The vendor saw strong growth of 46 percent in annual recurring revenue in 2024 and sees a massive ‘long-term’ opportunity for its channel partners, Cato Co-founder and CEO Shlomo Kramer tells CRN.
Cato Networks achieved annual recurring revenue of $250 million by the end of 2024 thanks to strong demand for its secure access service edge (SASE) platform, with ARR rising 46 percent from a year earlier, according to Cato Co-founder and CEO Shlomo Kramer.
In an interview with CRN, Kramer said that the 46-percent ARR growth “means that we are the fastest-growing SASE company in the market, we believe.”
[Related: 10 SASE Companies Making Moves In 2024]
The milestone also came during a year when Cato was elevated into the “leaders” quadrant in Gartner’s Magic Quadrant ranking for single-vendor SASE platforms, up from its ranking in the “challengers” quadrant the year before. Along with Cato, Netskope also moved up to the top quadrant in the influential ranking, joining Palo Alto Networks.
“Single-vendor” SASE offerings provide both networking capabilities, chiefly SD-WAN, combined on a unified platform with security service edge (SSE) capabilities and delivered using a cloud-focused architecture, according to Gartner. SASE has seen rising demand as a go-to approach for enabling secure access to applications and resources for remote and hybrid teams.
For Cato, the latest growth milestone builds on the company’s announcement of reaching $200 million ARR in July 2024, and comes as Cato reaches its 10th year in business. Cato was co-founded in 2015 by Kramer, who formerly was a co-founder of firewall pioneer Check Point Software Technologies and web application firewall firm Imperva.
The demand from customers and partners comes in response to Cato’s development of a “true” SASE platform that runs on the company’s own global network, with more than 85 points-of-presence in total, Kramer said.
Looking ahead, Cato plans to double down on channel partners, he said, with newly hired Channel Chief Karl Soderlund now on board. Soderlund, who formerly helmed partner programs at Zscaler and Palo Alto Networks, was hired earlier this month to succeed longtime channel executive Frank Rauch in the role at Cato.
For partners, SASE is ultimately “a long-term generational shift that is going to re-architect and redistribute many tens of billions of dollars,” Kramer said.
“For the channel, there’s ongoing opportunity for upsell [to] existing customers and in segments that would never consider these types of capabilities before — because they didn’t have the ability to deploy that,” he said. “With us, because we are the infrastructure, it’s very, very easy.”
Cato Networks is also reportedly eyeing an initial public offering, following its $238 million funding round at a valuation of more than $3 billion in 2023. Kramer declined to comment on the reported IPO aspirations but said “we have many options for funding” going forward.
“Our real goal is to be a large, independent company that leads the SASE market. Funding is a milestone on that road,” he said.
What follows is an edited portion of CRN’s interview with Kramer.
How do you see Cato’s opportunity looking ahead?
This is just the beginning of the market. When you look at the percentage of enterprises that have started deploying SASE, it’s in the low teens. And they have not fully deployed SASE, they just began the process. Almost 50 percent say they are going to deploy SASE in the next 36 months. The part [of the market] that feels less compelled to do anything is shrinking. And I believe that eventually it’s going to shrink to a very small percentage. Because SASE, essentially, is the third generation of network security. It’s the platform — much like CrowdStrike on the endpoint or Wiz on the cloud — it’s the platform on the network that replaces appliances and cloud proxies to the next generation [architecture].
So this is, for the channel, a long-term generational shift that is going to re-architect and redistribute many tens of billions of dollars. Gartner estimates that [reaching] almost $30 billion by 2028. So it’s a huge opportunity, and Cato is a leader in the SASE market. We actually invented the SASE market. And in the last Magic Quadrant from Gartner, we are one of the three leaders. [It’s a] great position to go into the renewal cycles, refresh cycles of organizations that are looking to modernize their network, modernize their security, modernize the remote access and replace second-generation players.
What is Cato’s biggest differentiator in SASE at this point?
We’ve built the platform from the ground up. So we have a real platform. Our competitors are generation two companies that have cobbled together an integrated solution. A platform has a huge value. It has a huge value because it’s more secure. Security is a data problem, and we can provide better security because our data is converged. It has a completely different operational cost. You can do with three people what you used to do with 30 people. It has a completely different agility to address the requirements of digital business.
What is the channel opportunity for working with Cato, and what’s the impact of hiring Karl Soderlund as channel chief?
This is a huge market, and the only way to address it — and we knew it from day one — is through partners. … The SASE market has started from the mid-enterprise, because that’s where the pain is most acute, and the buying centers of network and network security are more aligned. [Now] it’s going up-market to larger and larger enterprises. And we are doing the same with our partners. We are taking them up-market. And Karl is a great addition to the team to lead the charge on that. …
For the channel, there’s ongoing opportunity for upsell [to] existing customers and in segments that would never consider these types of capabilities before — because they didn’t have the ability to deploy that. With us, because we are the infrastructure, it’s very, very easy. We are seeing huge success with the launch of digital experience monitoring and IoT security. These are things that a true platform provides, and right now we are the only true platform for SASE.
How does your network of points-of-presence (PoPs) make a difference on SASE?
We have a true SASE network. We have 85 PoPs around the world. It is both providing us with the cost flexibility to become an 80-percent plus gross margin type of company. When you look at Google Cloud or AWS, these are data centers and networks. So they have very few, very big locations — nowhere near 85 PoPs that we have today — and [we’re] growing every quarter.
