Security intelligence and management solutions startup Exabeam Inc. and security intelligence firm LogRhythm Inc. are set to merge, with a goal to create a combined company that leverages strengths from each to deliver artificial intelligence-driven security operations.

The merger is being pitched as allowing customers from both companies to benefit from enhanced research and development investments and product innovation, greater service and support coverage and access to a larger AI-driven product portfolio.

It’s also a sign that some established cybersecurity companies are coming under strain as new technologies and startups continue to emerge and command more of enterprises’ security budgets. Despite the continuing M&A in cybersecurity and the rise of larger platforms such as Palo Alto Networks Inc., CrowdStrike Holdings Inc. and Zscaler Inc., though, there’s still little sign of the industry overall consolidating to fewer suppliers.

“Together our expertise and shared strategic vision will accelerate innovative AI-driven cybersecurity solutions for customers around the world,” Chris O’Malley, chief executive officer of LogRhythm, said in a statement. “With more than 20 years of best-in-class SIEM and UEBA experience in serving thousands of worldwide customers, we are poised to create a new employee-inspired organization that encapsulates the absolute best of what we both offer.”

The terms of the merger were not disclosed. It’s expected to close in the third quarter, subject to regulatory approvals and customary closing conditions.

LogRyhythm has been majority-owned by private equity firm Thoma Bravo since 2018 and it’s likely Thoma Bravo is behind the merger. Exabeam had raised $390 million in venture capital funding, including a round of $200 million on a $2.4 billion valuation in June 2021.

Investors in Exabeam include Blue Owl Capital Inc., Acrew Capital Partners LLC, Lightspeed Venture LLC and Norwest Venture Partners.

Founded in 2013, Exabeam provides security intelligence and management solutions. The company’s Security Intelligence Platform uses machine learning to deliver advanced analytics and automated incident responses while offering set pricing for unlimited data.

Logrhythm, founded in 2003, offers advanced security information and event management solutions to detect, analyze and respond to cybersecurity threats. Their platform uses machine learning, user and entity behavior analytics and security orchestration, automation and response to streamline security operations and enhance threat detection and mitigation.

The news of the merger comes after Palo Alto Networks Inc. and IBM Corp. announced a new partnership in which Palo Alto Networks will acquire IBM’s QRadar software-as-a-service assets and become IBM’s preferred cybersecurity partner across network, cloud and security operation centers.

Palo Alto Networks CEO Nikesh Arora noted that the IBM-Palo Alto deal was needed to prepare for competing with Splunk Inc., which was acquired by Cisco Systems Inc. in March for $28 billion.

If the pattern isn’t apparent, the LogRhythm and Exabeam merger, the Palo Alto IBM deal and Cisco’s acquisition of Splunk, among other M&A in recent months, all point to one thing: The age of cybersecurity consolidation is seemingly upon us, even if it isn’t resulting in fewer companies overall.

Countless security startups have launched over the last two decades, and though many bring innovative new ideas to market, there are so many of them that a typical customer struggles to pick between them and then manage them all. Security industry consolidation helps overcome that challenge through the creation of larger, one-stop companies that provide a full gauntlet of security services. That’s also core to what the LogRhythm and Exabeam merger is about — even if the vast majority of enterprises have no intention of reducing the number of cybersecurity supplies.

“As a combined organization, we will continue to push the envelope of security operations innovation with solutions that bring AI, automation, SIEM, security analytics and UEBA together to deliver a holistic approach to combating cyber threats,” said Exabeam CEO Adam Geller.

Image: LogRhythm