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Why Did Cisco Acquire Duo Security?

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Acquisition valued at $2.35 billion

Last week, Cisco Systems (CSCO) agreed to acquire cybersecurity unicorn Duo Security for $2.35 billion in cash.

Duo Security was founded in 2009 and has raised close to $121.5 million in funding to date. Its investors include Workday (WDAY) and Google Ventures (GOOG) (GOOGL). Duo Security was valued at over $1 billion following its last funding round of $70 million in October 2017.

According to Crunchbase, “Duo Security provides a cloud-based access protection solution for companies and organizations worldwide. Clients use its solution for adaptive authentication, BYOD (bring your own device) security, cloud security, endpoint security, mobile security, and two-factor authentication.”

Duo Security also has a Managed Service Provider program whereby it provides tools to protect service provider customers from data breaches. Enterprises can deploy this technology to protect user data and applications from theft and breaches.

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Cisco paid a premium for this acquisition

In February this year, Duo Security claimed to have passed the $100 million annual recurring revenue milestone, indicating that Cisco had paid a hefty premium to acquire it.

As we’ve seen in this series, Cisco’s Security business segment is one of the high-growth segments in which the company continues to gain traction. Over the last few months, Cisco has acquired companies such as Sourcefire and Lancope to penetrate the security space. Cisco likely expects its Duo Security acquisition to translate into significant top line growth for it over the next few years.

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