Palo Alto Networks CEO: We're Displacing Cisco, Check Point In The Field

Palo Alto Networks is accelerating its market-share gain, notching big wins against competitors Cisco Security and Check Point, CEO Mark McLaughlin said on the company's third-quarter earnings call Wednesday night.

McLaughlin ticked off multiple wins from the past quarter on the call, outlining instances where Palo Alto gained on competitors: one of the world's multimedia and creative companies, where Palo Alto beat Check Point; one of the largest retailers in Europe, where Palo Alto replaced Cisco technology across more than 4,000 stores; a large North American financial services provider, where Palo Alto replaced Check Point; and a U.S. local government authority, where Palo Alto beat Cisco for a security architecture project.

"All of these wins are validation that our platform approach works and customer feedback is very positive," McLaughlin said on the call.

[Related: Palo Alto Networks Acquires CirroSecure To Boost SaaS Application Security Offerings]

The statements help heat up the competition among the vendors, coming just weeks after Cisco's 2015 Partner Summit in Montreal, where executives from the San Jose, Calif.-based vendor touted an architecture-based approach to security that it said would allow it to win specifically over Palo Alto and Check Point.

CFO Steffan Tomlinson credited the higher win rates in the market to the growing Palo Alto team, distribution and reseller networks as well as increasing brand recognition in the security market.

"Competitive win rates are very high. We continue to take share from all of the legacy providers that are out there," Tomlinson said. "We win a very high amount of the time. If it's not obvious, that's showing though the results."

For the full third quarter, Palo Alto reported sales of $234.2 million for the quarter, which ended April 30, up 55 percent over the year before. Net loss for the quarter was $45.9 million, compared with a loss of $146.6 million in the third quarter last year.

McLaughlin said the company has continued to see a "strong" overall demand for its security solutions. The company added 1,500 new customers in the quarter, bringing its total customer base to 24,000.

"Security continues to be a top priority on a global basis and security spending remains strong. Our results demonstrate our market leadership with growth that significantly outpaces the market. We are achieving these results quarter after quarter because our customers and our prospects are reacting favorably to our philosophy, strategy and platform," McLaughlin said.

McLaughlin also high-fived the company's service provider vertical, saying it was a "good vertical" and "growing very well for us," particularly around the company's PA-7050 data center firewall offering.

Palo Alto Networks predicted fourth-quarter revenues to be between $252 million and $256 million, which would be a growth of 41 percent to 44 percent year over year. The company predicted earnings per share to be between $0.24 and $0.25.

PUBLISHED MAY 27, 2015