Palo Alto Networks stock rockets more than 10% as cybersecurity company hikes annual guidance a third time

Palo Alto Networks stock rockets more than 10% as cybersecurity company hikes annual guidance a third time


The shares of Palo Alto Networks Inc. they bounced back more than 10% in Thursday’s extended session after the cybersecurity company exceeded Wall Street expectations in its earnings report and raised its year-over-year guidance for the third consecutive quarter.

Palo Alto Networks PANW,
-0.51%
executives increased their year-over-year outlook to adjusted earnings of $ 7.43 to $ 7.46 per share, revenue of $ 5.48 billion to $ 5.5 billion and revenue of $ 7 billion. $ 11 billion to $ 7.14 billion. Last quarter, the company raised its adjusted earnings outlook from $ 7.23 to $ 7.30 per share, compared to a previous forecast of $ 7.15 to $ 7.25 per share, and rose again. revenue and billing forecasts.

Analysts had expected $ 7.29 million in revenue of $ 5.46 million and revenue of $ 6.82 million after the last increase, according to FactSet. Chief Executive Officer Nikesh Arora credited widespread demand for the company’s security products.

“Based on this strength in our portfolio, we are once again increasing our focus for the year on revenue, revenue and earnings per share,” Arora said in a statement, before going into more detail on how the company being successful despite macroeconomic problems. later Thursday at a conference call.

“As you know, the industry is facing unprecedented supply chain problems that are likely to persist for another year,” Arora told analysts in the call. “Our team is skillfully managing them with our partners.”

“Teams work hard every quarter with our suppliers and partners,” Arora said. “Not just this quarter, but for the next four quarters, and they no longer depend on the delivery times of the items.”

“In terms of demand, backlog and what we’ve been promising, we have a reasonable line of sight if all things work out in terms of what we’re likely to get on a quarterly basis, so our direction is consistent with what La our best guess as to what will be available is and that’s why we keep telling you that this is not a demand issue, this is the supply challenge we are trying to address as an industry, ”Arora told analysts.

In the future, the company’s navigation through the current supply chain environment will largely depend on how operating costs can be kept low as the company tries to keep prices reasonable.

“Cost pressures are really within the area of ​​the supply chain,” Dipak Golechha, chief financial officer of Palo Alto Networks, told analysts. “We recently realized the price, which has been good, but obviously the supply chain environment is still fluid. I think when it comes to where we’ve been able to focus on operating expenses to offset , is really just a laser focus “.

Part of this approach is to closely monitor the labor market and the higher costs of attracting and retaining talent. The company reported that operating expenses have risen over the past eight quarters, while gross margins have fallen over the past three quarters.

With regard to the persistent shortage of talent in the cybersecurity industry at a time of greater surveillance given the history of Russia’s cyberwarfare, Arora is optimistic about the narrow labor market it faces.

“My personal opinion is that labor markets will be easier in the next six or 12 months,” Arora said. “If you think about it, six months ago we were losing people to startups. We were losing people in front of competitors and stock prices were going up. “

“Market rationalization is making people take stock and say,‘ Wait, do I really want to go make that move? ’” Arora said. “Seen anecdotally, startups are starting to stop hiring because they are trying to keep their cash because they don’t expect to be able to raise money in the market for the next 12 to 18 months.”

That said, the company expects wage inflation, as cybersecurity talent is in high demand, but not “off the charts.”

For the third fiscal quarter, Palo Alto Networks reported a loss of $ 73.2 million, or 74 cents per share, compared to a loss of $ 145.1 million, or $ 1.50 per share, in period last year. Adjusted earnings, which exclude share-based and other item-based compensation charges, were $ 1.79 per share, compared to $ 1.38 per share for the period last year.

Revenue rose to $ 1.39 billion from $ 1.07 billion in the quarter last year. Turnover, which reflects future business under contract, rose to $ 1.8 billion from $ 1.27 billion a year ago.

Analysts had forecast earnings of $ 1.68 per share with revenue of $ 1.36 billion and revenue of $ 1.6 billion, while Palo Alto Networks had forecast earnings of $ 1.65 billion. $ 1.68 per share with revenues ranging from $ 1.35 billion to $ 1.37 billion and revenue from $ 1.6 billion to $ 1.5 billion.

Palo Alto Networks said it expects adjusted fourth-quarter fiscal earnings of $ 2.26 to $ 2.29 per share with revenue of $ 1.53 billion to $ 1.55 billion and revenue of $ 2.32 billion in $ 2.35 billion, while analysts surveyed by FactSet had projected $ 2.3 billion in revenue from $ 2.3 billion. and $ 2.23 billion in revenue.

Palo Alto Networks shares have risen 30% in the last 12 months. In comparison, the ETFMG Prime Cyber ​​Security ETF HACK,
+ 0.31%
down 19%, S&P 500 SPX index,
-0.58%
has a 5% discount and the COMP of the highly technological Nasdaq Composite Index,
-0.26%
down 14%.

In December, Palo Alto Networks joined the Nasdaq 100 NDX index,
-0.44%,
which has dropped by more than 10% in the last 12 months.

Other cybersecurity companies appeared to receive an increase after hours from the Palo Alto Networks report. Shares of CrowdStrike Holdings Inc. CRWD,
+ 2.99%
rose 4.5% in the last control, while shares of Zscaler Inc. ZS,
+ 3.29%
increased 3.9%, Fortinet Inc. FTNT,
+ 1.69%
equities were up 2.3% and the HACK ETF was up 1.7%.



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