Abnormal Security, valued at $5.1 billion amid email security push, eyes eventual IPO

• Cybersecurity company Abnormal Security announced Tuesday it has raised $250 million in a Series D funding round that values the firm at $5.1 billion.
• The round is being led by Wellington Management and includes existing investors Greylock Partners, Menlo Ventures, Insight Partners, as well as the venture arm of CrowdStrike.
• "The timing to go public will depend on when market conditions create a favorable opportunity for us," co-founder and CEO Evan Reiser told CNBC.

Cybersecurity company Abnormal Security said Tuesday it has raised $250 million in a Series D funding round that values the firm at $5.1 billion.

Abnormal's latest funding round is being led by Wellington Management and includes existing investors Greylock Partners, Menlo Ventures, Insight Partners, as well as the venture arm of CrowdStrike.

Launched in 2018 by two software architects and founders of Twitter-acquired TellApart, Abnormal doubled in size and crossed more than $200 million in annualized revenue over the last year. The cybersecurity software contender has more than 2,400 customers, including Maersk, Xerox and Mattel — in all, some 17% of the Fortune 500, according to the company.

"This funding allows us to further invest in our human behavior AI platform to protect more people across their everyday applications, while enabling customers to accelerate their AI initiatives with autonomous AI solutions," co-founder and CEO Evan Reiser said in a statement.

Abnormal is focused on the threat of advanced email attacks, one of the larger cybersecurity risk areas for corporations, among others such as phishing attacks, malware, spam and vendor fraud.

With Microsoft surpassing $20 billion in cybersecurity revenue last year, competition has picked up among cybersecurity sector incumbents Cloudflare, Zscaler and Palo Alto Networks. The market is also undergoing consolidation. Two main rivals to Abnormal have been acquired over the past few years — Avanan by Check Point Software in August 2021 for approximately $280 million, and Area 1 Security by Cloudflare in February 2022 for around $162 million.

"Abnormal is in a strong financial position, having secured our place in the market as one of the fastest-growing cyber companies of all time," Reiser told CNBC.

It has also made several strategic hires, potentially moving towards an IPO. Last year, Michael DeCesare, a former CEO at Exabeam and Forescout Technology, was brought on board as president, focusing on go-to-market jobs across departments.

Additionally, CrowdStrike veteran James Yeager was recently hired to head up public sector sales, an area that the email security vendor is targeting for growth. In March, Abnormal hired CFO Smita Sanadhya, a former executive at Microsoft Hong Kong and HP as well as startup Okta, which she helped to scale to a $2 billion public company. Also joining the leadership ranks at Abnormal was chief legal officer Jeff True, who previously led Zoom's legal department over a period of superfast growth during the pandemic.

That hiring spree span the ranks across the company, with as many as 300 new positions to be filled this year out of a current base of 600 employees.

"An IPO is another milestone on our journey to becoming a generational company, and the timing to go public will depend on when market conditions create a favorable opportunity for us," Reiser told CNBC.

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