The HardenStance Network Security Sales Index (NSSI) · •Juniper is continuing its recovery, with...

Patrick DoneganFounder & Principal Analyst, HardenStance Ltd

The HardenStanceNetwork Security

Sales Index (NSSI)September 2018 Edition

September 11th 2018

Contents3. Objectives of the NSSI

4. The NSSI Methodology

6. Executive Summary

7. Sales figures for Q2 2018 and 12 months to Q2 2018

9. The last eight quarters to June 2018

10. Vendor ranking – Q2 2018 sales

11. Vendor ranking – 12 months sales figures to Q2 2018

12. Vendor ranking – Q2 2018 YoY sales growth

13. Vendor ranking – 12 month sales growth to end June 2018

15. Vendor ranking – Sequential sales growth (Q2 2018 vs Q1 2018)

16. Individual vendor summaries (and some commentary)

26. What’s new from HardenStance?

27. Register to continue receiving the NSSI

29. “About HardenStance” & Disclaimer

2

September 2018

See disclaimer on Slide 29

Objectives Of The NSSI• The HardenStance Network Security

Sales Index (NSSI) tracks the quarterly security sales of eight of the largest vendors of network security hardware and software.

• The NSSI provides an index of customer spending on IT security hardware and software.

• The eight vendors have been selected on the basis of their size, their direct reporting of security sales and established relationships.

3

• The primary goal of the NSSI is to provide a quarterly and annual gauge of aggregate customer demand for network security hardware and software. The secondary goal is to provide high level benchmarking of these eight security vendors against those sales benchmarks.

• Any vendor’s sales performance is in part determined by its profitability goals. The NSSI is focused on reporting, aggregating and benchmarking the high level sales numbers. The most recent profitability numbers are reported.


September 2018

The NSSI Methodology (1/2)The eight vendors featured are:

• Cisco Systems

• Check Point

• Fortinet

• Juniper Networks

• Palo Alto Networks

• Sophos

• Symantec

&

• Trend Micro

4

• Sales numbers are taken from the official earnings releases published by these companies.

• Some security vendors can’t be included in the sample group as they don’t report security sales separately- e.g Arbor Networks (part of NetScout) and F5 Networks.

• The total reported sales for six of the eight vendors are shown throughout. For Cisco and Juniper, just their security sales are shown.


September 2018

The NSSI Methodology (2/2)

5

• The Cisco and Palo Alto Networks financial year runs from August 1 –July 30th. The Sophos financial year runs from April 1st - March 31st.

• The reporting quarters of Cisco, Palo Alto Networks & Sophos are re-labelled throughout for optimal alignment with the calendar based quarterly reporting of other vendors.

• The NSSI depicts what the above three companies report as their Fiscal Year Q4 2018 or Q1 2019 sales as calendar Q2 2018 sales.

• Due to variations in the timings of quarterly reports as stated, the alignment of numbers is imperfect.

• The re-alignment of numbers is necessary to provide the best possible like-for-like aggregate market view from a representative sample of large vendors.

• The eight vendors are diverse in the regions and product markets they serve. The term “network” is used in the broadest sense. Endpoint products feature prominently in the sales of some vendors featured. Network security products feature prominently in the case of others.

• Again, the NSSI’s main goal is to report aggregate demand as reported by some of the largest vendors.


September 2018

Executive Summary For Q2 2018• The eight security vendors generated

total security sales of $4 billion in Q2 2018, representing 10% sales growth over Q2 2017.

• The eight security vendors generated total security sales of $15.4 billion in the 12 months to June 30th 2018, representing 13% sales growth over the year to June 30th 2017.

• Symantec stated on May 10th 2018 that its financial results and forecast may change.

• This hinges on the outcome of an internal investigation that was initiated after concerns were raised by a former employee.

6

• Palo Alto Networks again reported the highest growth in Q2 2018 sales vs Q2 2017 (29%) and the highest growth in 12 months sales to June 2018 vs 12 months to June 2017 (29%). It even reported the highest growth in sequential sales (16%).

• Juniper is continuing its recovery, with quarterly sales up 16% YoY and 12 month sales up 3%.

