Palo Alto Networks beat Wall Street’s fiscal second-quarter estimates after the bell on Tuesday but shares fell 6% on disappointing guidance.
Here’s how the company did versus LSEG estimates:
- Earnings per share: $1.03 per share excluding items vs. 94 cents expected
- Revenue: $2.59 billion vs. $2.58 billion expected
The cybersecurity company forecasted lackluster earnings for the fiscal third quarter in the range of 78 cents and 80 cents, falling short of an estimate of 92 cents from LSEG.
Revenue is expected to hit $2.94 billion to $2.95 billion, topping a $2.60 billion estimate.
Revenue grew 15% from $2.3 billion a year ago, the company said. Net income totaled $432 million, or 61 cents per share, up from $267 million, or 38 cents per share a year ago.
Palo Alto also said on Tuesday that it’s buying Israeli cybersecurity startup Koi to secure AI agents as rising artificial intelligence innovation fuels more sophisticated cyberattacks. The company has bet big on AI tools, and recently launched AI agents to help customers automate certain security responses.
The company is also in the midst of a significant spending spree as CEO Nikesh Arora transforms Palo Alto into a hub for all things cybersecurity. Since joining the company in 2018, he’s overseen more than 20 acquisitions.
Earlier this month, the Santa Clara, California-based company closed its biggest acquisition ever, paying $25 billion for Israeli identity security company CyberArk. In January, it closed the more than $3 billion purchase of cloud observability platform Chronosphere.
“We saw continued strength in platformizations, a trend that is accelerating due to AI – customers are keen to both modernize and normalize their cybersecurity stack, aligning them to our approach,” Arora wrote in a release.
Remaining performance obligations, which track the value of contracts to be delivered to customers, totaled $16 billion and topped a StreetAccount estimate of $15.78 billion. Annual recurring revenue rose 33% to $6.33 billion.
Palo Alto shares have slumped 11% year to date.
