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Question: 226
While working the alerts involved in a Cortex XDR incident, an analyst has found that every alert in this incident requires an
exclusion .
What will the Cortex XDR console automatically do to this incident if all alerts contained have exclusions?
A. mark the incident as Unresolved
B. create a BIOC rule excluding this behavior
C. create an exception to prevent future false positives
D. mark the incident as Resolved C False Positive Answer: D
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-pro-admin/investigation-and-response/investigate-
endpoint-alerts/alert-exclusions/add-an-alert-exclusion.html Question: 227
To create a BIOC rule with XQL query you must at a minimum filter on which field inorder for it to be a valid BIOC rule?
A. causality_chain
B. endpoint_name
C. threat_event
D. event_type Answer: D
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-pro-admin/investigation-and-response/cortex-xdr-
indicators/working-with-biocs/create-a-bioc-rule.html Question: 228
After scan, how does file quarantine function work on an endpoint?
A. Quarantine takes ownership of the files and folders and prevents execution through access control.
B. Quarantine disables the network adapters and locks down access preventing any
communications with the endpoint.
C. Quarantine removes a specific file from its location on a local or removable drive to a protected folder and prevents it from
being executed.
D. Quarantine prevents an endpoint from communicating with anything besides the listed exceptions in the agent profile and
Cortex XD Answer: C
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-prevent-admin/investigation-and-response/investigate-
files/manage-quarantined-files
$13$10 Question: 229
Which statement is true for Application Exploits and Kernel Exploits?
A. The ultimate goal of any exploit is to reach the application.
B. Kernel exploits are easier to prevent then application exploits.
C. The ultimate goal of any exploit is to reach the kernel.
D. Application exploits leverage kernel vulnerability. Answer: A
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-prevent-admin/cortex-xdr-prevent-overview/about-
cortex-xdr-protection.html Question: 230
Which of the following best defines the Windows Registry as used by the Cortex XDRagent?
A. a hierarchical database that stores settings for the operating system and for applications
B. a system of files used by the operating system to commit memory that exceeds the available hardware resources. Also known as
the âswapâ
C. a central system, available via the internet, for registering officially licensed versions of software to prove ownership
D. a ledger for maintaining accurate and up-to-date information on total disk usage and disk space remaining available to the
operating system Answer: A
Explanation:
Reference: https://docs.microsoft.com/en-us/troubleshoot/windows-server/performance/windows-registry-advanced-users Question: 231
What kind of the threat typically encrypts userfiles?
A. ransomware
B. SQL injection attacks
C. Zero-day exploits
D. supply-chain attacks Answer: A
Explanation:
Reference: https://www.proofpoint.com/us/threat-
reference/ransomware#:~:text=Ransomware%20is%20a%20type%20of,ransom%20fee%20to%20the%20attacker Question: 232
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A file is identified as malware by the Local Analysis module whereas WildFire verdict is Benign, Assuming WildFire is accurate .
Which statement is correct for the incident?
A. It is true positive.
B. It is false positive.
C. It is a false negative.
D. It is true negative. Answer: B
Explanation:
Reference: https://live.paloaltonetworks.com/t5/cortex-xdr-discussions/cortex-xdr-false-positive-cloud2model-manager-1-005/td-
p/391391 Question: 233
LiveTerminal uses which type of protocol to communicate with the agent on the endpoint?
A. NetBIOS over TCP
B. WebSocket
C. UDP and a random port
D. TCP, over port 80 Answer: B
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-prevent-admin/endpoint-security/communication-
between-cortex-xdr-and-agents.html Question: 234
What are two purposes of âRespond to Malicious Causality Chainsâ in a Cortex XDR Windows Malware profile? (Choose two.)
A. Automatically close the connections involved in malicious traffic.
B. Automatically kill the processes involved in malicious activity.
C. Automatically terminate the threads involved in malicious activity.
D. Automaticallyblock the IP addresses involved in malicious traffic. Answer: A,D
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-prevent-admin/endpoint-security/endpoint-security-
profiles/add-malware-security-
profile.html#:~:text=With%20Behavioral%20threat%20protection%2C%20the,appear%20legitimate%20if%20inspected%20individu
ally Question: 235
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Which of the following policy exceptions applies to the following description?
âAn exception allowing specific PHP filesâ
A. Support exception
B. Local file threat examination exception
C. Behavioral threat protection rule exception
D. Process exception Answer: B Question: 236
Which built-in dashboard would be the best option for an executive, if they were looking for the Mean Time to Resolution
(MTTR) metric?
