Palo Alto Networks is not planning to make any large acquisitions after spending $3.46 billion on 12 acquisitions since 2018.
According to Chairman and CEO Nikesh Arora, the Santa Clara, California-based security vendor has had to be more careful when checking out acquisition targets since it already has a product in almost every space it wanted.
Any deals in spaces where the company already has a product would make integration take longer and create uncertainty for customers. The chairman stated that he does not believe in having two products in the same category.
Palo Alto will only play where it wants to play
As Arora explained when speaking to Wall Street Investors on Monday, a scenario with multiple products would create confusion, throw a wrench into strategy and create ‘unnecessary kerfuffle’ in the organization.
He stated that such challenges are why the company’s ability to expand in categories is limited.
Arora said that there are some security categories like identity, where the company is not looking to compete. That would mean it will not pounce on potential acquisition targets in that space, even if they opened up.
What does Palo Alto Networks want to do?
The CEO said that the company has decided to focus investments on three key areas that include cloud security, SOC automation, and network firewalls.
Chief Financial Officer Dipak Golechha told investors on Monday that the company believes it has assembled key pillars crucial for its platform strategy to perform. The expectation is that there will only be incremental M&A activity in fiscal year ’22, as compared to the recent past.
Arora assured investors that since building organic capabilities takes time, there may be an acquisition here and there. However, he made it clear that the company is not in the market for ‘substantive acquisitions’ at this point in time.