Palo Alto Networks: To Buy or Not to Buy...

Palo Alto Networks: To buy or not to buy… that will be the question. 

Palo Alto Networks is about to graduate the Cyber Security M&A Power Rankings, but more importantly, they are about to drive a valuation that should immediately exceed $2B in market cap.

Palo Alto Networks Fast Facts:

  • Palo Alto Networks was founded by Nir Zuk in 2005
  • Over $65M has been raised to drive this beast to IPO from some of the usual suspects to include Sequoia Capital, Capital Partners, Greylock Partners, JAFCO Ventures, and Globespan (the most recent Series D was $8.8M)
  • PAN moved their headquarters into a facility that looks and acts like a web 2.0 software company in San Jose, and yes, you should definitely stay to eat the food in the cafeteria for lunch
  • Nir has acquired about 3 corporate customers per day since launch (6,650+ in sum)
  • The cost of their security appliance line varies from hundreds (PA-200) to tens-of-thousands (PA-5000)

If we only knew the successes and growth trajectory of the company, then this would certainly be a buy at almost any strike price. Palo Alto Networks will IPO soon and I consider it a value stock until it hits $2B in cap. Post $2B, it becomes a growth stock and my personal belief is that there is plenty of room to see this company grow into a $4B organization over the next few years. I am expecting PAN to continue to mature its enterprise offerings, go after the malware market in full, and grow it’s international distribution footprint. All of this will happen in the face of competition who will be working on creating the application identification & control technology that PAN invented seven years ago.

Buy, sell or simply watch, Palo Alto Networks has waged war on the entire network security industry.