People walk by the Nasdaq Composite site in Times Square on May 11, 2021, in New York City. In spite of current market trends, security company ZeroFox began trading on the Nasdaq on Aug. 4. (Photo by Spencer Platt/Getty Images)

In a surprising move given market conditions, SaaS company ZeroFox Holdings on Thursday bucked the trend and started trading on the Nasdaq stock market. Investors clearly approved as ZeroFox stock was up 42% at closing, trading at $14.60.

Security industry analysts pointed out that ZeroFox may be the only “pure” cyber threat intelligence (CTI) company to have ever gone public.

“I can’t think of other CTI-specific vendors that have gone public,” said Jon Oltsik, senior principal analyst and ESG Fellow. ”Of course, cyber-threat intelligence is a big part of Mandiant’s value proposition and FireEye played this angle well during its ascension. Same is true of CrowdStrike. Other historical examples could include McAfee, Check Point, and Trend Micro.”

The ZeroFox SaaS platform combines advanced AI analytics, digital risk and privacy protection, threat intelligence, and breach, incident and takedown response capabilities to expose and disrupt phishing and fraud campaigns, botnet exposures, credential theft, impersonations, data breaches, and physical threats that target company assets.

“As I stated at the beginning of this process, we have a bold vision for ZeroFox to make the internet a safer place, eradicate cybercrime, and enable digital prosperity,” said James Foster, co-founder, chairman and CEO at ZeroFox. “We recognized early on that digital transformation would change how people conduct business and how humans interact; and that malicious actors would exploit these new technologies and advances, thus exposing organizations to new types of risk.”

Frank Dickson, who covers security and trust at IDC, said he found ZeroFox going public “very surprising” and “clearly unusual” given the current market conditions.

“The reality of the equity markets of 2022 makes going public unappealing,” Dickson said. “A number of really compelling security start-ups that we would have expected to go public have not. Many have decided to delay and wait for a more IPO-friendly environment.”

Dickson said the delay in IPOs has created an interesting and unfortunate phenomenon: companies that were once planning to go public are clearly delaying plans. Venture funding sources have also evaporated, so the ability to fund revenue growth with venture capital becomes problematic.

“High growth start-ups are now being forced to change their mantras from growth at all costs to cash flow neutral growth,” Dickson said. “Thus, foreboding equity markets has made lay-off cost cutting a necessary evil to achieve cash flow neutrality.” 

ESG’s Oltsik added that ZeroFox estimates revenue of $150 million by end-of-year, so it’s well-established and at the right size to go public. 

“I could still see it being acquired at some point in the future, but for now it has the right profile for an IPO,” Oltsik said.