Palo Alto Networks revenues beat estimates amid cybersecurity issues

Nikesh Arora, CEO of Palo Alto Networks and former President and COO of SoftBank Group Corp., speaks with Chairman and CEO Masayoshi Son during the SoftBank Academia Special Lecture on October 22, 2015 in Tokyo.

KAZUHIRO NOGI | AFP | Getty Images

Palo Alto Networks’ shares rose up to 6% in expanded trading Thursday after the security hardware and software company announced earnings in the second quarter that were healthier than analysts expected.

This is how the company did it:

  • Merits: Adjusted for $ 1.38 per share versus $ 1.28 per share as analysts expected, Refinitiv said.
  • Revenue: According to Refinitiv, $ 1.07 billion versus $ 1.06 billion as analysts expected.

Revenue increased 24% year over year for the quarter ended April 30, compared to 25% growth in the previous quarter.

CEO Nikesh Arora said in the statement that more attention is being paid to cybersecurity as remote working became popular during the pandemic, as well as a number of recent cybersecurity issues – believed to include attacks on Microsoft’s Exchange Server software, vulnerabilities in the SolarWinds- Software and the recent ransomware attack on the Colonial Pipeline, which shut down an important fuel line.

The company’s products can be more expensive than competitors’ offerings, and increased security concerns mean customers are more open to higher prices, Arora said.

Palo Alto Networks isn’t the only company looking to capitalize on security concerns. In the advanced threat detection and response software market, the company rivals competitors who employ dedicated salespeople. CrowdStrike outperforms Palo Alto Networks by eight to one, Arora said.

Executives have chosen to maintain a single equity structure, including the cloud and artificial intelligence security segment, based on current market conditions and discussions with shareholders, Arora said. In February, Arora announced that the company would complete filing an equity structure for its cloud and AI security business.

During the quarter, the company acquired Bridgecrew, a cloud security company, for $ 156 million.

In terms of projections, the company expects adjusted earnings of $ 1.42 to $ 1.44 per share and revenue of $ 1.165 to $ 1.175 billion for the fourth quarter of fiscal year. Analysts polled by Refinitiv had expected adjusted earnings per share of $ 1.42 and revenue of $ 1.16 billion.

Regardless of the post-business move, Palo Alto Networks’ shares fell roughly 4% year-to-date, compared to up roughly 11% for the S&P 500 index over the same period.

CLOCK: Palo Alto Networks CEO on What We Know About the Scope of the Microsoft Hack

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