Congratulations to the Wiz team on the announcement today that Google is acquiring Wiz for $32B in cash. I was impressed that this deal didn’t leak until 24 hours before the news was official and for those of you that are in the cloud security space and have been following Wiz, there has been no shortage of acquisition discussions in the past.
I have also read analysis so far that points out the revenue multiple is about 42x assuming a current ARR run rate of $750M. I don’t think that increasing the revenue of Wiz to $10B is really what this opportunity is about for Google Cloud.
I think the market is missing something telling in the Wiz acquisition press release that Google put out that points to what is the true measure of success:
How are Wiz and Google Cloud better together?
Wiz and Google Cloud share a vision to improve security by making it easier and faster for organizations of all types and sizes to protect themselves, end-to-end, across all major clouds.
Google Cloud is a leader in cloud infrastructure, with deep AI expertise and a track record of industry-leading security innovation. Bringing this to Wiz will help make their solutions even better and more scalable, helping protect more organizations faster.
This will help spur the adoption of multicloud cybersecurity, the use of multicloud, and competition and growth in cloud computing.
What is the right Wiz and Google Cloud deal metric?
In our view, “spurring the adoption of multicloud” means making significant in-roads with Azure and AWS customers that aren’t using Google Cloud today but are using Wiz. We don’t have definitive metrics that state amount of cloud spend that Wiz secures.
We can do some quick math on the total aggregate cloud spend of Wiz’s customers using our customer and market experience. If we assume 3% of current customer cloud spend hits their gross revenue line on the Wiz product side (customers spend 3% of their total cloud spend with Wiz to secure it), we can back into roughly $25B in cloud spend that is currently under protection from the Wiz platform which is roughly the same order of magnitude of the announced deal.
Is Google betting on more CISO’s backing their future Google Cloud deployments since they already bought into Wiz? We are about to find out…