Arctic Wolf, a privately held cybersecurity firm in Eden Prairie, Minnesota, may be one of the sector's most-anticipated initial public offerings within the next year or two. The company raised $7.2 million when it was created in 2012. Since then, the company has gone through eight more funding rounds, raising almost $900 million. It currently enjoys a $4.4 billion valuation. Read on to find out more about the company and its prospects for going public.
Is it publicly traded?
Is Arctic Wolf publicly traded?
Arctic Wolf is a cybersecurity firm that offers security operations as a concierge service that detects advanced threats and manages risks across healthcare, financial services, legal, manufacturing, government, and other sectors.
You can't buy Arctic Wolf stock at the moment since it's privately held. But the company has emerged as one of the potentially biggest cybersecurity stocks that could hit the initial public offering (IPO) calendar in the next year or two.
Cybersecurity stocks have been described as "a red-hot niche of the tech industry," and the sector is expected to grow about 12% annually through 2028, according to Gartner (IT 1.88%). Although Arctic Wolf is far from the only company specializing in managed detection and response (MDR), it's won accolades and registered lightning-fast growth during its relatively short life.
Major investors in Arctic Wolf include Owl Rock Capital, Lightspeed Venture Partners, Viking Global Investors, Neuberger Berman, and the Ontario Teachers' Pension Plan.
As a privately held company, Arctic Wolf isn't required to disclose financial information. However, market research firm Sacra estimated that it was generating annual recurring revenue of $438 million in 2023, a 36% year-over-year increase.
When will it IPO?
When will Arctic Wolf IPO?
Although it's been on the list of potential initial public offerings for a couple of years, Arctic Wolf doesn't plan to go public just yet. In an interview with the Financial Times, CEO Nick Schneider said the company is waiting to see if interest rates begin to fall and tech stocks start to rise again before launching an IPO. "We're not in a hurry," Schneider told the newspaper.
IPO
How to invest
How to buy Arctic Wolf stock
Since it's a privately held company, you can't buy shares of Arctic Wolf with a brokerage account just yet. However, there are several alternatives in the cybersecurity sector that potential Arctic Wolf investors might want to consider.
Here are three:
1. CrowdStrike
As a leader in the cybersecurity space, CrowdStrike (CRWD -0.65%) has lapped the field when it comes to share performance. Since its 2019 IPO, the company's stock has returned almost 350%, and it expects the market for its products to expand to $225 billion by 2028.
During the company's fourth-quarter earnings call for fiscal 2025, which ended Jan. 31, 2025, management said its free cash flow rose to a record $1.07 billion for the fiscal year. Annual recurring revenue climbed 23% year over year to $4.24 billion.
If there's one strike against the company, it's that its stock is highly volatile. Even so, the growth of the cybersecurity industry and the potential of artificial intelligence (AI) to boost the industry make it a strong option for buy-and-hold investors.
2. Okta
The San Francisco-based cybersecurity specialist suffered from concern over major data breaches, and its 2023 acquisition of Auth0, an authentication and authorization service, proved more expensive than anticipated.
Even so, Okta (OKTA 2.83%) also reported record free cash flow of $284 million in its fourth quarter, which ended Jan. 31. In addition, subscription revenue rose by 13% to $670 million.
It's likely that Okta and other companies may struggle as a result of a Securities and Exchange Commission requirement that companies report cyberattacks within four days if they're suspected of causing a material impact. Still, the company may be poised to take advantage of secular trends like generative AI.
3. Palo Alto Networks
Palo Alto Networks (PANW -0.4%) is one of the bigger players in the cybersecurity market. It's also one of the top performers, with stock prices rising more than 150% in barely a year. Indeed, share prices have risen so quickly that the company might split its stock for the second time in three years.
Like other cybersecurity firms, Palo Alto is poised to benefit from the industry's growth. Research and consulting firm Gartner has cited it as a leader in software-defined wide area network (SD-WAN) technology. Only about 30% of companies were using SD-WAN technology in 2020, but the company believes the figure will double by the end of this year.
Palo Alto's cloud-based security and AI threat-detection platforms have helped drive its profitability. Net income rose almost sixfold during its 2024 fiscal year; since its 2019 fiscal year, the company's revenue has grown at a compound annual growth rate (CAGR) of 23%.
Investors who want to buy one of these Arctic Wolf alternatives can purchase shares with any brokerage account. Here's a step-by-step guide on how to invest in stocks like Arctic Wolf.
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Profitability
Is Arctic Wolf profitable?
