‘Palo Alto Networks has been on a mission to become a huge platform player in the security market’ — the CyberArk acquisition might take it to the next level

Palo Alto Networks has announced plans to acquire identity security provider CyberArk in a move analysts say “rounds out” its solutions portfolio.

The deal, valued at roughly $25 billion, will enable Palo Alto Networks to move deeper into the identity security market and improve its product offering, the company said in a statement today.

CyberArk is a leading provider of identity software tools, offering a range of services spanning areas such as privileged access management (PAM), secure single sign-on (SSO), and multi-factor authentication (MFA).

Identity-based threats have been growing rapidly in recent years, according to research from eSentire, with threat actors ramping up efforts to target user accounts, logins, and identities.

While Palo Alto Networks already has a stake in identity security via its Cloud Identity Engine, bringing CyberArk’s Identity and Access Management (IAM) and PAM capabilities complement the firm’s existing portfolio, according to Geoff Cairns, principal analyst at Forrester.

“This acquisition elevates the consolidation trend that has characterized the IAM market in recent years to a new level, reshaping not only the IAM landscape but also the broader cybersecurity industry,” he said.

“Identity security is foundational to modern cybersecurity, and CyberArk’s areas of expertise in privileged identity management and machine identity security strongly complement Palo Alto Networks independent security platform approach.”

Indeed, Palo Alto specifically highlighted consolidation as a key factor behind the acquisition, noting the deal will help deliver a “combined platform” that integrates CyberArk’s identity security capabilities with its Strata and Cortex platforms.

Allie Mellen, principal analyst at Forrester, echoed Cairns’ comments on this front, noting that identity security is the “missing piece” of the puzzle for Palo Alto Networks.

Earlier this year, Palo Alto acquired Protect AI, which specializes in AI security, as part of a deal rumored to be around $500 million. This acquisition marked the fourth in the space of two years, having previously secured deals for Dig Security, Zycada Networks, and Talon Cyber Security in 2023 alone.

“Over the past several years, Palo Alto Networks has been on a mission to become a huge platform player in the security market,” Mellen said.

“Given its product portfolio as it stands today, identity security capabilities are a missing piece of that puzzle. This acquisition rounds out its approach, given its existing cloud, network, and endpoint security products.”

CyberArk has also been on an acquisitions spree in recent years in a bid to broaden its own identity security capabilities, first with a $1.54 billion deal to snap up Venafi.

In February this year, the company announced plans to acquire identity governance startup Zilla Security for $175 million.

Palo Alto Networks and the identity security “inflection point”

In a statement confirming the deal, Nikesh Arora, chairman and CEO of Palo Alto Networks, said the company’s acquisition strategy centers around entering “categories at their inflection point”.

Arora noted that the advent of generative AI and increasing volumes of machine identities has added impetus to the company’s approach on this front. The company recently announced a partnership with Okta focused on AI threat detection and identity security, for example, highlighting its sharpened focus on this domain.

“The rise of AI and the explosion of machine identities have made it clear that the future of security must be built on the vision that every identity requires the right level of privilege controls, not the 'IAM fallacy',” he said.

“CyberArk is the definitive leader in Identity Security with durable, foundational technology that is essential for securing the AI era. Together, we will define the next chapter of cybersecurity."

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