Higher Costs Dampen Palo Alto Networks’ Bumper Revenue

Security vendor Palo Alto Networks is riding the wave of very public security breaches as the company reports a 55 percent rise in annual revenue.

But its fourth quarter net loss grew 43 percent compared to the same period last year, rising to $46 million (£30m) from $32.1 million (£20.9m) as the company ploughs more into operating costs.

Taking share

“We are significantly outgrowing the market and rapidly taking share,” said CEO Mark McLaughlin.

Palo Alto Networks provides corporate security products such as network firewalls. The company, which went public in 2012, competes against players such as Check Point and FireEye.

“We are very pleased with our results for both the fourth quarter and fiscal year 2015,” said McLaughlin.

“During the year we grew our customer base to over 26,000 customers, expanded our technology partnerships and distribution relationships, enhanced our next-generation security platform with new offerings and achieved $928.1 million (£603m) in revenue, an increase of 55 percent year-over-year.”

Total revenue for the fiscal fourth quarter 2015 rose 59 percent year-over-year to $283.9 million (£185m), compared with total revenue of $178.2 million (£116m) for the fiscal fourth quarter 2014.

In August, McLaughlin admitted that by 2017, he sees Palo Alto Networks as the biggest security vendor in its particular niche.

Setting a goal of hitting $2 billion (£1.3bn) in revenue in the next two years, McLaughlin wants to double the size of Palo Alto by signing up more partners, customers, and increase billings significantly.

Steffan Tomlinson, chief financial officer of Palo Alto Networks, said: “We delivered strong fourth quarter and fiscal year 2015 results with accelerating revenue growth and expanding operating and cash flow margins. In the fourth quarter, our land and expand sales model once again drove substantial growth in billings, revenue and deferred revenue, which all reached new records.