Contact: Brenon Daly, Wendy Nather
In its first-ever acquisition, Alert Logic said Wednesday that it will hand over an undisclosed amount of cash and stock for Armorlogic. The purchase will bring application-layer security to the Houston-based MSSP. Up to now, Alert Logic has built its business on just two products: Threat Manager (a combination of vulnerability assessment, intrusion protection and other technologies) along with Log Manager.
That said, Alert Logic has built a tidy little business with its existing portfolio, finishing 2011 with sales of $21m, up slightly more than 40% over the previous year. It has accumulated more than 1,500 customers since setting up shop in 2002. Alert Logic indicated that it will cover part of the purchase by drawing on the $12.6m it raised in its series E funding round last April.
Although Armorlogic is small (only three employees and 70 customers), its Web application firewall (WAF) offering is selling into a hot market. As perhaps the cleanest proxy for the WAF sector, consider the princely valuation garnered by Imperva. Since its IPO last November, Imperva has steadily risen to a current market cap of about $750m. That’s almost 10 times the $78m in revenue it generated in 2011 and roughly seven times the revenue it’s likely to generate this year.