PANW's Platformization Gains Speed: Can it Multiply the Customer Base?

Palo Alto Networks PANW is gaining strong traction with its platformization strategy, which involves getting customers to adopt multiple PANW products across network, cloud, and security operations. In the third quarter of fiscal 2025, the company added more than 90 new platformized deals. This brings the total to around 1,250 platformizations among its top 5,000 accounts.

These deals aren’t small. A global consulting firm signed a deal worth more than $90 million, using Palo Alto Networks’ Cortex platform for Extended Security Intelligence & Automation Management to replace a legacy Security Information and Event Management (SIEM) provider. 

Another $46 million deal with a leading financial services firm included the displacement of its SIEM vendors, while a $32 million transaction with a United States financial services firm focused on reducing complexity in cloud and network security. These large transactions show that customers are ready to switch from fragmented tools to a more unified platform, and they are willing to spend big to do it. 

Moreover, customers who use more than one Palo Alto Networks platform grew by nearly 70% year over year during the third quarter. Management believes platformization is key to reaching its $15 billion Next-Gen Security Annual Recurring Revenue (ARR) target by fiscal 2030, with 60-70% of that total expected to come from platformized customers. With approximately 2% of PANW’s more than 70,000 customers fully platformized, the runway remains wide open.

How Competitors Fare Against PANW

Zscaler ZS and SentinelOne S are also evolving their platforms to meet enterprise security demands.

Zscaler continues to expand its Zero Trust Exchange platform. In the third quarter of fiscal 2025, Zscaler reported ARR of $2.9 billion, up 23% year over year. Zscaler’s Zero Trust Everywhere, Data Security Everywhere, and Agentic Operations are becoming its main growth engine. Together, these segments are approaching $1 billion in ARR, growing significantly faster than Zscaler’s total ARR growth.

Though comparatively a small competitor, SentinelOne posted year-over-year growth of 24% in its ARR in the first quarter of fiscal 2026. The growth was driven by the rising adoption of SentinelOne’s AI-first Singularity platform and Purple AI.

PANW’s Price Performance, Valuation and Estimates

Shares of Palo Alto Networks have gained 12.5% year to date compared with the Security industry’s growth of 23.5%.

PANW YTD Price Return Performance

From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 12.92X, lower than the industry’s average of 14.85X.

PANW Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for PANW’s fiscal 2025 and 2026 earnings implies year-over-year growth of 15.1% and 11.2%, respectively. The estimates for fiscal 2025 and 2026 have been revised upward in the past 60 days and 30 days, respectively.

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This article originally published on Zacks Investment Research (zacks.com).

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