Technology
Palo Alto CEO Nikesh Arora confronts Wall Side road skeptics nearest corporate’s greatest wager but
Nikesh Arora of america at the first hollow all the way through the 3rd spherical of The Alfred Dunhill Hyperlinks Championship at The Impaired Path on October 02, 2021 in St Andrews, Scotland.
David Cannon | David Cannon Assortment | Getty Pictures
When Nikesh Arora was once named CEO of Palo Alto Networks in June 2018, the cybersecurity corporate was once valued at about $19 billion and was once taking over immense networking distributors like Cisco and Juniper, that have been development safety into their merchandise.
Seven years after, Palo Alto’s marketplace cap has expanded via sixfold, pushed partially via an acquisition spree that’s revealed Arora spearhead greater than 20 do business in in an attempt to develop a one-stop store for all issues cybersecurity.
Arora’s ambitions took a dramatic flip latter presen, when Palo Alto introduced via a ways its greatest wager to age: the $25 billion acquire of Israeli id safety platform CyberArk.
Wall Side road’s response to this point has been downbeat, with more than one analysts downgrading the keep, and the stocks losing 16% since information of the offer first leaked out latter Tuesday.
Now not most effective does CyberArk constitute Palo Alto’s heftiest offer within the twenty years since its origination, nevertheless it’s the second-biggest U.S. tech acquisition introduced in 2025, nearest Alphabet’s $32 billion acquire of Wiz, any other cloud safety corporate from Israel.
Alphabet had transform a extra important participant in Palo Alto’s universe even prior to the calendar grew to become. Within the corporate’s 2024 annual report printed in October, Palo Alto named Alphabet as a competitor for the primary future, record it along Cisco and Microsoft as firms “that have acquired, or may acquire, security vendors and have the technical and financial resources to bring competitive solutions to the market.” In 2023, Cisco paid $28 billion for Splunk, which specializes in information coverage.
The life of cybersecurity megadeals coincides with a surge within the selection of refined cybercrimes fix to speedy developments in synthetic judgement.
With CyberArk, Palo Alto is creating a fat scatter within the id control marketplace, taking at the likes of Okta in addition to Microsoft and IBM’s HashiCorp. It additionally places the corporate into additional festival with CrowdStrike, the alternative pure-play safety corporate that’s crowned $100 billion in marketplace cap.
In an interview with CNBC quickly nearest latter presen’s announcement, Arora stated CyberArk suits squarely into his corporate’s focal point on AI and, on this case, the complexities that include granting permissions and get right of entry to. Arora stated that with M&A he seems for rising traits, specifically when it comes to era that’s at a crossroads.
“Our entire acquisition strategy, our organic product growth strategy, our selling strategy, has always been based on that approach,” stated Arora, 57, who’s revealed his non-public wealth lead $1 billion with the fat run-up within the keep.
In CyberArk’s earnings report latter presen, the corporate stated income jumped 46% within the actual quarter to $328 million, equivalent to about 14% of Palo Alto income, in keeping with the newest document. Arora stated within the convention name pronouncing the offer that he intends to paintings with CyberArk CEO Matt Cohen and Chairman Udi Mokady to “accelerate the pace of innovation.”
“We look for great products, a team that can execute in the product, and we let them run it,” Arora advised CNBC. “This is going to be a different challenge, but we’ve done well 24 times, so I’m pretty confident that our team can handle this.”
Maximum of Arora’s acquisitions through the years were of smaller startups. That features a $400 million offer to shop for Dig Security and the $625 million acquire of Talon Cyber Security in 2023. Utmost week, the corporate closed its takeover of Seattle-based startup Give protection to AI for an secret quantity.
Urge for food for possibility
Ahead of becoming a member of Palo Alto, Arora spent a decade at Google, including his last three years there as chief business officer. Some analysts called him the “acting CEO,” due to his lengthy roster of responsibilities, such as strategic partnerships and navigating the needs of advertisers.
In 2014, Arora left Google to join SoftBank as head of its internet and media operations business and vice chairman of the overall company. At SoftBank, Arora had been tapped as the likely successor to visionary founder and CEO Masayoshi Son. But less than two years after taking the job, Arora resigned. As he explained it, Son told him he was going to keep running the show for another five to 10 years.
Roughly 10 months before leaving SoftBank, Arora said he was buying more than $480 million worth of stock in the Japanese conglomerate, which he said involved taking an “enormous risk” reflecting his confidence “about the future” of the company.
While that’s all firmly in the past, Arora said that over the years, he’s “scavenged” different leadership qualities from each of his mentors, including an appetite for risk from Son.
“It’s about finding role models for certain behaviors and wanting to understand what makes them really successful,” he said. “That’s my model.”
Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., speaks during the company’s annual general meeting in Tokyo, Japan, on Friday, June 27, 2025.
Bloomberg | Bloomberg | Getty Images
Investors weren’t completely sold on Arora when he joined Palo Alto in 2018, said Joseph Gallo, an analyst at Jefferies. He was a skilled and experienced businessman but some worried that he hadn’t created a notable product or founded a company like many of his industry peers, said Gallo, who recommends buying Palo Alto shares.
Arora made up for it with an ability to spot trends ahead of the curve, Gallo said. That included investing aggressively in a transition from on-premises technology to the cloud and then recognizing early the power of AI.
In his first few years at the company, Arora made numerous acquisitions for a total of about $3 billion, helping Palo Alto penetrate the cloud security space as more businesses were moving their workloads to Amazon Web Services, Microsoft Azure and Google’s cloud.
“Every company wishes they were in Palo Alto shoes, where they could actually offer all these different products,” said Andrew Nowinski, an analyst at Wells Fargo who has a buy recommendation on the stock. “It’s very difficult. You’re not going to see many vendors like Palo Alto.”
With its expansion into identity management, Palo Alto is going big in a space that’s viewed by experts as a key spending area for IT in the coming years.
“You can’t slow down your spending because the hackers aren’t slowing down,” Nowinski said. “That’s your growth driver.”
Ofer Schreiber, senior partner and head of YL Ventures’ Israel office, said Palo Alto has helped take an extremely fragmented market, consisting of lots of point solutions, and created a centralized vendor for clients.
According to a joint report from IBM and Palo Alto printed in January, the common group makes use of 83 other safety merchandise from 29 independent firms.
“From the customer’s perspective, it’s much more convenient dealing with with one vendor with multiple products tightly integrated,” Schreiber stated. “You can’t really be just a one-product company.”
Nonetheless, Arora is in untested waters with CyberArk.
Palo Alto’s stocks dropped on all 5 days following the announcement of the offer. It’s the primary future at Palo Alto that Arora has led a multibillion-dollar acquire, and he now faces the execution demanding situations of integrating 1000’s of unutilized staff.
Analysts at KeyBanc diminished their ranking to the identical of reserve from purchase, due in part to considerations a couple of rarity of “meaningful synergies” within the product choices and a view that buyers would like an “independent vendor solely focused on identity.”
However TD Cowen’s Shaul Eyal nonetheless recommends purchasing the stocks. He stated that what’s made Arora a success is his “relentless focus on execution” and his means of having a bet on sizeable markets the place Palo Alto can briefly scale and transform the chief or runner-up.
That, and his skill to collect.
“It’s all about upsell,” Eyal stated. “Every other second, third, fourth module you’re selling to an existing customer flows straight to the bottom line.”
