As a private company, secured access service edge (SASE) player Cato Networks doesn’t report earnings. But the company offered a look behind the curtain this week, announcing it has grown its annual recurring revenue (ARR) from $1 million to $100 million over the past five years. A pair of analysts told Fierce Cato’s strong growth makes it a prime candidate to go public in the future.
In a press release, Cato claimed the speed with which it hit the $100 million mark represents a record for an enterprise networking security company. The figure means the company has achieved so-called “Centaur” status, which is just a moniker given to indicate a private entity’s financial position. Cato previously achieved the more commonly known “Unicorn” status – which is assigned to private companies which achieve a $1 billion valuation – in November 2020. By February of this year, the company said its valuation had risen to $2.5 billion.
Roy Chua, principal at AvidThink, told Fierce Cato’s milestone is indeed “significant” and indicates “that customers are buying what they are selling from a features and architecture standpoint.”
He added Cato seems to have been able to expand its feature set at a good clip, enabling its platform to be applied to more use cases including for data loss prevention (DLP) and as a cloud access security broker. And an increasing number of large deployments show Cato can build and manage its solution at scale, Chua said.
Indeed, Cato rolled out a new user interface as well as a Threats Dashboard and Applications Dashboard in December 2021. It followed up this year with risk-based application access control in April, network-based ransomware protection in June and a Smart DLP capability in July. It has also expanded its network with new points of presence in France and the Netherlands.
In February, Cato highlighted several significant wins it scored in 2021 which saw it deploy its solution to protect more than 100 sites in most cases. The largest deployment, for a European transportation services company, spanned 547 sites.
“They are definitely one of the leading independents in the converged networking and security market with strong momentum,” Chua stated. “Perhaps an eventual IPO is possible if they can continue growth and show good profitability.”
Futuriom’s R. Scott Raynovich agreed Cato could be an IPO contender.
“Cato is in a red-hot space at the intersection of Network as a service (NaaS) and secure access service edge (SASE) security platforms,” he told Fierce. “Co-founders Shlomo Kramer and Gur Shatz have strong records, so we see this company as an IPO candidate when technology markets come back.”
Dell’Oro Group recently forecast the total SASE market will top $13 billion by 2026. Meanwhile, Gartner predicted in 2021 that the SASE market would hit $15 billion by 2025.
To boost growth in an increasingly crowded and confusing market, Chua suggested Cato might need to rethink its selective go-to-market approach. While the company currently avoids most carrier partners, it might need to take a “more expansive” tack to accelerate market penetration, he concluded.