What happened

Shares of Palo Alto Networks (PANW 0.62%) slumped on Tuesday after the cybersecurity company reported mixed quarterly results and reduced its full-year guidance. The stock was down about 15.8% at 12:05 p.m. EST.

So what

Palo Alto reported fiscal second-quarter revenue of $816.7 million, up 15% year over year but $25.4 million below the average analyst estimate. Billings were up 17% to $998.9 million, while deferred revenue grew 27% to $3.2 billion.

A declining stock chart

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"Fiscal second quarter revenue was below our expectations primarily as a result of continued impact of sales incentives related to our Next-Generation Security products from our prior fiscal year. We have made progress to address this and have implemented several go-to-market programs to reignite our firewall sales growth," said CEO Nikesh Arora.

Non-GAAP (adjusted) earnings per share (EPS) came in at $1.19, down from $1.51 in the prior-year period and $0.07 higher than analysts were expecting. The company lost $0.75 per share on a GAAP basis, worse than a $0.03 loss in the same period last year.

Along with its results, Palo Alto announced a planned $1 billion accelerated share repurchase transaction. That transaction is in addition to an existing $1 billion share repurchase program.

Now what

For the third quarter, Palo Alto expects to produce revenue between $835 million and $850 million, up 15% to 17% year over year. Non-GAAP EPS is expected to be between $0.96 and $0.98.

For the full year, the company lowered its outlook. Palo Alto now expects revenue of $3.35 billion to $3.39 billion, and non-GAAP EPS of $4.55 to $4.65. Previously, the company predicted revenue of $3.44 billion to $3.48 billion, and non-GAAP EPS of $4.90 to $5.00.

Palo Alto is not a cheap stock, trading for more than 40 times non-GAAP earnings guidance even after Tuesday's plunge. For a pricey growth stock, a guidance cut is the last thing investors want to see.