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Palo Alto Networks (PANW) Revenues: What to Expect

VSCybersecurity specialist Palo Alto Networks (PANW) has consistently outperformed the overall cybersecurity industry in terms of revenue and profit growth.

Estimates suggest that cybercrime will increase by 15% per year over the next five years, costing the world around $10.5 trillion per year. Nearly 70% of companies surveyed expect cybersecurity spending to be a major component of their IT budgets in 2023. These trends bode well for Palo Alto Networks, which is expected to report third quarter fiscal 2022 results after the closing bell Tuesday. Investors want to know if the time is right to buy the stock.

Offering a diverse suite of IT products, the company continues to benefit from its leading position in seven key cybersecurity categories, and should therefore generate growth in both revenue and profit when it reports its results. for the quarter ending in April. With its shares up around 36% year-to-date, outpacing the 9.34% rise in the S&P 500, while climbing 30% over the past year, from a rise 7% of the S&P 500 index, it seems that the market has already rewarded the company for its performance.

Driven by an increasingly connected digital ecosystem and increased cyber threats, there are still huge opportunities in the cybersecurity landscape for 2023 and beyond. With its wide range of integrated products and focus on AI-driven innovation, Palo Alto is strategically positioned to capitalize on this demand. Investors who waited for a better entry point may have missed the recent surge in stocks, but they can still do well here.

Cybersecurity will remain one of the hottest technology sectors over the next five years, during which the company is expected to grow its profits at an average annual rate of 27.5%. Tuesday’s question, however, will be whether the company can provide strong guidance to keep investors (and analysts) excited about its stock, which continues to benefit from its leadership position in key cybersecurity categories.

For the three months ending in April, Wall Street expects the California-based company to earn 93 cents per share on revenue of $1.71 billion. That compares to the year-ago quarter when earnings were 60 cents per share on revenue of $1.39 billion. For the full year, ending August, earnings are expected to rise 59% year-over-year to $4.02 per share, while annual revenue of $6.89 billion would rise 25 .2% year over year.

With revenues continuing to grow north of 25% annually, this underscores the strength of Palo Alto’s cloud business. Analysts believe that the cloud security segment is still in its infancy and will continue to grow as employers embrace the hybrid remote and in-office work environment. This trend will rely on the kind of cyber prevention tools and cloud firewalls offered by Palo Alto to protect their endpoints. To date, the company has exploited its advantages.

Palo Alto has delivered ten straight beats up and down, including in the second quarter when it easily topped Street’s estimates. In the second quarter, Palo Alto earned an adjusted $1.05 per share on $1.66 billion, beating consensus of 78 cents per share on $1.55 billion in revenue. The 25.7% revenue growth rate in the second quarter was much faster than the 10% growth rate for the entire cybersecurity industry.

Equally impressive, second-quarter billings increased 26% to $2.03 billion, with remaining performance obligations increasing 36% year-over-year to $8.8 billion, outpacing estimates of $8.38 billion. On Tuesday, investors will want to see if these strong growth trends can continue. With PANW shares trading at around six times forward earnings, there is still value to be realized if Palo Alto can assert its strong position in the market.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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