CDSA

Continued demand for cybersecurity, including for the three security platforms of Palo Alto Networks, helped the company report strong results for its second quarter (ended Jan. 31), according to Nikesh Arora, CEO and chairman of Palo Alto Networks.

As a result of that strength, especially in the company’s latest, next-generation security offerings, and “based on what we’re seeing in our pipeline heading into the second half of fiscal year 2022, we are raising our total revenue, product revenue and total billings guidance for the year,” he told analysts on an earnings call Feb. 22.

The company reported total Q2 revenue grew 30% from $1 billion in Q2 last year to $1.3 billion and its non-GAAP net income increased to $185 million ($1.74 per diluted share) from $154.2 million ($1.55 per diluted share).

For fiscal year 2022, the company increased its forecast and now expects to report revenue of $5.425 billion-$5.475 billion for the year, representing year-over-year growth of 27-29%, and total billings in the range of $6.8 billion-$6.85 billion (25-26% growth).

The company has not seen any changes in the IT spending patterns of customers or a slowdown in companies investing in IT systems to “drive competitive advantage,” Arora said.

“On the contrary, we see acceleration around trends associated with the shift to the cloud as well as the continued efforts to redefine network architectures to enable employees to work effectively from anywhere, a trend which has been bolstered by the pandemic,” he told analysts. “And we continue to believe we are still in the early innings here. Both these factors underpin continued demand for cybersecurity services.”

At the same time, the company continues to see an “evolving and complicated threat landscape,” he said. Cybersecurity continues to be “at the front and center of all conversations around risks and threats” of companies as well as at national and state levels, he noted.

He predicted that cybersecurity will continue to become more relevant and important and that companies will, therefore, continue to focus on investing in cybersecurity strategies.

Along with those industry-specific trends, “we are seeing a trend that is unique to Palo Alto Networks,” he told analysts, explaining: “Given our investments in the areas and continued relevance across multiple platforms and needs of our customers, we’re having more and more significant partnership conversations which encompass the entire Palo Alto Networks offering.”

Although it was still early, he said: “We believe this is the true differentiation that Palo Alto Networks provides: both best of breed and integral integrated security that works.”

The company also continued to focus on execution, he told analysts, saying: “This focus is bearing fruit as we execute multiple dimensions across our business. Execution from our product teams means continuing our rapid pace of integrated platform delivery.”

Palo Alto Networks continues to innovate across its platforms, he also said. For example, on the same day as the earnings call, the company announced Cortex XSIAM: an artificial intelligence-driven platform that it said can revolutionize the way data, analytics and automation are deployed by security organizations.

The new XSIAM product is “poised to re-imagine security operation centers and truly deploy technology to resolve” cyberattacks in real-time, Arora said.

Palo Alto Networks has, meanwhile, discussed its large deal momentum for several quarters, he went on to point out. “To accelerate these results, as we exited fiscal ’20 to ’21, we layered on a sales strategy to elevate our focus and drive efficiency in our largest opportunities,” he told analysts.

“With BJ Jenkins taking over the leadership role for our broader sales organization” as president, “we’ve had an ability to increase management attention on the largest deals,” led by Amit Singh, the company’s chief business officer, Arora told analysts.

“We’re pleased with the results we have seen in the first half of the year,” Arora told analysts, adding: “These deeper, multi-platform relationships are [a] win-win for Palo Alto Networks and our customers.”

At the end of Q2, 47% of the company’s Forbes Global 2000 customers used products from all three of Palo Alto’s platforms, up from 38% a year ago, he went on to say. During the quarter, the company closed 221 seven-figure transactions, including three more than $20 million, he added.