A. Security Manager Dashboard
B. Data Ingestion Dashboard
C. Security Admin Dashboard
D. Incident Management Dashboard Answer: A
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-release-notes/release-information/features-
introduced/features-introduced-in-2021.html Question: 237
When selecting multiple Incidents at a time, what options are available from the menu when a user right-clicks the incidents?
(Choose two.)
A. Assign incidents to an analyst in bulk.
B. Change the status of multiple incidents.
C. Investigate several Incidents at once.
D. Delete the selected Incidents. Answer: A,B
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-release-notes/release-information/features-
introduced/features-introduced-in-2021.html Question: 238
Which of the following represents the correct relation of alerts to incidents?
A. Only alerts with the same host are grouped together into one Incident in a given time frame.
B. Alerts that occur within a three hour time frame are grouped together into one Incident.
C. Alerts with same causality chains that occur within a given time frame are grouped together into an Incident.
D. Every alert creates a new Incident.
$13$10 Answer: A
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-pro-admin/investigation-and-response/investigate-
incidents/cortex-xdr-incidents.html Question: 239
If you have an isolated network that is prevented from connecting to the Cortex Data Lake, which type of Broker VM setup can
you use to facilitate the communication?
A. Broker VM Pathfinder
B. Local Agent Proxy
C. Local Agent Installer and Content Caching
D. Broker VM Syslog Collector Answer: C
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-pro-admin/broker-vm/set-up-broker-vm/activate-the-
agent-proxy-for-closed-networks.html Question: 240
When creating a custom XQL query in a dashboard, how would a user save that XQL query to the Widget Library?
A. Click the three dots on the widget andthen choose âSaveâ and this will link the query to the Widget Library.
B. This isnât supported, you have to exit the dashboard and go into the Widget Library first to create it.
C. Click on âSave to Action Centerâ in the dashboard and you will be promptedto give the query a name and description.
D. Click on âSave to Widget Libraryâ in the dashboard and you will be prompted to give the query a name and description. Answer: D
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-pro-admin/monitoring/cortex-xdr-dashboard/widget-
library.html Question: 241
Phishing belongs which of the following MITRE ATT&CK tactics?
A. Initial Access, Persistence
B. Persistence, Command and Control
C. Reconnaissance, Persistence
D. Reconnaissance, Initial Access Answer: D Question: 242
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When creating a BIOC rule, which XQL query can be used?
A. dataset = xdr_data
| filterevent_sub_type = PROCESS_START and
action_process_image_name ~= ".*?.(?:pdf|docx).exe"
B. dataset = xdr_data
| filter event_type = PROCESS and
event_sub_type = PROCESS_START and
action_process_image_name ~= ".*?.(?:pdf|docx).exe"
C. dataset = xdr_data
| filter action_process_image_name ~= ".*?.(?:pdf|docx).exe"
| fields action_process_image
D. dataset = xdr_data
| filter event_behavior = true
event_sub_type = PROCESS_START and
action_process_image_name ~=".*?.(?:pdf|docx).exe" Answer: B
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-pro-admin/investigation-and-response/cortex-xdr-
indicators/working-with-biocs/create-a-bioc-rule.html Question: 242
When creating a scheduled report which is not an option?
A. Run weekly on a certain day and time.
B. Run quarterly on a certain day and time.
C. Run monthly on a certain day and time.
D. Run daily at a certain time (selectable hours and minutes). Answer: B
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-pro-admin/monitoring/cortex-xdr-dashboard/run-or-
schedule-reports.html Question: 243
When using the âFile Search and Destroyâ feature, which of the following search hash type is supported?
A. SHA256 hash of the file
B. AES256 hash of the file
C. MD5 hash of the file
D. SHA1 hash of the file Answer: A
Explanation:
Reference: https://docs.paloaltonetworks.com/cortex/cortex-xdr/cortex-xdr-pro-admin/investigation-and-response/response-
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actions/search-file-and-destroy.html Question: 244
Which statement best describes how Behavioral Threat Protection (BTP) works?
A. BTP injects into known vulnerable processes to detect malicious activity.
B. BTP runs on the Cortex XDR and distributes behavioral signatures to all agents.
C. BTP matches EDR data with rules provided by Cortex XD
D. BTP uses machine Learning to recognize malicious activity even if it is not known. Answer: A
Explanation:
Reference: https://www.khipu-networks.com/matchmadein/wp-content/uploads/cortex-xdr- endpoint-protection-solution-guide.pdf
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The companyâs âDarwinâ release is the biggest release yet for the cloud security platform, a Palo Alto Networks executive tells CRN.
