Palo Alto Networks Finding ‘Acceleration’ On Platform Strategy: Analysts

The cybersecurity giant reports that its platformization push yielded faster growth in new deals during its latest quarter.

Palo Alto Networks continues to show signs that its strategy to entice customers to consolidate tools on its broad cybersecurity platform is working, according to Wall Street analysts.

The analysts, who reviewed the company’s latest quarterly results released Tuesday, told investors that their confidence only continues to grow in Palo Alto Networks’ push around “platformization.”

The cybersecurity giant disclosed that it had a total of about 1,250 platformization customers as of the third quarter of the company’s fiscal 2025, ended April 30. That includes roughly 90 new platformization deals landed during the quarter, up from 75 during the previous quarter sequentially, noted Shaul Eyal, a managing director and senior analyst at TD Cowen, in a note to investors Wednesday.

This “platformization acceleration,” according to Eyal, is one of several positive signals about Palo Alto Networks’ revamped growth strategy that was first initiated more than a year ago. In February 2024, Palo Alto Networks CEO Nikesh Arora announced the overhaul of the company’s strategy that aimed to incentivize faster platform consolidation by customers.

Thanks in part to the platformization results, it’s clear that Palo Alto Networks’ efforts to reach the goal of $15 billion in annual recurring revenue (ARR) by its fiscal year 2030 “remains firmly on track,” Eyal wrote.

Judging from the quarterly results disclosed Tuesday, it’s clear that Palo Alto Networks is “laying the foundation for its platformization approach heading into FY2026 with AI front and center,” wrote Daniel Ives, managing director and senior equity research analyst at Wedbush Securities, in a note to investors Wednesday.

“We view 2025 as a transition year for the company as platformization deals with cloud penetration are leading to strong deal flow and a more stable pipeline while being a prime beneficiary of AI spending,” Ives wrote.

During the company’s quarterly call Tuesday, Arora pointed to major platformization wins during the quarter, including a deal worth more than $90 million with a global consulting firm. The deal included implementation of Palo Alto Networks’ Cortex XSIAM in place of a “legacy” SIEM provider, he said.

The platformization deal “reduced costs by consolidating a total of four products” while also helping the customer to “materially” improve their average response times to security issues, Arora said.

Cortex XSIAM is Palo Alto Networks’ alternative to traditional SIEM (security information and event management) and was another major bright spot of the quarter with ARR up 200 percent as of the end of the latest quarter, year over year, according to Arora.

That growth rate is “nearly twice as fast as our closest next-generation SIEM competitor,” he said, and XSIAM is now approaching $1 billion in total bookings.

Looking ahead, Arora predicted that traditional SIEM as a category will be displaced within several years by “new age players” that are using AI and modern architectures to enable security operations teams.

“I think in the next three to five years, it’ll get replaced,” he said.