Since it's a privately held company, Arctic Wolf doesn't have to publicly report its financial results. However, it's probably safe to say that it's doing well. Revenues shot up more than 4,300% between 2016 and 2020, and the company has been named by Gartner as the fastest-growing market security vendor by revenue in 2023.
Arctic Wolf has also been named to CNBC's Disruptor 50 list for the last three years, and it's been recognized by Forbes as one of the top 100 private cloud companies. It now has more than 10,000 customers in 30 countries.
Should I invest?
Should I invest in Arctic Wolf?
Since it's not publicly traded, you can't yet invest in Arctic Wolf. If and when the company goes public, you'll be able to invest in it. It's worth noting that you can invest in a number of cybersecurity companies that offer stock to the public, like CrowdStrike.
Keep in mind that most cybersecurity investments are likely to involve growth stocks, which can be extremely volatile. The best approach for such stocks is to use dollar-cost averaging, buying a set number of whole or fractional shares at regular intervals to even out an investment that could otherwise become a financial roller coaster ride.
Exchange-Traded Fund (ETF)
ETFs
ETFs with exposure to Arctic Wolf
Exchange-traded funds (ETFs) make it simple for people to exercise passive investment instead of having to keep a constant eye on their portfolios. ETFs let investors purchase a basket of similar stocks, which not only allows for passive investment but also increases portfolio diversification; generally, the funds invest in enough stocks that disastrous performance by one company won't affect your entire financial world.
Cybersecurity-focused ETFs are becoming more popular. Here are three of the larger ones that offer reasonable expense ratios:
1. First Trust Nasdaq Cybersecurity ETF
The First Trust Nasdaq Cybersecurity ETF (CIBR 0.22%) has $8.6 billion in assets under management (AUM) and a relatively reasonable expense ratio of 0.59%, which amounts to $5.90 in fees for every $1,000 invested. Ten holdings account for more than half of its total assets. The fund's largest holding is Crowdstrike at 8.45%, followed by Broadcom (AVGO 2.57%) at 8%. It also holds Palo Alto (7.6%) and Okta (4.8%).
The ETF is one of the oldest pure-play cybersecurity funds. It was created in 2015, and share prices have more than doubled since then. The fund holds about three dozen stocks that are rebalanced on a quarterly basis.
2. ETFMG Prime Cyber Security ETF
The ETFMG Prime Cyber Security ETF (HACK 0.3%) is also one of the longer-tenured funds focusing on cybersecurity. The fund, which was created in 2014, holds net assets of $2 billion and has an expense ratio of 0.6%.
Broadcom is the fund's largest holding at 8.9%, followed by Cisco (CSCO -0.58%) at 6.3% and Crowdstrike at 6%.
3. Global X Cybersecurity ETF
The Global X Cybersecurity ETF (BUG 0.31%) is one of the newer cybersecurity funds and concentrates heavily on software companies. It has an expense ratio of 0.51% and about $1.03 billion in net assets.
The fund has two dozen holdings, with Okta making up 6.3%. Zscaler (ZS -0.16%) accounts for 6%, and Check Point Software Tech (NASD:CHKP) is third with 5.98%. It's outperformed both the First Trust and ETFMG funds since its 2019 inception.
Related investing topics
The bottom line on Arctic Wolf
Cybersecurity is an extremely hot sector at the moment, and Arctic Wolf is poised to take advantage of the trend with its $900 million in funding rounds since 2012. It's now worth an estimated $4.4 billion and appears to be on track toward becoming a hot IPO.
The timing of an IPO, however, is up in the air. As long as interest rates and uncertainty over the economy remain, companies are less likely to go public.
In addition, Arctic Wolf is a tech growth stock with all the benefits and complications of other tech growth stocks; if and when it launches an IPO, its shares could go up very quickly and come down just as quickly. Smart investors will consider cybersecurity stocks as companies that are likely to grow very quickly but remain volatile. As always, a buy-and-hold strategy that emphasizes portfolio diversification is the best course of action.
FAQ
FAQ about Investing in Arctic Wolf
Is Arctic Wolf publicly traded?
No. Arctic Wolf is privately held, and management has said it's in "no rush" to launch an IPO.
Is Arctic Wolf profitable?
Since it's not required to disclose its finances, we don't know if it's profitable. The company is valued at $4.4 billion, and its revenue increased 4,300% between 2016 and 2020, which is a very good sign.
What is the latest funding for Arctic Wolf?
The company closed on $401 million in convertible bonds in October 2022. It has raised a total of roughly $900 million since its 2012 founding.
