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Palo Alto Networks

Company

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+ Palo Alto Networks (PAN)

Palo Alto Networks company – developer of the unique platform of security consisting of three elements: fayervola advanced protection of endpoints and cloud of identification cyberthreats. The last component provides anti-virus the software SaaS. Customers of Palo Alto company are the large organizations working in production areas, health care, education and financial services.

Performance Indicators

The average salary — $170 thousand.

2019: Revenue — $2.9 billion, losses — $81.9 million

In 2019 financial year which came to the end on July 31, 2019 revenue of Palo Alto Networks reached $2.9 billion against $2.27 billion the previous year. Sales of products at the company for the first time exceeded $1 billion and made $1.1 billion whereas the indicator was measured in the 2018th by $879.8 million.

Implementation of subscriptions and services of support brought to cybersecurity producer of solutions $1.8 billion annual revenues that there is more value of year prescription equal to $1.39 billion.

Financial performance of Palo Alto Networks
Financial performance of Palo Alto Networks

Turnover of Palo Alto Networks grows from year to year, but the company remains unprofitable. In 2019 financial year net losses of vendor were equal $81.9 million, though decreased rather monetary losses the previous year ($122.2 million).

After the publication of financial statements of the stock Palo Alto Networks fell in price by 6.7% at electronic biddings after closing of the exchange though revenues of the company exceeded market expectations. Since the beginning of 2019 of quotation of vendor rose by 6.5% by the time of a release of the report.

The company noted that by September, 2019 since the beginning of the 2018th it made seven acquisitions based on which in product division of Palo Alto Networks more than ten founders of the purchased companies began to work.

«
This year we purchased and released important new technologies and created a strong basis for own market promotion. It is pleasant to see that all hard work of a command resulted in strong market results, - the chairman of the board of directors and the CEO of Palo Alto Networks Nikesh Arora said, commenting on financial results.
»

At the conference devoted to the publication of annual results, the management of Palo Alto Networks designated strategy to which the company will adhere. It is connected with further acquisitions in the market, creation of the integrated solutions SaaS and technologies for protection of Internet of Things and ensuring cloud security.[1]

Business in Russia

In Moscow in September, 2011 the representative office of Palo Alto Networks opened. Products to Palo Alto Networks were represented in Russia by the official distributor – Landata company.

For February, 2017 official distributors of Palo Alto Networks in the territory of the Russian Federation are the companies Netvell and IT Guard (Axoft), in the territory the countries of the former CIS - Tiger Optics and Bakotek.

History

2019

Purchase of software developer for protection of Internet of Things of Zingbox

At the beginning of September, 2019 Palo Alto Networks announced acquisition of Zingbox for $75 million. The perimeter of the transaction included all developments of a startup of Zingbox, including the IoT Guardian tool kit which allows the companies to set several security levels for the network devices. Read more here.

Purchase of the cybersecurity developer of the PureSec platform

At the end of May, 2019 Palo Alto Networks announced acquisition of the cybersecurity developer of the PureSec platform. Read more here.

Purchase of software developer for security of besserverny and container applications of Twistlock

On May 29, 2019 Palo Alto Networks announced acquisition of software developer for security of besserverny and container applications of Twistlock for $410 million. It is going to close the transaction in the fourth financial quarter which will come to the end on July 31, 2019. Read more here.

Purchase of software developer for automatic response to Demisto cyberthreats

In February, 2019 Palo Alto Networks announced acquisition of Demisto for $560 million to expand the divisions which are engaged in technologies of prevention and response to cyberincidents. Read more here.

2018

Purchase of software developer for safe work in a public cloud of RedLock for $173 million

At the beginning of October, 2018 Palo Alto Networks announced acquisition of software developer for safe work in a public cloud of RedLock for $173 million. The transaction which is going to be closed until the end of November will be paid with own means of the buyer, i.e. without attraction of its actions. Read more here.

Purchase of software developer for search of the hidden cyber attacks of Secdo

In April, 2018 Palo Alto Networks announced purchase of Secdo company for the purpose of improvement of opportunities of collecting and data visualization about cyberthreats. Thanks to this acquisition the products Palo Alto Networks will be able quicker to reveal and stop the hidden cyber attacks. Read more here.

