If you are considering becoming a 1M/1M premium member and would like to join our mailing list to receive ongoing information, please sign up here.

Subscribe to our Feed

Cloud Stocks: How Will Carbon Black Differentiate?

Posted on Tuesday, Jan 29th 2019

A recent GM Insights report estimates the global endpoint security market to grow to more than $7.5 billion by 2024 driven by the rising adoption of Bring-Your-Own-Devices (BYOD) in organizations. Waltham, Massachusetts-based Carbon Black (Nasdaq: CBLK) is a leading player in this industry.

Carbon Black’s Offerings

Carbon Black was founded in 2002 by Ben Johnson, Michael Viscuso, and Todd Brennan. It was initially known as Bit9 and was set up to provide next-generation endpoint security solutions. Its predictive cloud platform continuously captures, records, and analyzes unfiltered endpoint data to help deliver security capabilities to its customers. Its solutions help customers predict, prevent, detect, respond to, and remediate cyber attacks before they result in damaging data breach.

Endpoints range from personal devices such as desktops, laptops and mobile phones to enterprise devices such as servers, virtual machines, cloud workloads, ATMs, point of sale systems, and many more. These devices, whether physical or virtual, store sensitive data and perform critical operations for the organization and end users. Carbon Black’s proprietary platform uses unfiltered data from these endpoints and deploys a data shaping technology that smooths bursts of endpoint data activity, optimizes bandwidth demands, compresses data, and delivers a graph-like custom model for endpoint data for further analysis. Its stream processing technology, then evaluates and classifies a continuously updated series of events to identify risk and viable solutions to attacks. Its customers include enterprises and government agencies spread across multiple industries.

Carbon Black’s Financials

Carbon Black earns revenues through a subscription and license fee model for its product and by providing other support services. It has seen strong financial growth in the recent past. Revenues have grown from $70.6 million in 2015 to $116.2 million in 2016 and to $162 million in 2017. Increasing revenues have not, however, translated to profits as the company continues to invest in growth related activities. Net losses came in at $38.7 million in 2015, $44.6 million in 2016, and $55.8 million in 2017.

More recently, Carbon Black reported third quarter revenues of $53.4 million, growing 29% over the year. Loss from Operations during the quarter grew to $18.1 million compared with loss of $13.7 million reported a year ago. Non-GAAP loss came in at $0.20 per share. The market was looking for revenues of $52.7 million and a loss of $0.25 per share.

By segment, subscription, license, and support revenues grew 32% to $50.8 million, and services revenues fell 17% to $2.6 million.

It continued to grow its customer base and ended the quarter with 4,625 customers, compared with 3,335 a year ago. Growth of customers who licensed at least one cloud product grew to 2,450, compared to 1,170 a year ago.

For the current quarter, Carbon Black expects revenues of $55.3-$55.8 million with a loss of $0.25-$0.24 per share. It expects to end the year with revenues of $208.1-$208.6 million and a loss of $1.21-$1.20 per share.

Carbon Black’s Growth

During the last quarter, Carbon Black introduced its newest product CB ThreatHunter. CB ThreatHunter leverages its incident response tool and extends that capability to the cloud with added functionality including a more powerful search, improved threat intel matching, and elastic cloud scalability. By accessing the unfiltered endpoint data, CB ThreatHunter provides security teams with improved visibility into potential threats across their environments.

Last year, it also released CB LiveOps, a service that extends core functionality of its platform to empower organizations to ask questions of all endpoints, take remedial action in real-time, and simplify operational reporting. With CB LiveOps, security teams can perform in-depth investigations, conduct remote remediation, and perform on-demand vulnerability assessments, within a single solution.

Besides product expansion, Carbon Black is also expanding into newer markets. Recently, the company announced plans to grow in the Japanese market by adding in-country hosting to help organizations to meet data privacy requirements and use the CB Predictive Security Cloud (PSC). Carbon Black will also launch its first user group in the country. The group will focus on building a community of security professionals for collaboration on cyber security issues.

Carbon Black has been growing steadily for more than 16 years. During this period it, has added several smaller companies to its fold. Its last acquisition was held in 2016 when it acquired another endpoint security service provider Confer for an undisclosed sum. Confer Technologies had raised $25 million prior to the acquisition and had patented technology that used enterprise-wide telemetry and data science to analyze, adapt, and eliminate manual processes, and facilitated an intelligent and efficient approach to securing the enterprise.

