Palo Alto plots $175m IPO

Partner hopeful decision to go public could release more funds for the channel

Next-generation firewall vendor Palo Alto is looking to kick-start the next phase of its development with a $175m (£110.5m) initial public offering (IPO).

In an S-1 filing, Palo Alto said Morgan Stanley, Goldman Sachs and Citigroup will act as lead book-running managers for the offering. It did not indicate how many shares would be put up for sale, or their potential price range.

Founded in 2005 by a group of former NetScreen executives, Palo Alto doubled revenue to $118.6m in its fiscal 2011.

As of 31 January, the vendor – which shot to prominence with its application-aware firewalls – has amassed more than 6,650 customers in 80 countries.

Barrie Desmond, group marketing director at Exclusive Networks, which was appointed as Palo Alto's first distributor in 2008, said the move could mean more funds for the channel.

"Partner acquisition and investment in programmes is a natural next step for them and this will help them in this endeavour," he said.

Palo has harboured IPO plans for some time and recently brought in a new CEO-CFO combo in the form of ex-VeriSign boss Mark McLaughlin and former Aruba CFO Steffan Tomlinson.

Although its bottom line is improving, the vendor still posted losses of $12.5m last year, compared with $21.1m for 2010.

Desmond praised Palo management's commitment to retaining the firm's independence, rather than selling up at the first opportunity.

"All credit to them. They managed to keep true to their word and build a global company in a very competitive space with some radical technology," he said.