Palo Alto Networks buys software developer for cyber defense of cloud infrastructure of Evident.io

In the middle of March, 2018 Palo Alto Networks announced acquisition of software developer for cyber defense of cloud infrastructure of Evident.io for $300 million which the buyer will pay from own means, i.e. without providing the stocks. Read more here.

2017

Growth of revenue by 28%

In 2017 financial year revenue of Palo Alto Networks grew by 28% thanks to the fact that the companies and public institutions began to spend more money for information security support after global cyber attacks.

According to the results of 12-month reporting period which came to the end on July 31, 2017 sales of Palo Alto Networks made $1.76 billion against $1.38 billion the previous year. At the same time also net losses — from 192.7 increased up to 216.6 million dollars.

Revenue of Palo Alto Networks grew by 28% thanks to the fact that the companies and public institutions began to spend more money for cyber security
Revenue of Palo Alto Networks grew by 28% thanks to the fact that the companies and public institutions began to spend more money for cyber security

The volume of service business which brings to the company more than a half of income for the first time exceeded $1 billion. It was promoted by active growth of the customer base which provoked large-scale hacker attack using viruses racketeers, such as WannaCry.

According to the CEO of Palo Alto Networks  Mark McLaughlin, in 2017 financial year the number of clients of the company increased on record-breaking high value — 42.5 thousand Besides, during this period the producer announced the largest start of products and functions in the history, the head noted.

It is interesting that despite the growing income in Palo Alto Networks the chief financial officer changes what it was announced at the end of August, 2017. Steffan Tomlinson will resign the authority after the successor is found. The reason of departure of the top manager is not stated.

After publication of financial results of the stock Palo Alto Networks rose in price for 6.5% and exceeded a mark of $141. To opening of the exchange on September 4, 2017 the cost of securities of Palo Alto increased to $144.8, during the day growth continued. It was promoted by the fact that quarter revenue and the profit of the company exceeded expectations of Wall Street.

Analysts raised the forecast for the target share value of Palo Alto Networks to $160-180.[2]

Finam" recommends

Analytical management of Finam Group prepared a research of potential share price performance Palo Alto Networks – the IT company providing solutions for cyber security of the enterprises, organizations and government departments which is based in California. According to outputs of experts, the target share price will be $160 at the current market price of $139.5. The recommendation "buy" (growth potential in the long term the current year - 14.7%) is appropriated to actions.

In the III fiscal quarter 2017 revenue of Palo Alto Networks increased by 24.9% of yoy, having made $431.8 million. Proceeds from sales of the products Palo Alto for last quarter increased by 1.3%, from a paid subscription to services and supports – for 45.7%. In particular, revenue from SaaS increased by 55% of yoy.

Market capitalization of Palo Alto company makes $12.7 billion, for the last 3 months of a stock of the company rose in price for 27.8%, in comparison with growth of the index of high-tech industries of the USA by Nasdaq Composite — for 8%.

According to the experts, in the next 5 years world expenses on fight against cyber crime will exceed $1 trillion, and Palo Alto Networks has every chance to receive the share of these potential flows of revenue, products of the company have good reputation in the market and are in demand. According to data of "a magic quadrant" of Gartner research firm, in the market of fayervol of a corporate class for 2017 Palo Alto Networks in the sixth time in a row appeared in the section of leaders. In the report it was said about what in a segment of corporate Palo Alto firewalls locates the high level of customer satisfaction the solutions for business.

2016: Sales growth and losses

At the end of August, 2016 Palo Alto Networks published the report for work for 2016 financial year. Revenue of the company increased almost half, but also losses grew.

For the reporting 12-month period closed on July 31, 2016 sales of Palo Alto made $1.4 billion against $928.1 million the previous year. Net loss reached $225.9 million that is 36% more than monetary losses of year prescription. Without single expenses and income the so-called adjusted earnings equal to $152.6 million which turned out twice above that that was in 2015 financial year took place.

Revenue of Palo Alto Networks increased almost half, but also losses grew
Revenue of Palo Alto Networks increased almost half, but also losses grew

In 2016 to a fiscal year service revenue of Palo Alto which includes sales of subscriptions for the software made $707.7 million against $435.4 million the previous year. This business brings to the company more than a half of revenue. Sales of the equipment year on year rose from $492.7 million to $670.8 million.

