NEW YORK (TheStreet) -- With cyber-attacks a constant threat and the security industry expanding at a feverish pace, expect more acquisitions of nimble, cutting-edge firms by more mature vendors.
Here are three emerging players that could be attractive acquisition targets:
1. Imperva (IMPV)
Imperva specializes in protecting databases and applications inside the firewall, operating in a $4.3 billion market that's growing about 24% annually. After years of under-investment, the database security segment is showing strong growth, a positive trend for the company. In the second quarter, Imperva's revenues grew 39%, driven by product revenue growth of 44%. Business was strongest in the Americas, with revenue advancing 53%.
Imperva has been building up its customer base, adding 190 accounts in the June quarter, up from 175 in the year-ago period. The company now has more than 4,100 customers in 90+ countries. With only 28% of the current customer base having bought more than one Imperva product, there is plenty of room for cross-selling improvement. The company is making steady progress when it comes to large deals over $100,000, closing 115 in the second quarter, up 31% year-over-year. For 2015, the consensus revenue estimate of $217 million represents growth of 32.3%.
Does Imperva make the cut as a top tech stock to own going into 2016? Find out here.
Proofpoint is mainly known for its cloud-based email security solutions. The company, which also offers archiving and governance security solutions, has been gaining traction with its newer TAP advanced malware protection service, which has consistently been doubling revenue each quarter. In the June quarter, Proofpoint's total revenue rose 37% and billings were up 51%. Even backing out $5 million of early renewals pulled in from the third quarter, billings growth was particularly strong at 41%.
About 60% of customers have bought only one Proofpoint product, but that measure is improving, as the company is now closing more transactions covering both email security and TAP. In the second quarter, half of Proofpoint's growth came from add-on deals with current customers. The company could triple its sales just from increased cross-selling into the installed customer base, according to management. The 2015 consensus revenue estimate of $257.7 million represents growth of 31.8%.
Rapid7 provides analytics-based threat assessment and vulnerability management software, operating in a market for security and data analytics estimated at $12.5 billion. Active analytics is becoming the preferred approach to security, as opposed to the prevention-focused approach, which has proven to be ineffective. It's estimated that 60% of enterprise security budgets in five years will be allocated to rapid detection and response solutions, versus less than 10% last year.
Rapid7's incident detection technology enables organizations to quickly discover new threats and breaches. In the second quarter, Rapid7's revenue and billings both advanced 44%. About 61% of the company's total revenue is recurring -- made up of subscriptions, maintenance and support. At the end of June, deferred revenue stood at $97.5 million, up 45% from a year ago. Rapid7 has 4,150 customers (up 34% from the year-ago level), including 34% of the Fortune 1000. For 2015, the consensus revenue estimate of $104 million represents growth of 35.3%.