F5 Networks Doubling Addressable Market with $1 Billion Shape Security PurchaseF5 Networks Doubling Addressable Market with $1 Billion Shape Security Purchase
F5 said the acquisition accelerates its product and total revenue growth.
December 20, 2019
Shape’s application protection platform evaluates the data flow from the user into the application and uses cloud-based analytics to discern good traffic from bad. Together, F5 and Shape will reduce the time and resources needed for organizations to deploy online fraud and abuse protection, according to F5.
F5 said the acquisition accelerates its growth momentum and more than doubles its addressable market in security. The transaction is expected to close in the first quarter of 2020.
F5’s Rob Gruening
Rob Gruening, F5‘s director of corporate communications, tells Channel Partners his company has a mature sales force across the globe and an established “world-class” channel strategy. Introducing Shape to the F5 channel is “one of the areas we’re most looking forward to after close,” he said.
“We will begin a lot of the work with partners after the deal closes,” he said. “But, the competitive advantage will be in how this acquisition brings together F5’s expertise in protecting applications across multicloud environments with Shape’s anti-fraud capabilities. Together F5 and Shape will offer comprehensive, end-to-end application security potentially saving billions of dollars lost to fraud, reputational damage and costly disruptions to critical online services.”
Keep up with the latest channel-impacting mergers and acquisitions in our M&A roundup.
Shape has a global partner program and in terms of how its partners will be impacted, Gruening said “we will work out details after the deal closes.”
F5 said the acquisition accelerates its product and total revenue growth, speeds its transition to a software-and SaaS-driven business mode, and is expected to increase F5’s software subscription mix in fiscal year 2020.
Ovum’s Eric Parizo
Eric Parizo, senior analyst with Ovum, tells us this is a “very important and positive move” for F5.
“The vendor has been behind the power curve for a while as it sought to discern the best way to address its need for what Ovum identifies as next-generation application security (NGAS) – namely the combination of web application firewall (WAF), anti-DDoS, anti-bot, and API security,” he said. “F5’s key competitors in WAF and application performance management (APM), namely Imperva, Cloudflare and Akamai, have already been moving in this direction. F5 already has WAF and anti-DDoS, but needed the two anti-fraud elements, anti-bot and API security.”
The challenge for F5 is that it already acquired open source DevOps specialist NGINX earlier this year for $670 million, so it was somewhat challenged on the cash front, yet it also determined that it lacked the internal capabilities to build these capabilities organically with enough speed to keep pace with the market, Parizo said.
“Hence it ultimately decided to spend all its available cash, and then some (it took out a loan to make the deal) to pull together the $1 billion needed to acquire Shape,” he said. “Ultimately F5 must still come to grips with how to transition more of its infrastructure-focused portfolio capabilities into the cloud, but for the time being this solidifies F5’s position as a top-tier NGAS competitor.”
Shape’s Derek Smith
“Since Shape’s inception, we observed a consistent pattern in customer after customer: the use of F5 technology to deliver and enable their applications,” said Derek Smith, Shape’s co-founder and CEO. “Now, we look forward to the opportunity to deeply integrate into F5’s platform for application delivery and security—F5 provides the optimum traffic flow insertion point for Shape’s industry-leading online fraud and abuse prevention solutions. This, combined with F5’s global go-to-market scale, means we can jointly protect significantly more customers’ applications and users from sophisticated attacks and malicious traffic.”
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