Palo Alto Networks unveiled what itâs calling the biggest release yet for its cloud security platform, Prisma Cloud, including an array of new features that provide greater intelligence and context to security teams as well as developers.
The cybersecurity giant said the âDarwinâ release for Prisma Cloud will include new capabilities to help organizations better prioritize their cloud security risks while giving customers a much-improved user interface.
The updates announced Wednesday also heavily utilize AI, though do not include any use of generative AI, the company said. Palo Alto Networks has major aspirations for GenAI but has not yet released capabilities powered by the technology.
The new Prisma Cloud release does, however, stand out in the crowded cloud security field in a number of respects with its new capabilities, said Ankur Shah, senior vice president and general manager for Prisma Cloud at Palo Alto Networks.
âDarwin is going to be the beginning of a new era,â Shah told CRN.
Along with the new enhancements to the Prisma Cloud platform as a whole, the company also announced one new module, Cloud Discovery and Exposure Management, which brings the total number of Prisma Cloud modules to 12.
The Prisma Cloud updates come as the platform has been seeing strong adoption from partners and customers, executives have said. The Prisma Cloud business surpassed $500 million in annual recurring revenue as of the companyâs fiscal fourth quarter, ended July 31, according to Palo Alto Networks.
What follows are the details on five new features unveiled for Palo Alto Networksâ Prisma Cloud platform.
Prisma Cloudâs new Code-to-Cloud Remediation capability enables an organizationâs infrastructure team to quickly ascertain what the most important threat is to focus on, Shah said.
One critical aspect of this capability is providing greater context to users from a number of directions, he said.
âWe contextualize that by combining identity, posture management, vulnerability [information], API attacks â all of that into a single context,â Shah said.
Infrastructure teams are then presented with two options. One is to fix the issue in the cloud, he said. However, those changes might be negated within weeks when a new release comes out, and so the new feature also allows users to fix the issue in the code itself, according to Shah.
Among the new Prisma Cloud features, Code-to-Cloud Remediation is the most unique for the industry and represents the biggest leap forward for the platform â and for the security practitioners that use it, he said.
âWeâre taking a fundamentally different approach, which is, context is the king. Intelligence is what you need. Because itâs a never-ending race,â Shah said. âSo we care about our security practitioners. And this is a way for them to really help the dev teams to get better early on, and also prioritize the most important things.â
Code-to-Cloud Vulnerability Management
Many customers are dealing with multiple sources of vulnerability data within a single application lifecycle, which is proving to be complex to manage, Shah said.
Meanwhile, customers have thousands or tens of thousands of vulnerabilities open at any given time, he said.
With Code-to-Cloud Vulnerability Management, customers are able to have just one tool to address cloud vulnerability issues, Shah said. This includes open-source scanning, registry scanning and runtime scanning, he said.
The capability will also help customers with âtracing whatâs happening in runtime back to the code,â Shah said.
Additionally, by clicking a button, ânow the practitioners will have the ability to fix the problem in code,â he said.
AppDNA
When it comes to cloud and application security, the first thing customers are looking for is better visibility, Shah said. Other tools on the market, however, are only providing visibility at the workload level, he said.
With the introduction of AppDNA, Prisma Cloud is âgiving you visibility at the application level. We tell you the application context,â Shah said.
âItâs looking at your cloud through the lens of an app. And apps are your crown jewel,â he said. âYour workloads are, to be honest, commodities. Virtual machines are not expensive. Your apps are worth millions of dollars.â
Infinity Graph
For forensics purposes, Palo Alto Networks is also adding its new Infinity Graph capability, Shah said.
With Infinity Graph, customers can easily ask questions using natural language and get answers that provide the ability to âunderstand risks with deep context,â the company said in a blog post.
âBy correlating the security stack across misconfigurations, vulnerabilities, exposure, identity and secrets, sensitive data, and more, you see the potential attack paths leading to a breach,â the company said in the post.
Code-to-Cloud Dashboard
Prisma Cloudâs newly added Code-to-Cloud Dashboard aims to provide customers with a way to quickly see how they are improving on security, Shah said.
âThe idea is weâll show our customers, as you get better at securing early on in the code pipeline, your risk will consistently reduce in the cloud,â he said.
The dashboard also breaks down the risk reduction progress by teams and by applications, to show where the successes are and where the trouble spots are in particular, Shah said.
