Palo Alto Networks acquires Aporeto for cloud security

Meanwhile, Palo Alto reported Q1 results above expectations; Nutanix also reported solid Q1 results.
Written by Stephanie Condon, Senior Writer

Palo Alto Networks on Monday announced plans to acquire Aporeto Inc., a machine identity-based microsegmentation company, for $150 million in cash. Aporeto's technology should bolster Palo Alto's cloud security suite, Prisma. The deal is expected to close during Palo Alto's fiscal second quarter. 

Founded in 2016 and based in San Jose, Calif., Aporeto uses identity-based access control to secure workloads across all infrastructures. Its technology should help strengthen the Prisma suite of cloud security services, which it launched earlier this year. 

Aporeto co-founders Dimitri Stiliadis and Satyam Sinha have agreed to join Palo Alto Networks.

Separately, Palo Alto on Monday published its first quarter financial results, beating market expectations. 

Non-GAAP net income for the quarter was $104.8 million, or $1.05 per diluted share. Revenue came to $771.9 million, up 18 percent year-over-year.

Wall Street was looking for earnings of $1.03 per share on revenue of $767.8 million. 

"Palo Alto Networks' multi-platform approach to security is clearly resonating with our customers. Our Next-Gen Security offerings performed extremely well in our first fiscal quarter, bolstering our confidence in our long-term prospects for Prisma and Cortex," CEO Nikesh Arora said in a statement. "At our recent Ignite conference, we introduced significant product enhancements, including Cortex XDR 2.0, SD-WAN and DLP capabilities for Prisma Access and the integration of Twistlock and PureSec into Prisma Cloud, that should sustain this momentum."

For the fiscal second quarter 2020, Palo Alto expects total revenue in the range of $838 to $848 million. It's forecasting diluted non-GAAP net income per share in the range of $1.11 to $1.13, which incorporates net expenses related to the Aporeto acquisition.

Meanwhile, Nutanix on Monday also published its first quarter financial results, beating market expectations. 

The company reported a non-GAAP net loss of $135.3 million, or 71 cents per share, on revenue of $314.8 million, up from $313.3 million a year prior. 

Wall Street was expecting a per-share loss of 75 cents on revenue of $306.4 million. 

"Our solid Q1 performance, particularly in the Americas, gives us confidence that we have the right formula for global sales leadership as demonstrated by improved productivity and sales hiring over the last six months," CEO Dheeraj Pandey said in a statement. "We have also seen momentum in key areas of our business, including the transition to subscription and an improved 28% attach rate of new products onto our core HCI platform."

Total billings came to $380 million, down from $383.6 million in the first quarter of fiscal 2019. The decrease, Nutanix said, reflects billings compression from the company's ongoing transition to subscription and the significant reduction of hardware billings from the prior year.

Subscription billings in Q1 grew 41 percent year-over-year to $276 million, representing 73 percent of total billings. 

Subscription revenue increased 72 percent year-over-year to $218 million, representing 69 percent of total revenue.

Nutanix also highlighted its expanded customer base, after ending the quarter with 14,960 total customers. The company closed a record high of 66 deals worth more than $1 million.

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