Palo Alto Networks Rises in Afterhours as Results Smash Estimates
Mondeum Capital (UK) Limited
Ticker Symbol: PANW
Cybersecurity firm Palo Alto Networks reported strong third quarter results and shares were trading up over 10% in the afterhours as the company also issued strong forward guidance. Adjusted earnings per share for the third quarter came in at $1.79, versus the average analyst expectation of $1.68 and $1.38 from the year ago period. Billings rose 40% year-on-year to $1.8 billion, crushing the $1.6 billion expected by Wall Street. Product revenue was up 22% year-on-year to $351.5 million, while subscription revenue was up 32% to $1.04 billion. Estimates called for revenue of $330 million and $1.03 billion, respectively.
Research and development costs also came in below projected, up only 14% to $355 million versus the $368.1 million estimate. Critically, the company also adjusted its forward guidance upwards which came in ahead of what analysts had modelled. The company now sees adjusted earnings per share in the fourth quarter to reach between $2.26 and $2.29, against an analyst estimate of $2.22. It sees billings at $2.32 to $2.35 billion, while estimates called for $2.25 billion, and total revenue at a midpoint of $1.54 billion versus the anticipated $1.53 billion. For the full fiscal year, the company expects to earn $7.45 per share, against the average estimate of $7.29.
The company expects the strong top-line growth to continue in the future given its capacity to execute, and strong industry trends. Hacking, corporate espionage and cyberattacks have become more common in recent years. Additionally, numerous U.S. government agencies have started requesting that companies across industries start amping up their technology and cybersecurity protocols to thwart state-sponsored spying and ransomware attacks.
Palo Alto Networks provides network security solutions, including firewalls that identify and control applications, scan content to stop threats, prevent data leakage, integrated application, user, and content visibility. Other companies in the sector were also rallying on the back of Palo Alto’s earnings. ZScaler, Okta, SentinelOne and Crowdstrike were all up at least 3% in the afterhours.
This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.
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