XM Cyber lays off 250 of its 300 Israeli employees following $600 million CrowdStrike deal
Calcalist has learned that only around 50 employees remain in Israel, working with existing customers, after extensive layoffs since CrowdStrike announced its acquisition of XM Cyber’s technology in July.
XM Cyber is selling its intellectual property to CrowdStrike, but the majority of its employees in Israel have already been laid off. Calcalist has learned that only around 50 of the company’s approximately 300 employees in Israel remain, working with existing customers. Since the initial announcement in July that CrowdStrike would acquire XM Cyber’s technology, the company has carried out extensive layoffs. XM Cyber employed around 400 people in total, approximately 75% of them in Israel.
On Monday, XM Cyber sought to present the transaction as a dazzling $600 million exit. The reality is more complicated. While the company acknowledged that it was undergoing a reorganization following the deal with CrowdStrike, it sought to downplay the scale of the layoffs.
In July, CrowdStrike, the world’s second-largest cybersecurity company after Palo Alto Networks, announced that it would acquire XM Cyber’s technology for a non-material sum. CrowdStrike, which has a market valuation of approximately $270 billion, paid just $145 million in cash. However, according to a recent filing with the U.S. Securities and Exchange Commission (SEC), it also issued 2.1 million shares to XM Cyber’s shareholders.
The largest shareholder was Germany’s Schwarz Group, which acquired the Israeli company for $700 million in 2021, at the height of the technology market boom. The stock component significantly increases the value of XM Cyber’s second exit, bringing the transaction’s implied value to around $600 million. However, CrowdStrike did not acquire XM Cyber’s employees or customer base. The company is estimated to have an order backlog of $450 million.
When the deal closed, CrowdStrike shares were trading at $208. They have since risen by approximately 25%, increasing the value of the shares received by XM Cyber’s shareholders.
CrowdStrike is also negotiating to acquire another Israeli cybersecurity startup, Orion, for approximately $500 million, in a deal first reported by Calcalist. In recent years, the cybersecurity giant has acquired several Israeli companies, including Seraphic Security, reportedly for $400 million earlier this year, as well as Adaptive Shield and Flow Security for a combined $700 million in 2024, while Bionic was acquired for $350 million in 2023.
XM Cyber was founded in 2016 by former Mossad chief Tamir Pardo, together with Noam Erez, Boaz Gorodissky and businessman Shaul Shani. Pardo is no longer involved in the company and holds no position there. Erez serves as CEO, while Gorodissky is CTO.
The company developed technology that simulates cyberattacks and identifies potential attack paths. Its $700 million sale in 2021, after raising $48 million, delivered a rapid and substantial return for its founders and early investors. Schwarz Group, however, appears not to have developed the business as anticipated, culminating in the sale of its technology to CrowdStrike.
One possible explanation is that Schwarz Group’s core business is retail rather than technology. The German conglomerate sought to expand into cloud computing and digital services during the technology market boom. CrowdStrike has said it is acquiring XM Cyber’s code and 45 patents, but not its revenue or customer base. The Israeli company’s successor entity will be able to continue operating under a license to use CrowdStrike technology.