• At $658 million vs $627 million in the latest quarter, Palo Alto Networks has overtaken Cisco in security sales.


• Cisco Systems & Palo Alto Networks sales numbers cover the twelve months - four quarters - from August 1st 2017 to July 28th 2018 whereas the other six vendors’ sales numbers are for July 1st 2017 to June 30th 2018.

• All figures throughout this edition are GAAP except the Q2 2018 numbers for Trend Micro which are Non-GAAP.

September 2018

0

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Q2 2017 Q2 2018

Rev

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$ m

illio

ns)

Juniper Networks Symantec Check Point Sophos

Cisco Systems Trend Micro Fortinet Palo Alto Networks

Sales For Q2 2018

7

Q2 2018 sales by the eight vendors were $4.0 billion, up 10% on Q2 2017



$3.6 billion

$4.0 billion

• Symantec Corp stated on May 10th 2018 that its financial results and forecast may change based on the outcome of an internal investigation that was initiated after concerns were raised by a former employee.


September 2018

Sales For The 12 months to June 2018

8

• The eight security vendors generated total sales of $15.4 billion in the year to June 30th 2018, representing 13% sales growth over the year to June 30th 2017.

• Palo Alto Networks reported easily the fastest sales growth for the latest reporting period, up 29% over the 12 months to June 30th 2017.

* Cisco Systems & Palo Alto Networks sales numbers cover the twelve months - four quarters - from August 1st 2017 to August 28th 2018 whereas the other six vendors’ sales numbers are for July 1st 2017 to June 30th 2018.


* Symantec Corp stated on May 10th 2018 that its financial results and forecast may change based on the outcome of an internal investigation that was initiated after concerns were raised by a former employee.

All figures throughout this edition are GAAP except the Q2 2018 numbers for Trend Micro which are Non-GAAP.

September 2018

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12 months to June 2017 12 months to June 2018

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Juniper Networks Symantec Check Point Sophos

Cisco Systems Trend Micro Fortinet Palo Alto Networks

$15.4 billion

$13.5 billion

The Last Eight Quarters To June 30th 2018

9See disclaimer on Slide 29

• Cisco Systems & Palo Alto Networks sales numbers cover the twelve months - four quarters - from August 1st 2017 to July 28th

2018 whereas the other six vendors’ sales numbers are for July 1st 2017 to June 30th 2018.



September 2018

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Q3 2016 Q4 2016 Q1 2017 Q2017 Q3 2017 Q42017 Q1 2018 Q2 2018

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Juniper Networks Symantec Check Point Sophos Cisco Systems Trend Micro Fortinet Palo Alto Networks

$3.6billion

$4.0 billion

Q2 2018 Ranking By SalesVendor Ranking

Vendor Q2 2018 sales ($ millions)

#1 Symantec $1,156

#2 Palo Alto Networks* $ 658

#3 Cisco* $ 627

#4 Check Point $ 468

#5 Fortinet $ 441

#6 Trend Micro** $ 362

#7 Sophos $ 176

#8 Juniper $ 80




September 2018


12 Months to June 30th 2018 Ranking By Sales

Ranking Vendor12 months sales

to 30-6-18 ($ millions)

#1 Symantec $4,827

#2 Cisco* $2,353

#3 Palo Alto Networks* $2,273

#4 Check Point $1,881

#5 Fortinet $1,631

#6 Trend Micro** $1,410

#7 Sophos $674

#8 Juniper $311



** All figures throughout this edition are GAAP except the Q2 2018 numbers for Trend Micro which are Non-GAAP.

September 2018

* Cisco Systems & Palo Alto Networks sales numbers cover the twelve months - four quarters - from August 1st 2017 to July 28th 2018 whereas the other six vendors’ sales numbers are for July 1st 2017 to June 30th 2018.