Palo Alto Networks (NASDAQ:PANW) stock is poised to be a commercial winner in 2024: As suggested by various CIO surveys, Cybersecurity demand is expected to accelerate momentum in 2024, likely setting up Palo Alto for a close to 20% topline expansion. On that note, investors should consider that Palo Alto's incremental revenue should be highly value accretive for shareholders, as the cybersecurity giant is generating about 0.33 cents of free cash flow for every dollar of incremental sales. However, despite the favorable business backdrop, PANW shares are trading too expensive to warrant an investment, in my opinion. On updated valuation estimates, I now estimate PANW's intrinsic worth at about $162/ share.
Last time I covered Palo Alto stock, I mistakenly argued that a guidance cut would be incoming, following a negative cross read from Fortinet's (FTNT)Q2 results.In this article, I adjust my view to a stronger-than expected commercial backdrop.
For context, Palo Alto stock has strongly outperformed the broad equities market YTD, also when compared to the "Tech" benchmark. Since the start of the year, PANW shares are up about 113%, compared to a gain of approximately 25% for the S&P 500 (SP500) and a gain of close to 55% for the Nasdaq tech-heavy Nasdaq 100 (QQQ).
2024 May Support A Cybersecurity Bull Market
As we approach 2024, I see a supportive backdrop for IT budgets. This perspective anchors on various Q3 conference call discussions about gradual shortening sales cycles for new clients and the compression of billing cycles for existing customer base. The set-up going into 2024 looks especially attractive for Cybersecurity spending. Investors should consider that not only is the year 2024 likely seeing geopolitical tensions, but also by emerging security challenges anchored on the evolution of GenAI, e.g. deep-fakes, data poisoning, adversarial attacks, etc. Moreover, Palo Alto management has previously highlighted that as of first quarter FY 2024, ransomware attacks have increased 37% YoY, while attack speed on data exfiltration has accelerated from 9 days two years ago to 2 days as of today.
On that note, I point out insights derived from the Piper Sandler 2024 CIO Survey (research note dated 11th December), which suggests that Security spending is the top investment priority for 2024, with 89% of respondents expecting an increased spend, and 22% expecting material (>25%) increases in spending over the coming year. Moreover, within the Security spending vertical the top spending categories were Cloud Security, Endpoint Security, Threat Intelligence, as well as Network Detection & Response -- capabilities that play into Palo Alto's strengths.
A similar takeaway about a bullish spending backdrop for Cybersecurity was confirmed by UBS Evidence Lab AI Survey (research note dated 17th December). According to the survey's insights, the advent of GenAI will result in expanding IT budgets, with Security being a key concern in relation to GenAI applications:
It was clear from the survey results that it wasnât just Microsoft that was being used to secure AI applications, most were using multiple vendors. Among the âpure-playâ security firms, Zscaler and Palo Alto Networks were by far the most frequently-cited, and they both screened well on forward adoption plans as well. Nearly a quarter of our respondents plan to use Zscaler to secure access to GenAI applications and 19% plan to use Palo Alto.
Lastly, there's an emerging trend indicating a desire among software buyers to streamline their vendor relationships. This trend hints at the likelihood of a consolidation wave within the SaaS enterprise sector in 2024, including Cybersecurity. In fact, the Cybersecurity vendor landscape looks quite fragmented, with Palo Alto Networks, Zscaler, SentinelOne, CrowdStrike, Fortinet, Microsoft, Cisco, Okta, etc. While Palo Alto may not necessarily be a major buyer in 2024, with only about $1.7 billion of net cash on the balance sheet, I argue that a consolidation should be supportive for the industry's competitive backdrop.
20% Revenue Growth Looks Reasonable
Palo Alto Networks' portfolio of cloud security solutions aligns seamlessly with the 2024 escalating demand for cloud protection; and I broadly agree with analyst consensus projections that Palo Alto's topline in FY 2024 should expand at about 20% YoY vs FY 2023.
On revenue, analyst consensus broadly aligns with PANW management guidance, who sees revenues for FY 2024 in the range of $8.15 to 8.2 billion. Moreover, management has projected that operating income growth will outpace topline expansion, with operating margin estimated +190 to 240 basis points. If this projection would materialize, PANW's earnings per share could be up 22-25% YoY, reaching about $5.46 at midpoint.
