Shares of Palo Alto Networks saw big gains Friday after it reported fiscal third-quarter earnings and revenue that topped estimates. The company's outlook also came in above views despite supply chain constraints, helping PANW stock to pop.
"Large deal momentum and effective cross-platform strategies drove strength that was broad-based across product categories and geographies," Cowen analyst Shaul Eyal said in a note to clients. "Superior supply chain management is helping drive share gains."
The cybersecurity firm reported April quarter earnings after the market close on Thursday. PANW stock surged 9.7% to close at 478.68 on the stock market today.
Palo Alto said profit rose 30% to $1.79 per share on an adjusted basis. Including acquisitions, revenue rose 29% to $1.4 billion, the company said. Analysts expected earnings of $1.68 per share on sales of $1.36 billion.
"Supply chain constraints led demand to outstrip supply, as the company continues to see strong reception for its fourth-generation firewall products and higher levels of subscription attach rates," William Blair analyst Jonathan Ho said in his note to clients.
Further, billings came in at $1.8 billion, up 40% from a year earlier, compared with estimates for $1.6 billion.
"Palo Alto reported results that were ahead of expectations and highlighted by 40% billings growth vs. consensus at 25%," RBC Capital analyst Matthew Hedberg said in a note. Another bright spot, he added, was that next-generation annual recurring revenue grew 65% to $1.6 billion.
PANW Stock: Guidance Tops Estimates
For the current quarter ending in July, Palo Alto expects per-share earnings in a range of $2.26 to $2.29. That's on revenue of $1.54 billion.
Analysts had projected earnings of $2.22 a share on revenue of $1.53 billion. Also, Palo Alto forecast billings of $2.33 billion compared with analyst estimates of $2.23 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.
"PANW easily possesses the strongest array of cloud assets among traditional network security vendors," Mizuho Securities analyst Gregg Moskowitz said in a note.
Heading into the Palo Alto earnings report, the cybersecurity stock had a Relative Strength Rating of 86 out of a best-possible 99, according to IBD Stock Check-up. PANW stock has retreated 21% in 2022.
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