Palo Alto Networks delivered another quarter of strong growth in 3Q16, increasing its top line 34 percent year to year to $398 million.
This achievement is especially noteworthy because it shows Palo Alto Networks to be one the fastest growing vendor in its class (e.g. vendors that currently earn more than $1 billion in annual enterprise security sales), according to TBR’s estimates.
However, it was the fifth consecutive quarter of decelerating year-to-year revenue growth for the vendor. Palo Alto Networks attributes the deceleration to longer sales cycles, claiming its customers require more evaluations and levels of approval to purchase security solutions.
Indeed, TBR has noted customers delaying purchasing decisions for Palo Alto Networks’ and other vendors’ security solutions in recent months. Customers are reconsidering their 2017 security deployments in light of seismic shifts in the security vendor landscape, including recent acquisitions, spin-offs, sell-offs and mergers of security business units by Symantec, HPE, Dell Technologies and Intel.
Palo Alto Networks promotes its platform approach for larger deals
Many customer organizations are in the midst of reducing the number of security vendors and products they use in an effort to improve their overall security posture. Palo Alto Networks is amplifying its messaging and partner training to help ensure that customers perceive the vendor as a platform partner rather than a point product vendor.
It is guiding its sales and channel teams to attach more subscription services to its line of firewall products that provide the underlying platform for threat detection and analysis, fulfilling more security feature requirements as flexible additions to the platform rather than added hardware products or software licenses.
A new cloud offering addresses security data location concerns in EMEA
In August Palo Alto Networks announced it is delivering threat analysis and prevention capabilities to customers in the European Union (EU) by hosting WildFire, its cloud-based threat analysis service, in a data center in the Netherlands. To ensure legislative requirements are met, all data gathered from customers will remain within the EU’s borders, although aggregated intelligence learned from the analysis will be shared globally.
By launching the WildFire EU Cloud, Palo Alto Networks has adapted to the long-standing privacy requirements raised in the Safe Harbor Act between the European Union (EU) and the U.S. by agreeing not to share customer data outside the EU’s borders. The WildFire EU Cloud is designed to satisfy customers’ current concerns about the location of their security data while the U.S. and EU continue to negotiate updates or alternatives to the 16-year-old Safe Harbor Act.
Jane Wright, principal analyst at TBR
