Palo Alto Networks to acquire Twistlock, PureSec

Palo Alto plans to add Twistlock's container security capabilities and PureSec's serverless security capabilities to its new cloud security suite, Prisma.

Palo Alto Networks on Wednesday announced its plans to acquire the container security company Twistlock and the serverless security company PureSec. Both acquisitions are expected to close during Palo Alto's fiscal fourth quarter. The cybersecurity giant is paying $410 million in cash for Twistlock. The terms of the PureSec deal were not disclosed.

Palo Alto plans to add the capabilities it will gain via the purchases to its new cloud security suite, called Prisma. With the acquisitions, Palo Alto Networks said in a release, it should be "uniquely positioned to secure today's modern applications throughout the entire life cycle."

Twistlock offers vulnerability management, compliance, and runtime defense for cloud-native applications and workloads. It has more than 290 customers, with more than a quarter on the Fortune 100 list. Twistlock co-founders Ben Bernstein and Dima Stopel will join Palo Alto Networks.

Meanwhile, PureSec provides end-to-end security for serverless functions, covering vulnerability management, access permissions and runtime threats. PureSec co-founders Shaked Zin, Ory Segal and Avi Shulman will join Palo Alto.

Palo Alto on Wednesday also reported its third quarter financial results, coming out ahead of market expectations.

Non-GAAP net income for the fiscal third quarter 2019 was $130.1 million, or $1.31 per diluted share. Total revenue grew 28 percent year-over-year to $726.6 million.

Analysts were expecting earnings of $1.25 on revenue of $704.05 million.

"Our team continues to execute on our plan and deliver robust results," CEO Nikesh Arora said in a statement. "The excitement around our new products is incredible and will only grow once customers have a chance to experience it for themselves. Both Twistlock and PureSec will be important additions to helping protect our customers' journey to the cloud. Combining their capabilities with Prisma, our leading cloud security suite, is a huge win for all of our customers."

For Q4, Palo Alto expects non-GAAP net income per share in the range of $1.41 to $1.42 with revenue in the range of $795 to $805 million.

The company's Q4 guidance is below the market's expectations for $1.55 per share. Palo Alto said its outlook includes the impact of approximately $15 million in net expense related to the Demisto acquisition as well as the proposed Twistlock and PureSec acquisitions. It also includes the impact of tariffs of approximately $2.5 million.