The cloud native application protection platform (CNAPP) market surged 40%, surpassing $600 million in the first quarter of 2024, according to the Dell’Oro Group’s recent report. Palo Alto Networks, CrowdStrike, and Wiz are the top three vendors that led this growth.

The CNAPP market revenue hit $2 billion in 2023, reflecting a 48% rise year-over-year. The market is poised for substantial growth, expected to reach $6 billion in revenue by 2028, with a compounded annual growth rate (CAGR) of 25%, the report showed.

“CNAPP remains in a period of aggressive growth as security teams play catchup with other IT teams that have been ahead in deploying workloads in the cloud,” Mauricio Sanchez, senior director of enterprise security and networking at Dell’Oro Group, told SDxCentral in response to questions. “Moreover, general cloud adoption, as measured by the growth in public cloud revenue, has remained robust, further boosting the needs for solutions like CNAPP.”

Wiz: The fast-rising star in CNAPP Wiz, an Israeli cloud security unicorn, experienced the most substantial revenue growth among all CNAPP vendors in Q1 2024, achieving a remarkable 105% increase. The startup consistently achieved triple-digit revenue growth every quarter since Q1 2019, capturing an 11% market share in Q1 2024.

“I attribute Wiz’s success to the combination of market awareness and product excellence,” Sanchez explained. “There aren’t many cloud security professionals that haven’t heard about Wiz, and even less this last week after the eye-popping offer from Google.”

Wiz made headlines as Google’s parent company Alphabet was reportedly in talks to buy Wiz for about $23 billion, which would be its largest acquisition ever. However, the startup rejected the takeover offer and opted to pursue an initial public offering (IPO) and focus on growing its business to generate $1 billion in annual revenue, according to the latest reports.

“I know the last week has been intense, with the buzz about a potential acquisition,” Wiz CEO Assaf Rappaport wrote in a memo. “While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz. Saying no to such humbling offers is tough, but with our exceptional team, I feel confident in making that choice.”

Beyond awareness, another differentiator is Wiz offers a product that majority of customers say provides quick time to value in answering the massive visibility problem, Sanchez said. “Customers are generally happy with their Wiz experience, which has translated into positive word-of-mouth that further compliments market awareness.”

As a start-up, how did Wiz gain an edge over established cybersecurity giants like Zscaler and Microsoft and become a top three vendor in the CNAPP market? “I think it’s the old story of large portfolio companies vs startups. Wiz, as a startup, has benefited from taking risks and moving faster than larger companies, who already have established lines of business in other technology markets, have reduced appetite for risk and can’t move as fast,” Sanchez said.

Palo Alto Networks, CrowdStrike and Wiz are market leaders in Q1 Palo Alto Networks maintained its leading revenue position in the CNAPP market with a 17% revenue share in Q1 2024, followed by CrowdStrike (13%) and Wiz (11%).

While Palo Alto Networks leads in revenue, CrowdStrike and Wiz are outpacing the security giant in growth, Sanchez said. “Yes, they are catching up to Palo [Alto Networks].”

Notably, this research report was released before the CrowdStrike-Microsoft global technology outage, which was triggered by a single update from CrowdStrike, the outage affected around 8.5 million devices running Microsoft Windows.

CNAPP market future outlook Though Google and Wiz ended the takeover talk, there have been several other big moves in the cloud security industry, including Fortinet recently announcing plans to acquire Lacework, and two cloud security unicorns – Aqua Security and Orca Security – recently announcing a partnership to integrate their runtime protection and visibility capabilities.

The cloud security market is one of the hottest mergers and acquisitions (M&A) areas right now, “because there’s a substantial amount of money to be made and it’s still an emerging market without entrenched vendors,” Sanchez said. “It’s completely unlike, say, the firewall market that is a mature, low-growth market dominated by three vendors — Palo [Alto Networks], Fortinet, and Cisco.”

“Long-term I see a mixture of startups who make it to the big leagues — defined as going IPO and becoming self-standing portfolio companies, and existing portfolio companies — companies with multiple cloud, network, application security, etc. that have strong CNAPP solutions,” he said.