02 Jun Former SoftBank Executive Nikesh Arora to Run Palo Alto Networks
Palo Alto Networks Inc. PANW 0.53% on Friday named Nikesh Arora, a former top SoftBank Group Corp. 9984 -0.04% executive, as its next chairman and chief executive, following years of rapid growth for the cybersecurity company.
Mr. Arora will succeed Mark McLaughlin, who joined Palo Alto Networks as CEO in 2011 and took the company public in 2012. He oversaw brisk growth at a time when high-profile cyberattacks pushed corporations to beef up their investments in security software.
In an interview, Mr. McLaughlin said that after nearly a decade of running publicly traded companies, he wants to spend more time with his family. He said he discussed the transition with the board for eight months. He will remain as vice chairman, a “customer-facing” role in which he said he will help with customer advocacy and the company’s relationship with the federal government.
With Mr. Arora, who also will replace Mr. McLaughlin as chairman, Palo Alto Networks gains a CEO with a reputation as a global deal maker.
Mr. Arora was a longtime executive at Alphabet Inc.’s Google, where as chief business officer he oversaw sales, customer service, marketing and tech support.
He pointed to his experience in helping Google build up globally.
“No, I haven’t worked in security,” Mr. Arora said in an interview. “The need here is to lead a team of 5,000 people, shore up our global operations to continue to scale.”
Mr. Arora said it was too soon to get into the specifics of his strategy, but noted that he was attracted to helping companies figure out how to stay secure as they transition to cloud computing. “I think that is a huge opportunity,” he said.
His tenure at Palo Alto Networks begins June 6, the company said. Mr. Arora declined to comment on his compensation.
Mr. Arora said he plans to focus on continuing the company’s current trajectory. “The question is how do we take this from here and 2x or 3x it and continue to scale,” he said.
At SoftBank, where he served as president and operating chief, Mr. Arora shepherded billions of dollars in investments. He had once been considered a successor to the Japanese internet and telecommunications company’s CEO, Masayoshi Son, who had handpicked the Silicon Valley deal maker to replace him. But Mr. Arora faced criticism from some SoftBank shareholders over his investment choices for the company, and he left abruptly in 2016—two years after he was wooed away from Google.
Mr. Arora on Friday defended his investment record. “Of the eight or nine investments I did, six are working really well, one still remains to be seen and two didn’t work. Now that’s called portfolio management.”
Palo Alto Networks sells next-generation firewalls, security products designed to keep malicious software out of corporate networks. When it went public in 2012, annual revenue was $225.1 million. By fiscal 2017, that figure had jumped to $1.8 billion as the company siphoned sales from established vendors such as Cisco Systems Inc. and Check Point Software Technologies Ltd.
However, Palo Alto Networks has consistently run at a loss, in part because of the cost of share-based compensation. Its loss widened to $216.6 million in fiscal 2017 from $192.7 million a year earlier.
The change at the top comes as Palo Alto Networks is looking to acquisitions to maintain its breakneck revenue growth. In March, the Santa Clara, Calif., company spent $300 million on cloud-security company Evident.io. The following month, it bought Israeli cybersecurity startup Secdo Ltd. Terms of that deal weren’t disclosed.
When Palo Alto Networks went public, the shares priced at $42. The stock finished Friday up a half percent at $209.19. For the year, it has surged 44%.
Mr. McLaughlin said the company’s strategy is to invest in its new security platform, for which it hopes other developers will write software—something akin to a Windows operating system but for security software.
Write to Robert McMillan at Robert.Mcmillan@wsj.com and Rolfe Winkler at firstname.lastname@example.org
Appeared in the June 2, 2018, print edition as ‘Cybersecurity Firm Picks New CEO.’