Palo Alto Networks, Inc. Reports 49% Sales Increase, Juniper Settlement

Palo Alto Networks beat analyst estimates in the third quarter and announced a favorable settlement with Juniper Networks. Shares leapt 10% on the news.

May 29, 2014 at 9:12AM
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Source: Palo Alto Networks.

Network security specialist Palo Alto Networks (NYSE:PANW) reported results for the third quarter of fiscal year 2014 last evening. Shares jumped in after-hours trading on the news.

Palo Alto saw sales increase 49% year-over-year to land at $151 million. Adjusted earnings grew 57%, stopping at $0.11 per share.

Analysts would have settled for earnings of $0.10 per share on $146 million in sales.

The company reported strong demand for enterprise security solutions. "We achieved the highest rate of new customer acquisition in our history," said Palo Alto CEO Mark McLaughlin in a prepared statement.

As part of the earnings release, the company also disclosed the settlement of all litigation between Palo Alto and networking peer Juniper Networks (NYSE:JNPR). Under the patent infringement settlement, Palo Alto will send Juniper a one-time payment of $75 million in cash and $70 million in Palo Alto stock, and a warrant to purchase another $30 million of Palo Alto shares. The deal includes a cross-licensing agreement between the parties, and neither company can sue the other over patent claims for the next eight years.

"[The settlement] allows us to further focus our resources and time on our customers and growing our business," McLaughlin said.

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Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends Palo Alto Networks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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