Cloudflare is acquiring Area 1 Security, an email security software company that helps MSPs and customers to stop phishing attacks. The purchase price is roughly $162 million in cash and stock. The deal is expected to close in Q2 of 2022.
This is technology M&A deal number 203 that MSSP Alert and sister site ChannelE2E have covered so far in 2022.
This is Cloudflare's second acquisition announcement in recent weeks. The other deal involved buying Vectrix.
Meanwhile, overall M&A activity in the email security market has been strong. Example deals include Permira acquiring Mimecast for $5.8 billion in December 2021, and private equity firm Thoma Bravo acquiring Proofpoint for $12.3 billion in April 2021.
About Area 1 Security
Area 1 Security, mainly a cloud email security company, launched a North American partner program for MSPs, VARs and solution providers in August 2020. The program enables channel partners to offer Area 1 security solutions that protect against business email compromise (BEC), credential harvesting, ransomware and other threats that secure email gateways (SEGs) sometimes miss.
That partner program surfaced only a few months after Area 1 Security hired Patrick Sweeney as CEO and raised $25 million in new funding around July 2020. At the time, Sweeney described the partner strategy to MSSP Alert and ChannelE2E in this video:Video link
Fast forward to present day, and Sweeney offered this statement about the M&A deal with Cloudflare:
“Today, email is a business’ most-used cloud application. It's unfortunately unprotected. We estimate that more than 90% of cyber security damages are the result of just one thing: phishing. By combining our leading phishing protection and threat intelligence capabilities with Cloudflare’s global network, data capabilities, and Zero Trust platform we truly believe that together we can help companies of any size better secure their entire network infrastructure and better protect against the most destructive cyber risks.”
Cloudflare CEO Perspectives
Added Matthew Prince, co-founder and CEO of Cloudflare:
“Email is the largest cyber attack vector on the Internet, which makes integrated email security critical to any true Zero Trust network. That’s why today we’re welcoming Area 1 Security to help make Cloudflare’s platform the clear leader in Zero Trust. To us, the future of Zero Trust includes an integrated, one-click approach to securing all of an organization’s applications, including its most ubiquitous cloud application, email. Together, we expect we’ll be delivering the fastest, most effective, and most reliable email security on the market.”
Ahead of the M&A deal, Cloudflare’s global network was already blocking an average of 86 billion cyber threats each day.
Also, Cloudflare has been growing rapidly ahead of the recent acquisitions. The company's revenue was $193.6 million in Q4 of 2021, up 54 percent from Q4 of 2020, Cloudflare reported in early February 2022.