Palo Alto Networks credits larger contracts for its next-generation product revenue growth. PANW stock rose Wednesday as January-quarter earnings and revenue topped estimates while guidance came in modestly above expectations.
The cybersecurity company reported fiscal second-quarter earnings late Tuesday.
PANW stock rose 0.4% to close at 477.61, paring earlier gains on the stock market today.
Palo Alto said profit rose 12% to $1.74 per share on an adjusted basis. Including acquisitions, revenue rose 30% to $1.31 billion, the company said. Analysts expected earnings of $1.65 per share on sales of $1.28 billion.
PANW Stock: Billings Top Estimates
Further, billings came in at $1.61 billion, up 32% from a year earlier, compared with estimates for $1.52 billion. Palo Alto said annual recurring revenue for next-generation products rose 70% to $1.43 billion vs. estimates of $1.36 billion.
"Palo Alto delivered another strong quarter with broad-based outperformance highlighted by 70% next-gen ARR growth and hardware sales that continue to allude supply-chain challenges as the company takes share on accelerating demand trends," said RBC Capital analyst Matthew Hedberg in a report.
At Wells Fargo, analyst Andrew Nowinski said in a report: "The key takeaway was the next-gen ARR, which reached $1.43 billion, with net new ARR of $166 million."
For the current quarter ending in April, Palo Alto said it expects per-share earnings in a range of $1.65 to $1.68 on revenue of $1.355 billion.
Analysts had projected earnings of $1.63 a share on revenue of $1.346 billion. Palo Alto forecast billings of $1.6 billion compared with analyst estimates of $1.587 billion.
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.
Solid Relative Strength Rating
Heading into the Palo Alto earnings report, the cybersecurity stock had a Relative Strength Rating of 90 out of a best-possible 99. PANW stock had retreated nearly 17% from an all-time high of 572.67 set on Dec. 27.
The IBD Computer-Software Security group ranks No. 104 out of 197 industry groups tracked, according to IBD Stock Checkup.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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