Proofpoint To Buy Threat Prevention Vendor ObserveIT For $225M

The deal is expected to give enterprises unique insights into user activity by combining Proofpoint’s information classification, threat detection, and intelligence with ObserveIT’s endpoint agent and data risk analytics.

Proofpoint has agreed to acquire insider threat management platform provider ObserveIT to better protect data across email, cloud, and the endpoint.

The Sunnyvale, Calif.-based cybersecurity vendor said its proposed purchase of Boston-based ObserveIT will give enterprises unprecedented insights into user activity with their sensitive data by combining Proofpoint’s information classification, threat detection, and intelligence with ObserveIT’s lightweight endpoint agent and data risk analytics. The deal is expected to close late in the fourth quarter of 2019.

“Defending data requires the ability to detect risky inside threat behavior and risky user activity, and swiftly mitigate risk across cloud apps, email, and endpoints,” Proofpoint CEO Gary Steele said in a statement. “We are the only security company that provides organizations with deep visibility into their most attacked people – and with ObserveIT, we will bring to market the first truly innovative enterprise DLP [data loss prevention] offering in years.”

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[Related: Proofpoint To Buy Cybersecurity Startup Meta Networks For $120M]

Proofpoint didn’t immediately respond to a request for additional comment. The company’s stock is unchanged at $117.81 per share since the deal was announced Sunday morning.

ObserveIT was founded in 2006, employs 188 people, and has raised $53 million in three rounds of outside funding, according to LinkedIn and Crunchbase. The company has historically operated under a perpetual licensing model, and had an annualized expense run rate of more than $40 million in the third quarter of 2019.

Proofpoint said it intends to shift ObserveIT to a subscription-based model promptly after the transaction closes, meaning that ObserveIT’s inorganic revenue and billings contribution for the 2020 fiscal year is expected to be quite limited. ObserveIT is expected to provide a nominal boost to Proofpoint’s revenue and a nominal hit to non-GAAP net income in the fourth quarter of 2019.

“We are excited to join the Proofpoint team and provide customers with even more powerful solutions to mitigate insider threats, decrease incident investigation time, and make sure users don’t intentionally or accidentally send valuable, confidential information externally,” ObserveIT CEO Mike McKee said in a statement.

ObserveIT’s insider threat management tool helps security teams detect, investigate, and prevent potential insider threat incidents by delivering real-time alerts as well as actionable insights into user activity. Given that more and more users are accessing data from endpoints off the corporate network, firms need better ways to understand how, when, and where users are interacting with critical data.

And as more companies encourage their employees to work from anywhere on any device, Proofpoint said enterprise data loss prevention must evolve from a legacy, perimeter-based control to an intelligent, activity-based tool that responds to data risks across cloud apps, email, and lightweight endpoint agents.

Integrating Proofpoint and ObserveIT’s capabilities together will provide deal-time detection of anomalous interactions across people, data, devices, and applications, the company said. This will allow security teams to better understand and respond to the mishandling of data, whether it’s on a corporate device, in a cloud app like Office 365, or via email, according to Proofpoint.

An integrated Proofpoint-ObserveIT offering is expected to be available at some point in 2020 as part of Proofpoint’s integrated protection suite. ObserveIT launched a two-tier partner program in North America in early 2017 as the company moved away from an inside sales strategy and toward the channel-focused sales model that had brought the company success internationally.

This is Proofpoint’s fourth acquisition in the past two years, and comes six months after the company bought zero trust network access startup Meta Networks for $120 million. Proofpoint also purchased browser isolation startup in November 2017 for $60 million as well as phishing simulation and training provide Wombat Security Technologies in February 2018 for $225 million.