Prior to Confer, Carbon Black had acquired two other companies in 2015 – VisiTrend and Objective Logistics. VisiTrend offered interactive visualization solutions for data analytics and had raised $1.3 million prior to the acquisition. Objective Logistics helped drive sales and improve guest experience in several service industries and had raised $9 million prior to the acquisition.

Carbon Black went public last year when it raised $152 million by selling 9 million shares at $19 each. Prior to the listing, Carbon Black had raised $192 million at undisclosed valuation from investors including Highland Capital Partners, Hone Capital, Kleiner Perkins, Accomplice, Sequoia Capital, Evolution Equity Partners, Founders Circle Capital, and .406 Ventures. At the time of listing, the company was valued at $1.3 billion.

Carbon Black’s stock is currently trading at $13.87 with a market capitalization of $970.5 million.  It has fallen from the peak of $35 that it was trading at in June last year. The stock is recovering from the low of $11.80 in December last year.

The company has acquired smaller startups which are on the bootstrapping-to-exit route to grow its portfolio and service capabilities. The security space is perpetually full of startups. What do you think are the gaps in Carbon Black’s product portfolio and what smaller startups do you think can fill up these gaps? Is Carbon Black’s quest to move from $200 million to $500 million revenue level going to happen largely organically, or with a strong focus on acquisitions?

The endpoint security market itself has quite a few competitors for Carbon Black. Players like Bitdefender, Druva, Endgame, and LogMeIn compete in a similar market and have all received recognition from the industry.

Bitdefender has received several accolades in both Forrester Wave and Gartner Magic Quadrant reports. It continues to make significant investments into its offerings. Last year, it purchased RedSocks, a security analytics vendor, to add more capabilities to its cybersecurity solutions.

Druva specializes in cloud security, backup and disaster recovery, and the digital cloud perimeter. It also made an acquisition last year when it added CloudRanger, an Amazon Web Services backup and disaster recovery company to its portfolio. The acquisition suggests that Druva is working on incorporating backup into endpoint security.

Endgame was ranked a visionary in the Gartner quadrant and is known for building the first macOS endpoint protection against unknown threats.

Finally, LogMeIn offers one of the most diverse endpoint security solutions by providing a comprehensive endpoint management and security solution that includes anti-virus, patch management, proactive alerts, software inventory, and computer health monitoring.

Carbon Black has focused on next-generation endpoint security and threat research. It has a strong community bond through its Cb Connect network. It will need to continue to nurture this niche to successfully battle the growing competition.

