Armis Acquires Otorio for $120M - Expanding Cybersecurity to Physical Spaces

Industry Consolidation Continues in Cybersecurity

Further consolidation is occurring within the security sector, as major platform providers acquire technologies to enhance their expertise in key growth areas. Armis, a cyber-exposure management firm valued at $4.2 billion, announced on Thursday its intention to acquire Otorio, a company specializing in the security of industrial and physical environments.

Deal Details

The financial terms of the acquisition have not been publicly disclosed. However, sources familiar with the transaction indicate that Armis, headquartered in San Francisco with origins in Israel, will pay $120 million in a combination of cash and stock for Otorio. Prior to this, the Tel Aviv-based startup had secured $50 million in funding from Andritz, an industrial company, as per PitchBook data.

Integration of Technologies

Otorio’s primary product, Titan, will be integrated into Armis’ existing Centrix platform. Armis has historically concentrated on cloud services, focusing on identifying and mitigating risks within that attack surface. Notably, the company recently gained attention for its role in blocking access to DeepSeek, a new AI model originating from China, and subsequently publishing research detailing the reasons behind this action.

Expanding into Industrial Security

The integration of Otorio’s technology will broaden Armis’ capabilities to include a crucial, often-overlooked area: industrial machinery and broader industrial settings. These environments are frequently perceived as consisting of simple, non-connected equipment. However, the increasing replacement of older machines with connected models introduces new vulnerabilities, potentially making industrial infrastructure even more susceptible to attacks due to its critical nature.

Strengthening Physical Security Protections

This technology also proves valuable in extending Armis’ work in other physical environments beyond industrial settings, which still demand highly secure protections. According to CEO and co-founder Yevgeny Dibrov, these environments necessitate on-premises security solutions.

Enhancing Platform Capabilities

“We are incorporating robust components into our platform to address a wider range of environments, particularly air-gapped environments that require on-premise deployments, as opposed to our SaaS product,” Dibrov explained. “Furthermore, this acquisition significantly enhances our ability to meet zero-trust needs and capabilities. Otorio is instrumental in elevating us to the next level in this domain.”

Growth Opportunity for Otorio

The acquisition presents Otorio with an opportunity to scale its operations in a manner that would have been more challenging as an independent startup.

Statements from Leadership

Daniel Bren, CEO and co-founder of Otorio, stated, “Armis has quickly established itself as a leading provider of cyber exposure management, building a best-in-class cloud SaaS platform that delivers unparalleled visibility, security, and risk management to enterprises across all sectors.” He further added, “Our team is excited to join Armis and leverage our extensive operational context.”

Trends in Cybersecurity Funding

The past decade has witnessed substantial growth in the early-stage cybersecurity sector. Driven by an expanding threat landscape, numerous companies have launched, attracting significant venture capital funding. However, recent trends suggest a shift, with larger, late-stage companies receiving the majority of available investment. This makes mergers and acquisitions a more viable option for many smaller startups.

Armis’ Acquisition Strategy

While companies like Wiz are utilizing substantial funding for acquisitions, others, such as Armis, are also actively pursuing this strategy. Otorio represents Armis’ third acquisition overall, and its third within the past year. Previous acquisitions include Silk Security for $150 million in April 2024 and CTCI for $20 million in February 2024.