BlackBerry Doubles Down on Security in $1.4B Acquisition of Cylance

BlackBerry has agreed to buy endpoint security firm Cylance for $1.4 billion cash in a deal expected to close before February 2019, the two companies announced today.

Once famous for its keyboarded smartphones, BlackBerry has since pivoted to enterprise software. The acquisition of artificial intelligence-based threat prevention firm Cylance is BlackBerry's largest buy in seven years, according to Bloomberg data, and it signifies BlackBerry is pushing further to add security and AI to its portfolio. Execs indicate Cylance will also help BlackBerry with IoT security as it focuses on connected devices.

Cylance was founded in 2012 by co-founders Stuart McClure, chairman and CEO, and Ryan Permeh, chief scientist. The Irvine, Calif.-based company applies artificial intelligence, algorithms, and machine learning to proactively identify threats without using signatures. Its idea is to detect "unknown unknowns" at the endpoint before they cause damage.

This year has been a busy one for Cylance, which announced a $120 million Series E funding round in June 2018 and reported annual revenues exceeding $130 million for the 2018 fiscal year. The company has raised a total of $297 million in funding over five rounds and reportedly has 3,500 active enterprise customers, including more than 20% of the Fortune 500.

Cylance was headed for an IPO before BlackBerry swooped in to make an offer, executives reported on a media conference call today. McClure said the reason behind its decision lay in BlackBerry's application of security into embedded and mobile technology. He sees an intersection between Cylance, which focuses on detection and prevention for endpoints and servers, and BlackBerry, which aims to secure a broad range of devices.

When looking at the company's mission and discuss where cyberattacks go, McClure said, they target cloud, mobile, endpoint, IoT, and embedded systems. "Wherever there is a target for an adversary … you're going to have an adversary," he noted. The BlackBerry acquisition will bring Cylance's technology to a wide range of devices and platforms.

John Chen, BlackBerry's executive chairman and CEO, expects Cylance will complement several aspects of its portfolio, most notably Unified Endpoint Management (UEM) and QNX, an operating system intended for embedded systems, particularly connected and self-driving cars.

"One area I think we're going to have a strong influence [in] is transportation," said Chen on the call, adding that 120M cars today use BlackBerry's embedded technology. He explained how UEM and Cylance tech will both be introduced into the connected vehicle space.

Chen also pointed to opportunities within the enterprise of things (EoT) and said Cylance's capabilities will be a "big, big help to making this platform a reality." It seems BlackBerry plans to integrate AI and machine learning into BlackBerry Spark, its platform for connecting the EoT.

In terms of cross-selling opportunities for BlackBerry, Chen said the company would like to get into the Cylance customer base by providing security solutions for device management and application management in the mobile world – a shift from Cylance's focus on PCs and laptops.

Following the deal's close, BlackBerry expects Cylance will operate as a separate business unit within BlackBerry Limited. Read more details in its press release on the news.

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