The Future of Security Risk Management and Operations is Data and AI

Rhea-AI Summary

Zscaler acquires Avalor to enhance enterprise security data with Avalor’s Data Fabric for Security, enabling real-time AI-driven security insights and threat prevention. The acquisition aims to leverage Zscaler's massive data foundation to transform AI capabilities in the cybersecurity industry.

Positive

• Zscaler acquires Avalor to improve security data insights and threat prevention.
• Integration of Avalor’s Data Fabric for Security with Zscaler’s Zero Trust Exchange platform.
• Enhanced AI capabilities to proactively identify vulnerabilities and optimize performance.
• Development of pioneering AI-driven solutions like Zscaler Risk360 and Zscaler Business Insights.
• Expansion of Zscaler’s Zero Trust Exchange platform for real-time AI-driven analytics and decision-making.
• Improved dynamic prioritization, streamlined reporting, and advanced threat detection for customers.
• Avalor’s Data Fabric for Security ingests, normalizes, and unifies data across enterprise security systems.
• Combination of Zscaler's proprietary data sets with 150 third-party sources for enhanced cyber protection insights.

Negative

• None.

Cybersecurity Analyst

The acquisition of Avalor by Zscaler represents a strategic move in the cybersecurity industry, particularly in the context of AI-driven security solutions. The integration of Avalor's Data Fabric for Security into Zscaler's Zero Trust Exchange platform is poised to enhance the latter's data analytics capabilities, enabling more effective identification of vulnerabilities and threat prediction. This consolidation could potentially lead to a significant increase in operational efficiency for Zscaler's customers.

From a cybersecurity perspective, the ability to analyze and unify disparate data sources across security and business systems is critical for a comprehensive risk assessment. The addition of Avalor's technology to Zscaler's already extensive transaction data could result in a more robust AI model, capable of real-time, proactive security measures. This could be a game-changer in an industry where the speed and accuracy of threat detection and response are paramount.

Furthermore, the emphasis on Zero Trust principles, which advocate for a 'never trust, always verify' approach, aligns with current industry best practices for securing enterprise networks. The acquisition could therefore reinforce Zscaler's position as a leader in this space, potentially impacting its market share and investor confidence positively.

Financial Analyst

The announcement by Zscaler regarding its acquisition of Avalor has several financial implications worth noting. Firstly, the move is indicative of Zscaler's commitment to maintaining its competitive edge through innovation and strategic partnerships. By leveraging Avalor's integrations, Zscaler can offer a more comprehensive product suite, which could lead to an increase in customer acquisition and retention.

Secondly, investors should consider the potential cost synergies and revenue opportunities arising from the acquisition. The integration of Avalor's technology into Zscaler's platform might result in cost savings in terms of research and development, as well as enhanced cross-selling opportunities. Additionally, the focus on AI-driven solutions could cater to the growing demand for advanced cybersecurity measures, possibly resulting in an uptrend in Zscaler's revenue streams.

It is also crucial to monitor the post-acquisition integration process, as the successful assimilation of Avalor's technology and talent will be key to realizing the full potential of the deal. Any failure to integrate effectively could lead to unforeseen costs and a negative impact on Zscaler's financial performance.

Market Research Analyst

Zscaler's acquisition of Avalor is reflective of a broader trend in the cybersecurity market towards consolidation and the integration of AI technologies. The demand for advanced security analytics and real-time threat prevention is on the rise and Zscaler's move could be seen as an attempt to address this market need proactively.

By incorporating Avalor's Data Fabric for Security, Zscaler is not only expanding its product offerings but also potentially setting a new industry standard for AI-driven cybersecurity solutions. This could influence competitors to seek similar acquisitions or partnerships to keep pace, thereby shaping the market dynamics.

Additionally, the focus on Zero Trust and AI-driven security insights is in line with the increasing complexity of cyber threats and the shift towards remote and hybrid work environments. As enterprises seek to adapt to these changes, Zscaler's enhanced platform could see greater adoption, impacting the overall market for cloud security solutions.

Zscaler acquires Avalor to unleash the power of enterprise security data with Avalor’s Data Fabric for Security™ to bring real-time AI-driven security insights and threat prevention

SAN JOSE, Calif., March 14, 2024 (GLOBE NEWSWIRE) -- Zscaler, Inc. (NASDAQ: ZS), the leader in cloud security, announced another major leap forward in artificial intelligence (AI) innovations that extends the Zscaler Zero Trust Exchange™ data, from more than 400 billion daily Zscaler transactions with Avalor’s Data Fabric for Security with over 150 pre-built integrations enabling customers to proactively identify and predict critical vulnerabilities as well as improve operational efficiencies. By leveraging its massive data foundation, Zscaler is poised to transform the AI capabilities for the cybersecurity industry to not only enable organizations to mitigate risks and optimize performance but also pave the way for zero-touch operations.

