The Expert's View with Michael Novinson

Endpoint Security , Governance & Risk Management , Internet of Things Security

Why Claroty Is Considering Going Public at a $3.5B Valuation

Rubrik Began the IPO Process. Will Cyber-Physical Systems Vendor Claroty Join It?
Why Claroty Is Considering Going Public at a $3.5B Valuation

Now that Rubrik is officially planning to move forward with an initial public offering, other cybersecurity startups are setting their feet on the starting blocks.

See Also: AI-Driven Strategies for Effective Cyber Incident Recovery

Both Snyk and Cato Networks have been eyeing the public market for months. Snyk reportedly drafted an IPO investor prospectus in January and is mulling a confidential filing with regulators in the next few months. Cato Networks, meanwhile, hired Goldman Sachs, JPMorgan Chase and Barclays to prepare for an initial public offering in New York that could come by 2025, Reuters reported last month (see: Rubrik IPO Filing Reveals Sales Acceleration, Growing Losses).

Following Rubrik's announcement last week that the data security startup plans to list on the New York Stock Exchange, another company is considering trying its luck in the public market. Claroty is meeting with underwriters ahead of a possible Nasdaq or New York Stock Exchange initial public offering in 2025 that could value the cyber-physical systems security titan at $3.5 billion, Calcalist said Tuesday.

"An IPO is an important business milestone in the development of the company and one we’ve long expressed is a possibility for Claroty," CEO Yaniv Vardi said in a statement provided to Information Security Media Group. "We have not yet officially begun the IPO process and we do not yet have a set timetable for a possible event."

Why Claroty Is a Candidate for an Initial Public Offering

The IPO report comes just a month after Claroty hauled in $100 million of strategic growth funding to pursue acquisitions in areas such as microsegmentation and expand its presence in the public sector and transportation industry. Both Calcalist and Globes reported Claroty received a $2.5 billion valuation in conjunction with the funding, which is up from the $2 billion valuation Claroty got in December 2021 (see: Claroty Gets $100M for Global Growth, Microsegmentation M&A).

"We have been going through IPO readiness for quite some time now because we want to make sure we follow the right processes for a healthy company, regardless of IPO," Vardi told ISMG last month. "I could be ready for an IPO right now, but I don't think the market is ready."

Claroty's IPO ambitions should be aided by its focus on operational technology and industrial control systems protection, which is one of the least saturated fields in the cyber industry. The two pure-play OT cybersecurity rivals to Claroty - Dragos and Nozomi Networks - are venture-backed. Dragos received $74 million in September from WestCap, and Nozomi Networks got $100 million from Schneider and Mitsubishi in March.

The company used proceeds from its December 2021 Series E funding led by Japanese conglomerate SoftBank to buy healthcare IoT security startup Medigate. Claroty has been led since July 2020 by former Panoramic Power CEO Yaniv Vardi, and it first surpassed $100 million in annual recurring revenue in 2023.

How Claroty Has Grown Over the Past Decade

Claroty was founded in 2015, has raised $732 million of outside funding and employs 524 people, up 19.4% from a staff size of 439 in April 2023, according to IT-Harvest. Roughly 305 of Claroty's workers are based in Israel, some 146 are located in the United States, 32 are based in the United Kingdom, and the remainder are spread across Germany, Australia, France, India and Canada, according to IT-Harvest.

The company has generated $110 million of revenue over the past 12 months, or nearly $210,000 per employee, according to IT-Harvest, which predicts Claroty's revenue will grow by $35.1 million - or 31.9% - over the next quarter. Claroty provides visibility into and protection of industrial environments. It offers secure remote access to commercial operational settings and detects threats in those settings.

Vardi told ISMG last month that going forward, Claroty plans to expand into heavily regulated verticals and deepen its presence in markets such as the United States and Japan. The company will consider M&A to broaden its technological capabilities in areas such as microsegmentation and gain more market share in verticals or territories Claroty deems critical, such as transportation, due to new federal rules in the U.S.

If Rubrik's initial public offering lives up to expectations, perhaps Claroty won't be too far behind.

Updated April 10 at 04:55 UTC with comment from Claroty

About the Author

Michael Novinson

Michael Novinson

Managing Editor, Business, ISMG

Novinson is responsible for covering the vendor and technology landscape. Prior to joining ISMG, he spent four and a half years covering all the major cybersecurity vendors at CRN, with a focus on their programs and offerings for IT service providers. He was recognized for his breaking news coverage of the August 2019 coordinated ransomware attack against local governments in Texas as well as for his continued reporting around the SolarWinds hack in late 2020 and early 2021.

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