Dive Brief:
- Cybersecurity firm Imperva gave a 2016 earnings forecast below analysts’ estimates last week, driving a 23% drop in the company’s stock.
- Imperva is not alone with its growing pains as other cybersecurity companies like Fortinet and FireEye Inc. have recently suffered in the stock market.
- Anthony Bettencourt, chief executive officer of Imperva Inc., said the company would have an operating loss between $7.5 million and $9.5 million in the first quarter.
Dive Insight:
Analysts say high-profile data breaches drove security spending up in 2015, making cybersecurity company valuations too high. As a result, many cybersecurity firms have recently seen their valuations plummet.
“We’re not seeing as much panic buying,” Andrew Nowinski, an analyst with Piper Jaffray in Minneapolis, told Bloomberg. “Their revenue growth hasn’t deviated, but it’s causing them to spend more money too.”
The cybersecurity field is expensive and changing rapidly. Last month, FireEye purchased threat intelligence firm iSight Partners for $200 million. Reuters reported that iSight CEO John Watters was aiming for a $1 billion valuation when he talked last year about a potential IPO in 2016. Now, the deal is worth just one-fifth of that hoped-for valuation.
