Wherever there's a cyber threat, Unit 42 is ready to respond.
The preceding may sound like the tagline for an upcoming Netflix series, but this is as real as it gets.
Unit 42 is Palo Alto Networks (PANW) threat intelligence and security consulting team.
The group is made up of cybersecurity researchers and industry experts who use data collected by the company's security platform to discover new cyber threats, such as new forms of malware and malicious actors operating worldwide.
The FBI said that Unit 42 has helped solve multiple cybercrime cases, such as the Mirai Botnet and Clickfraud Botnet cases, the LuminosityLink RAT case, and assisted with “Operation Wire-Wire” to name just a few.
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In 2018, Unit 42 discovered Gorgon, a hacking group believed to be operating out of Pakistan and targeting government organizations in the United Kingdom, Spain, Russia, and the U.S.
"Cybersecurity can often feel like an endless battle between attackers and defenders," the group said in a recent incident report. "At Unit 42, we believe intelligence, insight, and preparation still gives defenders the edge."
The report said that in 2023, the most damaging threat actor was a unit called Muddled Libra, which was described as "a sophisticated, tenacious, and damaging adversary."
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Palo Alto CEO says threat landscape challenges customers
"Their ransom demands are very large, often in the tens of millions of USD," the report said. "And, of course, they demand payment in cryptocurrency."
Last year, Unit 42 said that it worked more than twice as many cases where business disruption was one of the effects clients experienced.
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"Almost 35% of that casework involved business disruption of some kind," the report said. "Usually, it was due to the effects of ransomware or data destruction malware."
And, increasingly, this disruption is publicly visible, the group said.
"There’s a clear trend of greater public awareness of large-scale cybersecurity incidents," the report said. "Certain threat actors take advantage of this publicity to pressure their victims."
Founded in 2005, Palo Alto Networks offers an enterprise cybersecurity platform that provides network security, cloud security, endpoint protection, and various cloud-delivered security.
"The threat landscape continues to challenge our customers with increasing scale and sophistication of attacks," Nikesh Arora, chairman and CEO, told analysts during the company's second-quarter earnings call in February. I'm personally getting calls from CEOs and members of boards who have had bad incidents, as well as those who have seen their peers adversely impacted."
"We're increasingly focusing on working with companies impacted by breaches, an important commitment as we continue to be the leader in this space," he added.
Arora said that the company would accelerate cybersecurity "platformization" with promotions and incentives to bundle its cybersecurity products together.
"Our leadership across all of our three platforms and growing cross-platform adoption puts us in a strong and unique position," he said. "With this backdrop, we are activating our accelerated platformization and consolidation strategy, as well as our AI leadership strategy."
Palo Alto Networks also lowered its revenue and billings guidance for fiscal year 2024.
Analyst: tactical caution 'warranted'
The company said that it expected total billings in the range of $10.1 billion to $10.2 billion, down from $10.7 billion to $10.8 billion, and revenue from $7.95 billion to $8 billion, down from $8.15 billion to $8.2 billion.
Investors did not react well to the reduced guidance, and Palo Alto Networks saw its shares tumble 25% in the days following the announcement.
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The company is scheduled to report third-quarter earnings on May 20. Analysts expect Palo Alto Networks to earn $1.25 per share on $1.97 billion in sales.
Analysts at Evercore ISI mentioned platformization in a research note issued on Tuesday, May 14.
The firm lowered its price target to $385 from $405 and added Palo Alto Networks to Evercore's "Tactical Underperform" list ahead of third-quarter results.
After conducting a quarterly survey involving 15 large partners, the firm said the data suggests that the ecosystem maintains a positive long-term outlook, with continued optimism regarding 12-month revenue growth acceleration.
However, Evercore said that there was some moderation in quarter-over-quarter pipeline momentum and noted that the platformization strategy received mixed reviews.
The firm believes tactical caution into the third-quarter print is "warranted" as it is taking a somewhat more cautious stance, although it maintained an outperform rating on the shares.
“It's unclear to us how much visibility management currently has, considering the complexity of all the moving parts,” Evercore said. “Investor confidence in meeting their billing targets hinges on a significant acceleration in the 2HFY25 and through FY26, which heavily depends on the success of this strategy.”
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