Palo Alto Networks buys Embrace, adding RUM to $300M observability platform

Palo Alto Networks on Tuesday said it would acquire Embrace, a provider of real user monitoring software, extending its observability platform into digital experience monitoring as it competes for a larger share of the IT operations management market.

"To truly understand how their applications are performing, organizations need to see the whole picture — from the moment a user taps or clicks to what exactly happens on the backend," Lee Klarich, chief product and technology officer at Palo Alto Networks, said.

Financial terms were not disclosed. The deal is expected to close in the first quarter of Palo Alto Networks' fiscal 2027, which runs through October. Alongside the acquisition, the company introduced Synthetics, a capability developed by its Autonomous Digital Experience Management team that proactively validates application performance from global locations. Embrace's technology captures user taps, swipes and clicks across mobile and web applications, while Synthetics tests application availability before problems reach end users.

The acquisition builds on Palo Alto Networks' $3.35 billion purchase of Chronosphere in January, part of a broader push into observability that the company says has surpassed $300 million in annual recurring revenue. Palo Alto Networks has completed four acquisitions this year, including the $25 billion CyberArk deal and the reported $400 million purchase of Koi Security. By linking Embrace and Synthetics with its Cortex AgentiX platform, Palo Alto Networks aims to offer automated detection and remediation — a capability that could differentiate it from legacy monitoring vendors such as Dynatrace and Datadog.

Observability Becomes a Cybersecurity Battleground

Palo Alto Networks' expansion into observability reflects a broader convergence of security and IT operations. The company's observability platform, anchored by Chronosphere, now spans backend infrastructure monitoring, real user telemetry from Embrace, and synthetic transaction testing. Embrace was already a Chronosphere partner, integrating its mobile and web telemetry with Chronosphere's backend performance data to simplify workflows for developers.

The cybersecurity giant's push into application monitoring puts it in direct competition with Datadog, which reported $2.6 billion in revenue in 2025, and Dynatrace, which generated $1.5 billion. Both companies have invested heavily in AI-driven observability features. Palo Alto Networks' advantage lies in its existing security customer base of more than 80,000 organizations, which it can cross-sell observability tools to through its platform strategy.

Cortex AgentiX Links Detection With Remediation

The integration with Cortex AgentiX, Palo Alto Networks' AI operations platform, is central to the deal's value proposition. By connecting real user monitoring data with automated remediation workflows, the company aims to close the loop between identifying application issues and fixing them without human intervention. Klarich described the approach as "what true platformization looks like in practice."

Palo Alto Networks shares have gained about 18% this year through Monday's close, outperforming the S&P 500's 12% advance. The company trades at 32 times forward earnings, a premium to Datadog at 28 times but below CrowdStrike at 45 times, reflecting investor uncertainty about the pace of its platform expansion.

This article is for informational purposes only and does not constitute investment advice.