F5 Networks (FFIV) Buys Cloud Security Firm Threat Stack for $68M
The acquisition of Threat Stack is likely to further boost F5 Networks' (FFIV) competitive position in enterprise application security and delivery.
F5 Networks FFIV recently entered into a definitive agreement to acquire the Boston-based cloud security and compliance start-up, Threat Stack. Per the deal, the company will acquire all the issued and outstanding shares of the privately-held start-up for $68 million in cash.
The acquisition is expected to complete in the first quarter of fiscal 2022, subject to regulatory approvals and other customary closing conditions. F5 Networks intends to fund the transaction through its available balance-sheet cash.
Rationale Behind the Acquisition
Founded in 2012, Threat Stack offers cloud security for applications, and provides real-time threat detection for cloud infrastructure and workloads. The company’s Threat Stack Cloud Security Platform helps organizations monitor, detect, and respond to security and compliance risks. The platform is compatible across cloud, multi-cloud,hybrid cloud and containerized environments.
F5 Networks, Inc. Price and Consensus
The acquisition of Threat Stack will bolster F5 Networks’ cloud security portfolio, thereby, enhancing its capabilities and expertise in providing better visibility and protection across its application infrastructure and workloads. Therefore, the acquisition is further anticipated to strengthen the company’s competitive position in enterprise application security and delivery.
Haiyan Song, EVP of Security at F5 Networks said, "Applications are the backbone of today’s modern businesses, and protecting them is mission critical for our customers." She further added, "Threat Stack brings technology and talent that will strengthen F5’s security capabilities and further our adaptive applications vision with broader cloud observability and actionable security insights for customers.
Additionally, the acquisition of Threat Stack is anticipated to add approximately $15 million to F5 Networks’ fiscal 2022 total revenues.
Acquisitions: A Key Growth Strategy
F5 Networks, too, has resorted to acquisitions to boost its network security capabilities and tap the market. The buyouts have helped the company enhance its security capabilities, in turn, increasing the market share.
Most recently, in the first quarter of calendar-year 2021, the company completed the acquisition of Volterra, a privately-held edge-as-a-service platform, for a total consideration of nearly $500 million. Prior to that, it bought Shape Security in December 2019 for $1 billion and NGINX in March 2019 for $670 million.
Since its inception in 1996, the company has acquired 15 businesses for $2.63 billion. These acquisitions have fortified the company’s position across multiple sectors, such as cybersecurity, application security, enterprise networking and cloud infrastructure.
The acquisitions have enabled F5 Networks to provide its customers secured access to data and applications, which in turn, will create a protected business environment. As the Internet security market is evolving rapidly, we believe, these deals are an important strategic move by the company.
Zacks Rank & Other Key Picks
F5 Networks currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the broader technology sector include Microsoft MSFT, Cadence Design Systems CDNS, and NVIDIA NVDA, all carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Microsoft, Cadence Design, and NVIDIA is currently pegged at 11.1%, 11.7%, and 17.7%, respectively.
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