21 November 2025 Equity Research Report China Cybersecurity Equities Limited downside to demand; cost control drives earnings recovery Demand pressure persists; earnings recovery due to cost control measures. DBAPP's and QAX's 3Q25 revenue grew 6% and 18% y-o-y, respectively, backed by demand recovery from certain downstream industries (telecom, defense) and growth in new security subsectors. Both companies' recurring net loss narrowed, due to the implementation of expense control measures. Venustech's reve ...

Core Insights - Equinix, Inc. has appointed Douglas Merrill as Chief Information Security Officer (CISO), effective immediately, to enhance its global security organization and ensure the resilience and integrity of its digital infrastructure [1][2][3] Group 1: Leadership and Security Strategy - Douglas Merrill brings over 30 years of experience in technology modernization and transformation, which will be crucial for Equinix's commitment to security excellence [1][3] - Merrill previously served as interim CISO for six months, during which he redesigned Equinix's global security organization and introduced a strategic framework for integrating security across platforms, products, and services [2][3] - Harmeen Mehta, Executive Vice President and Chief Digital and Innovation Officer, emphasized the importance of embedding world-class security into product design to reduce risk and enhance customer confidence [2] Group 2: Background and Expertise - Merrill has a notable background, having served as a partner at McKinsey and as Chief Information Officer at Google, where he shaped technology strategy [3] - He is recognized for leading transformational security programs and driving innovation in cloud security, AI, and digital transformation [3][4] - Merrill holds master's and doctoral degrees in cognitive science from Princeton University and is a published author with patents in machine learning applications [4] Group 3: Company Overview - Equinix is positioned as a critical player in the world's digital infrastructure, connecting economies and delivering seamless digital experiences [5] - The company aims to set the standard for secure digital infrastructure on a global scale, focusing on innovation and customer trust [3]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $75 million, representing an 8% year-over-year growth [4][12] - Non-GAAP earnings per share increased by 22% year-over-year to $0.28 [4][18] - Gross margin remained strong at 82.2%, consistent with Q3 2024 [15][16] - Operating income grew 34% year-over-year to $9.6 million [16] - Net income rose 24% year-over-year to $12.6 million [18] Business Line Data and Key Metrics Changes - Cloud Security ARR increased to $89 million, up from $72 million in Q3 last year, reflecting a 24% year-over-year growth [4][13] - Subscription revenue grew by 21%, accounting for 52% of total revenue compared to 47% in the same period last year [6] - DefensePro X refresh cycle grew approximately 40% year-over-year [9] Market Data and Key Metrics Changes - Revenue in the Americas rose 28% year-over-year to $35.4 million, representing 47% of total revenue [15] - EMEA revenue decreased by 10% year-over-year to $22.8 million, accounting for 30% of total revenue [15] - APAC revenue increased by 3% year-over-year to $17.1 million, contributing 23% of total revenue [15] Company Strategy and Development Direction - The company is focused on expanding its business in cloud security, driving innovation through AI and automation, and strengthening global go-to-market capabilities [4][10] - The company plans to open three additional cloud security centers in Q4 2025, bringing the total to eight for the year [5] - The company aims to enhance its competitive edge through algorithmic-based security solutions and fully managed services [24][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand environment, indicating strong growth potential in Q4 2025 [27][28] - The company expects total revenue for Q4 2025 to be in the range of $78 million to $79 million [19] - Management highlighted the importance of ARR as a guiding indicator for future revenue growth [28] Other Important Information - Cash flow from operations in Q3 2025 was negative $4.2 million, primarily due to an increase in accounts receivable [18] - The company ended the quarter with approximately $455 million in cash and marketable securities [19] Q&A Session Summary Question: How are operations going now, and are there any areas for reorganization? - Management indicated satisfaction with North America's progress but plans to increase investments further to capture growth opportunities [23] Question: How would you describe your competitive position in the market? - Management emphasized the strength of their algorithmic-based security capabilities and fully managed services as key competitive advantages [24] Question: Can you discuss the demand environment in the quarter? - Management noted that demand remained stable compared to previous quarters, with strong visibility into Q4 [27][28] Question: Will billings follow the same trajectory as RPO? - Management expects billing and cash collection to be stronger in Q4, anticipating a return to positive cash flow from operations [30] Question: Are larger competitors focusing on other areas presenting an opportunity for customer acquisition? - Management confirmed that competitors broadening their offerings allows the company to focus on application and API security, presenting significant growth opportunities [34]

Core Insights - Radware has launched two new cloud security centers in Tel Aviv, Israel, and Bogotá, Colombia, expanding its global footprint in cybersecurity [1][2][3] - The new centers are part of Radware's strategy to enhance its global cloud security network, which now includes over 50 centers worldwide with a total attack mitigation capacity exceeding 15 Tbps [2][3] - The company aims to provide local customers with advanced cyber protection while ensuring compliance with data privacy regulations [3] Company Expansion - The addition of the second center in Tel Aviv and the new site in Bogotá is part of Radware's ongoing global expansion efforts, particularly in the EMEA and Latin America regions [3] - Recent expansions also included new cloud security centers in India, Kenya, and Peru, indicating a robust growth strategy [2][3] Cybersecurity Landscape - According to Radware's 2025 Global Threat Analysis Report, web DDoS attacks surged by 550% globally, while web application and API attacks increased by 41% from 2023 to 2024, highlighting the growing threat landscape [4] - The company's solutions are designed to mitigate various types of attacks, including denial-of-service and web application attacks, thereby improving application response times and reducing mitigation response times [3] Industry Recognition - Radware has received multiple awards for its cybersecurity solutions, including DDoS mitigation and application protection, and is recognized as a market leader by industry analysts such as Forrester and Gartner [5]

