What happened

Palo Alto Networks (PANW -1.77%) stock is seeing strong gains on the heels of its fourth-quarter earnings release for its last fiscal year, which ended July 31. The company's share price was up 16% as of 12:45 p.m. ET, according to data from S&P Global Market Intelligence.

Palo Alto published its Q4 results after the market closed last Friday, reporting earnings for the period that beat Wall Street's targets. While the company's revenue of $1.95 billion fell short of the average analyst target by $10 million, its non-GAAP (adjusted) earnings per share of $1.44 came in significantly ahead of the average analyst estimate's call for per-share earnings of $1.29.

So what

Palo Alto's slight sales miss in Q4 hardly looks concerning given that it posted a strong earnings beat in the period. Even with sales falling a bit short of expectations, revenue was still up roughly 26% year over year in the quarter -- and sales for the full fiscal year were up 25% annually at $6.9 billion.

Gross profit margin and operating income margin beat expectations in Q4 and powered the earnings beat in the quarter. The company ended its recently completed fiscal year with its operating income margin up 500 basis points annually.  

Now what

For the first quarter, Palo Alto is guiding for billings between $2.05 billion and $2.08 billion -- suggesting growth of 18% year over year at the midpoint of the guidance range. Meanwhile, revenue for the period is projected to be between $1.82 billion and $1.85 billion -- good for growth of 17% at the midpoint of the target. While the average analyst estimate had called for sales of $1.93 billion in the period, signs that the company may be on track for better-than-expected profitability are increasing bullish sentiment surrounding the stock. 

For the full year, Palo Alto expects billings to come in between $10.9 billion and $11 billion, up roughly 19.5% annually at the midpoint. Revenue is projected to come in between $8.15 billion and $8.2 billion, increasing 18.5% at the midpoint of the guidance range and once again falling short of Wall Street's target for sales of $8.3 billion in the period. But the company's guidance for adjusted earnings in the year to be between $5.27 and $5.40 came in far ahead of the average analyst call for earnings of $4.95 per share in the period.