Palo Alto Networks Seeing ‘Very Large’ Wins After IBM QRadar Deal: CEO Nikesh Arora

The results so far from the cybersecurity vendor’s acquisition of the QRadar SaaS business — and partnership with IBM around migrating customers to XSIAM — ‘couldn't have been better,’ Arora told analysts during the company’s quarterly call Thursday.

Palo Alto Networks has had a “spectacular” partnership with IBM following the cybersecurity vendor’s acquisition of the IBM QRadar SaaS business — helping to deliver on the goal of driving customers to the company’s XSIAM security operations platform, Palo Alto Networks CEO Nikesh Arora told analysts during the company’s quarterly call Thursday.

The cybersecurity giant closed on its $500 million acquisition of IBM’s QRadar SaaS business in September 2024, and the company has been heavily focused on enabling customer migrations to its Cortex XSIAM (extended security intelligence and automation management) platform from QRadar.

As Palo Alto Networks had hoped, IBM has been supportive in helping to migrate customers to XSIAM, which helped to bolster Palo Alto Networks’ financial results during its latest quarter, Arora said during the call with analysts.

All in all, the “inroads and the partnership that IBM had with many of these customers has translated into very, very large opportunities for us,” he said. “So it couldn't have been better.”

Arora pointed to one deal closed during the vendor’s fiscal second quarter, ended Jan. 31, which saw annual recurring revenue increase by five times at a financial services firm that had been a QRadar customer. The bank ended up closing on a “significant XSIAM deployment” with Palo Alto Networks during the quarter, he said.

Arora made the comments as Palo Alto Networks disclosed the second quarter of financial results that includes the impacts of owning IBM’s QRadar SaaS assets.

For Palo Alto Networks’ fiscal second quarter, revenue reached $2.26 billion, up 14 percent from the same period a year earlier. That was above the $2.24 billion in quarterly revenue that Wall Street analysts had been expecting.

Palo Alto Networks’ stock price was down 5.4 percent to $191 a share in after-hours trading Thursday.

XSIAM And Agentic AI

XSIAM, which aims to offer an AI-powered alternative to traditional SIEM (security information and event management), was a key contributor during the quarter and continues to be “one of the fastest-growing products in cybersecurity,” Arora said.

There’s no reason to expect a slowdown on XSIAM anytime soon, either, as new applications with complex security needs, such as agentic AI tools, come onto the market, he said.

“In XSIAM, we see all the [application] data — so we expect we will start seeing agentic activity in XSIAM,” Arora said.

Palo Alto Networks also expects to find a significant opportunity to build its own agentic-powered detection, remediation and management capabilities within XSIAM, he said.

Meanwhile, Palo Alto Networks’ push for “platformization” — a strategy to accelerate consolidation on its security platform that began one year ago — continues to catch on with customers as the company landed 75 new platformization deals during its recent quarter, according to Arora.

“We made considerable progress in platformization, allowing us to outperform both our top- and bottom-line expectations for this quarter,” he said during the call with analysts Thursday.