The VAR Guy

Palo Alto Networks has a concise message for channel partners: The security company was cash-flow positive in its most recent quarter, and is looking to double its business in the year ahead. To assist with that effort, Palo Alto Networks has recruited roughly 150 channel partners and is now working with two distributors: Westcon Group and Computerlinks. The longer-term goal, financial markets permitting, is an IPO. Here’s the story.

No doubt, Palo Alto Networks has its share of loyal partners. Two cases in point: A New England solutions provider just won a major Palo Alto deal with an entertainment complex, and a mid-Atlantic solutions provider is building out a managed services practice using Palo Alto’s security offerings, The VAR Guy hears.

Backed by those types of partner wins, Palo Alto’s annual bookings run rate now tops $100 million, according to VP of Worldwide Marketing Rene Bonvanie. Most of the wins involve large enterprises. But Bonvanie wants to scale the business even faster.

Dialing Two Distributors

Enter Westcon Group and Computerlinks. Both companies are now authorized Palo Alto Networks distributors in North America — providing additional training, support, evaluation demo gear, demand generation programs, financial credit terms and global account fulfillment resources to authorized Palo Alto Networks NextWave resellers.

All of Palo Alto Networks’ sales will now involve two-tier distribution, though the security company plans to stay closely involved with its partners, Bonvanie says.

The distribution strategy arrives nearly two years after Palo Alto Networks’ partner program hit a significant bump, with former Channel Chief Nancy Reynolds ultimately leaving the company in January 2009. (Reynolds has since joined Kaspersky Lab, the anti-virus specialist.)

What’s Your Exit Strategy?

No doubt, some customers and partners are asking Palo Alto Networks about industry consolidation, especially as security companies get acquired. The recent Intel-McAfee and HP-ArcSight deals come to mind, and rumors continue that Symantec could be a takeover target.

Does that mean Palo Alto Networks also is looking for an exit strategy? Bonvanie declines to get into discussions about hypothetical M&A scenarios. Instead, he says Palo Alto Networks is being built to remain cash flow positive, grow, and eventually launch an Initial Public Offering (IPO). And yes, the company continues to staff up. Among the recent recruits: Sophos veteran Mike Haro, who recently joined as director of corporate communications.

With our without a long-term IPO, two things are clear: Palo Alto Networks is in growth mode, and the two-tier distribution model seeks to accelerate that growth.

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