdStrike, Decreased by 66% and 35%, respectively, in that extension. Meanwhile, Sentinel One recorded 109% revenue growth in the most recent quarter compared to the previous year, while CrowdStrike increased 61%.

The arrows point outwards

Across the board, investors are moving away from high-growth technology to names and sectors that are generally considered safe in the context of inflation and interest rates. Like Cyber season, the IPO market has stalled Filing documents in secret For the upcoming offer.

“We said,‘ Well, we plan to go out and now we need to make sure we are financially responsible and can run the business for years to come, ’Dive said.

Although SentinelOne or CrowdStrike have not backed down from their pre-employment plans, their decline, along with the broader market, has forced companies before the IPO and those in pre-IPO positions to reevaluate their opportunities based on new realities in the capital markets.

Deep Instinct, a start-up that uses in-depth learning to prevent ransomware, Cut 10% of its sales this week. This is a continuing expansion rate in the first quarter of this year, despite growth in annual continuous revenue of more than 200% last year.

Lane Bess, head of Deep Instinct, said the company needs to be more efficient through its sales process.

“We looked at it and said, ‘Where do we operate most effectively in the company?'” Bess said in an interview with RSA. “Are we doing well at the lower end of the market, are there vendors inside? No. Do we have channel partners who can come to the lower end of the market? Yes.”

At the end of May, cloud security software vendor Lacework said a 20% discount Six months after raising $ 1.3 billion to $ 8.3 billion, its employees. The company said the “vibrational change” in the markets forced it to make changes.

“Although we have no control over the environment around us, we have a responsibility to control how we run our business and to make the necessary changes to sustain the company for sustainable and long-term success,” Laswerk said in a statement. Web site.

Lacework is ranked 25th on CNBC’s Disruptor 50 List, Which was released in May. Cyberson is ranked 41st in its rankings The second is straight The origin of the list.

Dismissals and layoffs in companies that were in a high-growth system could have a drop-down effect on the labor market in the industry. While every CEO and recruiter says that competing for the best technical talent, especially in security, is as difficult as ever, we need to rethink how employers in market turmoil think about compensation.

“It’s less competitive there because there are fewer start-ups,” Todd McKinnon said. Octa, A company that provides identity management software to companies. “We want our pay to be at the top of the market, but not too high. If the market falls, we do not want to be slow to adjust.”

Like its publicly traded counterparts, Okta has been hammered this year, with its share falling 58%. But there is no shortage of career opportunities. Revenue rose 65% in the first quarter.

“Private companies still have a ton of money,” McKinnon said, not expecting a sudden flood of talent in the market. Venture capitalists paid $ 332.8 billion to U.S. start-ups last year, more than double the previous year. National Venture Capital Association.

‘The Path to Profit’

High-value private security companies such as Snyk ($ 8.5 billion), Tanium (over $ 9 billion), and Illumio ($ 2.75 billion) have no plans to lay off CNBC because they are well-capitalized and experienced. The boom in business.

Snick CEO Peter McKay acknowledged that “the price of money is much higher than you put forward in the times ahead,” but he said his company was doing well after raising $ 530 million last year.

“We don’t have to raise,” McKay said, adding that its company’s technology enables customers to quickly identify vulnerabilities in their index. “We have a path to profit, and we have accelerated our path to profit.”

Charles Rose, Chief Customer Officer Danium, His team monitors what customers are doing, but so far there are no signs of a recession. After increasing the number of people to 1,000 or more than 80% last year, the company closed in its biggest first quarter in terms of customers and revenue.

One thing Rose says when asked by customers is that they integrate their security portfolio into a few essential vendors and cut elsewhere. Tanium’s technology gives IT managers the ability to evaluate threats across their network and to see where there is no security. It usually sits with software from endpoint security providers like CrowdStrike or SentinelOne, Rose said.

“They treat us well together,” Rose said in an interview with the RSA.

And at IllumioIts software helps prevent ransomware and prevent the spread of violations across networks, said CEO Andrew Rubin at a recent board meeting last month titled “Reducing or allowing people to go” was not on the agenda.

“We have no conversation within the company about firing anyone,” Rubin said. Raised $ 225 million last year. The company has “years and years and years and years of track,” he said.

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