Palo Alto Networks Takes a Swing at Cisco

As revenues continue to rise at Palo Alto, CEO is confident his firm can take on networking giant Cisco in network security.

By Sean Michael Kerner | Posted Nov 24, 2015
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Palo Alto Networks announced its first quarter fiscal 2016 financial results on November 23, showing continued growth in the network security market. Some of that growth, according to CEO Mark McLaughlin, comes at Cisco's expense.

For the quarter, Palo Alto reported revenue of $297.2 million for a 55 percent year-over-year gain. Palo Alto Palo Alto Networksalso narrowed its losses during the quarter, with net loss for the first quarter of 2016 reported at $38.7 million, an improvement over the net loss of $30.1 million reported in the first quarter of fiscal 2015.

Looking forward, Palo Alto provided second quarter guidance for revenue to be in the range of $314 million to $318 million, for a 44 to 46 percent year-over-year growth rate.

"Security remains a strategic consideration embedded in virtually every IT decision for both fundamental and new requirements, like cloud and mobility," Mark McLaughlin, Chairman, President and CEO of Palo Alto Networks, said during his company's earnings call. "As a result, the demand environment remains very healthy, and as we look ahead, we expect this to continue to be the case."

New product and service releases are key drivers that are helping to propel Palo Alto's fortunes forward. Among the recent new product releases is the PA 7080 next generation firewall. The PA 7080 is capable of delivering up to 200 gigabits of throughput.

"We are very pleased with early customer reception, and the PA 7080 was the cornerstone to several large Q1 deals," McLaughlin said. "What we're seeing is throughput requirements just continue to rise for companies in general, with more applications that are heavier throughput hogs."

McLaughlin is also optimistic about his company's new Aperture SaaS security control service, as well as the recently released AutoFocus threat intelligence service.

The security market is a very competitive one, and McLaughlin did not shy away from naming the names of the competitors that his company is taking share from. He noted that in the quarter, Palo Alto added new customers by beating out Check Point as well as Cisco in several large deals.

"What our customers are telling us is that you can't retrofit legacy technology by buying companies and popping them on top of each other, and come out with a next generation of platform capability, and that just sounds like more cost and complexity," McLaughlin said. "We continue to beat Cisco handily quarter after quarter, as we've done this last quarter."

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

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