Cisco’s $2.35 billion Duo acquisition front and center at earnings call

When Cisco purchased Ann Arbor, Michigan safety firm, Duo for a whopping $2.35 billion earlier this month, it confirmed the rising worth of safety and safety startups within the view of conventional tech corporations like Cisco.

In yesterday’s earnings report, even earlier than the ink had dried on the Duo acquisition contract, Cisco was reporting that its safety enterprise grew 12 p.c yr over yr to $627 million. Given these numbers, the acquisition was high of thoughts in CEO Chuck Robbins’ comments to analysts.

“We lately introduced our intent to amass Duo Safety to increase our intent-based networking portfolio into multi- cloud environments. Duo’s SaaS delivered answer will broaden our cloud safety capabilities to assist allow any consumer on any gadget to securely hook up with any software on any community,” he informed analysts.

Certainly, safety goes to proceed to take middle stage shifting ahead. “Safety continues to be our clients primary concern and it’s a high precedence for us. Our technique is to simplify and improve safety efficacy by an architectural strategy with merchandise that work collectively and share analytics and actionable risk intelligence,” Robbins mentioned.

That matches neatly with the Duo acquisition, whose guiding philosophy has been to simplify safety. It’s maybe finest identified for its two-factor authentication software. Typically corporations ship a textual content with a code quantity to your telephone after you modify a password to show it’s you, however even that methodology has proven vulnerable to attack.

What Duo does is ship a message by its app to your telephone asking if you’re attempting to signal on. You possibly can approve if it’s you or deny if it’s not, and if you happen to can’t get the message for some purpose you’ll be able to name as a substitute to get approval. It could possibly additionally confirm the well being of the app earlier than granting entry to a consumer. It’s a reasonably painless and safe method to implement two-factor authentication, whereas ensuring staff preserve their software program up-to-date.

Duo Approve/Deny software in motion on smartphone.

Whereas Cisco’s safety income accounted for a fraction of the corporate’s total $12.eight billion for the quarter, the corporate clearly sees safety as an space that might proceed to develop.

Cisco hasn’t been shy about utilizing its substantial money holdings to broaden in areas like safety past pure networking {hardware} to offer a extra numerous recurring income stream. The corporate at the moment has over $54 billion in money readily available, according to Y Charts.

Cisco spent a good quantity cash on Duo, which according to reports has $100 million in annual recurring income, a quantity that’s anticipated to proceed to develop considerably. It had raised over $121 million in enterprise funding since inception. In its final funding spherical in September 2017, the company raised $70 million on a valuation of $1.19 billion.

The acquisition value ended up greater than doubling that valuation. That might be as a result of it’s a safety firm with recurring income, and Cisco clearly needed it badly as one other piece in its safety options portfolio, one it hopes can assist preserve pushing that safety income needle ever larger.

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