Palo Alto Networks is doubling down on its platformization strategy as its Chairman and CEO Nikesh Arora touted the company landed about 65 platformization deals in the third fiscal quarter including an eight-figure deal with a large U.S.-based financial services company and a seven-figure transaction with a U.S. county agency.

“At the accelerated pace of change in cyber, even with healthy increases in cybersecurity funding, many organizations aim to simply keep pace with the volume of threat activity they see,” Arora said during the vendor's latest earnings call. “Most cannot do this and are increasingly receptive to a better way of tracking their security challenges – tackling their security challenges, windows sprawl and architectural complexity.”

“We firmly believe that answer is platformization of cybersecurity over time,” he said.

Palo Alto Networks offers products across more than 20 categories and organized these solutions into three platforms: network security, cloud security and security operations (DevOps).

During the earnings call, Arora announced the company’s bold move to drive the security platform approach transition by offering a “no-cost” period for its platforms until customers’ existing legacy contracts expire.

“I'm delighted to report, despite the concerns around our platformization approach after our last quarter, the customer feedback has been nothing but encouraging,” he said, adding the customer meeting volumes increased by 30%, predominantly centered on platform opportunities and an over 50% annual recurring revenue (ARR) growth on Prisma secure access service edge (SASE) this quarter.

Palo Alto Networks touts the success of its platformization strategy This platformization strategy has already helped Palo Alto Networks to achieve $4 billion in next-generation security (NGS) ARR, according to Arora.

“If you look at our top 5,000 customers, we have landed two or more of our platforms at about half these customers, and these customers contribute just over 80% of NGS ARR. If you look at this by platform, we have landed 97% of these top 5,000 network security, over 20% of them in Prisma Cloud, and over 40% with Cortex,” he said. “By all means, our land-the-platform strategy was extremely successful.”

Arora added that customers that are fully platformized saw better security outcomes. “We're still early in the results from full platformization,” he said. “Across these top 5,000 customers, we have completed about 900 through Q3 2024.”

Aiming to deliver 2,500-plus platformizations deals by fiscal year 2030 Palo Alto Networks’ platformizations push resulted in about 65 incremental sales in Q3, up 40% quarter over quarter, according to Arora.

The company set the goal of $15 billion in next-generation security ARR by fiscal year 2030. “With our incremental momentum in platformization, we see a runway to delivering approximately 2,500-plus platformizations sales, up from the current 900, while continuing to land our multiple platforms in our customer base and adding new customers.”

Analyst Gregg Moskowitz from Mizuho Securities pointed out during the earnings call that in order to reach Palo Alto Networks’ ambitious fiscal 2030 goals, the company may need to sign an average of around 75 new platformization deals per quarter.

Arora expressed optimism about this target, stating, “It's positively surprising, a good thing that we've got 60-plus deals done in this quarter,” the executive said. “We'll see what happens in Q4. We've just started going down this journey, and of course, if prospects get better, we'll be happy to update our targets in the future. But for now, that seems like a robust goal that will still make us the first company in the history of cybersecurity to ever get anywhere close to that kind of aspiration and number.”