Adjust Target Price to $162.22
Reflecting a bullish backdrop, and in line with updated analyst consensus EPS estimates for PANW through 2025, I adjust my residual earnings model for the company's stock: For FY 2024, I now estimate that Palo Alto's EPS will likely fall within the range of between $5.3 and 5.7 (non-GAAP). For FY 2025, and FY 2026 I set my EPS expectation at $26.4 and $7.8, respectively. Lastly, while I maintain my terminal growth rate input at about 150 basis point above expected nominal U.S. GDP growth, at 4.25%, I reduce my cost of equity assumption by 50 basis points, mostly as a consequence of the pending Fed rate cut projections.
On the backdrop of the adjustments highlighted above, I now calculate a fair implied stock price for PANW stock equal to $162.22, suggesting approximately 38% downside based on fundamentals.
Note: the table enclosed references calendar year, not financial year!
Below also the sensitivity table, which tests different assumptions for cost of equity (row) as well as terminal growth rate (column).
Investor Takeaway
Going into 2024, Palo Alto is seen leveraging strong momentum in Cybersecurity budgets to achieve strong topline and earnings growth, estimated at 20% and 23.5% YoY respectively. However, although I like the commercial backdrop, it is impossible for me to justify either a "Buy" or "Hold" rating for a stock that is trading at a 11x FY 2024 EV/Sales and 43x FY 2024 EV/EBIT. On updated valuation estimates, I now estimate PANW's intrinsic worth at $162; and as a function of valuation, I assign an Underweight/ Sell rating.
Wed, 03 Jan 2024 23:50:00 -0600entext/htmlhttps://seekingalpha.com/article/4661132-palo-alto-networks-valuation-concerns-overshadow-bullish-momentumPalo Alto Networks Inc PANW
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investorâs point of view. We also respect individual opinionsââthey represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
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Thu, 28 Dec 2023 23:00:00 -0600entext/htmlhttps://www.morningstar.com/stocks/xnas/PANW/quoteIn the spotlight
Soon holiday lights will be twinkling and friends and family will gather to celebrate, so this is the perfect time to shine a light on what our readers say are the best places to eat, drink, shop and spend time with family and friends in and around Palo Alto.
More than 1,600 locals cast 23,340 votes in 85 categories to create the Palo Alto Weekly's Best Of list for 2023. This year's list of winners includes some familiar favorites as well as some new places we're eager to explore.
Also, check out the businesses that have won their categories five years in row and are included in the prestigious Hall of Fame.
Here's your crowd-sourced guide to the very best of Palo Alto.
158 Hamilton Ave., Palo Alto; YogaSource.com; (650) 328-9642
Food & Drink
Best Burgers: The Counter Best Burrito: Sancho's Taqueria Best Take Out: Asian Box
Restaurants
Best Kids Menu: Palo Alto Creamery Fountain & Grill
Services
Best Men's Haircut: Hair International Best Orthodontist: Dr. Larry Morrill
Fri, 17 Nov 2023 08:18:00 -0600entext/htmlhttps://www.paloaltoonline.com/best_of/2023/Palo Alto Networks: Fully Valued
Palo Alto Networks' (NASDAQ:PANW) Q1 FY2024 results were somewhat soft, with NGS growth beginning to moderate and hardware sales normalizing. The company remains well positioned though, due to its large customer base and broad portfolio of solutions. In particular, XSIAM and SASE should drive growth going forward. The stock is starting to look fully valued though, meaning investors should not rely on further multiple expansion to drive returns.
Market
There are a number of cybersecurity trends that should prove favorable to Palo Alto over time. The SEC now requires companies to disclose breaches within four days, increasing the need for tools that enable companies to rapidly identify and remediate issues. This should help drive demand for security operations tools like Palo Alto's XSIAM.
Adversarial cybersecurity activity also continues to increase, both in terms of the volume and scale of attacks. In particular, ransomware attacks are increasing in frequency and severity. This should see cybersecurity spending continue to increase as a percentage of IT budgets.
Consolidation is also an emerging trend that is likely to prove beneficial to Palo Alto. Some of this is being driven by customers, with 75% of companies pursuing a vendor consolidation strategy. There are thousands of cybersecurity companies and the largest only has 1.5% market share. This indicates that cybersecurity is structurally different from many other software categories, although this could be set to change. The growing importance of data and cloud infrastructure provides economies of scale, and synergies between tools are making an integrated portfolio of solutions the preferred approach.
While the long-term outlook is favorable, Palo Alto's business continues to face near-term headwinds due to the macro environment. Scrutiny remains elevated and sales cycles are longer than usual. Businesses are adjusting to the higher interest rate environment though, with a number of cybersecurity vendors suggesting that market conditions were stabilizing.