Company Overview - Palo Alto Networks has become the largest player in the cybersecurity industry by market cap, with a valuation exceeding $130 billion [3] - CyberArk, founded in 2005 and public since 2014, specializes in identity management software and has a market cap nearing $21 billion after a 29% increase this year [4][5] Acquisition Discussion - Palo Alto Networks is reportedly in discussions to acquire CyberArk for over $20 billion, which would be the largest acquisition under CEO Nikesh Arora [1][4] - This potential acquisition follows a series of purchases by Palo Alto Networks, including Protect AI, Talon Cyber Security, Dig Security, and Zycada Networks [3] Market Performance - CyberArk shares surged by 18% following the acquisition news, reaching a record high and reflecting a 52% increase in 2024 [1][5] - Palo Alto Networks shares fell by 3.5% on the same news but are still up approximately 9% for the year [5] Financial Performance - In the first quarter, CyberArk reported a net income of around $11.5 million on revenues of approximately $318 million, marking a 43% year-over-year revenue increase [6] Industry Context - The cybersecurity market is experiencing significant activity, with major deals such as Google's $32 billion acquisition of Wiz and Cisco's $28 billion purchase of Splunk [6][7]

Industry Overview - The cybersecurity market is experiencing significant growth, projected to increase from $215 billion last year to $697 billion by 2035, reflecting an annualized growth rate of 11.3% over the next decade [2] - The typical data breach can cost companies approximately $4.9 million in damages, highlighting the critical importance of cybersecurity in today's digital landscape [1] Company Highlights - **Palo Alto Networks** specializes in firewall technology and has expanded into cloud security and AI integration, with analysts estimating a long-term earnings growth of 20% annually as security spending increases [5][6] - **CrowdStrike Holdings** is recognized for its endpoint security and has developed a comprehensive security platform, achieving $4.4 billion in annual recurring revenue, with a price-to-sales ratio of 28, indicating strong growth potential [8][9] - **Cloudflare** operates one of the largest content delivery networks and mitigates DDoS threats, boasting over 250,000 paying customers and positioning itself in edge computing for future technologies like autonomous vehicles [10][11] - **SentinelOne** utilizes AI for autonomous threat detection and competes directly with CrowdStrike, currently valued at a price-to-sales ratio of 6.7, suggesting potential long-term upside despite being smaller and not yet profitable [12][13] - **Microsoft** is a major player in the cybersecurity space, integrating security products into its Windows operating system and benefiting from its diverse exposure to AI, cloud computing, and enterprise software, making it a solid investment in the tech sector [14][15]

Core Insights - Radware has launched new cloud security service centers in Chennai and Mumbai, India, and Nairobi, Kenya, expanding its global network to over 50 centers with a mitigation capacity of up to 15 Tbps [1][2] Group 1: Company Developments - The new service centers will enhance Radware's ability to mitigate attacks close to their origin, improving application response times and reducing mitigation response times against various attacks [2] - Radware's ongoing investments in its security network are crucial for its cloud security growth strategy, emphasizing the importance of cloud innovation in providing industry-leading cyber protection [4] - The company has received multiple awards for its DDoS mitigation and application protection solutions, being recognized as a market leader by various industry analysts [4] Group 2: Industry Trends - According to Radware's 2025 Global Threat Analysis Report, web DDoS attacks surged by 550% globally, while web application and API attacks increased by 41% from 2023 to 2024, indicating a significant rise in cyber threats [3] - The increasing frequency, magnitude, and sophistication of cyber threats highlight the growing need for advanced security solutions in the industry [4] Group 3: Company Overview - Radware is a global leader in application security and delivery solutions for multi-cloud environments, utilizing AI-driven algorithms for real-time protection against sophisticated cyber threats [5] - Enterprises and carriers worldwide rely on Radware's solutions to address evolving cybersecurity challenges while reducing costs [5]

Core Insights - Tenable has appointed Eric Doerr as Chief Product Officer, bringing nearly three decades of experience in security product development from companies like Microsoft and Google Cloud [1][2][3] - Doerr will lead Tenable's global product organization, focusing on strategy, innovation, and execution, particularly as the company prepares to launch an expanded version of its Tenable One platform [2][3] - The appointment aligns with Tenable's momentum in cloud security and its vision for unified cybersecurity management across various attack surfaces [3][4] Company Overview - Tenable is recognized as an exposure management company, aiming to close cybersecurity gaps that can undermine business value and trust [5] - The company serves approximately 44,000 customers globally, providing an AI-powered platform that enhances security visibility and action across diverse environments [5]