Palo Alto Networks Exceeds Earnings Expectations, but Revenue Falls Short
Palo Alto Networks, a leading security software vendor, saw its stock surge by as much as 9% in extended trading on Friday after reporting earnings that surpassed analysts’ estimates. The company’s decision to announce its results late on a Friday had initially raised concerns among investors, who feared that problematic numbers might be hiding within the report.
Prior to the announcement, Palo Alto Networks’ shares had dropped by 16% in August, fueling apprehension among investors. The timing of the release on a Friday raised suspicions that the company might be trying to bury potentially troublesome figures.
However, the numbers revealed by Palo Alto Networks showed stronger-than-expected earnings for the quarter ended July 31. The company reported adjusted earnings of $1.44 per share, surpassing the estimated $1.28 per share predicted by Refinitiv. Despite this positive showing, the company fell slightly short of revenue expectations, with $1.95 billion compared to the expected $1.96 billion.
Palo Alto Networks also disclosed that its revenue for the fourth quarter of its fiscal year had increased by 26% to $1.6 billion, compared to the previous year. Net income for the quarter rose significantly to $227.7 million, or 74 cents per share, compared to $3.3 million, or a penny per share, in the same period last year.
Looking ahead, Palo Alto Networks provided its revenue projections for the first quarter, expecting it to range between $1.82 billion and $1.85 billion. Similarly, the company predicted sales for the year to be between $8.15 billion and $8.2 billion. However, these forecasts fell short of analyst expectations, with Refinitiv estimating $1.93 billion for the fiscal first quarter and $8.38 billion for the full year.
The choice to announce earnings on a Friday after the market close is atypical for West Coast tech companies. Typically, earnings are reported no later in the week than Thursday afternoon, allowing investors time to process the numbers and make informed trading decisions before the end of the week. Historically, companies with unfavorable news tend to release their results after the close of trading on Fridays.
Despite the weaker-than-expected revenue for Palo Alto Networks, the better-than-anticipated earnings calmed investors’ initial concerns. The stock’s 9% surge in extended trading suggests that confidence in the company’s future prospects remains intact.