Palo Alto recently stated that the pricing environment has stabilized, coming after pricing pressure in the previous fiscal year. Pricing pressure has been attributed to competitors trying to dislodge Palo Alto. This presumably refers to Palo Altoâs next-gen security offerings, which is interesting given that CrowdStrikeâs (CRWD) pricing has been fairly stable. This could then be a reference to SASE, where Cloudflare (NET) likely has a significantly lower-priced product.
Data
The rising complexity and sophistication of attacks means that data is now central to cybersecurity. Palo Alto believes that for most companies, 45% of security data comes from the firewall and another 40% comes from the endpoint. Palo Altoâs large customer base (~62,000 firewall customers) and solid position within the firewall market therefore gives it a strong competitive position from a data perspective. Palo Alto analyzes around 76 terabytes of data per day and believes that it is the largest user of BigQuery in the world. This access to data is behind Palo Alto's XSIAM solution and is difficult for most companies to replicate.
As a counterpoint, CrowdStrike has stated that around 85% of the valuable data comes from the endpoint as data gets filtered as it is transferred across the network, causing a loss of fidelity.
Palo Alto Networks
Palo Alto recently suggested that it is focused on integrating its solutions. This could suggest that the company is now approaching a full suite of solutions and that the pace of acquisitions may decline going forward. Palo Alto is still pursuing acquisition for the time being though, recently acquiring Dig Security and Talon Cyber Security for 232 million USD and 435 million USD respectively.
Companies like CrowdStrike have been touting their unified solutions, which is clearly a shot at Palo Altoâs strategy. There are pros and cons to internal development though. For example, it could be argued that Fortinet's focus on internal development has left it on the back foot in SASE.
With costs front of mind for customers, along with the interest rates, Palo Alto has implemented a number of strategies to help attract and retain customers. The company recently made the Unit 42 Rapid Incident Response Retainer available at no cost to all of its strategic customers. Other actions include annual billing plans, financing through PANFS, and partner financing.
SOC
Palo Alto believes that current security operations center approaches are outdated and that the market is about to undergo a paradigm shift. SOCs monitor, detect, and respond to threats but this is becoming difficult due to the volume and complexity of attacks. SIEM is used post-breach or post-event to figure out what happened, but enforcement and remediation capabilities are needed. Automating the security operations center is also important, as there is a labor shortage within cybersecurity. SOC presents a 30 billion USD opportunity, which Palo Alto believes could grow to 80-90 billion USD over the next decade, driven by AI.
Palo Altoâs XSIAM product was launched close to 12 months ago and did around 200 million USD of bookings in the first 9 months. XSIAM combines an endpoint agent with a data lake and AI, allowing mean response times to decline dramatically.
Palo Altoâs Cortex customer count increased by 25% YoY in Q1 FY2024 to over 5,300 customers. While this is impressive, Palo Alto appears to view Cortex largely as a customer acquisition tool for XSIAM. The companyâs XSIAM pipeline is now over 1 billion USD, of which 500 million USD was created in the last quarter alone.
SASE
Palo Alto estimates that SASE will be a 20-30 billion USD market, and so far only around 15% of the market has adopted this architecture. Palo Alto continues to suggest that there are only two and a half players in the market. Presumably referring to Palo Alto, Zscaler, and one of Fortinet, Cato, or Cloudflare.
Palo Alto recently acquired Talon Cyber Security to support its SASE business. Talon provides remote browser isolation technology. The combination of Talon and Prisma SASE will enable users to securely access business applications from any device. Palo Alto has suggested that this is not currently addressed by any SASE vendor but both Cloudflare and Zscaler have browser isolation solutions.
SASE is an important growth driver for Palo Alto at the moment, with its SASE ARR increasing approximately 60% YoY in Q1.
Cloud Security
Palo Altoâs cloud security business will be bolstered by the planned acquisition of Dig Security, which will provide Data Security posture management capabilities. Around 70% of organizations have data stored in the public cloud, and the security of that data is threatened by generative AI and a proliferation of cloud services. Palo Alto plans on integrating Dig's capabilities into its Prisma Cloud platform.
Hardware
There continues to be an industry-wide normalization on the hardware side of Palo Alto's business. As supply chain pressures have eased, backlogs have been reduced, and for some companies, this is now impacting sales. Palo Alto has stated that it never had a large backlog, which may be contributing to the relative strength of its product business. Going forward Palo Alto expects mid- to low-single digit industry product growth.
