💰 Security, Funded #180 - Mustard on the [Q4 Earnings] Beat

Security, Funded provides a weekly analysis of economic activity in the cybersecurity market. This week’s issue is presented together with Dropzone AI, Palo Alto Networks, and Harmonic Security.

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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

• 9 companies from 4 countries raised $247.4M across 8 unique product categories

• 3 companies were acquired or had a merger event across 3 unique product categories

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

• 5 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 the end of 2023 and the start of 2024 and 2025.

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Cyber Market Movers

Earnings reports from last week: Fortinet, Juniper Networks, Tenable, Varonis Systems, and Qualys

Fortinet (FTNT)

Fortinet reported strong Q4 2024 results, with a 17% increase in revenue and a 32% in ARR. This growth was driven by increased demand for its Secure Access Service Edge (SASE) and the acquisition of Perception Point.

Despite strong results, Fortinet gave cautious guidance for 2025, citing potential macroeconomic challenges and tariff impacts. Fortinet was one of the only companies to cite tariff pressures. The company still deals heavily in physical hardware, with nearly half of its revenue coming from North and South America. The remaining half is 80% EMEA and 20% APAC.

Uncertainty aside, Fortinet’s stock still ripped (as it did most of 2024) nearly 10%.

Juniper Networks (JNPR)

Juniper Networks didn’t have a live earnings call, but it did produce a year-end report with all its financial data. Juniper Networks saw a slight decline in net income, dropping from $310.2 million in 2023 to $287.9 million in 2024. Juniper cited the challenging market conditions it faced in 2024 as the reason for the decline in income.

Despite this, the company showed strong cash flow from operations, reaching $788.1 million, driven by operational efficiencies. The stock stayed roughly flat after the earnings call but was up for the week.

Also, as I reported in last week's issue, HPE’s acquisition of Juniper Networks is currently being challenged by the United States Department of Justice. Juniper Networks is really in stock price and shareholder preservation mode as they wait out what will happen here.

Tenable (TENB)

Tenable reported strong Q4 2024 results, beating all of its expected metrics. Revenue grew 11% year over year, driven by strong demand for exposure management, cloud security (which doubled year over year), and its consolidated platform with displacing competitors.

Tenable cited the recent acquisition of Vulcan Cyber to enhance its data integration and remediation capabilities, which also bolstered sales. Tenable also cited a more cautious outlook for U.S. Federal sales due to the transition of a new administration. The stock dropped 15% after the earnings call was released.

On a special note, this was Tenable's first earnings call since CEO Amit Yoran passed away. Tenable created a thoughtful separate site to remember Amit.

Varonis Systems (VRNS)

Varonis Systems reported strong financial results for Q4 2024 and showcased an 18% increase in ARR to $641.9 million. Varonis cited much of the success in 2024 to two factors:

1. Moving to a SaaS subscription model for their service offerings, given that they were primarily an “on-prem” kind of company.

2. Customers with deep partnerships with Microsoft wanted to avoid data breaches from AI-driven products like Microsoft 365 and Microsoft Copilot.

Varonis plans to complete the SaaS transition in 2025, which it says will unlock even more revenue. Even with strong Q4 2024 results, Varonis showed possibly too much caution. and predicted a “flat net new ARR” to start the year (the same thing it did last year). Investors didn’t like this weak guidance, and its stock fell more than 10% last week.

Qualys (QLYS)

Qualys showed strong performance in 2024, hitting a 10% increase in revenue to $607.6 million. Qualys accounted for this from increased demand for its risk management and cloud security platform, more partner-driven sales, and more US Federal sales.

Two challenges for Qualys include the departure of CRO Dino DiMarino, which knocks down confidence in sales a bit, and weak forward-looking guidance for 2025 (a recurring theme across almost all cyber companies). The stock was down ~6% after the earnings call.

Macro Context:

• Many cyber companies are trying to play it safe and conservative at the start of the year to temper investor expectations (this is not uncommon).

• Major stock indices rallied slightly again last week, fueled by a fresh batch of quarterly earnings reports, but all ended the week lower.

• The Bank of England cut interest rates again last week down to 4.5%, marking the third rate cut since August 2024. The bank also lowered its forecast for UK economic growth, which is already far behind the US.

Earning reports to watch this coming week:

• CyberArk, Palo Alto Networks, and Rapid7

• Resilient Cyber w/ Mike Privette - 2024 Cyber Market Analysis Retrospective - I got together with my friend Chris Hughes to do a video recap of the State of the Cybersecurity Market 2024 report.

• *One in ten AI prompts puts sensitive data at risk - In-depth, data-driven new report from the Harmonic Security research team, who analyzed prompts submitted into GenAI tools. Check out their findings.

• The Rise of AI Hackbots - My friend Joseph Thacker gave a TED Talk on the evolution of AI hackbots and the role they may play in our not-so-distant future.

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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.

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