Palo Alto Shares Gallop Ahead as More People Work From Home

Shares of cybersecurity company Palo Alto Networks were heading higher on Thursday in after-hours trading as Wall Street digested their latest quarterly results.

Both third quarter financial results and the company’s outlook had topped what analysts had been expecting. Shares gained 7% in extended trading following a 2.1% decline in the regular session.

“The world will likely be in a state of transition over the next 12 to 18 months due to the COVID-19 pandemic,” said Palo Alto Networks Inc. Chief Executive Nikesh Arora.

According to Arora, COVID-19 ‘will prompt key trends to accelerate, including remote working models, shift to the cloud, and focus on’ automation. He said on the earnings call, “A recent survey by Fortune magazine showed that three-fourths of Fortune 500 CEOs believe the crisis will force their companies to accelerate their technological transformation.”

For the third quarter, Palo Alto reported a loss of $74.8 million, or 77 cents a share, compared with a loss of $20.2 million, or 21 cents a share, in the year-ago period. Adjusted earnings were $1.17 a share, compared with $1.31 a share in the year-ago period. Revenue rose to $869.4 million from $726.6 million in the year-ago quarter.

Analysts surveyed by FactSet were waiting for adjusted earnings of 94 cents a share on revenue of $831.1 million, while the company had forecast 96 cents to 98 cents a share on revenue of $835 million to $850 million.

Looking ahead towards the fourth quarter, the company expects adjusted earnings of $1.37 to $1.40 a share on revenue of $915 million to $925 million. Analysts were waiting for adjusted earnings of $1.31 a share on revenue of $916.8 million.

Arora said on the earnings call, “I couldn’t be prouder of our teams who worked tirelessly to ensure the security needs of our customers, were met in this uncertain environment. It is important to note, our last month of this quarter saw a majority of the world under lockdown. And to be able to deliver these results in these times is a testament to the strength of our teams and our partner ecosystem.”

“As a company, we responded quickly, we’ve made the transition to nearly 100% remote workforce without a hitch. Focus on the well-being of our employees, we moved to work from home in early March, ahead of local ordinances. With the global team whose mission is enabling our customers to work securely, no matter where they are, we were well-equipped with the tools, technologies and security to work safely from home.”

He added, “We have over 1,500 customers just in the past six weeks, using our free trials for remote secure access, which we enabled in the middle of March. The feedback we have received from customers has been gratifying. And we look forward to the opportunity to continue to serve them, potentially across even more areas of our platform.”

Disclaimer: We have no position in Palo Alto Networks Inc. (NYSE: PANW) and have not been compensated for this article.