Quarterly insights: Cybersecurity
Demand accelerates in 2021, notably strong growth at larger firms
We present our annual analysis of publicly traded, enterprise-focused cybersecurity firm performance. We highlight that 2021 revenue grew 27%, a notable acceleration from 2020's 19.8% growth and 2019's 20.3% growth, and that actual 2021 revenue exceeded initial guidance by an average 7% and a median 6%, suggesting robust overall demand has only increased. We also highlight the emergence of two giants in the cybersecurity sector, something that hasn't happened previously in the sector's history. With this change, the cybersecurity market structure is for the first time beginning to look more like many other software markets, where a few megacap leaders dominate and many smaller players fill emerging voids. We examine the correlations between top- and bottom-line outperformance and stock price performance. Our analysis of one-, three-, and five-year cybersecurity stock performance through March 28, combined with other elements of our sector analysis, points to prospects for the group to outperform the broader indexes over longer time frames than we've seen historically. We also provide an overview of cybersecurity publicly traded stock performance and valuation, sector M&A activity, and private placements during the quarter.