Why Palo Alto Networks (PANW) Is Buying The Crypsis Group For $265 Million

By Amit Chowdhry ● August 25, 2020
  • Global cybersecurity leader Palo Alto Networks (NYSE: PANW) recently announced that it entered into a definitive agreement to buy The Crypsis Group for a total purchase price of $265 million in cash. These are the details.

Global cybersecurity leader Palo Alto Networks (NYSE: PANW) recently announced that it entered into a definitive agreement to buy The Crypsis Group — which is a leading incident response, risk management, and digital forensics consulting firm. As part of the agreement, Palo Alto Networks will acquire The Crypsis Group for a total purchase price of $265 million in cash, subject to adjustment. This proposed acquisition is expected to close during Palo Alto Networks’ fiscal first quarter.

How does The Crypsis Group work? Malicious actors are continuing to grow in sophistication when it comes to security breaches, thus causing a risk of revenue and reputational impact. And in order to focus on the health and growth of their business, organizations need trusted partners to not only quickly and efficiently respond to and contain attacks but also utilize their learning and insight to prevent future attacks.

Palo Alto Networks already provides best-in-class prevention, detection, and response capabilities through Cortex XDR. And the addition of The Crypsis Group’s security consulting and forensics capabilities will strengthen Cortex XDR’s ability to collect rich security telemetry, manage breaches, and initiate rapid response actions. 

The Crypsis Group’s experts and insights will also power the Cortex XDR platform with a continuous feedback loop between incident response engagements and product research teams to prevent future cyberattacks. And the company expects to integrate The Crypsis Group’s processes and technology into Cortex XDR to further enhance its ability to safeguard organizations at every stage of the security lifecycle.

The Crypsis Group’s 150+ security consultants have handled some of the most complex and significant cybersecurity incidents, responding to over 1,300 security engagements per year. The Crypsis Group has served over 1,700 organizations across the healthcare, financial services, retail, e-commerce, and energy industries. The company’s CEO Bret Padres will join Palo Alto Networks.

The Crypsis Group currently operates as part of the ZP Group — an organization with a portfolio of companies specializing in breach response, national security solutions, and IT staffing.

In related news, Palo Alto Networks also recently reported its fiscal fourth quarter and fiscal year 2020 financial results. The company’s fiscal fourth quarter revenue grew 18% year over year to $950.4 million. And the fiscal year 2020 revenue also grew 18% year-over-year to $3.4 billion. The fiscal fourth-quarter bills increased 32% year-over-year to $1.4 billion and fiscal year 2020 billings surged 23% year-over-year to $4.3 billion.

Palo Alto Networks also provided guidance based on current market conditions and expectations. For the fiscal first quarter of 2021, Palo Alto Networks expect total billings to be in the range of $1.03 billion to $1.05 billion, representing year-over-year growth of between 15% and 17%. And total revenue is expected to be in the range of $915 million to $925 million, representing year-over-year growth of between 19% and 20%.

KEY QUOTES: 

“The proposed acquisition of The Crypsis Group will significantly enhance our position as the cybersecurity partner of choice, while expanding our capabilities and strengthening our Cortex strategy. By joining forces, we will be able to help customers not only predict and prevent cyberattacks but also mitigate the impact of any breach they may face.”

– Nikesh Arora, chairman and CEO of Palo Alto Networks

“We have dedicated ourselves to creating a more secure world through the fight against cybercrime. Together with Palo Alto Networks, we will be able to help businesses and governments better respond to threat actors on a global scale.”

– Bret Padres, CEO of The Crypsis Group

“Bret Padres and the Crypsis leadership team have built a world-class incident response and digital forensics company. I cannot think of a better organization to leverage and scale the services that Crypsis offers than Palo Alto Networks.”

– Justin Jordan, chairman and CEO of ZP Group