Year On Year Quarterly Sales GrowthVendor Ranking

Vendor Q2 2018 YoY sales growth

Q2 2018 sales

($ millions)

Q2 2017 sales

($ millions)

#1 Palo Alto* +29% $658 $509

#2 Sophos +24% $176 $141

#3 Fortinet +21% $441 $364

#4 Juniper +16% $80 $69

#5 Trend Micro** +13% $362 $319

#6 Cisco* +12% $627 $558

#7 Check Point +2% $468 $459

#8 Symantec -2% $1,156 $1,175




September 2018


12 Months Sales Growth To June 30th 2018

June 2018

ranking

Vendor Growth in the year to June 2018 vs the year to June

2017

12 months sales to 30-6-18

($ millions)

12 months sales to 30-6-17

($ millions)

#1 Palo Alto* 29% $2,273 $1,762

#2 Sophos 24% $674 $554

#3 Fortinet 18% $1,631 $1,385

#4 Symantec 12% $4,827 $4,310

#5 Trend Micro** 10% $1,410 $1,277

#6 Cisco* 9% $2,353 $2,153

#7 Check Point 4% $1,881 $1,808

#8 Juniper 3% $311 $ 301




September 2018


Sales Growth in the Twelve Months to June 2018


* vs 12 months to June 2017



September 2018


3%

4%

9%

10%

12%

13%

18%

24%

29%

0% 5% 10% 15% 20% 25% 30% 35%

Juniper

Check Point

Cisco

Trend Micro

Symantec

NSSI Average

Fortinet

Sophos

Palo Alto Networks

Sequential Sales Growth Q2 2018 vs Q1 2018Vendor Ranking

Vendor Q2 2018 sequential

sales growth

Q2 2018 sales

($ millions)

Q1 2018 sales

($ millions)

#1 Palo Alto* +16% $658 $567

#2 Fortinet +11% $441 $399

#3 Juniper +9% $80 $73

#4 Cisco* +8% $627 $583

#5 Check Point +4% $468 $452

#6 Trend Micro** +3% $362 $351

#7 Sophos 0% $176 $176

#8 Symantec -5% $1,156 $1,222




September 2018

* Cisco Systems & Palo Alto Networks sales numbers cover the twelve months - four quarters - from August 1st

2017 to July 28th 2018 whereas the other six vendors’ sales numbers are for July 1st 2017 to June 30th 2018.

Individual Vendor Summaries

16

Check Point

17

• Q2 2018 sales were $468 million.

• #4 by Q2 2018 sales.

• #4 by sales for the 12 months ending June 30th 2018 ($1,881 million).

• #7 by Q2 2018 sales growth vs Q2 2017 (+2%).

• #7 by 12 month sales growth to end June 2018 vs 12 months sales to end June 2017 (+4%).

• #5 by sequential sales growth in Q2 2018 vs Q1 2018 (4%)

• Profitability in Q2 2018: GAAP operating income of $224 million.


September 2018

428

487

435

459 455

506

452468

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Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Revenues (

$ m

illions)

Cisco Systems

18

• Q2 2018 security sales of $627 million.

• #3 by Q2 2018 sales.

• #2 by sales for the 12 months ending June 30th 2018 ($2.4 billion).



• #4 by sequential sales growth in Q2 2018 vs Q1 2018 (+8%).

• Profitability: Cisco reports sales of security solutions but not profitability.

• Cisco and Palo Alto Networks report for the quarter ending July 28th 2018 whereas most vendors report for the quarter ending June 30th 2018.


September 2018

540 540

528 527

558

585

558

583

627

460

480

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540

560

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620

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Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Revenues (

$ m

illions)

Fortinet

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• Q2 2018 sales were $441.3 million.

• #5 by Q2 2018 sales.




• #2 by sequential sales growth in Q2 2018 vs Q1 2018 (11%).

• Profitability in Q2 2018: GAAP operating income of $50.7 million.


September 2018

317

363

341

364 374

417399

441

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Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Revenues (

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illions)

Juniper Networks

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• Q2 2018 security sales: $79.5 million.

• #8 by Q2 2018 sales.

• #8 by sales for the 12 months ending June 30th 2018 ($311 million)


• #8 by 12 month sales growth to end June 2018 vs 12 months sales to end June 2017 (3%).


• Profitability: Juniper reports sales of security solutions but not profitability.


September 2018

86

81

66 69

71

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Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

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Palo Alto Networks


• #2 by Q2 2018 sales.

• #3 by sales for the 12 months ending June 30th 2018 ($2,273 million)



• #1 by sequential sales growth in Q2 2018 vs Q1 2018 (+16%)

• Profitability in Q2 2018:GAAP net loss of $2.3 million.