Financial Analysis
Palo Altoâs revenue increased 20% YoY in Q1 FY2024 driven by growth in next-gen security solutions. NGS ARR grew 53% YoY and is now in excess of 3 billion USD. Product revenue grew 3% and total service revenue grew 25%, with subscription revenue growing 29% and support revenue growing 17%. Growth was fairly consistent across regions, with Palo Altoâs Americas business growing 20%, EMEA up 19%, and JPAC increasing 23%.
Second quarter revenue is expected to be 1.955-1.985 billion USD, an increase of 18%-20% YoY. For the full fiscal year, revenue is expected to increase 18-19%, with NGS ARR expected to grow 34-35% YoY. The expected decline in NGS growth should be concerning for Palo Alto investors, as it is this part of the business that has been Palo Alto's growth engine over the past few years.
Palo Alto continues to win new customers, particularly larger organizations, and is driving adoption of its platform within that customer base. As of Q1, 56% of the Global 2000 has transacted with Palo Alto. 34% of Palo Alto's customer base has deployed all three form factors. Within Palo Alto's top 100 network security customers, 60% have purchased all three form factors, and on average these customers spend over 15 times more than Palo Alto's other network security customers.
Palo Alto's product gross profit margins are trending higher because of growth in the contribution from high-margin software revenue. The easing of supply chain pressures also likely contributed to the rebound in product gross profit margins. The growth of Palo Altoâs XSIAM and SASE solutions should also be supportive of gross profit margins. Given Palo Altoâs reliance on the hyperscalers for infrastructure, SASE margins may not be that high though.
Depending on how competition evolves and the scale that is reached, cybersecurity leaders like Palo Alto appear to be heading towards operating profit margins well in excess of 30%. With Palo Alto demonstrating strong operating leverage over the past 2 years, this is now being reflected in the stock price.
Conclusion
The market is currently placing a premium on profitability, and this situation is likely to persist while interest rates are elevated and economic uncertainty is high. This is favorable for Palo Alto, as it is one of the few cybersecurity companies offering both solid growth at scale and profitability.
The company is now facing headwinds on the hardware side of its business, although, given its current revenue mix, this is not a significant concern. Growth is being driven by cross-selling next-gen security solutions to its existing customer base and leveraging its large sales force to rapidly grow the revenue of acquired businesses.
There is a risk of growth deceleration as Palo Alto begins to saturate its existing customer base though. Given the value of solutions like SASE and XSIAM per customer, and relatively low adoption rates, this may not occur for some time yet. Palo Altoâs stock likely continues to do ok going forward, provided the macro environment remains stable, but there may not be much more room for multiple expansion.
Sat, 02 Dec 2023 10:47:00 -0600entext/htmlhttps://seekingalpha.com/article/4655601-palo-alto-networks-fully-valuedPalo Alto Networks Acquires LightCyber For $105M, Adds Behavioral Attack Detection Capabilities
Palo Alto Networks announced that it had acquired LightCyber for $105 million, adding behavioral attack detection capabilities to its network security platform.
LightCyber's breach-detection and remediation solution is called Active Breach Detection. The company's solution uses behavioral analytics and anomaly detection to gain visibility into advanced and targeted attacks, insider threats, and attacks that have gone around traditional controls.
Palo Alto Networks announced the acquisition, which has already closed, during its second quarter earnings call on Tuesday.
CEO Mark McLaughlin said in a statement that LightCyber's technology would "complement the existing automated threat prevention capabilities of our platform to help organizations not only improve but also scale their security protections to prevent cyber breaches." On the earnings call, McLaughlin said Palo Alto Networks evaluated multiple companies in the behavioral attack detection market, and was "very impressed by the LightCyber offering."
"The LightCyber team's vision to bring automation and machine learning to bear in addressing the very difficult task of identifying otherwise undetected and often very sophisticated attacks inside the network is well-aligned with our platform approach," McLaughlin said in a statement.
On the earnings call, CEO Mark McLaughlin said Palo Alto Networks plans to integrate LightCyber as a non-attached subscription to its security platform, an integration it said it expects to be available by the end of the calendar year. In the meantime, he said it would continue to offer the products independently and support existing customers.
The acquisition is the latest in a slow, steady stream of smaller acquisitions by Palo Alto Networks in recent years. The company acquired Cyvera in 2014 to add endpoint security capabilities and CirroSecure in 2015 to add capabilities for SaaS application security. LightCyber already had a tie to Palo Alto Networks with investments from security investor Shlomo Kramer as part of its last $20 million Series B round in June 2016. Kramer was also an early investor in Palo Alto Networks.
