Steep Increase in Global Network Security Market Reaches $6.4 Billion, Propelled by Cloud Technologies and AI Advancements
In the dynamic landscape of network security, the second quarter of 2025 has proven to be a significant milestone. The market is projected to eclipse $26 billion by the end of the year, reflecting high single-digit growth.
One standout performer in this period is Palo Alto Networks. The company distinguished itself in cloud- and software-based network security, recording a 35% increase in Annual Recurring Revenue (ARR) and significant client transitions. This growth was driven by the adoption of AI-aware security elements like the Prisma Access Browser, which addresses AI-agent risks, and a shift towards identity- and usage-based billing.
Palo Alto Networks' growth story continues with their planned acquisition of CyberArk, a move that integrates identity security and is expected to contribute to strong Security Service Edge (SSE) and Application Delivery Controllers (ADC) revenue growth.
The expansion in the network security market was primarily driven by double-digit gains in SSE and ADC. SSE grew by 19% in the same period, while ADC surged by 24%. Within Application and Security Services (AS&D), virtual ADC revenue jumped 49 percent Year-over-Year (Y/Y), and SaaS Web Application Firewall (WAF) accelerated by 21 percent within AS&D. The overall market grew by 8%, while virtual firewalls climbed by 27%.
These trends underscore the shift towards cloud- and software-delivered controls, as organizations recalibrate their hardware footprints and embrace cloud application-centric architectures. In fact, hardware appliances are expected to decline by 2 percent in 2025. Conversely, virtual and SaaS-based Network Security solutions captured 78 percent of new spend.
Enterprise buyers are rewarding vendors that integrate AI-aware inspection and consolidate management consoles, contributing to the market's growth. In Q2 2025, Global Network Security revenue reached $6.4 billion, growing 8% year-over-year.
Mauricio Sanchez, Sr. Director, Enterprise Security and Networking at Dell'Oro Group, commented on the trends, stating, "The shift towards cloud- and software-delivered controls is evident in the market trends. Organizations are embracing cloud application-centric architectures, and this trend is set to continue in the coming years."
As the network security market continues to evolve, it's clear that companies like Palo Alto Networks, with their focus on AI-aware security and consolidated platforms, are well-positioned to lead the way.
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