Palo Alto has recently acquired SD-WAN company CloudGenix in an all-cash $420 million deal. Some may find this news surprising because Palo Alto had announced it’s internally developed SD-WAN offering in late 2019. Palo Alto’s SD-WAN product integrates with its firewall and cloud solution Prisma Access.
SD-WAN stands for software-defined wide area network and it basically allows remote sites of companies to securely access applications hosted on public clouds or at private data centers. This reduces the need to maintain expensive private networks and data centers as applications can be accessed via an inexpensive internet connection.
Acquiring CloudGenix makes sense because it gives Palo Alto control over a larger part of the market. Cloud Genix has about 250 customers and many of them are Fortune 100 companies. Palo Alto can market its home-grown SD-WAN solution to clients who want to maintain their own networks. The company can then also market CloudGenix’s solution to those who want to outsource their network process to the cloud and are looking for a SaaS offering.
Nikesh Arora, chairman and CEO, Palo Alto Networks said, “The integration of our platforms into a best-in-class SASE offering will benefit not only our combined customer base, but the industry at large as it continues to undergo network and security transformation.”
Palo Alto has close to $3 billion in cash and equivalents and $1.5 billion in convertible debt. So, the balance sheet is quite strong and the CloudGenix acquisition will help the company sustain its growth at a time when times are uncertain. There is a big demand for securing cloud-computing systems and working remotely, as a trend, may accelerate.
Shares of Palo Alto Networks, Inc. closed at $213.96 on May 8, up 8.88% for the month.