October Cyber Intelligence Review
Cybersecurity firms continue to experience strong demand in the capital markets. FireEye, Inc., a provider of malware protection software, made its public trading debut on September 20, 2013 under the ticker FEYE. Raising $303.5 million in new capital, FireEye, which earned $115.2 million in last twelve months (“LTM”) revenue as of June 30, 2013, closed at $36.00 on its first day of trading—representing an 80% increase from its $20.00 IPO price. At the $20.00 share price, FireEye had an implied enterprise value (“EV”) of $2.3 billion and commanded an EV / LTM revenue multiple of 20.0x. Within the federal market, Air Force officials are working to develop an effective procurement model for cybersecurity solutions in order to keep pace with technological advances. The value of data analytics was illustrated in a recent Bloomberg survey, which showed that CFOs are investing heavily in new IT systems to improve corporate performance by harnessing the capabilities of big data. Further illustrating the growing demand for data analytics solutions, IBM has announced it will invest $1 billion over five years to promote Linux, an operating systems designed for open-source software deployment and distribution. Cybersecurity M&A activity remained strong during September. Parallax Capital Partners acquired IdenTrust, a provider of digital identity authentication solutions, expanding the investment firm’s portfolio of security-focused firms. Additionally, F5 Networks, a publicly traded provider of network-based applications, acquired Versafe Ltd. The transaction allows F5 to leverage Versafe’s malware protection and fraud prevention capabilities as a differentiator in the market for cloud-based applications. VC funding for big data firms was similarly robust during September. Palantir Technologies, Inc., a provider of data analytics solutions to government and commercial enterprises, led VC headlines for the month, securing $196.5 million in growth capital. Palantir is expected to earn $450 million in revenue this year, a 50% increase from 2012. Additionally, Virtustream, Inc., a provider of enterprise cloud software, secured a $40.0 million Series D funding round from SAP AG. The funding will help to accelerate development of Virtustream’s cloud management software.