What happened
Shares of Palo Alto Networks (PANW 0.91%) climbed 10% this week, according to data provided by S&P Global Market Intelligence, after the cybersecurity specialist announced strong quarterly earnings.
Indeed, the bulk of Palo Alto Networks' pop came on Monday -- the first trading day after it released fiscal fourth-quarter 2023 (ended July 31, 2023) results last Friday after the market closed. After a brief panic given the unusual timing of the release, Palo Alto Networks management explained during its earnings conference call on Sunday that the company needed to disclose its financial performance ahead a sales conference that took place over the weekend.
So what
Palo Alto Networks' quarterly revenue climbed 26% year over year, to $1.953 billion, translating to adjusted (non-GAAP) net income of $482.5 million, or $1.44 per share. Analysts, on average, were expecting adjusted earnings of only $1.29 per share on slightly higher revenue of $1.96 billion.
Palo Alto Networks' billings also climbed 18% year over year, to $3.2 billion, while its remaining performance obligation (RPO) rose 30% to $10.6 billion.
Palo Alto Networks CEO Nikesh Arora lauded the company's "strong execution," noting the "changing environment drove more customers toward platformization."
"Our strategy is resonating with a growing number of our customers, driving continued consolidation, to deliver superior security outcomes," Arora said, adding that the company is "delighted" with customers' reception for its new AI-based security automation platform, XSIAM.
Now what
For the new full fiscal year 2024, Palo Alto Networks now expects total billings of $10.9 billion to $11 billion (up 19% to 20% year over year), total revenue of $8.15 billion to $8.20 billion (up 18% to 19%), and adjusted earnings per share of $5.27 to $5.40 (up 19% to 22%). By comparison, analysts on Wall Street were again technically expecting higher fiscal 2024 revenue of around $8.3 billion, but with far lower adjusted earnings of $4.95 per share.
In the end, even putting aside Palo Alto Networks' knack for underpromising and overdelivering on earnings, it seems the market is breathing a sigh of relief that its profitability is tracking well ahead of expectations -- especially amid continued macroeconomic uncertainty that has impacted enterprise spending in recent months. With shares down around 18% in August leading up to this report, it's unsurprising that this leading cybersecurity stock would rebound this week in response.
