Cloud Security , Security Operations

Aqua Security Lays Off 10% of Workforce Amid CNAPP Upheaval

Aqua Security carried out its second round of layoffs since 2022 as the future prospects for stand-alone cloud security vendors look increasingly uncertain.

See Also: The State of Cloud-Native Security 2024 Report

The Boston-based cloud-native application protection platform provider said axing 10% of its workforce will ensure Aqua continues on a path to profitability that's aligned with current economic conditions. The job cuts come just six months after Aqua closed a $60 million Series E extension round at a valuation in excess of $1 billion and 19 months after the company laid off 20 employees in Israel and 65 globally (see: Aqua CEO on Why Cloud-Native Apps Need Supply Chain Security).

"We have taken the necessary measures to align with the needs of our customers and focus our resources and our team on our customers' greatest problem of protecting their cloud-native applications," Aqua co-founder and CEO Dror Davidoff said in a statement emailed to Information Security Media Group. The layoffs were first reported by Israeli business publication Calcalist.

Aqua Security employed 667 people as of June 16, according to IT-Harvest, meaning the latest round of layoffs affected approximately 67 workers. Roughly 300 of the company's staff are located in Israel, nearly 185 are in the U.S., some 120 are in India, and the rest are spread across the U.K., Australia, Germany, Canada, France and Japan. An Aqua spokesperson told ISMG the layoffs span geographies, roles and seniority.

Davidoff said Aqua's top-line revenue has grown by 30% over the past year, and the company had more than 500 enterprise customers as of January, including 40% of the Fortune 100. The company's backers include Evolution Equity, ION Crossover Partners, Greenspring Associates and Insight Partners, who led Aqua's Series E extension, Series E, Series D and Series C funding rounds in 2024, 2021, 2020 and 2019, respectively (see: The Role of AI in Cloud Application Security).

Layoffs, Rumored M&A Abound for Pure-Play Cloud Security Firms

IT-Harvest estimates that Aqua has notched $202 million in sales over the past 12 months, and it expects the company's revenue to increase by $29.3 million - or 14.5% - over the next quarter. The company's second round of layoffs comes as other pure-play cloud security vendors firms hitch their wagons to broader security or technology platforms.

Network security titan Fortinet agreed in June to acquire struggling cloud security firm Lacework, in an announcement that came just two months after reports that Wiz was planning to buy Lacework - once valued at $8.3 billion - for less than $200 million. And on Sunday, The Wall Street Journal reported that Google parent Alphabet is in advanced talks to acquire Wiz for $23 billion, and a deal is expected soon.

If both Lacework and Wiz are scooped up, the remaining stand-alone cloud protection firms would be Sysdig, Orca Security and Aqua, which are worth just $2.5 billion, $1.8 billion and $1 billion, respectively. Orca laid off 15% of its 430-person staff in January and is embroiled in dueling patent infringement lawsuits with Wiz, which says Orca copied features and technologies to make up for subpar innovation (see: Wiz Counters Orca Security's Patent Infringement Allegations).

Forrester recognized Wiz, Orca and Aqua as strong performers in its cloud workload security rankings released in January, and analysts listed Sysdig and Lacework as contenders. Forrester praised Aqua for its container orchestration visibility, protection capabilities and scale but said the company lags in infrastructure-as-code scanning, agent-based defense, and infrastructure and entitlement management.

Despite layoffs and M&A activity, the CNAPP market as a whole is excelling. Quarter-over-quarter revenue jumped 40% in winter 2024, and annual sales are expected to soar from $2 billion in 2023 to $6 billion in 2028, according to Dell'Oro Group. Palo Alto Networks was the market leader with 17% share, CrowdStrike took the silver and Wiz took the bronze with 105% quarter-over-quarter revenue growth.