• Cisco and Palo Alto Networks report for the quarter ending July 28th 2018

whereas most vendors report for the quarter ending June 30th 2018.


September 2018

398423 432

509 506

542567

658

0

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Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

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Palo Alto Networks overtakes Cisco in quarterly security sales

22

150

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Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2017 Q3 2017 Q42017 Q1 2018 Q2 2018

Rev

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$ m

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ns)

Palo Alto Networks

Cisco $627million

$658 million


September 2018

Sophos

23


• #7 by Q2 2018 sales.

• #7 by sales for the 12 months ending June 30th 2018 ($674 million)




• Profitability in Q2 2018: GAAP operating profit of $6.2 million.


September 2018

127 130135

138 142

156

166

176 176

0

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Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

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s (

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Symantec

24

• Q2 2018 sales were $1,156 million.

• #1 by Q2 2018 sales.


• #8 by Q2 2018 sales growth vs Q2 2017 (-2%).


• #8 by sequential sales growth in Q2 2018 vs Q1 2018 (-5%).



September 2018

979

1041

1,115

1,175

1,2401,209 1,222

1,156

0

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800

1000

1200

1400

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Revenues (

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illions)

Trend Micro

25


• #6 by Q2 2018 sales.

• #6 by sales for the 12 months ending June 30th 2018 ($1,410 million)




• Profitability in Q2 2018: Operating income of $78.3 million.

* Q2 2018 Trend Micro figures are Non-GAAP


September 2018

316

332

310

318.5

334

363

351

362

280

290

300

310

320

330

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370

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Revenues (

$ m

illions)

What’s New From HardenStance?

26

HardenStance will be attending the following events in 2018

- Palo Alto Networks “IGNITE”, October 8th -10th 2018

- SDN World Congress, October 8th – 12th 2018

- Nokia’s Analyst event, November 5th – 7th 2018

- BlackHat Europe, December 3rd – 6th 2018

For more details see here:

http://www.hardenstance.com/events-where-hardenstance-is-speaking-or-attending/

The following cybersecurity insights

have recently been made available by

HardenStance:

- AMTSO’s Malware Testing Standard

- Managed Security: New Opportunities for Telcos

- 5G Security to Drive Enterprise Investment

- NetSecOPEN faces St Augustine’s Test

- Cyber Security Innovators: KPN

- Cybertech: Israel’s Start-Up Scene

- Cyber Security Services For Large Enterprises –Opportunities For Operators

For more details see here:

www.hardenstance.com


September 2018

http://www.hardenstance.com/events-where-hardenstance-is-speaking-or-attending/

http://www.hardenstance.com/

Register to receive access to new HardenStance content as soon as it’s published

27

Register here to receive email notifications of new HardenStance content


September 2018

http://www.hardenstance.com/research-white-papers/

About HardenStance

28

• HardenStance Ltd is a market research company delivering trusted research, analysis and insight in telecom and IT security.

• The company was founded in January 2017 by Patrick Donegan.

• Patrick spent more than ten years from 2006 – 2016 as a telecom market research analyst for Heavy Reading, the latter three as Chief Analyst.

• Find out more and subscribe free of charge to future editions of the HardenStance NSSI www.hardenstance.com

• Contact: [email protected]


September 2018

http://www.hardenstancecom/

HardenStance Ltd Disclaimer

29

• HardenStance is a market research company delivering best in class research, analysis and insight in IT and telecom security.

• Every effort has been made to ensure the accuracy of the information in this report and explain how discrepancies in the financial reporting cycles of different vendors have been reconciled.

• HardenStance is not qualified to undertake rigorous financial analysis or make investment recommendations. It is not the objective of this report to do that.

• You must not rely on the information in this report as an alternative to financial advice from an appropriately qualified financial professional.

• HardenStance Ltd will not be liable to you in respect of any business losses, including without limitation loss of or damage to profits, income, revenue, use, production, anticipated savings, business, contracts, commercial opportunities or goodwill arising from your consumption of this report.

September 2018

The HardenStance Network Security Sales Index (NSSI) · •Juniper is continuing its recovery, with...

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