Arista Boosts Threat Detection With Awake Security Buyout

Zacks Equity Research
·3-min read

In a concerted effort to boost threat detection capabilities across the cloud network traffic, Arista Networks, Inc. ANET has inked a definitive agreement to acquire Awake Security for an undisclosed amount. The transaction is expected to be completed by the fourth quarter, subject to mandatory closing conditions and regulatory approvals. The deal is not likely to have any material impact on Arista’s fiscal 2020 operating results.

Founded in 2014, Awake Security is a network detection and response platform provider that combines AI with human expertise to identify and respond to insider and external threats. Its disruptive security and AI-driven business model offers proactive threat detection with actionable insights that are radically different from traditional security solutions. This, in turn, helps to better address the evolving nature of data theft risks and develop a cognitive platform that safeguards day-to-day security operations from malicious intents.

The buyout is likely to add significant value to Arista and complement many of its Endpoint Detection Response (EDR) offerings. The transaction brings together two leading technology firms with complete situational awareness of customers’ digital assets along with the ability to fully assess and respond to critical threats. In addition to distinct synergies in technology and market opportunity, the deal is based on commonalities in values, culture and philosophies, and is likely to deliver secure cloud networking experience for clients.

Moving forward, Arista is likely to benefit from the expanding cloud networking market owing to strong demand for scalable infrastructure. In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance along with programmability that enables integration with third-party applications for network management, automation and orchestration. Notably, Arista has extended its leadership in open cloud networking software, while partnering with Microsoft Corporation MSFT for open networking for SONIC. It has also introduced new cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Alphabet Inc.’s GOOGL Google Hangouts, Microsoft Teams and Zoom Video Communications, Inc. ZM.

In addition, Arista is well poised to benefit from strong demand for its data center switches. Moreover, continued spending on IT infrastructure products (server, enterprise storage and Ethernet switches) for deployment in cloud environments is likely to benefit the company. Its switches and routers support the high-end cloud networking market that require fast throughput at low cost. The robust product portfolio is aiding the company to win customers on a regular basis.

However, the company expects near-term volatility to continue due to the coronavirus-led disruptions despite the underlying strength of the resilient business model and diligent execution of operational strategies. The company expects the remainder of 2020 to be quite turbulent, with a pause in cloud titan set of orders leading to muted growth compared with the previous years. Markedly, Arista has experienced annual revenue growth rate of 12.1%, 30.7% and 45.8% in 2019, 2018 and 2017, respectively.

The company is likely to tide over the short-term headwinds through healthy inorganic growth post the completion of the deal and integration.

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