Palo Alto Networks has got what it takes to grow big
Fast growing network security company Palo Alto Networks has filed a $175m IPO, which at a stroke makes it one of the most desireable IPO’s of the year. Founded in 2005 by Nir Zuk, the former CTO of NetScreen Technologies, it has been supported by investment from Sequoia Capital, Globespan Capital Partners, Greylock Partners and JAFCO Ventures, and it has grown tenfold since 2009 and now has 6,650 customers in 80 countries. According to its S-1 filing with the SEC, its turnover has more than doubled in the past year from $48.8 million to $118.6 million. This success has been built on the back of innovative technology and its latest next generation firewalls uses enhanced PBR (Policy Based Routing), which has been recognised as the next-generation of firewall technology. PBR is designed to recognise and block certain applications, not just the ports that certain kind of traffic travels through. This is significant because in recent years Web 2.0 applications have been built to evade standard firewalls either by port sharing or port hopping and most of the exploits used today to breach organizations are via these applications. With networks heading towards cloud computing implemented through the internet, this type of technology will become more and more invaluable to corporations. Such is the importance of PBR that rival corporations are working hard to acquire it - either through development in the case of Cisco, or through litigation in the case of Juniper Networks. Last December Juniper filed a lawsuit alleging patent infringements dating back to when Nir Zuk worked for Netscreen. Juniper alleges that while Nir Zuk developed the technology, it acquired the patents when it purchased Nir Zuk in 2004. Palo Alto denies the claims and the case continues. This lawsuit by Juniper underlines how much of a threat the larger network security companies view Palo Alto and with Juniper and Cisco generating $4.49 billion and $43.21 billion in revenue respectively in 2011, if Palo Alto wins their case, I expect it to also cross the billion dollar threshold in years to come.
