Cybersecurity Valuations: Q2 2026
Cybersecurity has re-anchored at a roughly 25% premium to broader software, with a public median near 6.0x to 6.5x NTM revenue and cloud, identity and AI-native platforms clearing 14x to 30x. Google's $32B Wiz close and Palo Alto Networks' $25B CyberArk close defined the Q2 2026 mega-deal cycle, while Gartner's $244B spending forecast and a Fed funds range of 3.50% to 3.75% set a constructive macro backdrop. Strategic buyers deployed an estimated 92% of cyber M&A capital in 2025, and the report sets out how founders should position for the current strategic-buyer-led window.
- Sector
- Cybersecurity
- Focus
- Valuations
- Published
- May 26, 2026
- Length
- 33 slides
- Reading time
- 10 minutes
Slide deck
33-slide deck. Desktop readers can page through the embedded viewer below. Mobile readers can open the direct PDF link.
Open slide deck PDF Key findings
- Public cybersecurity median EV/Revenue sits near 6.0x–6.5x NTM revenue in Q2 2026, a roughly 25% premium to the broader software median.
- AI-native private security platforms clear 20x–30x revenue, while legacy network security and managed services compress to 3x–8x — the widest cohort spread in a decade.
- Cloud security and SASE leaders trade at 14x–22x NTM revenue, anchored by Google's $32B Wiz close and Palo Alto Networks' $25B CyberArk close.
- Gartner forecasts $244B of global information-security end-user spending in 2026, up 13.3%, with AI security nearly doubling from $25.9B to $51.3B and cloud security growing 28.8%.
- The Federal Reserve held the funds range at 3.50%–3.75% in March 2026, with the dot plot signalling one further cut and easing the cost of capital for long-duration software assets.
- Rule of 40 remains table stakes; top-quartile cyber performers (score above 50) earn a 50%–100% premium over the median, and each ten-point gain is worth roughly an additional turn of revenue.
- Strategic acquirers deployed an estimated 92% of cybersecurity M&A capital in 2025, with $1.1T of PE dry powder available alongside for take-privates and roll-ups of mature assets.
- The public-to-private cyber premium has compressed from roughly 7x in 2023 to about 2x in 2026, putting public comparables back at the centre of late-stage private pricing.
Methodology
Valuation inputs are drawn from Gartner, PitchBook, CB Insights, S&P Global Market Intelligence, McKinsey & Company, Bain & Company, PwC, EY-Parthenon, KPMG, the World Economic Forum, the Federal Reserve and SEC filings. The Q2 2026 cybersecurity multiples, the ~25% premium to broader software, and the subsector ranges are Windsor Drake's own synthesis of those institutional sources, calibrated against a proprietary index of verified cybersecurity software transactions from 2019 to 2026.
Frequently asked questions
What multiples are cybersecurity companies trading at in 2026?
The public cybersecurity median is 6.0x–6.5x NTM revenue, about 25% above the broader software median. Cloud security and SASE leaders trade at 14x–22x, identity at 12x–16x, endpoint and XDR at 10x–15x, while legacy network security has compressed to 5x–8x and managed security services to 3x–5x.
How are cybersecurity companies valued in 2026?
Valuation is a multi-factor model anchored on the Rule of 40, AI-native architecture, and platform-attach economics. Top-quartile performers with a Rule of 40 score above 50 trade at 12x–22x revenue; sub-30 names fall to a 3x–5x discount.
Why are AI-native cyber companies trading at such a premium?
AI is now a measurable driver of cyber value, not a talking point. Private AI-native security platforms clear roughly 20x–30x revenue when the case is concrete — quantified SOC analyst productivity gains, demonstrable cost-to-defend reductions, and a credible cloud-native architecture story.
What is the Rule of 40 and why does it matter for cyber valuations?
Revenue growth plus EBITDA margin reaching at least 40% is the primary filter for a premium multiple. Bain finds public software clearing the rule posts a median 10.7x EV/Revenue; CrowdStrike trades near 22x at a materially higher score. Each ten-point gain in the score is worth roughly one additional turn of revenue.
Which valuation metric should apply to a cybersecurity company?
EV/Revenue suits high-growth, recurring-revenue cyber — cloud security, identity, DevSecOps, AI-native platforms. EV/EBITDA fits mature network security and MSSPs, with managed security in a 12x–18x EBITDA range. NRR above 120% and gross retention above 90% add premium on top of the underlying multiple.
Who is buying cybersecurity companies in 2026?
Strategics deployed an estimated 92% of cyber M&A capital in 2025, led by hyperscalers and platform incumbents (Google/Wiz at $32B, Palo Alto Networks/CyberArk at $25B). Private equity adds roughly $1.1T of dry powder for take-privates and roll-ups of mature, cash-generative assets.
Companies covered
Public and private companies referenced in this report.