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Palo Alto CEO High-Fives Partners For Better-Than-Expected Results

Palo Alto Networks reported a net loss for its fiscal second quarter, but said earnings were up thanks to partners such as Dimension Data that helped nab market share from rivals for positive growth.

Palo Alto Networks reported a net loss for its fiscal second quarter, but said earnings were up, thanks to partners such as Dimension Data that helped nab market share from rivals for positive growth.

Palo Alto Networks reported better-than-expected second-quarter results on Monday, citing strong growth in key metrics from revenue, new customer wins and sales. Despite growth, however, the enterprise security firm still reported an overall second-quarter net loss of $43 million based on $217.7 million in revenue. Wall Street analysts with Zacks Investment Research had expected $203.4 million in revenue.

The Santa Clara, Calif.-based company reported sales were up 54.3 percent compared to the year-ago quarter, and that it had made significant gains in the sales trenches against its rivals Check Point Software Technologies and Cisco. Palo Alto said it had seen a 40 percent increase in new customers over the past year, bringing its total customer count to over 22,500.

[Related: Palo Alto Networks Overtakes Fortinet In Network Security Market ]

’Examples of new customer wins this quarter include a Check Point and Cisco replacement at one of the United States’ largest energy providers,’ said CEO Mark McLaughlin in a conference call with analysts.

McLaughlin credited key partners Dimension Data and VMware for driving sales of its WildFire firewall and PA-7050s appliance. "We're replacing incumbent Cisco and a global firewall refresh and won a very competitive bake-off for an APT solution with WildFire," McLaughlin said.

Palo Alto has invested heavily in the software-defined networking model and is trying to stay ahead of the curve by focusing on a couple of technologies that work well around VMware NSX. Late last year, Palo Alto unveiled a joint integration partnership with VMware’s network virtualization platform.

The Americas, Palo Alto reported, experienced a year-over-year 62 percent revenue increase representing 67 percent of the company’s total revenue. Europe, the Middle East and Africa experienced a revenue increase of 35 percent and Asia-Pacific was up 51 percent year-over-year.

In December, Palo Alto Networks overtook competitor Fortinet in the network security market, taking third place in IDC's Worldwide Quarterly Security Appliance Tracker. Check Point is the second-largest security appliance vendor behind Cisco Systems, according to IDC's latest Worldwide Quarterly Security Appliance Tracker. Palo Alto Networks overtook Fortinet in the network security market, with the third most market share.

The IDC data is based on revenue and unit shipments and showed Palo Alto Networks as the fastest-growing vendor in the network security market with year-over-year revenue growth of 58.3 percent.

Palo Alto faces a number of challenges in the year ahead. Last month, Check Point ramped up the battle against the rival, acquiring Israel-based security startup Hyperwise in a bid to detect advanced threats. Hewlett-Packard on Monday unveiled plans to buy wireless networking company Aruba Networks for about $3 billion.

PUBLISHED MARCH 3, 2015

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