Nikesh Arora of the United States on the first hole during the third round of The Alfred Dunhill Links Championship at The Old Course on October 2, 2021 in St Andrews, Scotland.
David Cannon | David Cannon Collection | Getty Images
Palo Alto Networks shares moved 7% higher in extended trading Tuesday after the security hardware and software maker posted fiscal second-quarter earnings that beat Wall Street projections.
How the company fared:
- Profit: $1.05 per share, adjusted, vs. 78 cents a share in line with analysts’ expectations, according to Refinitiv.
- income: $1.66 billion, versus the $1.65 billion analysts expected, according to Refinitiv.
The company’s revenue rose 26% year-over-year in the quarter ended Jan. 31 declaration. Net income came in at $84.2 million, or 25 cents a share, compared with a loss of $93.5 million in the year-ago quarter.
“Our focus on profitable growth is reflected in our Q2 results,” Dipak Golechha, the company’s chief financial officer, was quoted as saying in the statement. “As a result, we are increasing our cash flow margin and operating profitability targets as we continue to focus on driving efficiencies across our business.” The company has slowed headcount growth, Golechha said on a conference call with analysts.
Palo Alto Networks has now posted three consecutive quarters of profitability after a decade in the red. It is now three years ahead of its 2021 profitability targets, CEO Nikesh Arora said on the call.
“We believe we now meet the criteria for inclusion in the S&P 500,” Golechha said.
The company called for third-quarter adjusted earnings of 90 to 94 cents per share on revenue of $1.695 billion to $1.725 billion. Analysts polled by Refinitiv had expected 78 cents in adjusted earnings per share on revenue of $1.74 billion.
Management raised its earnings estimates for fiscal 2023. It called for $3.97 to $4.03 per share. In November the estimate was $3.37 to $3.44 in adjusted earnings per share. Analysts polled by Refinitiv had expected adjusted earnings per share of $3.42. The company maintained its revenue outlook. Golechha said it expects revenue in the fiscal third and fourth quarters.
Customers have delayed or canceled projects, but most remain on track, Arora said. According to him, the company has shifted some of the projected revenue to the fiscal fourth quarter from the fiscal third quarter.
He said executives continue to see evidence that the cybersecurity market is resilient while other sectors of the economy are falling as central bankers raise interest rates.
During the quarter, the company acquired startup Cider Security, which focused on software supply chain and application security for about $195 million. It’s the latest deal in a series that has helped Palo Alto Networks continue to grow its top line under Arora.
Regardless of the after-hours move, shares of Palo Alto Networks are up 20% so far this year, outperforming the S&P 500, which is up 4% over the same period.
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