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ForeScout’s New Platform Focuses on OT Security

Posted on Monday, Jun 24th 2019
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ForeScout (NASDAQ: FSCT), a cyber security company specializing in visibility for endpoint security, went public in October 2017. It recently reported a strong quarter and announced the release of a new platform focusing on operational technology (OT) security.

ForeScout’s Financials

California-based ForeScout was founded in 2000 by Israeli entrepreneurs Oded Comay, Doron Shikmoni, Hezy Yeshurun, and Dror Comay. It offers Global 2000 enterprises and government organizations agentless visibility and control of traditional as well as IoT devices and BYOD endpoints when they connect to the network. Its solution supports heterogeneous wired and wireless networks, virtual, and cloud infrastructures and can scale to meet the needs of globally distributed organizations. It competes with Grand Junction Networks, HP-owned Aruba Networks, and Pulse Secure.

In the recent first quarter results, ForeScout reported revenue of $75.6 million, up 27%. GAAP net loss was $34.3 million, or $0.78 per share compared to $14.6 million, or $0.38 per share a year ago. Non-GAAP net loss per share was $0.41, beating analyst estimates of a loss of $0.44 per share on revenue of $73.76 million.

By segment, License revenue was up 27% to $37.7 million, Subscription revenue was up 28% to $33.8 million, and Professional Services revenue was up 15% to $4.1 million.

For the second quarter, ForeScout expects revenue in the range of $75.3 to $78.3 million, representing 14% growth at the midpoint. It expects non-GAAP net loss per share in the range of $0.48 to $0.46. Non-GAAP operating loss is expected to be $20.8 to $20 million.

The company expects revenues for the full year 2019 to be in the range of $365.3 to $375.3 million, representing 24% growth at the midpoint. Non-GAAP net loss per share is expected to be in the range of $0.41 to $0.34 and non-GAAP operating loss is expected to be $15.6 to $11.6 million.

ForeScout’s annual revenue for 2018 was $297.7 million, up 33%. GAAP net loss for 2018 narrowed to $74.8 million or $1.83 per share from $93.5 million, or $8.2 per share in 2017. Non-GAAP net loss for 2018 was $17.4 million, or $0.42 per share.

ForeScout’s New Offerings

During the first quarter, Forescout announced the release of ForeScout 8.1, the industry’s first unified device visibility and control platform for IT and OT security. The new enhancements will enable comprehensive visibility for multi-cloud infrastructures, provide auto-classification for medical and industrial devices, and automate network segmentation controls across firewalls, as well as cloud and software-defined network (SDN) environments. This release integrates the technology from its $113 million acquisition of SecurityMatters in November last year.

SecurityMatters, a global leader in OT network protection was founded in 2009 and had raised $5 million in funding from investors including Emerald Technology Ventures, KPN Ventures, Phoenix Contact Innovation Ventures, and Robert Bosch Venture Capital. Its annual revenue was estimated to be $8.2 million. It competed with Indegy, Claroty, and Cyberbit.

Last month, ForeScout added to its focus in OT security with the release of SilentDefense 4.0. Forescout’s SilentDefense 4.0 comes equipped with the Enterprise Command Center (ECC) and ICS Patrol. These new enhancements will provide enterprises with improved productivity, lower risk profiles and faster mitigation of threats.

Before it went public, ForeScout was venture funded with $121.6 million raised from investors including Wellington Management, Accel, Amadeus Capital Partners, Aspect Ventures, Cross Creek Advisors, Founders Circle Capital, ITOCHU Corporation, Meritech Capital Partners, and Pitango Venture Capital. It had raised $76 million in January 2017 in a round led by Wellington Management at a valuation of $1 billion. The company went public in October 2017 at a list price of $22 and raised $116 million at a valuation of $800 million.

Its stock is currently trading at $34.26 with a market capitalization of $1.55 billion.

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