Cybersecurity firm Proofpoint considers pre-IPO funding as it plots a return to public markets

LONDON — Privately-held cybersecurity company Proofpoint is exploring tapping exterior buyers for pre-IPO financing and the dignity of mergers and acquisitions of smaller cyber firms because it seeks a go back to society markets in 2026, CEO Sumit Dhawan informed GWN.

“We are looking at potentially exploring public markets sometime in the next 12 to 18 months,” Dhawan, who took the reins as Proofpoint’s newly appointed in 2022, a yr then the corporate used to be obtained by means of personal fairness company Thoma Bravo.

Dhawan added that the timing of Proofpoint’s IPO would nonetheless stay depending on common marketplace statuses in addition to the end result of the 2024 U.S. presidential election.

Since Proofpoint’s 2021 buyout by means of Thoma Bravo and Dhawan’s next appointment as CEO, corporate control has been pushing the company to imagine strategic alternatives comparable to mergers and acquisitions of smaller cybersecurity corporations to stimulate business consolidation.

Noting that there are curreFntly too many gamers within the cybersecurity marketplace, Dhawan stated that Proofpoint is these days on the lookout for acquisition objectives that trade in a “strategic fit” for the corporate — for the appropriate value.

“It’s happened in many other technology spaces — it happened with infrastructure, it has happened in the application platform space — where you start building fewer providers but richer platforms and, as a result, there will be consolidation,” Dhawan informed GWN in an unique interview this month.

“There are at this point in time, 2,000 or so non-profitable cybersecurity companies that are venture-backed, so clearly they’ll either get consolidated or potentially not exist. Because there’s no way any market can have that many players. So it’s going to happen, it’s bound to happen.”

Dhawan stated he’s discovering there’s a little bit of a “bid-ask spread” available in the market these days in terms of cybersecurity alternatives, which means goal firms are inquiring for extra money on the sale value than the valuations they’re being introduced. However he added that he’s sight some “great opportunities” available in the market.

A key precedence for Proofpoint because it hunts for M&A objectives is geographic growth, Dhawan famous, including that the corporate sees primary enlargement alternatives in non-English talking nations like Japan, South Korea and the Heart East, the place cyber breaches are skyrocketing because of the stand of generative AI.

The choice of industry electronic mail compromise assaults grew by means of 35% in Japan, 31% in South Korea, and 29% within the United Arab Emirates, in step with figures shared by means of Proofpoint with GWN. This is occurring as a result of generative AI is making it more straightforward for hackers to personalize emails in a couple of languages, in step with Dhawan.

Based in 2002 in Silicon Valley, Proofpoint makes era that is helping firms restrain phishing makes an attempt and alternative cyberattacks throughout a dimension of platforms, together with electronic mail, social media, cellular gadgets, and the cloud.

The corporate competes with the likes of Palo Alto Networks, CrowdStrike and Fortinet, all 3 of that have detectable their stocks stand sharply within the time three hundred and sixty five days. CrowdStrike — the corporate that led to a world IT outage this yr because of a instrument factor — is up 65% year-over-year.

Palo Alto Networks and Fortinet stocks are up 44% and 32% respectively over the similar duration.

Proofpoint went society within the U.S. in 2012, however therefore delisted then Thoma Bravo obtained the corporate in a $12.3 billion do business in in 2021. The buyout got here then investor issues over a deceleration in earnings enlargement.

Now, Proofpoint is as soon as once more having a look to faucet the society markets.

“We are a little bit different from typical companies going to IPO,” Dhawan stated. “They tend to be smaller. They tend to have a very different profile. They tend to have uncertainty in terms of profitability, and they tend to not be in position to easily consolidate.”

Taking Proofpoint society wouldn’t mark the primary future an organization Thoma Bravo obtained in a non-public fairness buyout has performed an IPO for a 2nd future. In 2019, cybersecurity company Dynatrace, which Thoma Bravo took personal in a 2014 buyout, went society once more in a Brandnew York checklist.

Proofpoint may just proceed thru “multiple rounds” of financing to extend possession of the corporate by means of alternative personal fairness buyers, Dhawan informed GWN, including that personal placements — gross sales of stocks to pre-selected buyers versus common gross sales to the society — are amongst choices it’s taking into consideration.

“We’re close to starting the process” for fundraising from buyers past its personal fairness homeowners, Dhawan stated. Alternatively, he stressed out the company hasn’t formally prompt this procedure.

Proofpoint’s boss stated he hopes that what separates his corporate from alternative tech and cybersecurity corporations searching for a matching IPO course, is a superb steadiness of enlargement and profitability, double-digit enlargement, and robust management in its marketplace.