This segment is a part in the series : Cloud Stocks

. Smartsheet Acquiring Bootstrapped Startups to Drive Growth
. Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups
. Netflix Price Hike Ruffles Competition
. How Will Carbon Black Differentiate?
. ServiceNow Grows Through Addition of Capital-Efficient Startups
. Zendesk and Freshworks Follow Different Acquisition Strategies
. Tableau Grows Through Small Acquisitions
. Open Platform Strategy Stands Intuit in Good Stead
. Will GoDaddy Follow the PaaS Route?
. Adobe Delivers Via PaaS
. A Look at Oracle’s 2018 M&A Activity
. What Apps Will Drive More Traction for Cloudera?
. Slack's App Focus Will Be Key to Post-IPO Success
. IBM Counts on its Cloud and Platform for the Turnaround
. Atlassian Acquires From its PaaS Marketplace
. What Should SAP Acquire to Triple its Value by 2023?
. Expect ServiceNow to Acquire From App Marketplace
. Should Follow a PaaS Strategy?
. How Upwork Can Leverage the Virtual Company Trend
. Qualys Scouting For Acquisitions
. Should SAP Acquire Zendesk or Freshworks?
. HubSpot Counts on its API Strategy
. SurveyMonkey Eyes Acquisitions for Growth
. Workday Wants to Disrupt Cloud Computing Using Machine Learning
. Einstein and Open-Source Platform Lead the Charge for Salesforce
. DocuSign Prepares to Beat Rival Adobe
. Veeva Soars, But Dassault Acquires Medidata for $5.8 Billion
. Tableau Acquisition Signals Massive Analytics Push for Salesforce
. Oracle Joins Hands with Microsoft to Take on Amazon
. GoDaddy is Making Strategic Acquisitions for the Next Level of Growth
. Alteryx Sees Strong Momentum
. Adobe Leveraging Magento and Marketo to Deliver Blockbuster Performance
. Is Slack Overvalued?
. How Will Cloudera Address the Competition?
. Zoom is Not Bothered by Cisco or Microsoft
. Domo Counts on Enterprise Revenue for Growth
. Netflix Plays with Pricing and Games to Attract Subscribers
. CrowdStrike Has a Successful IPO
. Atlassian Crosses the Billion Dollar Revenue Milestone
. ServiceNow Believes Strength Lies in Tie-ups
. Partnerships are the Mantra for BlackLine
. SurveyMonkey Counts on Enterprise Segment for Growth
. HubSpot Soars to a New High
. Intuit Pushes AI to Simplify Tax Filing
. Splunk Sees Strong Cloud Momentum
. Forescout Partners with Big Names
. Smartsheet Tapping into the Government Sector
. Salesforce Continues its Shopping Spree
. Palo Alto Networks Targets the IoT Security Market
. DocuSign Focuses on the Mortgage Sector
. Oracle Brags About Autonomous Database
. Blackbaud Acquires YourCause to Grow Addressable Market
. The Market Expects a Lot More from Adobe
. Anaplan Makes its First Acquisition Post IPO
. Activist Investor Drives Market Interest in Box
. MongoDB's Formula for Success
. Coupa Aims for $1B Revenue
. Dropbox on a Rocky Road
. Medallia Banks on Acquisitions
. IBM Banks on AI
. Time For Skepticism with Netflix
. SAP Riding High on the Cloud
. Amazon's Faster Shipping Hurting its Earnings
. ServiceNow CEO Change Signals Focus on Acquisitions
. Will Google Acquire Fitbit?
. HubSpot Focuses on Its Platform
. BlackLine Partners with Google Cloud
. Rapid7’s Focus on Cloud SIEM Pays Off
. Splunk Bets Big on Data Streaming
. Intuit's QBO Scores Big
. VMware Builds Up With Acquisitions
. Palo Alto Targets $5B Revenue by 2022
. Workday Targeting Procure-to-Pay Cycle
. Will Salesforce Acquire DocuSign?
. Okta Targets Enterprise Customers
. MongoDB Eyeing China With Alibaba Partnership
. Twilio Counts on API Upgrades for Growth
. Adobe Revs up its Experience Platform
. Top 20 for 2020
. Anaplan Sees Expanding Use Cases
. Dropbox Gears Up to Regain Lost Valuation
. Forescout Fails to Deliver
. Enterprise Bet Pays Off for SurveyMonkey
. SAP Bets Big on Experience Management
. Twilio Steps up Investment in 2020 to Preserve Growth Momentum
. Zendesk, Freshworks Focus on Marketplaces and Integrations
. Proofpoint Targets Insider Threats Through Acquisition
. RingCentral's Powerful Partner Strategy Would Augment with PaaS
. Qualys Counts on Google and Microsoft for Growth
. Shopify Soars on Improved Merchant Offerings
. HubSpot Believes in the Importance of PaaS
. BlackLine Remains Focused on SAP Integration
. Recently Public Cloudflare has New Edge
. GoDaddy is on a Shopping Spree
. Intuit Targets Online User Base Through Acquisition
. Should Palo Alto Networks Acquire ZScaler?
