Palo Alto Networks (PANW) on Thursday reported fiscal third-quarter earnings and revenue that topped estimates. PANW stock popped as its outlook for the July quarter came in above expectations despite supply chain constraints.
Palo Alto Networks shares rose 12% in extended trading on Thursday after the network security hardware maker announced fiscal third-quarter results that came in stronger than analysts had expected.
“We saw strong top-line growth in Q3, which is a testament to our teams’ consistent execution in capitalizing on the strong cybersecurity demand trends,” Palo Alto Networks CEO Nikesh Arora was quoted as saying in the statement.
Palo Alto Networks has observed Russian cyberattacks since the war broke out during the quarter, and it’s seeing greater interest in protection from corporations and government agencies across Europe, Arora told analysts on a conference call.
Palo Alto Networks has observed Russian cyberattacks since the war broke out during the quarter, and it’s seeing greater interest in protection from corporations and government agencies across Europe, Arora told analysts on a conference call.
Supply shortages are posing challenges, Arora said. Higher component and shipping costs narrowed the company’s adjusted gross margin in the quarter, said Dipak Golechha, its finance chief. Constraints “are likely to persist for yet another year,” Arora said.
Both in the U.S. and abroad, prices of goods are moving higher. But so far that’s not a big challenge for Palo Alto Networks.
Earning Highlights
Palo Alto Networks said revenue grew 29% year-over-year in the quarter, which ended on April 30, according to a statement. Revenue jumped 30% in the prior quarter.
Further, billings came in at $1.8 billion, up 40% from a year earlier, compared with estimates for $1.6 billion. The cybersecurity company released April-quarter earnings after the market close.
“Palo Alto reported results that were ahead of expectations and highlighted by 40% billings growth vs. consensus at 25%,” RBC Capital analyst Matthew Hedberg said in a note to clients Another bright spot, he added, was that next-generation annual recurring revenue grew 65% to $1.6 billion.
The company expects Q4/22 EPS in the range of $2.26-$2.29, compared to the consensus of $2.22, and revenue in the range of $1.53-1.55 billion, compared to the consensus of $1.53 billion.
For the full 2022-year, the company expects total revenue of $5.481-$5.501 billion and diluted non-GAAP EPS of $7.43-7.46, versus the consensus of $5.46 billion and $7.29, respectively.
In the quarter Palo Alto Networks announced a next-generation firewall tool available exclusively through Amazon’s public cloud. The company also announced a tool to help companies detect vulnerabilities in software supply chains following issues stemming from malicious updates to SolarWinds’ Orion software.
Guidance for the next result
For the current quarter ending in July, Palo Alto said it expects per-share earnings in a range of $2.26 to $2.29 on revenue of $1.54 billion.
Analysts had projected earnings of $2.22 a share on revenue of $1.53 billion. Also, Palo Alto forecast billings of $2.33 billion compared with analyst estimates of $2.23 billion.
Meanwhile, the company has spent over $3.4 billion making 10 acquisitions over the past three years. With roots in the “firewall” network security market, Palo Alto aims to build a broad cloud-based security platform.
The guidance considers wage inflation, Arora said, in part because of Santa Clara, California-based Palo Alto Networks’ proximity to large technology companies in Silicon Valley.
