Cato Networks Ltd., a major player in the secure access service edge market, today announced that it has raised $238 million in fresh funding.

The investment values the Tel Aviv-based startup at more than $3 billion. That’s up from the $2.5 billion it was worth after its previous funding round in 2021. Cato’s latest raise was led by LightSpeed Venture Partners with contributions from Adams Street Partners, SoftBank Vision Fund 2, Sixty Degree Capital and Singtel Innov8.

Cato co-founder and Chief Executive Officer Shlomo Kramer told TechCrunch that the company intends to go public within 12 months. In the same time frame, Cato will use its latest funding round to hire 100 new workers. It expects to have about 900 employees after the recruiting drive.

Cato provides a secure access service edge, or SASE, platform that is used by more than 1,800 organizations. The platform provides a cloud-based network that a company can use to link together its offices, cloud environments and other geographically disparate technology assets. Cato’s infrastructure also allows remote workers to connect to internal business applications.

The platform combines its networking features with a raft of cybersecurity tools. Those tools can scan network traffic for malware, block malicious domains and perform a range of other breach prevention tasks.

Historically, companies used separate products to power their networking and cybersecurity operations. Administrators would use one tool to connect a new branch office to the corporate network and another to scan the branch office’s traffic for malware. In many cases, companies also deploy additional products to manage the other aspects of their cybersecurity efforts.

Regularly switching between different software tools’ interfaces is time-consuming for administrators. According to Cato, the fact that its platform provides both networking and cybersecurity features in a single product eases day-to-day network operations. Its all-in-one approach also promises to simplify administrators’ work in other ways: Installing a single product in a corporate network is easier than deploying several.

Cato’s value proposition has struck a chord in the enterprise. Last November, the company disclosed that its annual recurring revenue has exceeded $100 million. Cato reached that milestone five years after passing the $1 million mark.

Today, the company detailed that its revenue is growing at a year-over-year rate of more than 60%. Cato added that its gross dollar retention rate now exceeds 95%. Gross dollar retention rate is a metric that tracks how existing customers’ spending on a product changes over time.

“We have grown not only the customer base, but the scale and complexity of enterprises that are supported by Cato today,” Kramer wrote in a blog post today. “In the process of transforming and modernizing our customers’ infrastructure we replaced many incumbent vendors, both appliance-centric and cloud-delivered, that our customers could not find the skills and resources to sustain.”

To continue its sales momentum, Cato will expand its partner ecosystem using today’s funding round. The goal is to onboard more companies that can offer managed services based on its SASE platform. Additionally, Cato will invest in the development of new networking and security capabilities.

Three months ago, the company expanded its roster of cybersecurity features with a new artificial intelligence tool for detecting malicious domains. It’s designed to prevent workers from visiting malware-laden websites. Cato claims its AI catches nearly six times more malicious domains than legacy approaches.

Usually, companies determine if a domain should be blocked by comparing it against a database of known malicious websites. This detection approach misses newly created websites that aren’t yet in the database. To address the issue, Cato’s AI models analyze URL letter patterns and webpage elements for signs a site may be attempting to impersonate a legitimate brand.

Because its SASE platform is used by more than 1,800 organizations, Cato processes a significant amount of network traffic. This traffic produces a large volume of metadata that the company leverages to train its AI models. Using its metadata trove and the newly raised $238 million round, Cato could potentially build additional AI capabilities into its platform.

 Photo: Cato Networks