Identity security company CyberArk has acquired identity governance and administration (IGA) platform Zilla Security in a deal worth up to $175 million.
The transaction consists of a $165 million cash portion and an additional $10 million “earn-out” which is payable upon meeting certain milestones — it can be seen as an incentive for the founders or other key personnel to hang about through the transition phase.
Founded in 1999, Boston-based CyberArk specializes in access management, including privileged access security which helps organizations protect sensitive data and critical infrastructure from external (and internal) threats.
CyberArk has made eight known acquisitions previously, the largest by some distance being the $1.54 billion it paid for machine identity company Venafi last year.
Zilla, for its part, is another Boston-based security company operating in the identity and access management realm. But given that it was founded in 2019, Zilla is a nimbler cloud-native player that has been adding more automation and AI-enabled features to the mix, making it an alluring proposition for a much larger company founded in the days before SaaS or cloud computing had taken hold.
“What worked 20 years ago clearly doesn’t work today,” Zilla CEO and co-founder Deepak Taneja said in a statement.
Zilla had raised around $19 million since its inception six years ago, with backers including FirstMark, Pillar VC, and Tola Capital.
Reshaping identity governance
The long and short of all this is that CyberArk wants to bolster its own products with tools “purpose-built for the cloud,” with AI at its core and easy integrations for hybrid- and multi-cloud environments.
“By expanding the CyberArk Identity Security Platform with Zilla’s modern IGA capabilities, we will reshape identity governance with scalable automation that delivers compliance and helps maximize security for the modern enterprise,” CyberArk CEO Matt Cohen added in a statement.
That’s not to say that CyberArk hasn’t already been modernizing, though. The company went public on the Nasdaq in 2014, and its shares currently sit more than 1,000% up on its IPO price — in the past year alone, its valuation has surged 41% to more than $18 billion. Earlier today, the company posted its Q4 results that revealed a year-on-year revenue hike of 41%. Specifically, its subscription revenue in particular grew by 62%, with its annual recurring revenue (ARR) surpassing the $1 billion mark.
As a result of the transaction, CyberArk will offer key Zilla services — including Zilla Comply and Zilla Provisioning — as standalone products through the CyberArk identity security platform. Additionally, Zilla’s co-founders — Deepak Taneja and Nitin Sonawane — and their team will be joining CyberArk.