Revenues of Palo Alto in May-July, 2016 exceeded forecasts of the analysts polled by Thomson Reuters I/B/E/S. It occurred thanks to the fact that the companies and state bodies still spend large sums for cyber security after the large attacks in last years, notes Reuters news agency.[3]

However the forecast of Palo Alto for the first quarter of 2017 financial year fell short of expectations of Wall Street: the company predicts revenue in $396-402 million at adjusted earnings in 51-53 cents on an action, and experts predict $402.2 million and 56 cents counting on one security respectively. According to the results of all financial year the company expects adjusted earnings in the range from $2.75 up to $2.8 that above the average forecast of the market ($2.64).

Along with the publication of financial results Palo Alto announced the program of additional share repurchase of stocks approved by Board of Directors for the amount of $500 million[4]

2011: Creation of the firewall of new generation

At the beginning of the 2010th developers of network applications from the classical client-server architecture pass to "clientless" web applications which do not work on strictly certain port, and ports (80 and 443) use standard web or select port dynamically. In such conditions the normal firewall becomes useless since its work is based on permission and prohibition of traffic on certain ports.

Creation of the firewall of new generation became result of approach of Palo Alto to development of systems of network security. Security policies in the firewall of new generation are applied not to ports and zones (or to the IP addresses), and to specific users of directory services and applications.

Palo Alto developers patented 3 innovative technologies:

  • App-ID is technology which allows to identify more than 900 applications in network, irrespective of their port and the protocol (including the web applications working at port 80). The technology can recognize applications even in a SSL tunnel, deciphering it;
  • User-ID is technology which integrates the firewall of new generation with service Active * Directory (and also LDAPI Novell eDirectory), thereby identifying each user of each application;
  • Content-ID is technology which provides protection against a set of threats (viruses, trojans, botnets, spywares), blocks not authorized file transfer on network and the surfing controls web.

Use of these technologies provides unprecedented control over network traffic and allows to configure flexibly security policies, doing network transparent and managed. Accomplishment of all listed functions is made at a speed of 10 Gbps with very small delay. Even in a scan mode on viruses, the device provides the speed of 5 Gbps.

The main idea of firewalls of new generation, in comparison with traditional approaches including UTM solutions, consists in simplification of infrastructure of network security, eliminates need for different self-contained units of security and also provides acceleration of traffic due to single-pass scanning. The Palo Alto Networks platform solves a broad spectrum of the requirements of network security necessary for different type of customers: from a data processing center to corporate perimeter with conditional logical borders, the including branches and mobile devices.

The main Palo Alto models have FSTEC certificates on the estimated trust level of OUD2 and the 4th RD NDV level that allows to use firewalls of new generation Palo Alto Networks during creation of automated systems to a class of security 1G and for data protection in personal data information systems to 1 class inclusive.

Developments of specialists of Palo Alto Networks allow to apply security policy not to ports and the IP addresses, and to specific users and applications. "Traditional firewalls classify and limit traffic on port, the Internet protocol and the IP address. Earlier such method was rather effective, but the new generation of Internet-applications which are not able to trace traditional firewalls was shown recently", - the vice president for sales in EMEA region Karl Drizen told.

In an arsenal of the company three innovative technologies which allow to provide unprecedented control over network traffic, flexible security policy and to make network transparent and managed. App-ID identifies about 3.5 thousand applications in network, irrespective of their port and the protocol (including the web applications working at port 80). The technology can recognize applications even in a SSL tunnel, deciphering it. User-ID will recognize each user, and Content-ID provides protection against viruses and spywares and also blocks not authorized file transfer on network and controls web surfing.

In addition to accomplishment of fixed functions of the package filter, Palo Alto Networks firewalls control traffic of applications and users of directory services and also protect infrastructure from network attacks (IPS), the malware (a network antivirus) and leakages of confidential data. In addition on Palo Alto Networks devices function of filtering of URL is implemented (local and dynamic base; on categories and separate URL).

2005: Foundation of the company

The Palo Alto Networks company is founded in 2005 by Nir Zuk and group of the senior engineers of the companies, leaders in the field of network security - Check Point, Cisco, NetScreen, McAfee, Juniper Networks.

Notes