The tense geopolitical environment, accelerated digitization of the economy and the growing number of connected and smart devices create fertile ground for cybercriminals, leading to a surge in intrusions and attacks.
Against this backdrop, all enterprises and organizations have no choice but to roll out Zero Trust security architectures that combine user identification and access management with device authentication and protection and to massively invest in detection tools and automated response solutions.
AI is also rapidly emerging as a powerful driver for the cybersecurity industry. First, the widespread use of personal data to train AI models, coupled with the rise of adversarial AI threats—where malicious actors attempt to manipulate models used in autonomous driving or facial recognition, for example— requires increased data security.
Second, the integration of Generative AI capabilities into cybersecurity products is expected to materially improve the detection of unusual patterns, enable faster responses to emerging threats and bring major productivity gains to enterprise security teams. As a result, AI should provide a boost to vendors’ pricing power and margins.
Finally, M&A is adding some spice to the investment case. Most cybersecurity firms indeed seek to offer comprehensive platforms covering all security needs and are on the hunt for acquisitions as customer enterprises demand packaged solutions to reduce costs and complexity.
The industry growth outlook as well as its fragmentation are also attracting private equity firms seeking to extract synergies by combining various cybersecurity assets.
If the Tech industry has reached new highs in recent weeks, the cybersecurity sector has encountered some turbulence with Palo Alto’s acquisition of CyberArk raising some concerns about the need for large-scale M&A to sustain growth and Fortinet’s earnings commentary and soft Q3 outlook in early August weighing on the group and dragging down peers.…
According to The Wall Street Journal, Palo Alto Networks is in advanced talks to acquire identity and access management leader CyberArk in a deal exceeding $20 billion. This potential acquisition would mark a strategic leap for Palo Alto. First, it aligns with the company’s ongoing “platformization” strategy by extending its reach beyond network, cloud, and…
Thoma Bravo, a leading private equity firm whose investment focus is software and cybersecurity, announced last week the completion of fundraising for various buyout funds totaling more than $34 billion. Considering that Thoma Bravo has been a major M&A predator of listed cybersecurity midcaps in the last couple of years with five acquisitions in a…
Machine identity has emerged as a major growth opportunity for the cybersecurity industry lately, specifically for identity & access management specialists. Machine identity refers to a unique digital credential assigned to non-human entities, ensuring secure interactions between machines and allowing only trusted systems to access and exchange information. Historically, this term has included a wide…
Almost a year after initial discussions, Google is finally acquiring the privately-held cloud cybersecurity company Wiz for a staggering $33 billion, marking the largest deal in the industry to date, surpassing the $28 billion Cisco’s acquisition of Splunk from two years ago. In recent years, Tech giants have been intensifying efforts to strengthen their cybersecurity…
Palantir, the largest position in both our AI and Cybersecurity portfolios, impressed again last night with revenue growth accelerating for the sixth quarter in a row to 36% (from 30%) and a FY25 revenue growth guidance of 31%, both figures coming 5-10% ahead of expectations. The strong top-line performance sparked another significant margin leverage, with…
Synapse Invest was founded in 2019 with the mission of offering a diverse range of thematic investment products centered around innovation. Our journey began with the launch of our first Actively Managed Certificates (AMCs) in the closing weeks of 2019, and we are now proud to celebrate more than five years of consistent growth and…
While most software companies, from the small ones (C3.ai, MongoDB…) to the large ones (Adobe, ServiceNow, Salesforce…), are now wannabe AI companies, Palantir is the real deal in our view. The company, known for its software products used by governments/military around the world, has developed over the years an AI platform (AIP) that is quickly…
The upcoming earnings season could be a bit noisy for the cybersecurity players, as violence escalation in the Middle East is likely to have hampered project timelines and delays product innovations in Israel where many cybersecurity firms are located and/or have large R&D teams. It’s probably no coincidence that Q3 VC funding in cybersecurity startups…
Even if cybersecurity remains a top IT priority for most organizations (along with AI, obviously) and, accordingly, keeps growing fast, two events affecting two of the largest cybersecurity vendors have weighed down on investor sentiment this year: Palo Alto’s aggressive pricing policy, fueling concerns about the company’s short-term outlook and potential industry-wide discounting initiatives; and,…
The cybersecurity sector had a rough ride last week as Palo Alto Networks (a portfolio company), one of the industry leaders, announced an underwhelming billings guidance for both the current quarter (only +2-4%, after +16% in CQ4) and the full year (+10-11% vs +16-17% previously). Amid healthy cybersecurity spending, Palo Alto’s figures clearly came as…
UK-based Darktrace kicked off the cybersecurity earnings season with a robust set of figures and a guidance upgrade, giving confidence that the recent rally in security stocks is sustainable as fundamentals improve. In H1 (calendar H2), Darktrace delivered 27% revenue growth, 3% above expectations, with an EBITDA margin above 19% (100-200bps above consensus) and raised…
Eighteen months after initial reports of M&A talks, networking giant Cisco announced the takeover of data analytics and cybersecurity software company Splunk in a massive $28 billion deal (both Cisco and Splunk are portfolio companies). The 32% premium is in line with recent sector transactions and the valuation multiple (6x revenue) is in the low-end…
As we commented a couple of months ago, generative AI has been emerging as a weapon for hackers, making phishing attempts (emails or texts inviting a user to open a malicious link to steal his/her credentials) bespoke and then much harder to detect, and helping to reduce malware software development cycles and/or rewrite code to…
