Thursday, March 23, 2023

Palo Alto Networks (PANW) earnings Q2 2023

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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 02, 2021 in St Andrews, Scotland.

David Cannon | David Cannon Collection | Getty Images

Palo Alto Networks shares moved 7% higher in extended trading on Tuesday after the security software maker issued fiscal second-quarter earnings that topped Wall Street projections.

Here’s how the company did:

  • Earnings: $1.05 per share, adjusted, vs. 78 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $1.66 billion, vs. 1.65 billion as expected by analysts, according to Refinitiv.

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

“Our focus on driving profitable growth is reflected in our Q2 results,” said Dipak Golechha, the company’s finance chief, was quoted as saying in the statement. “As a result, we are raising our cash flow margin and operating profitability targets as we remain focused on driving efficiency in our business.”

Palo Alto Networks has now posted three consecutive quarters of profitability following a decade of being in the red.

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

Management pushed up its earnings guidance for the 2023 fiscal year. It called for $3.97 to $4.03 in adjusted per share. In November guidance was $3.37 to $3.44 in adjusted earnings per share Analysts polled by Refinitiv had been looking for $3.42 in adjusted earnings per share. The company maintained its revenue guidance.

Customers have delayed or canceled projects, but most remain on track, CEO Nikesh Arora said on a conference call with analysts. The company shifted some forecasted revenue to the fiscal fourth quarter from the fiscal third quarter, he said.

He said executives continue to see evidence of the cybersecurity market being resilient, while other sectors of the economy sag as central bankers increase 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 have helped Palo Alto Networks keep growing its top line under Arora.

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

This is breaking news. Please check back for updates.

WATCH: It’s important to look at overall macro sentiment, says Palo Alto Networks’ Nikesh Arora

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