Mark Miller, a partner at Dallas-based M&S Technologies, a Kudelski Security company, said LightCyber has an "interesting product" in the behavioral analytics and anomaly detection market, but sales have been slow to gain traction with his business.
Miller said it makes a lot of sense for Palo Alto Networks to buy, rather than build, a company in this market, as there are multiple companies in the space already. The acquisition will also add engineering talent, he said. He said the acquisition would add a broader sales base for LightCyber as it is incorporated as a subscription on the Palo Alto Networks platform.
"Selling it as an add-on feature or subscription would be the way to go. If they can go back to their current Palo Alto Networks customer base, it should garner sales for them," Miller said.
Tue, 28 Feb 2017 09:01:00 -0600text/htmlhttps://www.crn.com/news/security/300083967/palo-alto-networks-acquires-lightcyber-for-105m-adds-behavioral-attack-detection-capabilitiesAbout Cloud ConfidentNo result found, try new keyword!Because the latest cloud technology is only as powerful as the security that protects it, Palo Alto Networks partnered ... of dollars in financial losses, remediation costs and cyber liability ...Mon, 16 Oct 2017 09:46:00 -0500entext/htmlhttps://www.forbes.com/paloaltonetworks/cloud-confident/Palo Alto
Fire officials from the Santa Clara County Fire Department declared the Los Altos fire under control.
Palo Alto police are investigating a robbery that occurred at a Taco Bell restaurant in the city this week. Â Â
CSW Engineering Group presented the plan that would widen the sidewalks and create parallel parking spaces.
A woman has been arrested for burglarizing two occupied homes in Palo Alto.
Pro-Palestinian demonstrators target offices of three congressional representatives, calling for conditions attached to military aid in Israel's ongoing war with Hamas.
Palo Alto police are investigating a carjacking after a man in his 60s unsuccessfully tried to fight off the thief early Friday morning, the Palo Alto Police Department said in a press release.
Two Israeli artists from New York have started a project that has garnered worldwide attention.
A man suspected of shooting a woman on the Stanford University campus and an attempted robbery of a Trader Joe's has been taken into custody, the Santa Clara County Sheriff's Department said Wednesday.Â
The director of the Federal Bureau of Investigation, Christopher Wray, was in Palo Alto on Tuesday, meeting with heads of intelligence agencies from Britain, Australia, New Zealand and Canada.
Kevin Coslett, a missing Navy veteran who suffers from mental illness, has been found.
Palo Alto police are investigating a sexual battery case where a woman says an unknown suspect groped her as she was walking Wednesday night.Â
Christian, Jewish and Muslim faith leaders spoke of building a world around peace instead of war.
A couple in Palo Alto says their home has been targeted by burglars three times since 2020.
Community members and political leaders on Monday remembered what happened on 22 years ago on Sept. 11, 2011, in somber services across the Bay Area.Â
Police in Palo Alto say a multi-million dollar home was burglarized for the third time in three years this week.
Officials for the South Bay and Peninsula took another stride on Tuesday in helping educators find affordable housing.
Authorities are investigating the death of a man whose body was found on a downtown Palo Alto street Wednesday morning.
Mike Wallau says heâs been at the location for 29 years and wants to stay, but the owner says the eviction is about more than paying rent late for one month.
A new study suggested that the Bay Areaâs housing market was seeing one of the nationâs largest cooldowns, as 13 local cities were among a list of the top 18 U.S. spots, where home prices were falling.
 A bomb threat phoned in for a taqueria in downtown Palo Alto on Friday proved to be unfounded, police said.  Â
Tue, 15 Oct 2019 19:05:00 -0500entext/htmlhttps://www.ktvu.com/tag/us/ca/santa-clara-county/palo-altoIn the spotlight
Soon holiday lights will be twinkling and friends and family will gather to celebrate, so this is the perfect time to shine a light on what our readers say are the best places to eat, drink, shop and spend time with family and friends in and around Palo Alto.
More than 1,600 locals cast 23,340 votes in 85 categories to create the Palo Alto Weekly's Best Of list for 2023. This year's list of winners includes some familiar favorites as well as some new places we're eager to explore.
Also, check out the businesses that have won their categories five years in row and are included in the prestigious Hall of Fame.
Here's your crowd-sourced guide to the very best of Palo Alto.
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