Shares of cybersecurity firm Palo Alto Networks experienced a significant downturn of 19% in after-hours trading on Tuesday, following the company’s earnings report which surpassed expectations on both the top and bottom lines. However, Palo Alto Networks revised its full-year guidance for revenue and billings downwards.
Here’s a breakdown of the company’s performance compared to estimates from LSEG, formerly Refinitiv:
– Earnings per share: $1.46, adjusted, exceeding the expected $1.30
– Revenue: $1.98 billion, slightly surpassing the anticipated $1.97 billion
![CEO Nikesh Arora of Palo Alto](https://analyzingmarket.com/wp-content/uploads/2024/02/CEO-of-Palo-Alto.jpg)
For the quarter, net income amounted to $1.7 billion, equivalent to $4.89 per share, in contrast to $84 million, or $0.25 per share, reported for the fiscal second quarter of 2023.
Palo Alto Networks now forecasts full-year total billings to fall between $10.1 and $10.2 billion, down from the previous guidance range of $10.7 to $10.8 billion. Additionally, the company anticipates full-year revenue to range from $7.95 to $8 billion, a decrease from the previous projection of $8.15 to $8.2 billion.
During a conference call with analysts, CEO Nikesh Arora attributed the adjusted guidance to a “shift” in strategy, emphasizing the desire to expedite growth, migrate and consolidate platforms, and assert AI leadership. He noted the anticipation of encountering challenges with certain customers due to the company’s evolving stance.
![Expects 10-11% growth, with revenue growth lowered to 15-16%.](https://analyzingmarket.com/wp-content/uploads/2024/02/Palo-Alto-Networks-e1708603027203.jpg)
Projections for the upcoming quarter also fell short of consensus estimates. While analysts surveyed by LSEG had anticipated fiscal third-quarter revenue of $2.04 billion, Palo Alto Networks now expects revenue to range between $1.95 billion and $1.98 billion.
The revised billings guidance indicates a full-year growth rate of 10% to 11%, compared to the prior estimate of 16% to 17% growth. Similarly, the company now expects full-year revenue growth to be between 15% and 16%, down from the initial projection of 18% to 19% growth.
These downward revisions come at a time when the AI craze is driving up cybersecurity stocks and the wider technology sector. Arora highlighted the company’s intention to leverage its “AI leadership strategy” in the earnings release.