. Why Salesforce Buying Vlocity Proves the Growing Importance of PaaS
. Datadog Performing Well Post Recent IPO
. Workday Should Open Up About its PaaS Success
. Anaplan Focuses on API Connectors for its Platform
. Veeva
. Five9 Strengthens its PaaS Focus
. RealPage Brings AI and SaaS to Real Estate
. Splunk Should Open up About its PaaS Metrics
. Okta Benefiting from App Diversity
. Oracle Sees Growth Momentum
. Xero Focuses on a PaaS Strategy
. DocuSign Resilient to COVID-19
. Smartsheet Looking up to Enterprise Customers for Growth
. Paylocity Delivers Solid Results
. Q2 Holdings Expands TAM with Acquisitions
. New Relic Focuses on PaaS
. AppFolio Leverages AI for Product Enhancement
. Will Adobe Open Up About its PaaS Statistics?
. Change Healthcare Pushes APIs
. Dropbox Needs to Share API Metrics
. Upwork Improves Monetization
. MongoDB has Miles to go
. Nutanix Needs to Define a PaaS Strategy
. Cloudera Focuses on Hybrid Cloud
. Atlassian Gears Up for Growth, Unfazed by Covid-19
. Shopify Helps Merchants Pivot to Online Stores
. ServiceNow Steady in Turbulent Seas
. RingCentral Sees Strong Traction
. Twilio Hits 52-Week High Amidst COVID Crisis
. HubSpot Lowers Outlook Amidst Virus Concerns
. Proofpoint Acquiring Even Amidst Crisis
. BlackLine Looks Solid At The Face of Covid-19
. GoDaddy Continues to Acquire
. Qualys Expands Cloud Offerings to Soar to New Highs
. Zendesk Struggling Amidst the Downturn
. Alteryx Bounces Back Despite Low Outlook
. Palo Alto Networks Continues to Acquire
. Workday Extends its PaaS Strategy
. Splunk Rides High on Cloud Initiatives
. Salesforce Partners with Workday to Address the New Normal
. Veeva Scales New Highs
. Is Smartsheet’s Pullback a Buying Opportunity?
. MongoDB Soars Even in the Crisis
. Okta Reiterates Outlook
. Is Anaplan a Prospect for Oracle, SAP?
. Oracle Relies on Autonomous Offerings
. Adobe Shifts its Focus
. Paycom Confident Under Current Conditions
. DocuSign Soars to Record Highs
. Paylocity Acquires Amid Crisis
. Datadog's Integrations and Upgrades Help it Soar
. AppFolio Improves Offerings for Current Conditions
. SurveyMonkey Should Get Into PaaS
. Model N Soars to a Record High
. Appian Focuses on RPA for Growth
. Slack Beefs up its Portfolio
. Coupa Expands into Treasury Services
. CrowdStrike Soars to Record Highs
. Guidewire Expands Cloud Offerings
. Dropbox Should Focus on PaaS
. Talend Expands Data Offering Through Partners
. IBM Expands Cloud Partners
. One Medical Supports COVID-19 Care Digitally
. Microsoft Rides High on Teams and Gaming
. Investors Say Yes to nCino’s IPO
. Nutanix Focuses on Government and Media Verticals
. SAP Rethinks Qualtrics Acquisition
. Tenable Expands Into Industrial Cyber-Security
. ServiceNow Expands Ties with Zoom
. Cloudera Powers its Data Platform with Partnerships
. Atlassian Continues to Acquire from PaaS Ecosystem
. Shopify Soars to an All-Time High
. The PaaS Landscape
. HubSpot Focuses on the Enterprise Segment
. GoDaddy Restructures During COVID
. Akamai's Security Solutions Thriving
. Blackline Needs a PaaS Strategy
. Twilio - A Successful PaaS Story
. Zendesk Invests in the Future
. Qualys Continues to Acquire Indian Startups
. ZoomInfo Lists Despite COVID-19
. Analysis of Alteryx PaaS Strategy
. Fastly Needs to Diversify from TikTok
. Way to Go, Salesforce
. Intuit Continues to Acquire
. VMware Continues Buying Spree
. Analysis of Five9's PaaS Strategy
. Okta Expands Alliances to Attract Enterprises
. Palo Alto Continues to Acquire
. Analysis of Splunk's PaaS Strategy
. BigCommerce Goes Big with IPO
. Analysis of Workday's PaaS Strategy
. Analysis of Anaplan's PaaS Strategy
. Sees Strong Demand
. Analysis of MongoDB's PaaS Strategy
. Analysis of Wix's Platform Strategy
. New Relic Product Upgrades Deliver Growth
. What Should Proofpoint Acquire?
. Smartsheet Should Follow Atlassian’s Example
. Adobe's Relentless Growth Continues
. SurveyMonkey's PaaS Prospects
. DocuSign Acquires Amid COVID
. Paylocity Counts on Video
. The Unstoppable Veeva
. Magic Software Acquires to Expand in Europe
. What Can Cloud Startups Do To Raise Seed Capital in 2021?
. Guardant Seeks to Disrupt Oncology Testing
. Dropbox Adds Security Capabilities
. Domo Growing Steadily
. Nutanix Focuses on the Hybrid Cloud
. IBM Fails to Impress

Hacker News
() Comments

Featured Videos