Palo Alto Networks (PANW, Financial), a network security company continues to grow at a healthy rate. Its revenue increased by 50%, while its earnings grew approximately 88% in the last reported quarter. Also, its non-GAAP operating margins expanded 10.6% in the first-quarter 2015. Looking ahead, the company remains strong on its on-going growth potentials, while demonstrating differentiation and sustainability of its platform. That should boost its top as well as bottom line performance and drive its growth ahead.
As per the recent report by the Research and Market, the Global Enterprise Network Security market is forecasted to grow at a healthy run rate of 6.6% annually from 2012-2016. The on-going growth of virtualization servers and rising adoption of security solutions by small and mid-sized businesses are reasons behind this stable growth.
The growth potential
Palo Alto Network currently pursuing its growth based on three noteworthy drivers prevailing in the markets. First, the criticality of security solutions across the world, which is becoming very essential to every business and accelerating security spend. Second, the innovative integrated and automated next generation security solutions of Palo has about $16 billion total addressable market opportunity. Last but not the least, Palo enjoys a competitive global sales coverage model along with a powerful sales team and key distribution relationships across the world that offers its customers with security matter expert before and after the order.
Palo expects its next generation enterprise security solutions to keep its momentum going. The company is acquiring customers at a good rate and has approximately 21,000 customers at its fold worldwide. Its security platform offers the most comprehensive protection and prevention in the market for all their security use cases, while each individual aspect provides best of bread capabilities. This is the principal driver why customers are choosing its security solution platforms.
In addition, the company continues to observe wide-spread adoption for its high-end PA-7050 chassis. This PA-7050 offers the world’s best prevention capabilities at all point in network. Also, it has newly launched PA-3060 for its small and mid-sized enterprise customers in datacenter use cases. The company is pleased with the initial performance for its PA-3060 security solution. The company has experienced relatively more sales for its chassis to business in different segments that should enhance its performance in the upcoming quarters.
Key platforms to drive growth
Furthermore, the company has the best in class security solutions for next-generation firewalls. It has only 4% of market share in this segment and has plenty of rooms to grow in the future. The company continues to develop next generation firewalls that implement policy at an application level as well as the port and protocol level. It is the largest provider by customer count with about more than 4,000 customers paying for WildFire’s integrated and automated prevention capabilities.
Besides, the company has executed a real time exploit and malware prevention at both the network and the end point a reality with the integrated of Traps and WildFire. The company expects these Traps to contribute remarkably to its revenue in the future. These traps are solving some of its most complex security needs for customers. It is also making significant progress in by offering best solutions in cloud and mobility platform.
It has recently expanded its partnership with VMware. This partnership is expected to offer advance security to VMware’s public cloud platform vCloud Air. The enterprises can now apply the same rich set of security services integrated through VMware NSX and Palo Alto Networks across both public and private Cloud environments.
Palo has recently released VM series with support for Amazon AWS and KBM. This will certainly enhance its global protect mobility offerings as these offerings help the organizations to control access to enterprise applications and data based on key policy criteria such as application, user, and device.
Conclusion
Palo looks good with these investment and growing market trends that promise great return on the stock in the future. The analysts estimate its earnings to grow at CAGR of 45.98%, more than double the average industry CAGR of 20.56% for the next five years. This undeniably indicates strong growth prospects for the stock in the long-run. In fact, the stock has good-looking short term return as its earnings are expected to grow at CAGR of 85.00% this year and 97.30% by next year respectively.