The rapid advancement of AI will have pivotal impacts to the cybersecurity industry and to effectively combat AI-led threats, organizations must fully harness their currently isolated security data at massive scale. Zscaler's 16 years of leadership operating the world's largest cloud security platform has allowed it to leverage a massive data set to develop its pioneering AI-driven solutions, including Zscaler Risk360 and Zscaler Business Insights, which set a new benchmark for proactive cybersecurity and business intelligence.

“AI is only as good as the underlying data, and many solutions lack the additional context and knowledge from data sources across the enterprise to truly leverage security specific AI models,” said Jay Chaudhry, CEO, Chairman, and Founder of Zscaler. “Zscaler operates the world’s largest security cloud with the most relevant data to train security specific large language models (LLMs) and with the Avalor acquisition, we can more effectively identify vulnerabilities, while predicting and preventing breaches.”

Avalor’s Data Fabric for Security ingests, normalizes, and unifies data across enterprise security and business systems to deliver actionable insights, analytics, and operational efficiencies. By expanding Zscaler’s Zero Trust Exchange platform with a security-centric data fabric, Zscaler enables enterprises to significantly enhance and fully automate AI-driven analytics and decision-making in real-time without the complexity of data aggregation and collection. Customers now have dynamic and customizable prioritization, streamlined reporting, zero-copy analytics, and real-time incident mitigation, as well as advanced threat detection, auto data discovery, classification, and policy generation, all within the Zscaler cloud security platform.

“We have long understood that being able to make sense of all the disparate security data sources in an organization is essential to understanding and improving risk posture, that’s why we delivered the industry's first Data Fabric for Security to provide that aggregated platform,” said Raanan Raz, co-founder and CEO, Avalor. “The first application running on our Data Fabric is our Unified Vulnerability Management (UVM) module. By combining the Zscaler proprietary data sets with the 150 third-party sources Avalor supports, we will be in a prime position to enhance our UVM capabilities and create new applications with additional cyber protection insights.”

To learn more about Zscaler’s AI capabilities, please visit https://www.zscaler.com/capabilities/machine-learning

Transaction Details
The purchase price was paid predominantly in cash, with a portion delivered in the form of equity subject to vesting conditions. The acquisition closed on March 13, 2024.

Forward-Looking Statements
This press release contains forward-looking statements that are based on our management's beliefs and assumptions and on information currently available to our management. These forward-looking statements include the expected benefits of the acquisition to Zscaler’s product offerings and to our customers. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. A significant number of factors could cause actual results to differ materially from statements made in this press release, including those factors related to our ability to successfully integrate Avalor’s technology and operations, and our ability to retain key employees of Avalor after the acquisition. Additional risks and uncertainties are set forth in our most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) on March 6, 2024, which is available on our website at ir.zscaler.com and on the SEC's website at www.sec.gov. Any forward-looking statements in this release are based on the limited information currently available to Zscaler as of the date hereof, which is subject to change, and Zscaler will not necessarily update the information, even if new information becomes available in the future.

About Zscaler
Zscaler (NASDAQ: ZS) accelerates digital transformation so customers can be more agile, efficient, resilient, and secure. The Zscaler Zero Trust Exchange™ platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications in any location. Distributed across more than 150 data centers globally, the SASE-based Zero Trust Exchange™ is the world’s largest in-line cloud security platform.

Media Relations Contact:
Natalia Wodecki
press@zscaler.com

Investor Relations Contact:
Bill Choi, CFA
ir@zscaler.com

What did Zscaler acquire Avalor for?

Zscaler acquired Avalor to enhance enterprise security data with Avalor’s Data Fabric for Security, enabling real-time AI-driven security insights and threat prevention.

What are some benefits of the acquisition for Zscaler?

The acquisition aims to leverage Zscaler's massive data foundation to transform AI capabilities in the cybersecurity industry, enabling proactive identification of vulnerabilities and optimization of performance.

How does Avalor’s Data Fabric for Security contribute to Zscaler’s offerings?

Avalor’s Data Fabric for Security ingests, normalizes, and unifies data across enterprise security systems, providing actionable insights, analytics, and operational efficiencies.

What are some key features enabled by the integration of Avalor’s Data Fabric with Zscaler’s platform?

Customers can now benefit from dynamic prioritization, streamlined reporting, advanced threat detection, auto data discovery, classification, and policy generation within the Zscaler cloud security platform.

How does the acquisition of Avalor enhance Zscaler’s Unified Vulnerability Management capabilities?

By combining Zscaler's proprietary data sets with 150 third-party sources supported by Avalor, Zscaler can enhance its Unified Vulnerability Management capabilities and create new applications with additional cyber protection insights.