Gigamon Enters NFV Arena

Yesterday Gigamon (NASDAQ: GIMO) reported continued business momentum with 3Q revenues up 47% YoY, representing three straight quarters of accelerating revenue growth. Pretty bullish stuff, especially against a somewhat anemic backdrop for other security players.

To that point of divergence, CEO Paul Hooper said:

Organizations are seeking out platforms rather than point products to address the challenges of tomorrow. Security solutions that will take share and capture budgets in the future require pervasive visibility to information in motion. As a result, visibility platforms are now seen as a pre-requisite for detection and protection solutions, and our platform is the clear leader in the visibility market delivering tangible value for our customers and our shareholders.
NFV Monitoring Deal

As we've discussed on the blog before, there a number of public data points that suggest Gigamon and RADCOM (NASDAQ: RDCM) are partnering to deliver NFV cybersecurity solutions.

[1] Gigamon announced a deal with Amazon Web Services in May 2016 for network visibility solutions. That deal kicks in next month in November 2016.

[2] AT&T publicly announced RADCOM as a key vendor for its NFV initiatives, in particular virtual probes for service assurance.

[3] AT&T and AWS announced a partnership in October 2016, which is centered on Internet of Things and security applications. The relationship will leverage AT&T's new cybersecurity architecture, Threat Intellect.

[4] Gigamon announced it won a Tier-1 CSP for NFV who we believe is AT&T.

Turning to the second of the three growth segments, mobility. This quarter show a significant milestone for us after a thorough evaluation one of the three largest mobile service providers in the U.S. has started the deployment of our visibility platform in support of their next generation network function virtualization architecture or NFV. We pleased to see the first of what we believe to be a number of orders, as they broaden their virtualized infrastructure and deploy our visibility solution to support their expanding deployment.

[5] Threat Intellect is focused on threat detection. For that, visibility and packet inspection are needed. That fits into exactly into Gigamon and Radcom's core competencies.

[6] Gigamon will be enhancing and extending its product solutions for implantation into other public cloud vendors like Microsoft Azure and Google Cloud in 2017. It appears likely that RADCOM will go along for the ride into the cloud Infrastructure as-a-Service ("IaaS") market. Huge implications for growth.

Conclusion

Given the acceleration in Gigamon's business and Tier-1 NFV win in 3Q [after many quarters of sales discussions], it appears likely to us that RADCOM will also announce another product extension into AT&T on November 1. This is incremental to the "high seven digit" deal discussed on the 2Q earnings call, and another new NFV category.

We think the RADCOM 3Q earnings release on November 1, and Needham & Company Next Gen Storage Conference the next day in New York City will be the big coming out party for new product announcements that RADCOM has been hinting at in previous quarters.

These are big, game-changing opportunities for a $225 million market company with a $30 million revenue run-rate.

Disclosure: I own RDCM shares and added more today.