Palo Alto Networks Shares Soar as Company Lifts Full-Year Forecast

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Traders were celebrating news from Palo Alto Networks about lifting its full-year forecast.

The company’s stock rose 12% in extended trading yesterday after it surpassed expectations on the top and bottom lines and on full-year guidance.

Palo Alto also announced software to help companies deal with virtual supply-chain issues.

Beating on both the top and bottom lines, fiscal third-quarter results came in stronger than analysts had expected.

For the quarter, Palo Alto Networks reported earnings per share of $1.79 adjusted. This was better than the $1.68 a share that was expected by analysts, per Refinitiv.

Revenue at $1.39 billion was also better than the $1.36 billion expected by analysts, again per Refinitiv.

The company said revenue grew 29% year-over-year in the quarter, which ended on April 30, according to a statement. Revenue jumped 30% in the prior quarter.

“We saw strong top-line growth in Q3, which is a testament to our teams’ consistent execution in capitalizing on the strong cybersecurity demand trends,” Palo Alto Networks CEO Nikesh Arora was quoted as saying in the statement.

According to Arora, the company has observed Russian cyberattacks since the war broke out during the quarter, and it’s seeing greater interest in protection from corporations and government agencies across Europe.

Supply shortages are posing challenges, Arora said. Higher component and shipping costs narrowed the company’s adjusted gross margin in the quarter, said Dipak Golechha, its finance chief. Constraints “are likely to persist for yet another year,” the CEO added.

“We’re not seeing the pressure from inflation or reduced economic activity perspective,” Arora said.

Looking ahead, the company raised their guidance for the full fiscal year. They now expect adjusted earnings of $7.43 to $7.46 per share on $5.481 billion to $5.501 billion in revenue. Analysts polled by Refinitiv had been looking for $7.29 in adjusted earnings per share on $5.46 billion in revenue.

The guidance takes wage inflation into consideration, Arora said.

“We haven’t hired as many people as we are expecting during this market,” he explained. “It’s a very tight labor market in its current point, as you see. Having said that, my personal view is the labor markets are going to become easier in the next six to 12 months.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.