Proofpoint Completes the Acquisition of ObserveIT

Combined solution will solve legacy endpoint data loss prevention challenges and deliver real security value through detection, response, and compliance

Proofpoint, Inc., a leading cybersecurity and compliance company, today announced it has completed its acquisition of ObserveIT, the leading insider threat management platform. By combining ObserveIT’s lightweight endpoint agent technology and data risk analytics with Proofpoint’s industry-leading information classification, threat detection, and intelligence, enterprises will have unprecedented insight into user activity with their sensitive data, wherever it resides and the ability to immediately remediate risk.

“More than 30% of all data breaches are the result of insider threats and only a people-centric approach to data security can effectively prevent these breaches from happening,” said Gary Steele, chairman of the board and chief executive officer of Proofpoint. “As more companies look to successfully transition to the cloud, traditional ways of protecting data and intellectual property aren’t enough. Our acquisition of ObserveIT will help organizations overcome the challenges of legacy data loss prevention (DLP) and compliance by extending our market-leading email and cloud access security broker (CASB) DLP capabilities with endpoint. By joining email and data-at-rest solutions, Proofpoint will deliver the industry’s first truly innovative enterprise DLP offering in years.”

Companies worldwide are in a constant battle to stop cybercriminals from stealing employee credentials, to correct accidental user behaviors that can result in unintended data loss, and to prevent malicious employee action. Through this acquisition, Proofpoint will provide security teams with the capability to understand and respond to data being mishandled, whether on a corporate device, in a cloud app like Office 365, or via email allowing teams to rapidly detect, investigate, and prevent potential insider threat incidents.

Financial Impact

ObserveIT’s revenue model has historically operated under a perpetual licensing model which Proofpoint intends to promptly transition to subscription. ObserveIT’s annualized expense run rate was just over $40 million as of the third quarter of 2019.

Proofpoint expects that ObserveIT’s financial results will be nominally accretive for the company’s revenue and billings guidance for Q4 2019, last provided on October 24, 2019, and nominally dilutive to its guidance for non-gaap net income and free cash flow for the same period. For fiscal year 2020, the inorganic revenue and billings contribution from ObserveIT’s historical business model is expected to be quite limited due to the planned shift to a subscription-based model.

Proofpoint intends to provide additional commentary on the acquisition of ObserveIT during the company’s fourth quarter and year-ended 2019 earnings call to be held in early 2020.

Source: Proofpoint media announcement