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Despite increased investment in cloud security services, companies continue to struggle with managing their attack surface amid recent data breaches. Surveys show that for 67% of organizations, their external attack surface expanded over the past two years due to the rising use of cloud, third-party services, the Internet of Things, and cyber-physical systems. About 69% of these organizations have been compromised via unknown, unmanaged, or poorly managed internet-facing assets in the past year. IBM (NYSE: IBM) is trying to target this market through its recent acquisition of Randori.
 

IBM’s Financials

Second quarter revenues grew 16% to $15.5 billion, ahead of the Street’s estimates by 2.75%. Adjusted earnings of $2.31 a share were also ahead of the analyst estimate of $2.29 per share.

By segment, revenues from Software that includes Hybrid Platform & Solutions and Transaction Processing grew 12% to $6.2 billion. Revenue from Consulting including Business Transformation, Technology Consulting, and Application Operations grew 18% to $4.8 billion. Revenue from Infrastructure including Hybrid Infrastructure and Infrastructure Support grew 25% to $4.2 billion.

IBM did not provide any outlook for the third quarter or the year. It did, however, mention that it expected constant currency revenue growth at the high end of the mid-single digit range. It also expects an additional 3.5 point contribution from incremental sales to Kyndryl.
 

IBM’s Acquisitions

Recently, IBM announced its acquisition of Massachusetts-based Randori, an attack surface management, and offensive cyber security provider. The acquisition will allow IBM to integrate Randori’s attack surface management software with the extended detection and response (XDR) capabilities of IBM Security QRadar. Security teams have the ability to leverage real-time attack surface visibility for intelligent alert triage, threat hunting, and incident response, eliminating the need for customers to manually monitor new critical applications and respond quickly when new issues or emerging threats arise on their perimeter.

Randori’s solutions will help complement IBM’s X-Force Red’s elite hacker lead offensive security services while simultaneously enriching QRadar XDR detection and response capabilities. Global customers will be able to benefit from a top-tier attack experience that helps uncover where organizations are most vulnerable. IBM will be able to leverage Randori insights through its Managed Security Services, improving threat detection. Prior to the acquisition, Randori raised $29.8 million in two rounds of funding led by Legion Captial, .406 Ventures, Accomplice, and Harmony Partners. Its most recent round was held in April 2020 when it raised $20 million.

IBM appears to be building a cyber security portfolio. The Randori acquisition will help further strengthen IBM’s Hybrid Cloud strategy and its portfolio of AI-powered cyber security products and services. This is not the first acquisition that IBM has made in this space. Last year, it announced the acquisition of ReaQta, an endpoint security solution provider whose products are designed to leverage AI to automatically identify and manage threats. Netherlands-based ReaQta’s behavioral-based platform helps stop known and unknown threats in real-time and it can be deployed in a hybrid model. IBM has been leveraging ReaQta’s capabilities into its suite of XDR offerings under the QRadar brand. Terms of the acquisition were not disclosed.

IBM’s stock is currently trading at $130.88 with a market capitalization of $117.7 billion. It touched a 52-week high of $144.73 in June. In November last year, it touched a 52-week low of $114.56.

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