💰 Security, Funded #146 - AI's Got 99 Problems, But CRM Ain't One

Security, Funded is a weekly deep dive into cybersecurity funding and industry news captured and analyzed by Mike Privette. This week’s issue is presented together with Wiz, Nudge Security, and iVerify.

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Table of Contents

• 😎 Vibe Check

• Market Summary

• 📸 YoY Snapshot

• 🤙 Earnings Reports

• 🧩 Funding By Product Category

• 🏢 Funding By Company

• Funding by Country

• 🤝 Mergers & Acquisitions

• Great Reads

• 🧪 Labs

• 4 companies raised $44.7M across 4 unique product categories in 2 countries

• 1 company was acquired or had a merger event across 1 unique product category

• 100% of funding went to product-based cybersecurity companies

• 3 public cyber companies had an earnings report

This is a rolling 12-week chart comparing funding and acquisitions each week in a year-over-year (YoY) view between 2023 and 2024.

Here are notable earnings reports from public cybersecurity companies. This section is Powered by Quartr, where I track all the latest earning reports.

Earnings reports this week: Okta, SentinelOne, and Zscaler

Okta (OKTA)

The Teflon Don of the cybersecurity world, Okta, had strong Q1 results mostly on the back of large public sector deals. I call Okta the Teflon Don because companies don't stop buying their services no matter how many breaches they have.

A few key financial highlights include:

• Raised its full-year guidance

• Added 150 new customers in Q1

• 111% net retention rate (NRR) for the last 12 months

Despite the good quarter, Okta still noted macroeconomic headwinds and a bit of a drag in the SMB market. As a result, some analysts questioned their ability to execute, and its stock dropped ~9%.

SentinelOne (S)

SentinelOne had a bang-up quarter. Revenue increased 40% year-over-year, ARR grew 35% and they finally got free cash flow positive.

Even still, its stock dropped ~22% after the earnings call. SentinelOne lowered its full-year guidance, citing continued macroeconomic challenges, but analysts weren’t having it. They said more could be spent on marketing and sales so they could turn up the heat on its growth.

SentinelOne also cited some weakness in selling in the SMB market, where they normally shine, and said it was still trying to strengthen its enterprise sales muscles. (Call me, Tomer! 👀)

Zscaler (ZS)

Zscaler reported strong results after experiencing significant growth in selling zero-trust and SASE services to large customers last quarter and increased its full-year guidance. All of this was achieved despite a challenging macroeconomic environment and the departure of key sales personnel.

A few highlights include:

• Revenue up 32% year-over-year to $533 million

• Grew customers spending over $1 million ARR up 31% year-over-year

• Gross margin was 81.4%

Despite all of this and analysts being generally impressed with Zscaler’s performance, its stock was down ~7% after the call. The consistent theme last week was software companies taking hits more generally with the continued rise of AI eating into budgets.

See the public cyber company tracker, which shows all public cybersecurity companies worldwide, along with market data, funding raised, product categories, and more.

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Data Methodology and Sources

• All of the data is captured point-in-time from publicly available sources.

• All financial figures are converted to U.S. dollars (USD) when collected.

• Company country locations are pulled from publicly available sources.

• Companies are categorized using our system at Return on Security, and we write all the company descriptions.

• Sometimes, the details about deals, like who led the round, how much money was raised, or the deal stage, might get updated after the issue is first published.

• Let us know if you spot any errors, and we’ll fix them.

About Return on Security

Return on Security is all about breaking down the cybersecurity industry for you with expert analysis, hard facts, and real-life stories. The goal? To keep security pros, entrepreneurs, and investors ahead in a fast-moving field. Read more about the “Why” here.

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