Earnings Results: Palo Alto Networks stock rallies on earnings beat, hiked outlook

The company reported a fiscal second-quarter loss of $93.5 million, or 95 cents a share, compared with a loss of $142.3 million, or $1.48 a share, in the year-ago period. Adjusted earnings, which exclude share-based compensation charges and other items, were $1.74 a share, compared with $1.55 a share in the year-ago period.

Revenue rose to $1.32 billion from $1.02 billion in the year-ago quarter. Billings, which reflects future business under contract, rose to $1.61 billion, compared with $1.21 billion a year ago.

Analysts surveyed by FactSet had forecast earnings of $1.65 a share on revenue of $1.28 billion and billings of $1.52 billion. Palo Alto Networks had forecast earnings of $1.63 to $1.66 a share on revenue of $1.27 billion to $1.29 billion and billings of $1.51 billion to $1.53 billion.

“In Q2, our company continued to benefit from strength across our three security platforms, driven by strong cybersecurity demand, organizations architecting for hybrid work and growing their hyperscale cloud footprints,” said Nikesh Arora, Palo Alto Networks chairman and chief executive, in a statement.

“On the back of this strength, notably in our next-generation security offerings, we are raising our guidance for the year across revenue, billings, and earnings per share,” Arora said.

Palo Alto Networks expects adjusted fiscal-third quarter earnings of $1.65 to $1.68 a share on revenue of $1.35 billion to $1.37 billion and billings of $1.59 billion to $1.61 billion, while analysts had forecast $1.63 a share on revenue of $1.35 billion and billings of $1.58 billion.

For the year, Palo Alto Networks raised its forecast to adjusted earnings of $7.23 to $7.30 a share, versus a previous forecast of $7.15 to $7.25 a share. The company forecast revenue between $5.43 billion and $5.48 billion, versus a previous outlook between $5.35 billion and $5.4 billion; and billings between $6.8 billion and $6.85 billion, up from a previous forecast range between $6.68 billion and $6.73 billion.

Analysts expect $7.23 a share on revenue of $5.39 billion and billings of $6.72 billion.

Last quarter, the company had raised its forecast revenue from a range of $5.28 billion to $5.33 billion, and billings from a previous range of $6.6 billion to $6.65 billion.

Of note, Palo Alto Networks has gone more than a year without announcing a new acquisition, not since it said it was acquiring Bridgecrew Inc. for $156 million.

Before Bridgecrew, the company had been on an M&A spree, having acquired 11 other companies over the past four years to the tune of about $3.3 billion. Back in August, Arora had said that Palo Alto Networks “might talk” to a company “here or there,” concerning an acquisition, “we’re not looking for substantive acquisitions, at this current point in time.”

The company reported cash and cash equivalents of $1.93 billion, compared with $2.11 billion in the year-ago period.

Palo Alto Networks shares are up 24% over the past 12 months. In comparison, the ETFMG Prime Cyber Security ETF 
HACK,
-0.90%
is down 11%, the S&P 500 index 
SPX,
-1.01%
 is up 11%, and the tech-heavy Nasdaq Composite Index 
COMP,
-1.23%
 is down 1.1% in that span.

Back in December, Palo Alto Networks joined the Nasdaq 100 Index
NDX,
-0.99%,
which is up 4.9% over the past 12 months.