Shares in Palo Alto Networks popped on Tuesday after the cybersecurity firm reported July-quarter earnings and revenue that topped Wall Street targets amid strong growth in large contracts. Guidance for PANW stock came in above expectations.
Palo Alto reported fiscal fourth quarter earnings after the market close on Monday. In addition, the company announced its board of directors approved a 3-for-1 stock split. Also, Palo Alto said it expects to turn profitable using generally accepted accounting principles (or GAAP) in fiscal 2023.
Palo Alto stock popped 11.7% to 567.68 in afternoon trading on the stock market today.
Palo Alto Stock: More Large Contracts
"Deal activity during Q4 was robust, and large deal momentum continues to surge with more than 1,200 customers spending over $1 million annually, up from 986,000 in Q4 2021," said Cowen analyst Shaul Eyal in a report.
For fiscal 2023, the company forecast adjusted earnings in a range of $9.40 to $9.50 a share, compared with estimates of $9.23.
Palo Alto said it expects 2023 revenue in a range of $6.85 billion to $6.9 billion. Palo Alto forecast billings in a range of $8.95 billion to $9.05 billion. Analysts projected revenue of $6.74 billion and billings of $8.56 billion. That correlates to respective growth of roughly 23% and 20%.
"The company is taking market share in the traditional firewall market as well as benefiting from strong innovation-led solutions in cloud and SASE (Secure Access Service Edge) security," said William Blair analyst Jonathan Ho in a report.
In fiscal 2023, Palo Alto said it expects next-generation annual recurring revenue of $2.625 billion, up 38%, vs. estimates of $2.46 billion.
PANW Stock To Join S&P 500?
Also on Monday, the cybersecurity firm announced that trading for PANW stock on a split-adjusted basis will start on Sept. 14. The company has authorized an additional $915 million in its stock repurchase program.
Morgan Staney, in a report, said it expects Palo Alto stock to be added to the S&P 500 index in 2023.
Palo Alto said fiscal fourth-quarter profit rose 49% to $2.39 per share on an adjusted basis. Including acquisitions, revenue rose 27% to $1.6 billion. Analysts expected earnings of $2.28 per share on sales of $1.54 billion.
Billings rose 44% to $2.7 billion, topping estimates of $2.34 billion.
"Management attributed the very strong billings growth to some large, long duration deals, along with some pull-forward in demand ahead of the Aug. 1 product pricing increases," said Well Fargo analyst Andrew Nowinski in a report.
PANW Stock: Relative Strength Rating At 88 Out Of 99
In addition, PANW stock had declined 8% in 2022. It holds a Relative Strength Rating of 88 out of a best-possible 99, according to IBD Stock Checkup.
Meanwhile, the company has spent over $3.4 billion making 10 acquisitions over the past three years. With roots in the "firewall" network security market, Palo Alto aims to build a broad cloud-based security platform.
Firewall appliances protect computer networks by blocking online intrusions and monitoring web-based apps.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
