Palo Alto Networks Abdicates

Is dethroning next?

It came as a surprise to many that Palo Alto Networks, the largest vendor by revenue and market cap in the cybersecurity industry, had made a choice to withdraw from exhibiting at the 2024 RSA Conference in San Francisco.

Every one of the 400+ vendors that exhibited this past week had the same choice to make. Should they invest all that money on booth space, booth furniture, flying people in, putting them in $800/night hotels, and other marketing costs? These are marketing expenses and thus are subject to ROI calculations. Will the $100K in expense lead to $200K in revenue? Often the answer is a resounding “No,” and the decision is to not exhibit. After a tough year for many venture funded companies, over 30 pulled out from RSAC this year. That may well be the wise choice.

But PANW is not a struggling vendor under pressure from its venture investors to extend runway. Its $96 billion market cap makes it the most valued cybersecurity pure-play. It has $7.5 billion in revenue and $1.1 billion in EBITA.

Palo Alto Networks is the undisputed leader of this industry and as such should demonstrate that leadership at the biggest conference of the year. They are not a mid-tier player like Qualys which pulled out of the conference years ago and spent all the money on a big rooftop party at the conference. They are more akin to Check Point Software which pulled out around 2006. Which soon regretted that decision and came back.

Palo Alto did not hurt the RSA Conference by pulling out. By all accounts this was the most upbeat event since pre-Covid days. Wiz’s $1 billion in new funding drove people to Wiz’s booth to see what all the excitement was about. Crowdstrike, the #2 vendor by market cap was there in force. Its CEO, George Kurtz even keynoted.

Like a petulant child Palo Alto tried and failed to gain attention by attempting to upstage the entire conference. They bought billboards on the way into the city. They hired Keanu Reeves for an 8 second video clip. They took out space in an adjoining hotel. They paid for a drone display on the Embarcadero but failed to tell anyone about it (they posted a video though.) They had their own virtual event on Tuesday. They inexplicably went all-in on AI Security, whatever that is. Maybe it was an attempt to boost the stock price? How did that work out?

Apparently not well enough to turn around Wall Street’s recent dissatisfaction with PANW.

As near as I can tell the decision to abandon its leadership role at RSAC was made a year ago. It may prove to be one of the biggest blunders ever by a major player. (The biggest was, of course, Symantec acquiring Veritas.)

I think that, unlike a struggling startup, the largest and arguably the most successful vendor in cybersecurity should shoulder its responsibility and celebrate the industry. Palo Alto grew on the back of this conference. Founder Nir Zuk showed up in the early years and presented from their 20X20 booth. People mobbed the booth to hear his message. The company obviously values the crowd and focus that the conference brings to San Francisco. Spending lavish amounts of money to try to capture attention, while simultaneously thumbing its nose at the conference that thousands pay to attend and hundreds choose to exhibit at is an abdication of Palo Alto’s position in our industry.

Leaders come and go. CA, Bluecoat, Symantec, McAfee, all had their day in the sun. They also failed to take on the mantle of leadership and eventually lost their way pursuing misguided strategies. Let’s hope Palo Alto Networks sees the error it made and returns to RSAC 2025 in force.