Rapid7 to acquire DivvyCloud to help enterprises accelerate innovation

Rapid7, a leading provider of security analytics and automation, announced that it has entered into a definitive agreement to acquire DivvyCloud, a leader in Cloud Security Posture Management (CSPM).

Under the terms of agreement, Rapid7 will acquire DivvyCloud for a total purchase price of approximately $145 million, subject to adjustments, to be paid in cash and stock. The acquisition is expected to close during the second quarter of 2020, subject to the satisfaction of customary closing conditions.

As organizations accelerate their migration and adoption of cloud services, they need help bringing Security and DevOps teams together to understand and effectively manage the governance, risk and security of their cloud and container environments.

Through DivvyCloud’s platform, Rapid7 customers will have the ability to innovate more securely, move out of data centers and into the cloud, and make infrastructure accessible and manageable.

DivvyCloud enables deep visibility, combined with automated prevention and real-time remediation of risk to deliver continuous security and compliance for cloud environments, including support for Amazon Web Services, Microsoft Azure, Google Cloud Platform, Alibaba Cloud and Kubernetes.

Using DivvyCloud, customers can protect cloud and container environments from misconfiguration, policy violations, external and internal threats, and identity and access management challenges.

“We are thrilled to welcome DivvyCloud, its customers, and the entire DivvyCloud team to the Rapid7 family,” said Corey Thomas, chairman and CEO, Rapid7.

“With the acceleration of cloud adoption introducing new enterprise risk areas, we’re excited to bring Security and DevOps teams together with DivvyCloud’s best-of-breed compliance, risk management and governance for multi-cloud and container environments, while also integrating it with our Insight Cloud platform to create enduring customer value.”

“Joining forces with Rapid7 is a natural next step,” said Brian Johnson, CEO and co-founder, DivvyCloud.

“Their commitment to customers, employees, and company culture is well-aligned with the values that have made DivvyCloud so successful. With the combined expertise of both Rapid7 and DivvyCloud, we are even better positioned to help enterprises accelerate innovation using cloud and containers without the loss of control.”

“Security teams are constantly challenged with understanding and effectively managing the risk and security for cloud environments at DevOps speeds,” said Lee Weiner, chief innovation officer, Rapid7.

“DivvyCloud’s technology, team, and market leadership in the cloud security space will enable Rapid7 to better serve its customers’ needs by helping them innovate more securely, and provide a robust set of compliance and remediation paths for those with modern cloud infrastructure.”

Rapid7 provides one of the most comprehensive security operations platforms in the market today, with a broad set of best-of-breed capabilities across SIEM-based incident detection and response, vulnerability management, application security and security automation and orchestration.

Through this acquisition, Rapid7 will address the growing need for organizations to secure multi-cloud environments by extending the cloud security capabilities of its Insight platform.

RTP Ventures, MissionOG, and Providence Strategic Growth, an affiliate of Providence Equity Partners, were the lead investors in DivvyCloud. DC Advisory served as DivvyCloud’s financial advisor and Miles & Stockbridge served as legal advisor.

Preliminary first quarter financial results

Rapid7 also provided preliminary estimated financial results for the first quarter ended March 31, 2020. Preliminary estimates of revenue and non-GAAP loss from operations for the first quarter 2020 exceeded Rapid7’s previous guidance provided on February 10, 2020.

Rapid7 anticipates revenue for the first quarter 2020 to be in the range of $93.8 million to $94.0 million. For the first quarter 2020, the Company anticipates GAAP loss from operations to be in the range of $(20.3) to $(20.1) million, and non-GAAP loss from operations to be in the range of $(4.4) to $(4.2) million.

Acquisition details

Under the terms of the acquisition agreement, Rapid7 will acquire DivvyCloud for a total purchase price of approximately $145 million, subject to adjustments. The purchase price includes approximately $128.3 million in cash to be paid at closing, $7.4 million of deferred cash payments and $9.3 million in stock. DivvyCloud co-founders Brian Johnson and Chris DeRamus have agreed to join Rapid7.

Revolving credit facility

Rapid7 announced that it has entered into a new three-year revolving credit facility with Keybank National Association that provides borrowing capacity up to $30 million with an accordion feature to expand borrowing capacity up to $70 million. Rapid7 does not intend to immediately draw on this revolving credit facility.

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