How ArcSight Plans to Stay Ahead of the Curve

NEW YORK -- Up-and-coming security specialist ArcSight(ARST Quote) outlined plans to boost its operating margin and continue the company's growth trajectory during its first-ever analyst day Tuesday.

"We do feel very bullish about the growth opportunities in front of us," said Stewart Grierson, the ArcSight CFO, during his presentation. The company, he said, has experienced rapidly expanding operating margins in recent years, growing from 2% in fiscal 2007 to 14% in fiscal 2009. "Although fiscal year 2010 is an investment year [for ArcSight], we feel confident that we can achieve 18% to 20% operating margin by fiscal 2012."

ArcSight posted revenue of $136.2 million in fiscal 2009, up from $101.5 million in 2008 and just $15.3 million in 2004. "We have seen consistent growth of at least 25% in year-over-year quarters," said CEO Tom Reilly, during a presentation. "Cyber threats are continuing to rise."

ArcSight Selling OK

ArcSight sells devices for monitoring security threats across networks and data centers and touts its neutrality as one of its key strengths.

Reilly described the company as the security industry's equivalent of "Switzerland," working with a vast array of products from the likes of EMC(EMC Quote), Juniper(JNPR Quote), McAfee(MFE Quote), IBM(IBM Quote) and Cisco(CSCO Quote).

The Cupertino, Calif.-based firm is now looking to increase its international sales over the next few years, as well as reaping the benefits of increased government spending on cyber security.

"The government market is a growing business for us," said Reilly, in response to an analyst's question. "I am currently in the midst of a six-week stay in D.C. trying to understand government opportunities."