Zscaler (NASDAQ: ZS) has completed the acquisition of SquareX, a firm that develops browser detection and response technology, according to a note from Cantor Fitzgerald, which also reaffirmed an Overweight rating on Zscaler.
The purchase brings SquareX’s security extension into Zscaler’s toolkit. That extension operates within any web browser and is designed to detect malicious extensions and scripts while enforcing least-privilege application access directly from the browser - removing the need to deploy secure, third-party browsers on unmanaged devices.
Neither company disclosed the financial terms of the transaction.
The deal arrives as competitors are also bolstering their secure browser offerings. CrowdStrike announced an acquisition of Seraphic, and both CrowdStrike and Zscaler are positioning themselves against private entrant Island and Palo Alto Networks’ Prisma Access Browser within the expanding secure browser segment.
Palo Alto Networks is noted in market data as a significant software industry participant, carrying a market capitalization of $111 billion and holding an analyst consensus Buy rating of 1.73, per InvestingPro. Industry metrics referenced show Palo Alto Networks achieved 15.3% revenue growth over the last twelve months.
Additional corporate moves and analyst activity were noted for Palo Alto Networks in the same industry snapshot. The company recently completed its acquisition of Chronosphere, a provider of cloud-native observability tools intended to help manage and secure large volumes of data for AI-driven operations. Jefferies reiterated a Buy rating on Palo Alto Networks and kept a $250.00 price target, while noting the company’s acquisition of CyberArk is nearing completion.
CyberArk itself is reported to be growing rapidly, with a 20% year-over-year increase in net new annual recurring revenue, a signal highlighted in the same coverage as an indication of a healthy core business.
Analyst coverage of Palo Alto Networks included further endorsements: Citizens maintained a Market Outperform rating, citing favorable industry feedback on the company’s platformization potential; Guggenheim moved its rating from Sell to Neutral, acknowledging recent strategic acquisitions; and DA Davidson kept its Buy rating with a $240.00 price target following an investor call the firm described as generally upbeat.
Gartner projections, as reported in the same industry overview, anticipate notable adoption growth for secure enterprise browsers. The forecast cited expects that by 2028 roughly 25% of enterprises will use secure enterprise browsers, up from about 10% at present. These projections underpin competitive strategic activity across vendors in the secure browser market.
Where this matters:
- Cybersecurity and enterprise software vendors are directly impacted as they jockey for position in the secure browser market.
- Enterprise IT and managed device security teams may see changes in vendor options for enforcing browser-native controls on unmanaged endpoints.
- Analyst coverage and near-term earnings reports for major players could shape investor views on competitive positioning and growth prospects.
Summary
Zscaler’s acquisition of SquareX adds a browser-based security extension that detects malicious extensions and scripts and enforces least-privilege access from within the browser, removing the need for secure third-party browsers on unmanaged devices. Cantor Fitzgerald reaffirmed an Overweight rating on Zscaler. The move takes place in a competitive environment where CrowdStrike and Palo Alto Networks are pursuing acquisitions and product enhancements in the secure browser arena, and where analyst ratings and market-capitalization metrics for larger competitors are highlighted.
Key points
- Zscaler acquires SquareX to integrate a browser extension that runs on any browser and enforces least-privilege application access.
- Cantor Fitzgerald reiterated an Overweight rating on Zscaler following the acquisition.
- Competition is intensifying in the secure browser market, with CrowdStrike and Palo Alto Networks also active via acquisitions and product development; Palo Alto Networks is noted with a $111 billion market cap and a Buy consensus rating.
Risks and uncertainties
- Financial terms of the Zscaler-SquareX transaction were not disclosed, leaving the acquisition’s immediate financial impact unclear - relevant to investors and financial analysts.
- Intensifying competition from firms such as CrowdStrike, Island, and Palo Alto Networks could affect market share and pricing dynamics in the secure browser segment - relevant to the cybersecurity and enterprise software markets.
- Market expectations and near-term earnings reports for larger competitors, notably Palo Alto Networks, could influence sentiment and valuation dynamics across the sector - relevant to software investors and enterprise IT procurement strategies.
Note: This report presents factual details regarding the acquisition and related industry developments as provided in the referenced coverage. It does not include undisclosed financial terms or speculative commentary beyond the reported information.