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Palo Alto Networks to purchase IBM QRadar cloud security software assets

Nikesh Arora, CEO and president of Palo Alto Networks, speaking on CNBC’s Squawk Box during the WEF annual meeting in Davos, Switzerland, January 16, 2024.

Adam Galicia | CNBC

Palo Alto Networks purchases cloud security software assets from IBM as part of a broader partnership that will give the cybersecurity firm access to more consultants and a larger customer base.

In a joint press release, the companies said Palo Alto was acquiring IBM’s QRadar cloud software for an undisclosed amount and migrating existing customers to its security platform, Cortex Xsiam. IBM will train more than 1,000 of its consultants on Palo Alto’s products.

Consolidation is accelerating in the security software industry as companies prepare for a wave of attacks driven by artificial intelligence. In March, Cisco has completed the $28 billion acquisition of Splunk, the networking company’s largest-ever deal, buying the leading provider of security information and event management (SIEM) software.

Earlier on Wednesday, two other companies in the SIEM market, Exabeam and Thoma Bravo’s LogRhythm, announced plans to merge.

Palo Alto CEO Nikesh Arora told CNBC his company needs to be better prepared to take on Splunk.

“Obviously, this is just a hotbed of activity in the consolidation of cybersecurity,” Arora said.

Palo Alto and IBM have been working more closely together for months, and Arora said he has spoken with IBM CEO Arvind Krishna about how to advance their partnership. But they both sold SIEM software.

“We were stuck there,” Arora said.

In December, IBM announced that its consulting group would offer Palo Alto’s competing Cortex Xsiam software to clients. IBM will now adopt Cortex Xsiam, as well as Palo Alto’s Prisma Sase 3.0 product set. Palo Alto will integrate IBM’s large Watsonx language models into Cortex Google.

The SIEM category has been around for over 20 years, but Palo Alto just introduced Cortex Xsiam two years ago. Its adoption has been rapid, with more than $90 million in bookings in the most recent quarter, and Arora said the company has taken market share from “everyone.”

For IBM, a more robust suite of contemporary security tools for consulting could help the company achieve its stated goal of mid-single-digit revenue growth for 2024. In the first quarter, revenue rose 3 %, with an increase of 2%. the consulting segment.

Palo Alto is growing much faster than IBM. In the January quarter, revenue jumped 19%. The company will release its results for the latest quarter on Monday.

Palo Alto’s value more than doubled last year and its shares are up 6% in 2024, pushing the company’s market capitalization past $100 billion. The stock rose more than 1% in extended trading. IBM is up nearly 5% this year and is now valued at $154 billion.

The companies said the transaction is expected to be completed by the end of September, subject to regulatory approval and other conditions.

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