The cybersecurity sector has come under pressure over the last couple of days following Microsoft’s introduction of a secure web gateway solution (SWG) called Entra, that complements the Tech giant’s leading franchise in identity/access management and extended detection and response (XDR). SWG – which is one of the main components of Gartner’s defined Secure Access…
The easing of the zero Covid policy in China and of the government crackdown on its Tech industry have obviously been a major positive as both Chinese Tech giants and local companies, that often fly under investors’ radar, enjoyed a significant rerating since the end of 2022. Specifically, cybersecurity firms, that were hit by a…
Ransomware attacks have been increasing at an alarming rate over the last couple of years (between +50% and +100% according to various sources) with ransomware becoming the preferred method for many cybercriminals to monetize their fraudulent activity. With the emergence of the Ransomware-as-a-Service (RaaS) “business model” in the hackers’ community, this type of attack is…
Crypto hacks are now making the headlines on a regular basis, as illustrated by the $620 million heist of blockchain game Axie Infinity in March or last week’s $160 million hack of crypto market maker Wintermute. With criminal activity involving cryptocurrencies on track to reach a new record after the 2021 peak ($14 billion, up…
As illustrated by Google’s recent acquisition of Mandiant and Cisco’s increasing focus on security, a convergence between tech hardware and cybersecurity software has been taking place, a move that should intensify over coming years. For networking hardware specialists such as Cisco and Juniper, implementing firewalling and threat detection software in their routers and switches is…
Many cybersecurity companies, including Fortinet, Cloudflare or Rapid7, reported their quarterly earnings in recent days. While revenue and earnings were overall solid, most companies hinted at increasing deal scrutiny from their corporate customers, lengthening sales cycles and softening growth trends going forward as customers navigate a complex environment and are closely watching their spending amidst…
Identity management specialist Ping Identity (a portfolio company) just announced its acquisition by private equity firm Thoma Bravo for a $2.8 billion enterprise value and a massive 63% premium, marking the sixth multi-billion M&A deal in cybersecurity so far this year. This deal follows the recent SailPoint takeover (also by Thoma Bravo), which was the…
Amid general concerns about the macro and corporate spending outlook, it appears that cybersecurity remains an area of strong growth and resilience, as illustrated by the latest Morgan Stanley survey of Chief Information Officers that found that spending on security software was the least likely to be cut among the whole Tech categories (software and…
According to various media reports, semiconductor giant Broadcom is in talks to acquire cloud software infrastructure company VMware. Having started with server virtualization, a software solution that morphs a single and physical server into several virtual ones, VMware gradually added storage and networking virtualization in order to offer a complete infrastructure software stack that allows…
Two weeks ago, we highlighted the need for automated threat detection in an environment where the number of threats is rising exponentially and commented that Google’s recent acquisition of privately held Siemplify could pave the way to other M&A deals in the field of security automation. It looks like things are speeding up with Microsoft…
Before a potential invasion, Russia has reportedly sought to destabilize Ukraine on the cyber front in recent weeks as hackers attacked and placed destructive malware inside tens of Ukrainian government agencies. This prompted the US Cybersecurity and Infrastructure Security Agency to warn critical infrastructure operators against possible cyber threats to US assets, reminding that two major cyberattacks…
Many cyber-attacks and security breaches made the headlines last year (SolarWinds, Kaseya…). But that was almost nothing compared to the Log4Shell vulnerability present in the Java open-source Apache logging library Log4J that was revealed in early December and sparked a coordinated response from several US agencies (NSA, FBI, CISA…). This dismay is not disproportionate as…
Since the beginning of the COVID-19 pandemic, cybercrime activity has been on a tear (e.g. +130% for ransomware) as companies had no choice but to open up their IT network to remote workers and devices, often struggling to comprehensively secure it on time, leaving entry points for malicious attacks. Interestingly, 50% of these security failures…
Recently, we commented that the Internet-of-Things (IoT) was finally gaining traction in the industrial world and was on track to become 5G’s killer app as it provides industrial companies with the opportunity to attach a wide range of digital services and features (monitoring, analytics…) to their installed base of cars, factory machines or robots. The…
The cyber-attack which recently struck one of the biggest oil infrastructures in the US, the Colonial Pipeline, is the latest in a series of high-profile attacks targeting critical US infrastructures. Back in December, the Sunburst/SolarWinds infiltration operation made the headlines as it hit the US Treasury, the US Department of Commerce as well as most…
Since the vaccine news last month, some investors have started questioning the growth sustainability of work-from-home winners, including cybersecurity names, considering that most lockdowns are now behind us and that we are heading towards a full economy reopening in 2021. This week’s earnings and guidance from some of the top software vendors securing the remote…
Back in April, we commented that a new generation of cloud-native cybersecurity companies (Zscaler, Okta, CrowdStrike…) was likely to disrupt the actual leaders (Check Point, Palo Alto…). Clearly, the accelerated digitization of the economy in the last couple of months helped them deliver on our expectation, with several players reporting impressive earnings last week and…
There’s been a lot of literature in recent days about the “remote” or at-home revolution. Remote working, videoconferencing, telemedicine and online shopping just to name a few are indeed currently supporting millions of people across the world in their daily professional activity, in helping them to stay in contact with colleagues and loved ones and,…
NAV & Performance
ISIN
CH0473585252
Currency
USD
Type
Active Equity
Issuer / Rating
UBS / S&P A+
Inception Date
08.11.2019
Liquidity
Daily