Dive Brief:
- Palo Alto Networks leaders said enterprises and the market are responding positively to a strategy they kicked off nine months ago to lure customers away from competitors. The effort includes deferred billings and other incentives designed to encourage organizations to consolidate spend on Palo Alto Networks cybersecurity platforms.
- “We feel the cybersecurity industry is embarking into its next phase, where the market will continue to converge towards a fewer set of platformization players over the next five to 10 years,” Chair and CEO Nikesh Arora said Wednesday during the company’s Q1 of fiscal year 2025 earnings call. “Point solutions will continue to get subsumed in these platform plays. Having started this trend, we intend to be one of those few players.”
- Palo Alto Networks said it added more than 70 new platformization deals during the quarter, about a third of which came from the company’s recent acquisition of IBM QRadar’s SaaS assets.
Dive Insight:
The world’s largest cybersecurity vendor sparked concerns among investors earlier this year when it warned revenue growth would take a hit through mid-2025 due to its plan to allow customers to defer payments until their contracts expire with competitors.
Yet, the company continues to see momentum and notes other cybersecurity vendors are adopting a similar approach.
“Our industry peers have been evangelizing the virtues of platformization, and industry experts have begun to weigh in,” Arora said during the earnings call.
Mentions of the word “platform” are up 50% this year on cybersecurity vendors’ earnings calls, he said. “As they say, imitation is the highest form of flattery.”
Palo Alto Networks closed the quarter, which ended Oct. 31, with about 1,100 platformization deals in place, the company said.
During Q1, the company said it closed 305 transactions valued over $1 million, up 13% year over year, and 60 transactions over $5 million, which marks a 30% increase from the year prior.
“Our Q1 performance keeps us on track to achieve 2,500 to 3,500 platformization deals by fiscal year 2030,” Arora said.
Palo Alto Networks’ revenue increased 14% year over year to $2.14 billion and net income was up 80% to $351 million.
