PANW: Data Security for Governments, Businesses, and Home Users

09/30/2015 9:00 am EST

Focus: STOCKS

Michael Berger

President & Founder, Technical420.com

Recent US government cyber attacks have led to an increase in demand for data security, so Michael Berger, of Technical420.com, highlights one provider that continues to beat expectations, increase its geographic presence, and take market share around the world.

Data security is critical for governments, businesses, and even home computer users. Data lost due to natural disasters is upsetting, but losing it to hackers can have much more significant consequences. Earlier this year, the United States government was the target of a massive data breach and millions of government employees and former employees had their personal information stolen from the Office of Personnel Management.

These cyber attacks have led to an increase in demand for data security and we expect such demand to continue to increase for years to come. There are a number of data security providers and one we have been monitoring closely is Palo Alto Networks, Inc. (PANW).

PANW Continues to Beat Expectations

PANW specializes in multi-function next generation firewall appliances, which can replace several point solutions with one standalone appliance. The company pioneered application control technology, which allows firewalls to place selective usage policies for an application rather than block it entirely. PANW primarily sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries.

During the fourth quarter, PANW beat Wall Street revenue expectations and first quarter expectations exceeded analyst expectations. Revenue during the fourth quarter grew 59% on year over year basis and PANW generated $284 million in revenue (Wall Street expected $256 million).

PANW continues to increase its geographic presence and take market share around the world. The company saw 36% growth in Europe, the Middle East, and Africa, 67% growth in North and South America, and 58% growth in the Asia-Pacific region. PANW added 2,000 new customers during the quarter bringing them to a total of 26,000 customers.

PANW continues to drive a next generation replacement cycle of outdated firewall solutions and saw a significant increase in the number of customers using its Wildfire solution during the quarter. Wildfire is used by customers who face advanced threats. PANW has 7,000 paying Wildfire customers (customers increased by 1,000 during the quarter).

An Industry with Massive Growth Potential

Data security is a growing trend across the world and PANW is expanding its already large footprint in this industry. Investors who are looking for long-term investments should be focused on companies that are leaders in industries that are in the middle of a long-term growth cycle. We view PANW as one of these leaders and investors should have shares on their radar.

Michael Berger, Founder and President, Technical420.com

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