Posted on Tuesday, Nov 20th 2018
According to a Radiant Insights research report, the global network security market is estimated to grow at 4.74% annually through the year 2022 driven the continuing adoption of mobile devices and the increasing demand for integrated security solutions. Santa Clara-based Billion Dollar Unicorn Palo Alto Networks (NYSE:PANW) is a leading player in the network security market whose stock has had a strong run this year.
Palo Alto Network’s Financials
Palo Alto Networks reported its fourth quarter results with revenues growing 29% over the year to $658.1 million, ahead of the market’s forecast of $632 million. It ended the quarter with earnings of $125 million or $1.28 per share, recording a 39% growth over the year. The market was looking for an EPS of $1.17 for the quarter.
By segment, revenues from products grew 26% over the year to $267.6 million. Subscription and support revenues grew 38% to $390.5 million. For the quarter, billings improved 29% to $868.1 million. Among other metrics, it added nearly 3,000 customers during the quarter, to end with 54,000 customers.
Palo Alto Networks ended the year with revenues growing 29% to $2.3 billion with an adjusted net income of $381.4 million or $3.99 per share.
For the current quarter, Palo Alto Networks expects revenues of $625-$635 million and EPS of $1.04-$1.06. The market was looking for revenues of $622 million with an EPS of $1.05 for the quarter.
Palo Alto Network’s Acquisitions
Palo Alto Networks has been building its portfolio through several acquisitions. Last month, it announced the acquisition of a cloud threat defense company RedLock for an estimated $173 million. Menlo Park-based RedLock was founded in 2015 to help companies manage security risks across cloud services, including Google Cloud, Amazon Web Services, and Microsoft Azure. It emerged from stealth mode nearly a year ago. RedLock’s services companies make sure their cloud instances are locked down and secure. Prior to the acquisition, RedLock had raised $12 million in funding from investors including Sierra Ventures, Storm Ventures, and Dell Technology Capital. Prior to the acquisition, RedLock was valued at close to $35 million when it raised funds in 2017.
Earlier in the year, Palo Alto Networks had announced a $300 million acquisition of Evident.io. Evident.io is a leader in cloud services infrastructure protection. The acquisition is expected to help expand Palo Alto Networks’ API-based security capabilities. Palo Alto plans to integrate Evident.io’s capabilities to deliver continuous monitoring, storage security, and compliance validation and reporting capabilities to its customers. Prior to the acquisition, Evident.io had raised $49 million in funding from in-Q-Tel, True Ventures, Venrock, Bain Capital, and GV.
The market is keeping a keen eye on cyber security stocks. The recent exit of Facebook’s data security chief coupled with its various data breaches suggest that Facebook would either outsource or acquire a cyber security player. Palo Alto’s competitor Fire Eye remains a strong contender for the position. But analysts also suspect that Palo Alto may end up winning the bid.
I would like to know which of these players do you believe will win Facebook’s favor?
Its stock is trading at $169.61 with a market capitalization of $16 billion. It touched a 52-week high of $239.50 in September this year. It was trading at a 52-week low of $140.12 in November last year. But last month’s stock market volatility has hurt the stock as well.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.
This segment is a part in the series : Billion Dollar Unicorns
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