💰 Security, Funded #173 - Resilience Flexes

Security, Funded is a weekly deep dive into the financial transactions, industry news, and economic activity in the cybersecurity market. This week’s issue is presented together with Vanta, DeleteMe, and Nudge Security.

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Security trends: The State of Trust Report 2024

Key trends on security, compliance, & the future of trust

The data is in! The State of Trust Report 2024 from Vanta uncovers key trends in security, compliance, and the future of trust based on a survey of 2,500 business and IT leaders. The findings show that the security landscape has never been more challenging—with cybersecurity threats ranking as the #1 concern for businesses in 2024.

The insights also show that building good security is good business, with nearly half (48%) of respondents saying that good security practices drive customer trust for their business.

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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

• 11 companies raised $272.2M across 9 unique product categories in 3 countries

• 5 companies were acquired or had a merger event across 4 unique product categories

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

• 4 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.

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Exposed Executive Data Creates Risk

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Cyber Market Movers

Earnings reports from last week: Okta, Rubrik, SentinelOne, Zscaler

Okta (OKTA)

Okta reported strong Q3 results, with significant progress among large customers, especially in the public sector. Okta hoped to see more new logos from this quarter, and analysts acknowledged that there were fewer than expected, especially outside of the US in Europe. Okta said its main focus now is continued growth and will continue to invest in partnerships and product innovation.

Okta is in a very interesting position. During that call, there was an anecdote without a specific source cited that said something like 8 out of 10 breaches occur due to identity abuse. There was also an acknowledgment that identity is simply harder to change and get rid of, and this is something I have been talking about for a long time now. There’s no business interaction that doesn’t involve some form of identity, so that means that identity IS a business operation. There’s nothing else in cybersecurity like identity, which is why breaches, outages, and the like don’t move companies to change identity providers. There are no viable alternatives often, and the pain of change is far too great compared to another part of the cybersecurity stack.

Rubrik (RBRK)

Rubrik reported a very strong third quarter, surpassing $1 billion in ARR with 38% year-over-year growth. Total revenue for Q3 was $236 million, an increase of 43%, and subscription revenue reached $222 million, up 55% year-over-year. 🤯 Huge numbers all around.

As the cyber industry shifts from traditional back-ups to more robust data protection and recovery platforms, “resilience” could easily be the word of the year in the cybersecurity industry in 2024. In addition to this, data security posture management (DSPM) (Rubrik does this, too) is one of the fastest-growing sub-sectors in the cybersecurity industry, and it’s no wonder that Rubrik has been doing well.

Rubrik raised its outlook for fiscal year 2025, showing confidence in its continued growth in the resiliency sector and profitability improvements.

SentinelOne (S)

SentinelOne reported strong Q3 results, with revenue and ARR growth exceeding expectations. Revenue increased 28% to $211 million, and total ARR grew 29% to $860 million.

SentinelOne cited a focus on operational resilience (see above) as a tailwind for demand for its platform, as well as the July CrowdStrike outage, which caused some large customers to migrate platforms. As a result, SentinelOne raised its forward-looking guidance for the rest of the year, as this time of the year has been historically good for its pipeline and signing large customers.

Zscaler (ZS)

Zscaler reported a strong quarter, with revenue up 26% year-over-year to $628 million, bookings growth exceeding 30%, and 585 customers having over $1 million in ARR. 🤯 Zscaler also cited that it secures over 35% of Global 2000 and about 45% of the Fortune 500.

Zscaler’s growth was mainly driven by increased customer focus on zero trust and reducing reliance on traditional firewalls. This is the same playbook that Zscaler has been speed-running for at least the past two years, and given that their customer base has a large presence in the US public sector, there don't look like there are any signs of slowing down.

Macro Context:

• The US labor market has shown signs of cooling off, with more job openings and fewer layoffs.

• The US Federal Reserve Chair (my boy JPow) says the strength of the US economy gives the Fed the ability to take time on rate cuts.

• It’s still too soon to know what the global economic impacts of the incoming Trump administration in January 2025 will be.

Earning reports to watch this coming week:

• That’s all for the year, folks! I’ll pick this back up for the 2025 earnings season. 🫡 

Before anyone mentions the Upwind Security round being missing, that event was captured back in 💰 Security, Funded #169 - Pastels de Cyber. I report them as they come out 🫡 

• Foreign Influence on U.S. AI Policy - Ted Cruz addresses U.S. Attorney General Merrick Garland about European regulations and the concerns over foreign influence on U.S. AI policies and compliance issues related to the Foreign Agents Registration Act (FARA).

• *How to Conduct an AI Risk Assessment [Guide] - GenAI is clearly here to stay. This guide will help you take practical steps to mitigate GenAI risks and ensure safe and compliant use in your org.

• Why Every Cybersecurity Leader Needs Financial Literacy - How financial literacy can transform cybersecurity teams into more effective partners within their organizations.

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Always compute safely

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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