What happened

Shares of Palo Alto Networks (PANW 0.91%) jumped Wednesday morning, surging as much as 12.9%. At 10:39 a.m. ET, the stock was up 10.7%.

The catalyst that sent the cybersecurity specialist's shares higher was the company's quarterly financial results, which were far better than investors had hoped -- particularly in the face of economic headwinds.

So what

For its fiscal 2023 second quarter (ended Jan. 31), Palo Alto Networks generated revenue that grew 26% year over year to $1.7 billion, fueled by strong momentum from existing customers and the addition of new ones. This resulted in adjusted earnings per share (EPS) of $1.05. On a GAAP basis, the company was profitable for the third consecutive quarter and expects to produce a profit for the full fiscal year.  

To give those numbers context, analysts' consensus estimates were calling for revenue of $1.65 billion and EPS of $0.78, so Palo Alto Networks cleared both hurdles with room to spare.  

Total billings -- which represents contractually obligated sales that haven't yet been booked as revenue -- gives investors the clearest insight into the company's continuing growth potential, and the future looks increasingly bright. Second-quarter billings increased to $2.03 billion, up 26% year over year, while continuing to keep pace with revenue growth, which suggests Palo Alto Networks will maintain its momentum. 

Another positive indicator is the quality of deals. Customers that spent more than $1 million in trailing-12-month sales climbed 20%, those worth $5 million jumped 84%, and those spending $10 million surged 140%. 

Now what

Palo Alto Networks' robust forecast also fueled investor enthusiasm. For its fiscal third quarter, management is projecting revenue of roughly $1.71 billion, which would represent year-over-year growth of 23% at the midpoint of its guidance. The company also expects diluted adjusted EPS of $0.92.  

For fiscal 2023, management is guiding for revenue of $6.88 billion, up roughly 25% year over year. Palo Alto Networks expects total billings of about $9.15 billion at the midpoint of its guidance, which would represent approximately 22% growth. 

Given the company's continued strong execution and increasing profitability, Palo Alto Networks' stock is a buy.