Palo Alto Networks CEO Mark McLaughlin said there is soon going to be a new biggest network security company on the block.
In a recent interview with CRN, McLaughlin said that as of its last quarterly earnings, the Santa Clara, Calif.-based network security company has surpassed competitor Check Point Software Technologies in size and is quickly approaching Cisco Systems' security business in size.
Palo Alto Networks reported sales of $509.1 million on Aug. 31 for its fourth quarter, a 27 percent increase year over year. In its most recent earnings report on July 16, Check Point reported second-quarter sales of $459 million, up 8 percent year over year. That is the first quarter that the company has reported higher sales than its competitor, McLaughlin said.
Cisco, which has been investing heavily in its network security portfolio, reported security sales of $558 million in its fourth quarter earnings on Aug. 12, up 3 percent year over year. McLaughlin said he expects Palo Alto Networks will soon eclipse Cisco's security practice, as its growth rate is about nine times higher year over year.
While that doesn't change much about how the company goes to market, McLaughlin said the company's size is a key factor in conversations with boards of directors, ensuring that it is part of more network security purchasing conversations.
"I think one of the things that a lot of partners don't realize because we've grown so quickly in such a short amount of time is actually how big Palo Alto Networks is. I think most people don't realize that we're bigger than Check Point and we're 90 percent the size of Cisco and growing nine times as fast. They just don't see that and when you get that data at the CEO level, they start to make decisions about resources to say if they aren't heavily invested with Palo Alto then someone else is," McLaughlin said. "I think it's very hard to ignore that at this point just given the size and velocity of the growth."
For partners, McLaughlin said that size has played a key factor in channel conversations with customers. It also has helped bring partners on board with Palo Alto Networks that previously were focused on the competition, he said.
"Some of the largest folks in the distribution community, who have historically had longtime relationships with Check Point and Cisco and were continually just renewing things for customers … almost all of them have said, 'I'm on the wrong horse. Palo Alto is clearly taking market share at very high rates and at scale. We really need to invest heavily with Palo Alto Networks.' We've been privileged to have that occur more and more and more with our partner community," McLaughlin said.
One partner who has made that transition is Presidio, No. 21 on the 2017 CRN Solution Provider 500 and a longtime Cisco partner. While the New York-based solution provider is still a large Cisco partner, Chief Information Security Officer Joe Leonard said the company also has started working more with Palo Alto Networks. Presidio started working with the security vendor about four or five years ago and it now has one of the highest growth rates of any of the company's portfolio partner companies, he said.