PANW's platformization strategy and strong Q4 revenue consensus support a positive growth outlook, despite competitive pressures from other vendors.

Palo Alto Networks has been seen as one of these real leaders in cyber security, but this is also pretty competitive space and so as you assess an earnings event coming off of the heels of really strong reports from some of its peers, how do you think through this name?

Yeah, I think that definitely frames it very effectively. That is Palo Alto in itself is very attractive in terms of its revenue picture and I would say it's overall fiscal performance and that is actually alongside what's going on and across the entire cyber security market segment.

And so I think the consensus for 3.35 billion in Q4 will ring true and what that is also indicating is a 32% year-over-year acceleration. And you can combine that with the fact that Palo Alto Networks I think is differentiating itself very effectively.

That is it's pushing its customers to consolidate. It, you know, their multi-vendor IT stacks onto its unified platform.

And so as a result, I'm looking for growth in terms of the remaining performance obligations and also net retention rates to demonstrate that enterprises are indeed committed to signing these larger multi-year platform deals with Palo Alto Networks and thus underpin their growth projections over the next couple of years.

So this is all looking positive in terms of not just Palo Alto Networks uniquely, but also the entire cyber security segment.

It's been obviously successful for Palo Alto as they sort of look to be, if I use layman, almost like a one-stop shop for cyber security.

Can Palo Alto actually accomplish this platform is it What is it? Platform seditization that they call it? Have trouble saying that when the needs to be diversified are also still there for these big companies.

That's a great question and I think that hits the nail on the head as to what will define Palo Alto's success, not just, you know, for the next quarter, but certainly I would say over the next two years plus.

And that is, yeah, their platformization strategy is something that is ongoing with other players. And the reason why I think will be successful despite some of the built-in concerns is that many organizations out there are looking really for a trusted advisor to help simplify or streamline all these different silos.

And so, as a result, Palo Alto is offering, I would say, a very impressive discounting or you know, revenue recognition delay mechanisms and so forth to help, you know, encourage the enterprises, the organizations out there to go with their specific platform.

So, that could be a competitive concern for Palo Alto Networks is that Cisco could in effect outflank them in terms of, you know, the platformization strategy.

So, I think there'll be enough to go around though where some organizations, because of the the way they are set up, will prefer a Palo Alto to really focus on the security part.

But there'll be other organizations that say, "Hey, I need network and security combined." Or I need the AI stack, you know, combined from one of these other players. And so, all this is going to create, you know, more competitive open-endedness, but there's plenty of opportunity for Palo Alto to capitalize.

I mean, what has been coined as like a Palo Alto Networks specific platformization really strategy, but it's it's being seen, I mean, in in that same regard across all of these various companies, even outside of cybersecurity.

But where Palo Alto Networks has been busy is they've also used acquisitions to expand their platform and capabilities. and also Cronosphere when it comes to the observability part, the Palo Alto has shown that it has the DNA to effectively optimize these acquisitions and as a result improve uh metrics such as ARR as well as uh again the RPO metrics, but also the underlying uh you know, revenue growth quarter by quarter, let alone on an annual basis.

And what is also underpinning this is that Palo Alto Networks I identify as having a 300 billion total addressable market just by 2028 alone.

So, in essence, as long as Palo Alto Networks is doing common sense integration of these new assets, and it's resulting in these outcomes, then yes, we can say this has been a success for Palo Alto Networks and that it's actually strengthening its overall competitiveness relative to other uh security specific rivals who may not have that same portfolio breadth because they haven't pulled the trigger on uh these types of acquisitions.

Setting aside, you know, valuation, repricing, market risk, sector-wide sell-off, when you look at Palo Alto specifically, maybe in relation to its peers, what if any stands out as a potential risk of like a hiccup?

Uh it can go wrong if for example, not enough organizations decide to go with Palo Alto for its approach because they might opt for an even broader approach.

And when it comes uh specifically to AI uh security architectures, uh there is uh the concern that how it's being implemented might again require a more native approach that's coming from you know, the AI stack uh players such as the Googles and the Microsofts and so forth.

And so, I don't I there is a concern that's unique to Alto Networks when it comes to the overall cybersecurity segment. But again, it's about these evolving competitive dynamics that can enable these competitors to maybe outflank Palo Alto Networks, but certainly again reduce its total addressable market.

Awesome momentum has of course went up pretty substantially into this report. So high expectations here for a name that's climbed. I mean about now 14% just this month alone.