September 24, 2023

Palo Alto Networks Shares rose 7% in extended trading Tuesday after the security hardware and software maker released fiscal second-quarter earnings that topped Wall Street estimates.

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Here’s how the company did:

  • Earning: $1.05 per share, adjusted, versus the 78 cents per share expected by analysts, according to Refinitiv.
  • Income: $1.66 billion, versus $1.65 billion as analysts were expecting, according to Refinitiv.

The company’s revenue grew 26% year-on-year in the quarter ended January 31. statement, Net income came in at $84.2 million, or 25 cents per share, compared to a loss of $93.5 million in the year-ago quarter.

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“Our focus on driving profitable growth is reflected in our second quarter results,” the company’s finance chief Deepak Golechha said in the statement. “As a result, we are increasing our cash flow margin and operating profitability targets as we focus on driving efficiency across our business.” Golechha said on a conference call with analysts that the company has slowed down the growth in headcount.

Palo Alto Networks has turned profitable for three consecutive quarters after a decade of losses. CEO Nikesh Arora said on the call that it is now three years ahead of its 2021 set profitability targets.

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“We believe we now meet the criteria for inclusion in the S&P 500,” Golechha said.

The company called for adjusted earnings of 90 cents to 94 cents per share for the fiscal third quarter on $1.695 billion to $1.725 billion in revenue. Analysts polled by Refinitiv had expected 78 cents in adjusted earnings per share on $1.74 billion in revenue.

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Management raised its earnings guidance for fiscal 2023. It called for an adjusted range of $3.97 to $4.03 per share. in November Guidance in adjusted earnings per share was $3.37 to $3.44. Analysts polled by Refinitiv were looking for $3.42 in adjusted earnings per share. The company maintained its revenue guidance. Golechha said they expect earnings in the third and fourth quarters of the fiscal.

Arora said clients have delayed or canceled projects, but most are on track. The company shifted some of the estimated revenue from the fiscal third quarter to the fiscal fourth quarter, he said.

He said authorities are seeing evidence of the cyber security market being resilient, while other sectors of the economy are reeling from interest rate hikes by central bankers.

company during the quarter acquired Startup Cider Security, which focused on software supply chain and application security, raised about $195 million. It’s the latest deal in a series that has helped Palo Alto Networks grow its top line in nearly five years under Arora, costing the company more than $3 billion to date.

Despite the after-hours move, shares of Palo Alto Networks are up 20% so far this year, outperforming the S&P 500 index, which has risen 4% during the same period.

Watch: It is important to watch the overall macro sentiment, says Nikesh Arora of Palo Alto Networks