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By Bruce Sussman
Fri | May 22, 2020 | 5:30 AM PDT

Many of the major players in the cybersecurity industry announced rapidly expanding revenues in the most recent quarter, and some are raising earnings forecasts.

COVID-19 helping boost cybersecurity marketplace

A number of cybersecurity company CEOs say their sudden surge in revenue is at least partly tied to the COVID-19 pandemic and a switch to remote work.

Proofpoint revenue jumped 23% in the most recent quarter, climbing to $249.8 million.

Gary Steele, Chief Executive Officer of Proofpoint, explains it like this:

"We believe that Proofpoint and our people-centric approach to cybersecurity are even more relevant for enterprise customers given work-from-home mandates around the world, and we believe that we will emerge from this uncertain period even better positioned and stronger than ever."

Palo Alto Networks saw revenue increase 20% in the most recent quarter to $869 million, and it upped its earnings projections for the current quarter.

The company's Chairman & CEO, Nikesh Arora, wrote to stockholders to explain why the pandemic's impacts are driving the cybersecurity market:

"The massive changes that are needed to fit cybersecurity to our new reality provide an opportunity for organizations to pay the technical debt they have accumulated over the last two decades. We believe
they will take the opportunity to:

1) Significantly reduce the number of cybersecurity solutions and vendors they have by moving to platforms.
2) Implement consistent security across the entire infrastructure—physical, virtual, and cloud-delivered as well as across network, endpoint, and cloud.
3) Move security from being physical to being delivered in the form of SaaS.
4) Secure the cloud with a single platform.
5) Automate their security operations.
6) Do more for their customers, who will expect more from their security partners, and rightfully so."

And Trend Micro reported 9% sales growth as revenue climbed to $386 million for the quarter ending March 31, 2020.

Eva Chen, Co-Founder and CEO of Trend Micro, explained that a transition of commercial customers moving to SaaS-based solutions accelerated. SaaS deployed instances grew at a rate of 59% year-over-year. 

"These quarterly results truly reflect our dedication to making the digital world safer, and our part in helping to make the physical world a better place."

[Related podcast: Trend Micro on Tracking COVID-19 Cyber Threats]

It's easy to see a contrast between the cybersecurity market during the pandemic and many other industries right now, isn't it?

The airline industry is one example, including Delta.

"With the significant impact of COVID-19 on Delta's revenue, we were burning $100 million per day at the end of March. Through our decisive actions, we expect that cash burn to moderate to approximately $50 million per day by the end of the June quarter," said Paul Jacobson, Delta's CFO.

Or how about the automotive industry? Take Ford Motor, for example.

"The company's first quarter earnings before interest and taxes, was negative $632 million."

The cybersecurity marketplace is a stark contrast, indeed. But what about the future?

What happens to the cybersecurity market for the rest of 2020?

All of the companies we researched point to unknowns in the marketplace based on the earnings pressure of their customers.

However, an April survey by HSF Research revealed that 68% of the organizations surveyed still plan to increase cybersecurity spending during 2020.

Mike Weber, Vice President at security firm Coalfire, has a few ideas on what is driving this optimism:

"Migrating systems from a 'legacy' on-prem solution to a highly available remote-access-friendly solution can be loaded with changes and nuance that are not immediately apparent. These can create security issues that could require expensive and time-consuming re-engineering to mitigate. Those organizations that had to scramble are likely coming up short on cybersecurity controls like monitoring and analytics, which could be part of the anticipated uptick in spending as reported on the survey."

And Steve Durbin, Managing Director of the Information Security Forum, believes forward-looking organizations cannot afford to cut back on their security spending:

"It would extremely short sighted for business leaders to reduce cybersecurity staff and budget at a time when the majority of the workforce is critically dependent on cyber to function.”

Rick Holland, CISO and VP at Digital Shadows, agrees with that sentiment.

"Budgets will have more scrutiny than ever before, however, a risk-based approach is still required. Non-essential spending should be pushed back, but it would be foolish to stop mitigating risks in the near term. Historically, cybersecurity is a sector where spending still occurs, even when the economy dips."

Will that be true for cybersecurity startups like it typically is for well-known players in the space? We're about to find out.

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