In January 2021, Microsoft CEO Satya Nadella revealed the size of the software company\u2019s security business for the first time. The number was big.<\/p>\n
Nadella told analysts on an earnings call that the operation had reached $10 billion in annual revenue and was \u201cup more than 40%\u201d year over year. In other words, it was outpacing every other major Microsoft product.<\/p>\n
The remarks were revelatory. Nadella was known for reviving Microsoft, overseeing a fivefold expansion in market cap by that point in his seven years at the helm. That growth was largely based on turning Microsoft\u2019s cloud business into a more serious threat to Amazon Web Services in a giant market.<\/p>\n
By letting investors in on the enormity of Microsoft\u2019s security business, Nadella was casually uncovering a powerful growth engine. Total revenue across the company was up just 14% from the prior year. And by way of comparison, Palo Alto Networks, one of the largest pure-play security software companies, delivered 21% revenue growth over roughly the same period, on a base smaller than $4 billion.<\/p>\n
\u201cNobody had any idea it was a $10 billion business,\u201d said Andrew Rubin, CEO of cybersecurity software start-up Illumio, speaking of Microsoft\u2019s security revenue. Rubin, whose company was valued last year at $2.75 billion, was surprised by the growth and scale of what Microsoft had assembled, spanning several markets and all three reporting segments.<\/p>\n
Microsoft is scheduled to report fiscal third-quarter results on Tuesday, and investors might get another glimpse into what\u2019s happening inside the company\u2019s security unit. Ransomware attacks have only increased of late, leading to a surge in spending by enterprises, smaller companies and the public sector. And the U.S. government has warned of greater cybersecurity threats following Russia\u2019s invasion of Ukraine earlier this year.<\/p>\n