Palo Alto Networks, in its earnings report for Oct-Dec 2024, said it’s increasingly focusing on artificial intelligence to strengthen its cybersecurity offerings, capitalizing on the growing demand for AI-driven security solutions.
Fiscal second quarter revenue grew 14% to $2.3 billion.
Next-Generation Security ARR grew 37% to $4.8 billion.
Remaining performance obligation grew 21% to $13.0 billion.
As cyber threats become more sophisticated, enterprise clients are turning to AI-powered products to protect their digital infrastructure, minimize risks, and safeguard their reputation. The company’s strong performance in the second quarter was fueled by businesses adopting AI-integrated technologies, particularly in cloud investment and infrastructure modernization.
Palo Alto Networks’s platformization has also lead to strong financial performance. Their high ARPU expectations were met, contributing to notable NGS ARR growth and revenue outperformance. The company experienced growth across its portfolio, with strong large deals internationally and key contributions from SASE, software firewalls, and XSIAM. Operational efficiency initiatives, including AI-driven improvements, helped exceed profitability targets.
Palo Alto Networks
As AI adoption accelerates, many companies are encountering obstacles due to legacy architectures, prompting increased cloud transformation and network security demand. AI is a driving force behind technological shifts, making security a critical consideration. A key trend is the need for better data security, as businesses recognize the importance of securing cloud data. Palo Alto Networks’ acquisition of Dig has proven timely, addressing this growing demand for data security posture management.
As enterprises leverage AI and cloud transformation, security operations need modernization. Legacy security solutions fail to unify SecOps across hybrid environments or harness AI’s potential. AI is essential for automating data analysis, enabling real-time threat detection and remediation.
Security is fundamentally a data problem, requiring centralized data for AI-driven threat prevention. The industry must transition from fragmented solutions to platformized security for improved outcomes. Research with IBM shows that platformized organizations detect threats 72 days faster and contain them 84 days quicker.
Palo Alto Networks is committed to accelerating cloud adoption and security transformation with integrated AI-powered platforms. Their platformization strategy is gaining traction, with adoption increasing significantly. The company achieved 75 new platformizations in Q2, up from 45 in the prior year, totaling over 1,150 platformizations within its top 5,000 customers. Large transactions continue to grow, with a significant rise in $5 million + and $10 million+ deals.
Their network security platform, NetSec, remains a key driver, contributing 80 percent of bookings. The Zero Trust platform, designed for distributed environments and AI-based interactions, is gaining momentum. Network security must evolve to integrate data harmonization and AI training, ensuring future-ready solutions.
Firewall as a Platform bookings grew 21 percent, with steady appliance demand. The company introduced AI Runtime Security, allowing direct AI application protection without traffic interception. This innovation supported their first seven-figure software firewall transaction for AI, with a robust pipeline for future AI-related security deals.
CEO Nikesh Arora has emphasized the role of AI in Palo Alto’s strategy, highlighting how the company’s proprietary data and expansive technology footprint give it a competitive edge in leveraging AI-driven security solutions.
Palo Alto’s commitment to AI extends beyond technology development to strategic leadership. It added Helle Thorning-Schmidt, former prime minister of Denmark, and Ralph Hamers, former CEO of UBS Group AG and ING Group, to its board.
The company’s strong AI focus has had a direct impact on its financial outlook. Palo Alto raised its full-year revenue forecast to a range of $9.14 billion to $9.19 billion, up from its previous projection. The company also projected third-quarter revenue between $2.26 billion and $2.29 billion. Revenue for the second quarter grew 14 percent to $2.26 billion.
Baburajan Kizhakedath
