5 Things You Need to Know About Thoma Bravo’s $12.3 Billion Purchase of Proofpoint
On April 26, 2021, Thoma Bravo announced the acquisition of the cybersecurity company Proofpoint for an outstanding $12.3 billion. Lately, Thoma Bravo has been building a cloud software vendor portfolio, making Proofpoint the third billion-dollar cloud software vendor acquired in the last two years. As it appears, a top ten private equity firm has its sites on cloud software acquisitions. With the well-documented track record of success by Thoma Bravo, we can focus our sites on the cloud software market as an investment and perhaps consider Proofpoint a cybersecurity company to safeguard our enterprises safely.
5 Things you should know about the Thoma Bravo aquisition of Proofpoint
- Largest private equity cloud deal in history
- This will be the third cloud software acquired company by Thoma Bravo in the last two years
- Proofpoint revenue growth slowed gradually from 2018–2020
- Proofpoint was founded in 2002
- Proofpoint passed $1 billion in annual revenue
As this acquision moves forward, these five factors are signifcant in the consideration that there are high hopes for the future of cloud software and cybersecurty services, especially when it comes to Proofpoint.
Largest private equity cloud deal in history
Thomas Bravo paid out $176 per share to all Proofpoint shareholders, representing a premium of 34%, taking the company private. Previously, the largest cloud aquisition by a private equity firm was $11 billion initiated by Hellman & Friedman’s buyout of the HR software solutions company Ultimate Software.
According to a report by Cybersecurity Ventures, in 2021, cybersecurity experts predicted there will be a cyberattack incident every 11 seconds. With the improvement stratagies by Thoma Bravo, the potential growth of Proofpoint, and the demand of cybersecurity, the largest private equity cloud software deal makes a lot of sense.
Thoma Bravo added two other cloud software companies to their portfilio
Besides aquiring Proofpoint recently, Thoma Bravo aquired two other cloud software companies within the last two years.
- Ellie Mae — purchased in April of 2019 for $3.7 billion
- Talend — purchased in March of 2021 for $2.4 billion
According to Gartner (the analytical agency), the global market for public cloud services will potentially reach $308.5 billion in 2021. This value is $40 billion up from 2020, and $90 billion up from 2019. According to Globenewswire.com, the cloud computing market is expected growth at a CAGR of 18% up until 2027.
Proofpoint revenue growth slowed gradually from 2018–2020
According to CNBC, Proofpoints revenue growth slowed to 18% in 2020. In 2019 revenue growth was 24%, and 39% in 2018.
However, after a bad year in 2018, Proofpoint managed to bounce back the following year. A gradual decline in year-over-year revenue growth of a company that has managed to bounce back after a bad previous year is a company worth considering for a buyout, especially if they’ve showed significant consistenat growth potential in previous years. Not only does bouncing back draw attention to the company in a positive light, but motivates the company to add the latest technology to its operations.
After Proofpoint stocks fell 5% in 2018, it managed to bring the stock up 44% in the first quarter the following year. The email security business was still in high demand. They added Email Fraud Defense (EFD) which blocks fraudulent emails before they reach employees, partners and customers. They added Threat Response which is a security orchestration automation and response (SOAR) solution. They added Wombat which allows customers to use actual detected phishing attacks for training simulations, and many other solutions. These solutions constituted to the growth of Proofpoint in 2019 up from its decline in 2018. Although, overall, revenue growth slowed over the last couple of years, the potantial has been proven. With the expertise of Thoma Bravo, performance is expected to imrpove, as well as revenue growth. So, customers of the cybersecurity company should be in good hands.
Proofpoint was founded in 2002
With over 19 years of cybersecurity experience, Proofpoint has made a good name for themselves. They are one of the top cybersecurity solution companies who has managed to pass $1 billion in revenue.
Proofpoint passed $1 billion in annual revenue
It is clear, based on these numbers below, that Proofpoint accumulated profit each year to increase the worth of its business. However, the rate at which it increased its worth, specifically between 2018 and 2020, raised concerns.
The following numbers are based on millions of dollars. As you can see, 2020, is when Proofpoint finally hit the billion dollar mark. Based on annual revenue increase (in parathesis) you can clearly see that Proofpoint took a major dive on annual revenue increase from 2018–2020. The following numbers are based on Macrotrends.net.
- 2010 — $65
- 2011 — $82 (26.15%)
- 2012 — $106 (29.26%)
- 2013 — $138 (30.1%)
- 2014 — $196 (42.02%)
- 2015 — $265 (35.20%)
- 2016 — $378 (42.64%)
- 2017 — $520 (37.56%)
- 2018 — $717 (37.88%)
- 2019 — $888 (23.84%)
- 2020 — $1050 (18.24%)
Is Proofpoint a top cybersecurty company?
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Why did Proofpoint take their business private?
Proofpoint’s Chief Executive, Gary Steele, says “We believe that as a private company, we can be even more agile with greater flexibility to continue investing in innovation, building on our leadership position and staying ahead of threat actors."
Based on these five things to know about Proofpoint, enterprises seeking reputable cybersecurity has a company to seriously consider for the protection of its day-to-day computer operations. If the rate of cyber attack incidents is to reach 11 seconds, a trustworthy cybersecurity solutions company is in high demand. With the acquistion by Thoma Bravo of Proofpoint, at a record buyout of an outstanding $12.3 billion, when the slow growing company just recently reached $1 billion in revenue in 2020, the potential is there. And if Thoma Bravo, a top private equity firm sees the potential in the cybersecurity leader than it may be safe to weigh heavily towards the future services of Proofpoint as a consumer.
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