Palo Alto Networks guidance falls short of estimates; shares slump premarket
Investing.com | Author Yasin Ebrahim
Published Feb 20, 2024 04:18PM ET
Updated Feb 21, 2024 06:01AM ET
Investing.com -- Palo Alto Networks (NASDAQ:PANW) shares slumped in premarket trading on Wednesday after the cybersecurity firm reported current-quarter guidance on Tuesday that missed estimates.
The company said it expects to deliver fiscal third-quarter adjusted earnings per share (EPS) of between $1.24 to $1.26 on revenue of $1.95B to $1.98B. That was below Wall Street expectations for an EPS outlook of $1.29 on revenue of $2.04B. Total billings was guided in the range of $2.30B to $2.35B.
Speaking to analysts following the report, Chief Executive Officer Nikesh Arora flagged that clients are closely watching expenditures on cyber protection after recently shelling out cash to bolster their safeguards against rising digital threats.
"The customers are demanding to get more for the amount of money they have allocated to cybersecurity," Arora said. However, he noted that demand for its offerings continues to be "very strong."
For its 2024 fiscal year, the company guided for adjusted EPS of $5.45 to $5.55 per share on revenue of between $7.95B to $8.00B. That compared with a prior estimate for adjusted EPS of $5.40 to $5.53 on revenue of $8.15B to $8.20B.
Arora added that 400 customers have also signed up to receive free support services in the event of a breach, a perk that Palo Alto originally offered to 1,500 clients in its first quarter.
Analysts at Piper Sandler said that while this decision helps to create longer-term contracts, it should negatively impact the business for at least the next 12 months -- including a projected elimination of $600 million in billings in Palo Alto's fiscal second half. The Piper Sandler analysts subsequently lowered their rating to "Neutral" from "Overweight" and slashed their price target for the stock to $300 from $350.
Annual billings are now seen at between $10.1B and $10.2B, down from a previous range of $10.7B to $10.8B. Revenue is also anticipated to be between $7.95B and $8B, a reduction from a prior view of $8.15B to $8.2B.
In the three months ended on Dec. 31, California-based Palo Alto Networks posted adjusted profit of $1.46 a share on revenue of $1.98 billion, compared with estimates of $1.30 and $1.97B, respectively.
Get The News You Want
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.