Cato Claims Record Financial Growth

Privately held Cato Networks has revealed financial results that validate the secure access service edge (SASE) strategy as central to enterprise cloud deployment — and signal the vendor’s intent to lead in that market segment, perhaps as a public entity.

In a statement today, Cato said bookings in 2020 exceeded 200% for the fourth year in a row and that larger enterprises than ever have engaged its services. These included a Fortune 500 grocery company that replaced its 500-store MPLS network with Cato; a car rental company that deploys Cato to interconnect over 1,000 sites; the 40,000-employee spinoff of an automotive parts manufacturer that adopted Cato for its new global network; and a global construction business that opted for Cato to replace a legacy of 1,200-plus sites.

All this tallies with Futuriom’s research, which points to a growing interest in adopting software-defined wide-area networking (SD-WAN) — Cato’s fundamental technology proposition — as the basis for improved security, better management and network agility, bandwidth optimization/cost savings, streamlined branch-office setup, and faster cloud applications performance.

Companies looking to establish all these improvements without the hassle of building their own SD-WAN networks from scratch are increasingly turning to network-as-a-service (NaaS) offerings from the likes of Cato and Aryaka Networks, to name just two. Further, the trend should continue to grow energetically, as shown in Futuriom’s 2021 SD-WAN Managed Services Survey, in which most respondents reported keen interest in SD-WAN managed services, as shown in the chart below:

Remote Networking Credited for Growth

Cato attributed part of its sizable growth last year to the remote-work trend driven by the COVID-19 pandemic. The vendor said remote and mobile use of its network grew 500% in 2020, as over 200,000 users logged on remotely for work-from-home (WFH). As a result, the company expanded its points of presence (PoPs) worldwide by eight, for a total of over 60 locations today. Here again, SD-WAN enables customers to avoid the backhaul requirements of traditional virtual private networking (VPN) connections.

“SASE has become the de facto standard for building the secure network of the digital business. Cato strongly benefitted from this trend that accelerated due to the global pandemic,” stated Shlomo Kramer, Cato’s CEO and co-founder, in today’s prepared announcement.

Cato Cites Channel and New Features

Cato pointed to its channel partnerships as a solid growth indicator. Last year, the number of partners grew by 255%, and the number of bookings nailed down by channel partners grew by 240%.

Part of Cato’s attraction to partners may be its sharpened focus on extending its network to incorporate and support third-party platforms and tools. In December 2020, for instance, the vendor announced an application programming interface (API) that can initiate management of Cato’s services from third-party security information and event management (SIEM) products.

This kind of integration is essential to Cato, since its competitors feature a range of gateways and links to third-party gear. Aryaka, for instance, supports solutions from an ecosystem of technology partners that includes Check Point Software Technologies (CHKP), Palo Alto Networks (PANW), and Zscaler (ZS), among others.

Will Cato Go Public?

Over the last year, Cato has made a habit of declaring its financial milestones. The last such announcement in November 2020, boasted of the vendor’s reaching a $1 billion valuation prior to the addition of $130 million in venture funding (the vendor’s total raised is now $332 million).

This, coupled with the latest news, hints that Cato may be flirting with a public offering or merger. After all, M&A has been a trend in the SD-WAN space, with CloudGenix's purchase by Palo Alto Networks and Silver Peak’s acquisition by HPE last year both illustrating the trend.

Cato won’t comment on any of this except to say that management will consider all options and act when the time is right. Based on the latest figures out of Cato, perhaps that time is imminent.