Expel Lays Off 10% of Workers 8 Months After Hauling in $31M


Managed Detection & Response (MDR)
Security Operations

60 Staffers Axed Months After Expel Slowed Hiring to Reduce Likelihood of Layoffs

Expel Lays Off 10% of Workers 8 Months After Hauling in $31M

Expel has axed 60 workers just eight months after hauling in $31 million to provide the managed detection and response vendor with a financial cushion.

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The Washington, D.C.-area company revealed plans Friday to reduce its 600-person staff by roughly 10% – or about 60 people – in response to “many shifts in the market,” Expel co-founders Dave Merkel, Yanek Korff and Justin Bajko wrote in a blog post. The layoffs come six months after Merkel told Information Security Media Group that Expel had slowed hiring in late 2022 in case of choppy economic times ahead (see: Dave Merkel on Why MDR Firm Expel Sought More Money in 2022).

“If something bad does occur, there’s only one way to fix that, and I’d rather not have to be in that cost-cutting, headcount-reduction situation if I can avoid it,” Merkel told ISMG in December 2022. “I can’t promise that’s not going to happen. No CEO can see the future. But we’re being prudent right now just to reduce the likelihood that would become necessary.”

‘One of the Most Difficult Days in Expel History’

Workers in the United States laid off by Expel will receive at least two months of severance pay, paid healthcare coverage through the end of 2023 and adjusted option exercise timelines and vesting cliffs for departing employees wishing to participate in Expel’s equity program. The company said it is also providing laid-off employees with workshops and career search guidance to help them find their next work opportunity.

“Today is one of the most difficult days in Expel history,” Merkel, Korff and Bajko wrote Friday. “While saying goodbye is never easy, we also knew we’d strive to do our best to support those departing.”

Expel didn’t respond to ISMG inquiries about the departments, geographies and levels of seniority most affected by the layoffs. The company has expanded aggressively in recent years, increasing headcount by 39.7% in 2021, 58% in 2022 and 12.5% so far in 2023, according to IT-Harvest. Expel’s IT and business development organizations have grown by 19% and 16% respectively over the past six months, LinkedIn found.

The company last disclosed outside funding in October 2022, when it raised a $31 million extension to its Series E funding round led by Alphabet’s independent growth fund CapitalG and Paladin Capital Group. Markel told ISMG in December that the money would fuel Expel’s growth in the United Kingdom, Ireland, Sweden and the Netherlands since the regulatory environment is well suited to Expel’s product.

Expel’s original $140.3 million Series E funding round closed in November 2021, and the firm has raised nearly $290 million since its founding in 2016. Despite Merkel’s calls for international growth, more than 98% of Expel’s workforce today is based in the United States. The company has just seven employees in Canada, India and the United Kingdom, IT-Harvest found. Expel said the layoffs won’t affect its service delivery capability.

Expel Is 4th Cyber Firm to Conduct Layoffs This Month

The company is well regarded by analysts and was recognized by Forrester last month as the industry’s strongest provider of managed detection and response, besting CrowdStrike, Red Canary and 10 others. Forrester praised Expel for having a vision of where security operations and MDR will go, but it chided the company for being one of the more expensive providers and for having less budget and reach than its rivals (see: Expel, CrowdStrike, Red Canary Dominate MDR Forrester Wave).

“Organizations that want their teams to work with a stellar security operations platform and hope to up-level their skill sets by working with exceptional practitioners – and have some budget headroom – should turn to Expel,” Forrester Vice President and Principal Analyst Jeff Pollard wrote.

IDC in August 2021 named Expel as a leader in managed detection and response alongside CrowdStrike, Rapid7, FireEye, Arctic Wolf, Secureworks, eSentire and Alert Logic. The analyst firm said that organizations preferring a “bring your own technology” approach, bot-first alert analyzation and communication via a dedicated Slack channel or Microsoft Teams should consider Expel.

“Today is one of the most difficult days in Expel history.”

– Dave Merkel, Yanek Korff and Justin Bajko, co-founders, Expel

So far this year, Expel has unveiled a native managed detection and response offering for Kubernetes to safeguard the container surface sitting inside the customer’s cloud for organizations that don’t own a cloud access security broker, Merkel told ISMG last month. The company also debuted vulnerability prioritization capabilities to ascertain what clients need to worry about most.

Expel is the fourth cyber company to lay employees off this month. SentinelOne cut 105 workers after a significant drop in data usage for products with consumption-based pricing. Dragos last week axed 50 workers after experiencing longer sales cycles and smaller initial deployment sizes. And Sumo Logic conducted widespread layoffs last week after being bought by Francisco Partners for $1.7 billion, The Information reported.


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