Palo Alto Networks Aims to Sharpen Security with AutoFocus

AutoFocus and Aperture technologies expected to drive future growth as Palo Alto Networks FY2014 revenue tops $928 million.

By Sean Michael Kerner | Posted Sep 10, 2015
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Security vendor Palo Alto Networks continues to grow its business as it enters the first quarter of its fiscal 2016 year. Palo Alto Networks reported its fourth quarter and full year fiscal 2015 financial results on September 9, showing improving revenue and narrowing losses.

For the fourth quarter, Palo Alto reported revenue of $283.9 million for a 59 percent year over year gain. For the full fiscal 2015 year, the company's revenue came in at $928.1 million, for a 55 percent year-over-year gain.

Despite the revenue gains, Palo Alto is still not a profitable company, though the overall picture is improving. For the full year, Palo Alto reported a net loss of $165 million, an improvement over the $226.5 million net loss reported in fiscal 2014.

Looking forward, Palo Alto provided first quarter fiscal 2016 guidance for revenue to range from $280 million to $284 million.

Palo Alto is growing by way of new products and competitive wins. During the earnings call, Palo Alto CEO Mark McLaughlin said that during the fourth quarter, his company replaced Cisco in a seven-figure data center deal with a North American brokerage and banking company. McLaughlin also called out a win over Cisco with an Asian government security agency and a win against Check Point with one of the largest US-headquartered airlines in the world. Additionally, he noted that Palo Alto beat both Check Point and Cisco in a large deal with a utility provider of natural gas and electricity.

Growth for Palo Alto isn't just about Next Generation Firewall (NGFW) hardware but also about other areas of network security. The Palo Alto WildFire technology provides in the cloud malware threat detection and analysis.

"We continue to believe there is a lot of runway ahead of us with WildFire, which appeals not only to existing customers, but attracts a significant number of new ones as well," McLaughlin said.

Palo Alto has the Traps (Targeted Remote Attack Prevention System) endpoint security platform that it gained by way of its acquisition of Cyvera in 2014 for $200 million. McLaughlin said that Palo Alto's Traps technology is now being used by close to 150 customers: it's the top of the first inning for Traps adoption. According to Jane Wright, Senior Analyst / Engagement Manager, Security at Technology Business Research (TBR), Inc, however, Traps growth isn't where investors want it to be.

"Despite the vendor’s report of new Traps customers, TBR believes Traps customer penetration has not yet met Palo Alto Networks’ or investors’ expectations," Wright said. "As Palo Alto Networks develops or acquires new technologies, each must meet with quick customer adoption or the vendor's growth will stall, providing an opportunity for Check Point and Fortinet to carve out additional market share."

Palo Alto is also working on rolling out new services in fiscal 2016 that will help it to grow in the year. One of those services is called AutoFocus, a threat intelligence platform that helps Palo Alto customers focus on stopping unique and targeted attacks.

"We have been running an AutoFocus Community Access program for several months now and are very pleased with the level of participation and feedback we have received," McLaughlin said.

Palo Alto is also reaching into the cloud application visibility space with its new Aperture service.

"Aperture expands our ability to safely enable applications by providing visibility and control for sanctioned SaaS applications such as Box, Google Drive or Salesforce.com that are highly collaborative, but often contain an organization's most sensitive data," McLaughlin said.

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist.

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