Stocks zigzagged between gains and losses Thursday, with the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) eventually ending the session in the green. The energy sector weighed on the market, as the price of crude oil fell almost 4%.
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As for individual stocks, two vendors of cloud-based software reported results late yesterday and their shares moved in opposite directions. Palo Alto Software (NYSE:PANW) fell, but Veeva Systems (NYSE:VEEV) soared.
Palo Alto Networks strengthens its cloud offerings
Palo Alto Networks gave investors a lot to think about yesterday -- reporting fiscal third-quarter results that blew away expectations, announcing two new acquisitions, and launching a cloud security suite -- and shares sold off today, falling 5.1%. Revenue grew 28% to $727 million, beating the analyst consensus of $704 million, and the company lost $0.21 per share compared with a loss of $0.44 per share in Q3 last year. On a non-GAAP basis, earnings came in at $1.31 per share, exceeding expectations of $1.25.
Palo Alto Networks' latest acquisitions are Twistlock, a specialist in security software for cloud-native applications, and PureSec, a provider of security solutions for serverless applications. The company also announced Prisma, which organizes Palo Alto's existing cloud-based security offerings into a single suite.
Total billings increased only 13% to $821.9 million, and contract duration declined by four months from a year ago. Palo Alto Networks' move to cloud-based subscriptions means shorter billings cycles and a temporary headwind for billings growth, a fact that drew some questions by analysts on the conference call and may account for the stock's move.
Subscription growth at Veeva Systems boosts the bottom line
Shares of Veeva Systems, a provider of cloud-based software for the health sciences industry, jumped 14.7% after the company reported better-than-expected growth in the first quarter. Revenue increased 25% to $244.8 million and earnings per share soared 62% to $0.47, or $0.50 on a non-GAAP basis. Analysts were looking for non-GAAP EPS of $0.44 on revenue of $239 million.
Subscription revenue grew 27% to $198.1 million and professional services revenue was up 18% to $46.6 million. Revenue from Veeva Vault increased 44% and accounted for 50% of sales. The company added 47 new customers for Vault and signed its first enterprisewide deal with a top-20 pharmaceutical company for Vault Clinical Data Management System.
Veeva Systems increased its guidance for the full year, saying it expects revenue between $1.045 billion and $1.05 billion and non-GAAP EPS between $2.01 and $2.03. Analysts had been modeling earnings of $1.92 on revenue of $1.04 billion. Executives on the conference call were happy with the results and believe the company's growth strategies will pay off, with at least 20% subscription growth this year.