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Mass Federal Layoffs Could Undermine U.S. Cybersecurity, Warns Former NSA Official

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Former National Security Agency (NSA) director of cybersecurity, Rob Joyce, warned on Wednesday that the mass reduction in federal workers will have a “devastating” impact on U.S. cybersecurity and national security. Joyce testified before the House Select Committee on the Chinese Communist Party, discussing the harmful consequences of cutting government employees, particularly in areas critical for countering Chinese cyber threats.

Joyce explained that eliminating probationary employees would destroy a vital pipeline for new talent essential to combatting cyber threats from China. These workers play a key role in protecting U.S. critical infrastructure, telecommunications, and other sectors from ongoing cyberattacks.

Over 100,000 federal employees have either taken early retirement or been laid off under the direction of former President Donald Trump and advisor Elon Musk’s initiative to drastically reduce the size of federal agencies. While it’s unclear how many NSA employees have been affected, the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) has already cut more than 130 positions as of mid-February. CISA is tasked with defending civilian federal networks and facilitating collaboration between private industry and the government on cybersecurity issues.

Despite national security jobs being exempt from the cuts, some critical cybersecurity positions have still been eliminated, further raising concerns about the long-term impact on U.S. cyber defense. The White House and NSA did not respond to requests for comment, while DHS stated that the cuts would save $50 million, emphasizing that efforts are ongoing to eliminate positions that do not align with the agency’s mission.

Zscaler Raises Annual Revenue Forecast Due to Rising Demand for Cybersecurity Services

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Zscaler (ZS.O) raised its revenue forecast for fiscal 2025 on Wednesday, reflecting growing demand for its cloud-based cybersecurity solutions. Shares of the California-based company surged 6% in after-hours trading.

Enterprises are increasingly investing in AI-powered cybersecurity services to combat the rise in digital scams and online hacking, driving sales for companies like Zscaler. As a result, the company now expects annual revenue for fiscal 2025 to fall between $2.64 billion and $2.65 billion, up from its previous forecast of $2.62 billion to $2.64 billion.

Zscaler also raised its adjusted earnings per share forecast to a range of $3.04 to $3.09, up from the previous expectation of $2.94 to $2.99 per share.

“Growing adoption of Zero Trust and AI is driving strong demand for our platform,” said Zscaler CEO Jay Chaudhry, highlighting the increasing reliance on their services for secure cloud access.

The company projected third-quarter revenue between $665 million and $667 million, slightly below the median analyst estimate of $667.4 million.

In the face of rising cybercrimes, data breaches, online scams, and high-profile hacks, businesses are ramping up their investment in cybersecurity. Zscaler posted second-quarter revenue of $647.9 million, exceeding analysts’ forecast of $635.6 million.

Fraud Prevention Software Firm Riskified Explores Sale

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Riskified, a New York-based company specializing in fraud prevention software for e-commerce, is exploring strategic options, including a potential sale, after attracting interest from multiple parties, according to sources familiar with the matter. The company, originally founded in Israel, is working with investment bank Qatalyst Partners to evaluate takeover approaches, with discussions remaining in the early stages.

Potential buyers for Riskified include digital payment processing firms, online shopping platforms, cybersecurity companies, and private equity firms. However, the sources cautioned that a deal is not assured. Following the news, Riskified’s stock price rebounded, surging nearly 9% on Wednesday.

Riskified, which went public nearly four years ago through an initial public offering, is currently valued at around $860 million. The company has faced significant challenges, with its stock plummeting more than 80% from its peak in September 2021 to its close on Tuesday. Despite its success in providing fraud prevention software for retailers, Riskified has not been profitable since its shares began trading.

For the quarter ending December 31, the company reported a widened net loss of $4.1 million, compared to a loss of $3.3 million in the previous year. This financial setback was partially attributed to the loss of several large customers in some of its key sectors.

Founded in 2013, Riskified provides fraud prevention services to e-commerce businesses, helping retailers protect digital transactions from fraudsters. Notable clients include luxury fashion brand Prada, online travel platform Booking.com, and jewelry brand Swarovski.